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Mountain Man Case

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by

Kaitlyn Shimazaki

on 11 May 2014

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Transcript of Mountain Man Case

Mountain Man Brewing Company
Nature of Demand
Mountain Man Brewing Company
Nature of Competition
Stage of Product Life Cycle
Financial Resources
Target Market
Product Strategy
Pricing Strategy
IMC & Budget
Recommendation Decision
Decision Options
Decision Criteria
Proof of Recommendations
Disadvantages
Will DeGesero, Vita Bauer, Debra Ferrando, Abeba De Armey, Kaitlyn Shimazaki
Who
New Competitor Opportunities
Brand Positioning
Distribution Strategy
Existing equipment & facilities.
Manufacturing
Marketing
Skills of the Firm
Skills Compared to Competitors
Import Beer Companies
Major Domestic Producers
Possess Higher Skills
Craft Beer Industry Companies
Second-Tier Domestic Producers
What
When Purchasing
Low to mid-income blue collar working men over age of 45.
9% of their customer base is female and the remaining 81% are males.
Mountain Man Lager.
Consideration Factors:
Taste, Price, Occasion, Quality, Brand Image, Local Authenticity
Brand played a critical role
Where
Off premise locations
Main Target Market in West Virginia & Eastern regional areas
Why
Brand Loyalty
Quality & Taste
How
Distributed in Illinois, Indiana, Michigan, Ohio, and its native West Virginia. Purchases are made in pubs, bars, cafes or restaurants but can also be purchased in supermarkets, liquor stores, gas stations or kiosks.
Family-owned regional brewery founded in 1925 by Guntar Prangel.
A reformulated family brew recipe resulted in their one product,
Mountain Man Lager
.
MM Lager was a legacy brew in a mature business.
Had held top market position among lagers in West Virginia for almost 50 years.
(
Marketing Program Implications
Does not have the resources to match the marketing efforts of the large, national light beer brewers
Has its own sales force that focuses on pushing the brand to off-premise locations.
Its distributors are not promoting the brand because they carry larger competitors, which are more profitable.

How is Market Segmented?
Consumers that like craft beers
Those who like imports,
Those who like domestic beer.
Consumers that only like light beer or only like dark beer.
The market is also segmented between female and male preferences.

Extent of Demand
History of Competitor Retaliation
Second-Tier Domestic Producers
Import Beer Companies
Craft Beer Industry Companies
Major Domestic Producers
Environmental Climate

Health Concerns
Encouraged Moderation / Personal Responsibility


Removed Old Law that Prohibited Marketing
More Pressure from Large Breweries


Increased Competition
Increase in the Federal Excise Tax
Opportunities & Problems
Distribution Structure

On-premise Channels
:
At the site of the sale; generally in pubs, bars, cafes or restaurants.
Off-premise Channels:
Off site of sale such as supermarkets, liquor stores, gas stations or kiosks.


Distributors
Retaile
rs



Use of company's sale force to sell to off-premise location
70% of their sales comes from off -premise locations.
30% of their sales is consumed at on-premise locations.


Retail stores
supermarkets
convenience stores


No support form distributors & retailers



High cost for intensive distribution
Increasing competition in the industry
Use selective distribution strategy
Situation Analysis
Low Involvement Purchase
External advertising agency.
Blue-collar, middle to lower income >45
Purchase 60% from liquor stores, where 70% of MM was sold at
Sold 520,000 barrels in East Region for over $50 million
"Best Beer in West Virginia" 8 years running
"America's Championship Lager" at the American Beer Championship
Indirect distribution strategy
Sell their products through intermediaries such as distributors & retailers.

Limited distribution channels & retail shelf space.
Distributors wants to carry only products that are profitable for their business

Level of intensity of distribution for MMBC: low
.
MMBC does not sell their products using all available channels, they use a selective distribution strategy

Mountain Man Lager margins are 31%. (To figure this out we did the gross margins divided by revenues)

Do not open up Mountain Light and contnue to have 2% loss year over year

Focus on Mountain Man Lager, their core competency yet extend marketing efforts to strengthen presence in other geographic locations within the U.S

Introduce a light beer under line extension called Mountain Light with possible cannibalization ranging from 5%- 20%

Introduce a light beer under new name with possible cannibalization and brand equity erosion
Mountain Man Brewing Company should open the line extension under the name Mountain Light.


Since the target market is young adults and women, cutting out “man” helps simplify the name and appeals to this market by removing the masculine tone.


Opening Mountain Light will be profitable for MMBC with cannibalization of Mountain Man Lager up to 17%.
74% of beer shipments in the East Central Region
12.5% of beer shipments in the East Central Region
12% of beer shipments in the East Central Region

1.5% of beer shipments in the East Central Region
-Light beer sales have grown at a compound annual rate of 4%
-Traditional premium beer has declined each year by 4%

Young drinkers aged 21-27 account for 27% of total category spending
No established brand loyalty
Discrimination among distributors as to which smaller brands they decide to carry


Large national brewers who maintain economies of scale put great pressure on small regional brewers like Mountain Man
Mountain Man Drinker
Loyal Hard Working Deserving
Blue Collar >45

Top market position among lagers in West Virginia for almost 50 years
Distribution Channels
Indirect Channels
Selective Distribution Strategy
Marketing Channels
Expanding sales territory
(premium)


Not cost effective or profitable for MMBC
Consumer loyalty is to their own region brewers
Change in customer tastes
Change of the law
Channel marketing support: Low
Intensity of Distribution: Low
Channel Marketing Support

Bavarian Hops and unusual strains of barely resulting in flavorful Bitter taste




Brown Bottle to accentuate the beer's dark color
Original 1925 Coal mining crew label design
Taste
Packaging
Priced similarly to premium domestic brands such as Miller and Budweiser and below specialty brands such as Sam Adams.


Its price was typically $2.25 for a 12-ounce serving of draft beer in a bar and $4.99 for a six-pack in a local convenience store.
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Critique of Options

Lower Demand
More Competition
Higher Overall Cost
Declining Product Life Cycle

Younger Demographic is Growing

Younger Population Prefers Light Beer over Premium
Q & A
Conclusion

The proposed budget and proposed .25% initial market share for MM light makes the launch feasible and profitable.


We are catering to a market growing @ 4%
New target market
The company will save on advertising expenses by leveraging its brand equity.

Radio, Print and Outdoor
Sponsorships
Total Budget
: $1.35MM (2.7% of total revenue)



Strengthens Brand Image
Free
History of Introducing or Updating Product Lines
History of Innovation
One product - Mountain Man Lager
No history of new introductions
Small history of innovation with Mountain Man Lager
New brew recipe that resulted in a different taste in beer
Brand Type
Brand & Brand Equity
Development History
National Brand
Independent & Family Owned
Brand plays crucial role in purchasing
Brand awareness with blue-collar customers
Product itself
Advanced sales force
Grass-roots Marketing
Potential Growth in Young Demo due to current Market Share being Low
Problem
Opportunities
Social Issues
Political Issues
Economic Issues
Possess Higher Skills
Possess Higher Skills
Similar Level Skills
They Do currently have the financial resources to
They do have the Financial Resources to support an effective marketing program.
Enjoys the rouged bitter taste
Sacrificing taste for calories is not an option
Household income that ranges from 25K to $49.9K/Year
Advertising & Sales Promotions
Word of Mouth & Grass Roots Efforts
After Analysis
By Introducing Mountain Light
Evaluation of Current
Marketing Programs
Full transcript