PRESENT
MM6016 Branding and Marketing Communication
BRINGING THE BRAND TO LIGHT
29111311 Haidir Afesina 29111363 Wirania Swasty 29111384 Chairunnisa M. 29111387 F X Kresna Paska 29111398 Aqsa Adhiperwira 29111400 Fajar Liem
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HIGHLIGHTS Chris Prangel has returned home to manage the marketing operations of Mountain Man Brewing Company (MMBC) Experiencing declining sales for the first time in its history due to changes in beer drinkers' taste preferences
Want to launch Mountain Man Light, a attracting younger drinkers
"light beer”
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MMBC
A family-owned business which brewing bitter-tasting beer
Brewed one beer – Mountain Man Lager, also known as West Virginia ’s beer Mountain Man Lager's brand equity is a key Popular among blue-collar workers
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TIMELINE
2006
1960s 1925 Founded by Guntar Prangel
MM Lager’s entrenched throughout East Central US
2005
Oscar Prangel retired
Selling over 520,000 barrels
Taken over by Chris Prangel
Generating revenues over $50 million – down 2%
wanted to launch Mountain Man Light
Top market position Best Beer in West Virginia; for its 8 year straight Best Beer in Indiana Winner of America’s Championship Lager
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INDUSTRY ANAL ANALYSIS YSIS (PORTER 5 FORCES) Threat of new Entrants
Supplier Power Lots of supplier (raw material) Low switching cost
Local Beer & craft beer Lots of big & famous competitor Customer loyalty of product competitor
Rivalry Competition
Buyer Power
Local & Import Beer
Threat of Substitutes
Wine Spirits
Price Sensitivity Product Undifferentiated Undifferentiated
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PERCEPTUAL MAPS The Occasions being celebrated vs Quality among competitors The occasion being celebrated
Brand awareness vs Price among competitors Brand Awareness +
+
Import beer
Major Domestic producers
Specialty Brewers
Major Domestic producers +
Quality
MMBC
Second-tier domestic producers
Import beer +
Price
Specialty Brewers
Second-tier domestic producers
MMBC
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PERCEPTUAL MAPS Taste vs Local Authenticity among Competitors Taste
+
MMBC Specialty Brewers
Import beer
Major domestic producers
+
Local Authenticity
Second tier domestic producers
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COMPETITION
Mountain Man Lager
Source: http://en.wikipedia.org/w http://en.wikipedia.org/wiki/Beer_style iki/Beer_style
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MARKET SHARE Exhibit 6. Light Beer Market Shares
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MMBC CBBE PYRAMID 53% brand loyalty rate As good a beer as you could get anywhere Best Beer in West Virginia Focused on quality, Won beer championship, Use original ingredients Recognizable brand
Loyal customer feel this is the part of their life, Habit from generation Local Authenticity, Legacy Independet family owned brewing company, Old company MMBC
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WHAT HAS MADE MMBC SUCCESSFUL?
WHAT WHAT IS DISTINGUISHES DISTINGUISHES IT FROM COMPETITORS?
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KEY SUCCESS Manufacture an exceptional beer with a great brand name •
•
Mountain Man was as recognizable a “brand among working -class males” in the East Central region
The good perception of quality and the brand loyalty it cultivated
Never lost sight of their core customer Never been seduced by the other guy’s market
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WHAT ABOUT THESE FACTORS ENABLED MMBC TO CREATE CREATE SUCH AS A STRONG BRAND?
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MMBC AS A STRONG BRAND •
Consistency of taste and quality •
The uniqueness (bitter flavor and slightly higher-than-average alcohol content)
•
•
Its history and its status as an independent, familyowned brewery to create an aura of authenticity Positioning the beer with its core drinkers •
•
Blue-collar, which tended to be very loyal
Invested in a number of branding activities to build brand equity with core consumers
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WHAT WHAT HAS CAUSED MMBC’S DECLINE IN SPITE OF ITS STRONG BRAND?
