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mountain brewing case analysis
A case analysis for the Mountain Man Brewing Company Case.
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To Chris
Company Background –
Mountain Man Brewing Company (MMBC) was established back in 1925, and since then has come to be known as “West Virginia’s Beer” with a loyal customer base. It has been familyowned and perceived as being high-quality which has been passed on from generations. It’s has been known as a miner’s beer and appealed to a certain blue collar market.
MMBC developed its brand equity as a symbol of toughness, authenticity, quality and uniqueness this with several other factors made MMBC successful. Brand Equity is defined as the $$$$ value contained in a specific brand. High alcohol content that appealed to the blue collar market along with these specific specific factors added to to MMBC brand. It caters to regional tastes (dark, bitter). MMBC also has class cachet (it’s a miner’s beer) it’s family-owned, it’s
perceived as being high-quality and it’s a legacy product. People Peop le seem to drink Mountain Man as a way to connect with past generations of their family. Brand played a critical role in beer purchasing decision. The promotion of MMBC was done by accentuating its dark color by packaging it in a brown bottle, b ottle, with its original 1925 design of a crew of o f coal miners printed on the front. Mountain Man Lager was priced similarly to premium domestic brands such as Miller and Budweiser but below specialty brands such as Sam Adams. MMBC used its own sales force to focus on off-premise locations (liquor stores or supermarkets) with much success. Blue collar males purchased 60% of the beer the y drank at these off-premise locations. The decline in MMBC was due to changes in beer drinkers preferences. This decline was happening across the whole United States S tates to the traditional premium beer category at an annual rate of 4%. Competition –
Introduction of a Light Bear –
Breakeven Analysis –
Options to consider for MMBC –
Mountain Man Brewing Company does not want to go another year with revenue lost from Mountain Man Lager. By adding a light beer to the product line it could gain loyalty from a younger crowd and attract more then just the workingman. At the same time he does not want to lose the brand equality that has taken years to create. He is also faced with solid monopolies in the beer world that make it hard to keep up. Chris is faced with a hard decision, will taking a chance and changing the image really be the right move for Mountain Man. By introducing a new product line called Mountain Man Light the company would be able to reach a broader audience. They would no longer focus on the workingman, they would appeal to a younger generation of beer drinkers. They would also be able to gain a woman base, women being extremely heath cautious would be more likely to purchase the beer if it came to a “light” version with fewer calories. By launching a Mountain Man Light it would also play down most peoples perception of the Mountain Man Original being too strong and only a manly mans beer. Mountain Man Brewing Company is a beer for the workingman. It has been around since 1925 and has gained strong loyalty from the baby boomer generation. Mountain Man has strong brand awareness down south and if you asked anyone over the 21 they are more then likely able to recognize the name even if they do not drink it themselves. The brand has been able to stay in the game with strong competitors such as, Anheuser Bush, Miller, and Adolf Coors. The uniqueness of the taste along with the higher then average alcohol content is what makes its loyal customers coming back for more. One alternative to look at for the Mountain Man Brewing Company is to look and see how hard it would be to distribute it into restraints and local bars with the option to have it available on draft.
What has made MMBC successful? What distinguishes it from competitors\ Brand Loyalty Older working class, blue collar
Effective marketing Sales team - "Grass roots" marketing 70% consumed at home higher alcohol % 2. What has caused MMBC’s decline
in spite of its strong brand? Think in terms of the beer market in
general, as well as the market MMBC serves. Alternate beverages health concerns tax increases Consumer changes/shift in tastes towards light beer Limited distribution channels -shelf space very competitive industry and capital intensive 3. Should MMBC introduce a light beer? What are the pros and cons of doing from a qualitative perspective? Pros Gaining younger demographics Diverse product portfolio May be MMBC could create a unique Light beer Cons Alienate existing customers Dilute the existing brand equity in te rms of image - particularly the brand stands for Lager with higher alcohol % Decrease/ cannibalize shelf space. More expensive to produce Light beer already has a strong presence. Finally, if they go with light beer with a different brand name, then think about financing - new brand, additional advertising etc.
Financial Numbers In order to be break even volume = fixed cost/unit rev - unit variable cost = 1.65M/97-71.62 = 65012 barrels