Mmbc Case Study

Introduction: Summary

Having accumulated a respectable market share, Mountain Man Brewing Company (MMBC) successfully defended its title as one of the top brewing companies for Lagers in West Virginia for almost 50 years. Unfortunately, due to changes in drinkers’ preferences from strong to light beer along with a new rising consumer segment consisting of younger drinkers, the company experienced a decline in sales for the first time in 2005.

Technical Analysis, Alternatives and Solution

Given the threat of changing consumer preferences (SWOT Analysis, Exhibit 6) the shrinking premium beer market has resulted in a 2% drop in 2005 revenues for Mountain Man Lager (MML). This implies that MML has either entered the declining stage of its product life cycle or is nearing the end of its maturity phase. If this continues, MMBC’s revenue will drop from $50.4 million to $45.5 million and net profit would decrease by nearly a third to $2.1 million within 5 years (Exhibit 1). Since MMBC’s sole product offering is on the decline, alternatives need to be developed to help maintain the status quo or the company may face eventual death.

The light beer market presents a huge opportunity for MMBC (SWOT) as it represents 50.4% of the entire beer market with 4% p.a. growth. Analyzing Exhibit 2, a modest 0.25% p.a. growth for MMBC in this market would represent a huge proportion of sales and profits relative to MMBC’s current figures.

However, while it is lucrative, entering the light beer industry will inevitably hurt MML (Exhibit 3). Assuming a 10% sales erosion of MML with the introduction of a light beer, graphical representations (Exhibits 4 and 5) show rapid growth in profits and revenue which eventually exceed status quo after an initial dip in 2006. As the pros outweigh the cons, it is crucial that MMBC proceeds with the launch of its light beer.

Our solution is to develop a light beer that caters to the wants and needs of our target consumers by embracing the marketing concept while capitalizing on our expertise in producing quality beer (SWOT). The beer will then be introduced using a two pronged-marketing strategy of “Defend”—limiting the erosion of MML to a maximum of 10%— and “Conquer”—maximizing growth in the light beer market beyond our initial estimates of 0.25%.

Moreover, MMBC currently relies heavily on the “Rough Men” consumer segment (Exhibit 7, Psychographic Segmentation) for its revenue. By introducing light beer as a line extension, it can also tap into other highly promising segments: “Young Drinkers” and “Non-fancy drinkers”. This change will correct MMBC’s marketing myopia by developing the vision of “connecting people from all walks of life, one beer at a time,” rather than merely being an “exclusive, tough beer company”. With this vision in mind, using BCG’s framework, Exhibit 8 displays MMBC’s future projections and the possibility of additional product lines as it strives to reach out to more consumers, gather more people, and create more connections through its beer.

Marketing Mix/Strategy for Mountain Brew Light – 4Ps
Product: Given that gender equality concerns are on a rise, naming our new product, Mountain Brew Light (MBL), rather than Mountain Man Light will appeal more to women who account for a massive 42% of light beer consumption. Further, as the change in name is subtle, MBL can still capitalize on MMBC’s brand awareness and positive brand attributes such as quality, smoothness and drinkability. Name aside, MBL will be packaged in a dark blue bottle (Exhibit 10) which serves to differentiate itself from MML and to portray an image of youthfulness and coolness which would likely appeal to young consumers. Ultimately, the changes will help “Conquer” by capturing additional market share and “Defend” by making MBL more distinctive from MML by associating manliness only with MML.
Place: While distribution of MML was focused on off-premise locations, MBL’s distribution will be through both on and off-premise locations. However, focus will be on on-premise locations, primarily pubs and bars. This complements our targeted consumers as women and youths frequent these locations, enabling us to better “Conquer”. Additionally, “Defend” is also enacted through differentiation of distribution channels which reduces cannibalism that may rise due to limited shelf space. Since the younger generation are typically tech savvy, MMBC could also capitalize on the rise of e-commerce by delivering MBL via online purchases. Greater accessibility and convenience can be additional justification for consumer’s purchase decisions.
Price: Due to tight competition and a price sensitive target segment (Exhibit 9, Porter’s 5 forces), MBL will maintain the same price level as MML. Thus, its affordability backed with its renowned brand equity will aid in delivering greater value and build a competitive edge.
Promotion: The initial stage of MBL’s launch will require a “push” strategy via extensive and aggressive marketing campaigns to raise product awareness. Apart from stand-alone TV advertisements, MMBC could save costs by tapping on MML’s 1.35 million advertising budget through joint TV advertisements. Such advertisements can convey its vision of connecting people by illustrating familial events like BBQs or parties where everyone is enjoying a refreshing bottle of beer - older generation drinking MML while younger generation drinks MBL.