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MMBC S PROBLEMS ’
It has “lost 2% of its revenue base annually (2005) aging demographic in the shrinking premium segment trend (customers are over age 45) Sales and profits ($) Introduction Introductio n
Growth
Maturity
Decline Sales
Profits
Losses-investment
Time
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FACT FINDING
BEER INDUSTRY Over the previous six years, light beer sales in the US had been growing at a compound annual rate of 4%, while traditional premium beer sales had declined annually by the same percentage Since 2001, US per capita beer consumption had declined by 2.3% •
Competition from wine and spirits-based drinks, an increase in the federal excise tax, initiatives encouraging moderation and personal responsibility, and increasing health concerns
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FACT FINDING – BEER INDUSTRY CONT. Key consumer segment was younger drinkers (21-27 years of age) who preferred light beer and accounted for more than 27% of total beer consumption The trend was growth in the light beer category cat egory •
Accounted for 50.4% of volume sales in 2005
In aging demographic, the premium segment of the beer market were shrinking
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FACT FINDING – MMBC Brand played a critical role in the beer-purchasing decision Recent study in West Virginia, the audience rated Mountain Man Lager as the best-known regional beer Consumers considered: taste, price, the occasion being celebrated, perceived quality, brand image, tradition, and local authenticity •
•
•
MMBC relied on its history and its status as an independent, family-owned brewery to create an aura of authenticity MMBC positioning the beer with its core drinkers (blue-collar, middle-to-lower income, men, over age 45)
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FACT FINDING – MMBC CONT. There were ranges of subjective attributes attributes that defined the quality of Mountain Man Lager, Lager, like its smoothness, percentage of water content, and drinkability––but it was Mountain Man Lager’s distinctively bitter flavor and slightly higher-thanaverage alcohol content that uniquely contributed to the company’s brand equity
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SHOULD MMBC INTRODUCE A LIGHT BEER?
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MMBC’S BUSINESS STRATEGY In response due to declining on sales, sale s, MMBC’s options: whether or not to launch the new product •
Mountain Man Light – a “light beer” formulation of Mountain Man Lager
Yes
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Strengths • Market leader and established brand name • Strong brand equity
Opportunities • Younger demographic and increase lifetime customer value • Light beer appealed to women
Weakness • New brand extension will spread already thin resources of the company • MMBC doesn’t have the marketing marketing budget to compete in the “light beer” market
Threats • Risk of canalization of core brand • Alienation of core consumer through new brand that might not be in line with their aspirations of MMBC
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IS MOUNTAIN MAN LIGHT FEASIBLE FOR MMBC?
FEASIBILITY OF MOUNTAIN MAN LIGHT • • •
•
Nett revenue: $50,440,000 Barrel sold 520,000 Selling price per barrel $97 0.25% Market Share Every Year Light beer market share in 2005: 18,744,303 With 4% CAGR: 2006: 19,494,075 MMBC market share: 48,735 2007: 20,273,838 MMBC market share: 101,369 MMBC Revenue from light beer 2006: 48,735x97=$ 4,727,295 MMBC Revenue from light beer 2007: 101,369 x97=$ 9,832,793
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Feasibility Analysis Break Even Point = Fixed cost/Variable cost ($900k +$750k)/($66.93+$4.69) +$750k)/($66.93+$4.69) $1.650k/$(97-71.62) = 65,012 barrels 2% de cl i ni ng sal e s 5% canibalization 10% canibalization canibal ization 20% canibalization canibal ization
2% dec decli lin ning ing sa sales les 5% canibalizati canibalization on 10% 10% canibalization canibali zation 20% 20% canibalization canibali zation
2005 $ 50,440,000.00
2005 $ 50,440,000.00
2006 $ 49,431,200.00 $ 46,959,640.00 $ 44,488,080.00 $ 39,544,960.00
2007 $ 48,442,576.00 $ 46,020,447.20 $ 43,598,318.40 $ 38,754,060.80
2006 $ 49,431,200.00 Loss $ 46,959,640.00 $ 2,471,560.00 $ 44,488,080.00 $ 4,943,120.00 $ 39,544,960.00 $ 9,886,240.00
2007 $ 48,442,576.00 Loss $ 46,020,447.20 $ 2,422,128.80 $ 43,598,318.40 $ 4,844,257.60 $ 38,754,060.80 $ 9,688,515.20
$4,727,295.00
$ 9,832,793.00
Revenue From Light Beer
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SHOULD MMBC LAUNCH MOUNTAIN MOUNTAIN MAN LIGHT?
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MOUNTAIN MAN LIGHT Yes, targeted to young consumer 21-27 27% of total beer consumption & spending twice as much per capita on alcoholic beverages than consumers over 35 years of age
The light beer category accounted for 50.4% of volume sales in 2005, compared with 29.8% in 2001 ” To grab a potential 0.25% market share annually from the regional light beer market The projected regional revenue growth is at 4% annually
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MOUNTAIN MAN LIGHT MARKETING MIX Product
Price
Promotion
Place
•Brand name Mountain Man Light •Packaged in a green bottle to differentiate from its lager •The green bottle also indicated a lower alcohol content
•Need further market research to determine the optimal pricing
•Grass-roots marketing by word of mouth
•On-premise locations: restaurants and bars
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EVALUATION OF MMBC’S OPTIONS Launch Mountain Man Light through brand extension
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