Reference: https://drive.google.com/file/d/1YpMJHdSj6sNOLd9_qJlgFxKu_fD3f3Nz/view?usp=sharing

Instructions:

Q1. Please clearly states the one main problem that MMBC needs to be solved. Present brief but specific recommendations such that the company's CEO could make a decision from it. (Please note that the main problem is not that MMBC has one type of beer!)

Q2. Next, discuss the situational analysis and course of action which explains the rationale behind the recommendations. Present any drawback to recommendations.

Q3. Lastly, mention the action plan (4 Ps). Again, also needs to present a drawback.

Background Information

The below information has already been gathered after going through the case which might help u answer the instruction questions:

What is Chris considering doing and what factors will he have to align to be successful?

With Mountain Man Beer Company experiencing declining sales and data showing that light beer sales in the United States had grown at a compound annual rate of 4 percent over the previous six years, Chris is considering launching Mountain Man Light, a "light beer" formulation of Mountain Man Lager.

Some of the factors that must be aligned in order for this launch to be successful are as follows:

i) Developing a new campaign aimed at light beer drinkers (younger drinkers)

ii) Chris must collect data and inform/convince senior management that the product will generate a profit (after expenses such as marketing and lost sales) while also increasing brand equity.

What goal should MMBC (Chris) have?

In the long run, MMBC should strive for a significant market share and year-over-year growth in the light-beer market. However, MMBC must first assess whether they can reposition the brand to drive Mountain Man Light sales to younger people without jeopardizing Mountain Man Lager's core brand equity. In other words, by introducing this new beer, they must not cannibalize their current core consumers.

According to the statistics provided, they must also increase profits due to the 2% drop that MMBC is currently experiencing.

What has made MMBC successful?

MMBC has remained this traditional and regional family-owned brewery since 1925, cultivating brand loyalty by strictly adhering to its core customer base, offering an appealing product at a great price, and with a local authenticity.

The uniqueness in thebrand awareness in the brand's success cannot be overstated. Another significant achievement for MMBC was its designation as "West Virginia's Beer" in West Virginia.

What distinguishes it from competitors? (includingits marketing mix)

MMBC is distinguished from competitors by its rich history and status as an independent, non-corporate, and family-owned brewery. They are distinguished from competitors by qualities such as smoothness, packaging, slightly higher alcohol content, and bitter flavor. Overall, brand awareness, quality perception, and brand loyalty have all contributed to MMBC's success.

What about these factors enabled MMBC to create such a strong brand?

As previously stated, MMBC promoted its product through strong customer loyalty rather than through advertising and sales promotion. It is a cost-effective plan that is effective due to the statistics generated from their core customers.

ii) In fact, the distinctive bitter flavor and above-average alcohol content contributed significantly to MMBC's brand equity.

What has caused MMBC's decline in spite of its strong brand?

i) Changing drinker preferences, competition from wine and spirit-based drinks, an increase in the federal excise tax, initiatives encouraging moderation and personal responsibility, and rising health concerns are just a few of the factors contributing to MMBC's 2.3 percent decline in US per capita beer consumption.

ii) Another factor is the pressure that larger national brewers put on smaller, regional breweries like Mountain Man in order to maintain economies of scale in brewing, transportation, and marketing. Many independent breweries in the East Central region have closed as a result of this pressure over the last 40 years.

iii) The majority of MMBC's market was made up of an aging demographic in the beer market's shrinking premium segment.

Describe the market and current and future competition.

Currently, the introduction of Light MM will not reduce the sales revenue of the existing product, but it will generate new customer base without switching Lager beer customers to Light MM. Because of the existence of strong brand recognition, this will generate a new customer based on the existing market with less marketing expenditure cost. This will aid in competing directly with competitors who have low-cost, light-calorie products, ultimately increasing MMBC's market share.

To meet beer drinkers' new preferences, competitive brewers will introduce newer styles of beer, specifically lighter beers. Both styles, however, will remain in the same brand family. They are willing to leverage their core brand name in order to gain more shelf space from distributors and retailers. MMBC has a large market, a strong brand image based on product attributes, a clearly defined consumer segment, and potential consumers value the brand's association with an independent brewery.

Should MMBC introduce a light beer?

Yes, based on a) market trends predicted by industry observers, current company trend of 2% loss of annual revenue; and b) increase of light beer sales over the past 6 years at an annual compound rate of 4%, the Mountain Man Light beer launch appears to be the right way to go. Nonetheless, marketing tools such as brand tracking provide visibility of brand equity and brand performance on a daily basis, facilitating decision-making during the marketing program's execution.

What are the pros and cons of doing so?

Pros:

• Access to the younger drinker segment, where there is no established loyalty to any particular brand of beer, and who are larger consumers (twice as many as those aged 35 and up).
• Attainment of female beer drinkers in the younger and other age demographics.
• The brand extension will help the core brand by gaining more shelf space with distributors and retailers, resulting in increased sales.
• The product life cycle appears to be transitioning from a mature to saturation and declining stage, necessitating the introduction of new products while the brand remains strong and can be leveraged.

Cons:

• There will be some cannibalism between Mountain Man Lager and Light beers because distributors may sacrifice some of the old lagers when purchasing the lighter version in order to fit both on the same shelf space.
• Also, any dilution caused by customer loss as a result of brand expansion into a new segment. If the brand extension is not properly planned and provides clear brand identity, there is a risk of destroying the brand image and brands becoming diluted, resulting in the loss of core customers.

Should MMBC launchMountain Man Light?

Yes, MMBC should introduce a light beer based on the data provided, such as the market trend predicted by industry observersan increase in light beer sales over the past 6 years at an annual compound rate of 4 percent. According to Chris' financial projections, the Light beer share market will generate a profit of $107000 in two years. (For more information, please see Appendix1's excel sheet.) 6a. What does Mountain Man Light need to break even in two years? It is necessary to sell enough Mountain Man Light barrels (50000 approximately) in two years to cover both the associated launch marketing ($750000) and incremental SG&A ($900000/year) expenses.

What other strategic options for growth does Chris have ifMountain ManLight isnot launched or is unsuccessful?

There is a good chance that MMBC, using their current brand image of old family brew recipe, will move into Super-premium yield (craft and high-end domestics beer), which holds 1.5% of the East Central Region and has grown at a rate of 9% in the last 6 years. Going nationwide and eventually global, MMBC should try marketing to the same core customers but at a national level; this way, they can stay true to their core while broadening their customer base without compromising the product. However, they may need to invest significantly in a manufacturing location and equipment, or they may be able to begin by outsourcing some production to contract breweries.

They should also expand their presence in on-premise locations where distinct flavors are valued, such as restaurants and brewpubs. They could also capitalize on the "retro-cool" trend in order to reach new customer segments described by the young woman in the case's text. They could also choose to use co-branding, licensing, and franchising to capitalize on their brand equity. Others who think outside the box may consider line extensions to other product segments such as bourbon or Scott whisky, which are associated with the image of craft and high-quality products. MMBC should find it easier to make this transition with the help of branding.