Table of Contents
What is the current situation? 2
What has made MMBC successful & distinguishes it? 2
What enabled MMBC to create such a strong brand? 3
What has caused MMBC’s decline in spite of its strong brand? 3
Should MMBC introduce a light beer? 4
Is MM Light financially feasible for MMBC? 5
Break-Even Point (BEP) Analysis 6
MM Lager Cannibalization 6
MM Light Marketing Strategies 7
Exhibit 1 – SWOT Analysis 9
Exhibit 2 – Financial Data and Assumptions 10
Exhibit 3 – Break-Even Point (BEP) Analysis Calculations 11
Exhibit 4 – MM Lager Cannibalization Calculations 12
Exhibit 5 – MM Light Marketing Strategy 15
What is the current situation?
Mountain Man ...view middle of the document...
In addition, it has very strong brand position with consumers favoring MM Lager’s unique taste and quality ingredients from the family recipe. Finally, MMBC has a trained sales force that is very adept and getting its product into the right channels to compete with national breweries.
The legacy of the company is its main distinguishing trait from its competitors. As mentioned before, the very strong brand equity has made MMBC stand out as a brewery that has experienced customer loyalty for successive generations. Holding the title of “West Virginia’s Beer” allows MM Lager to have an ingrained exposure to consumers in the region and act as a natural default for its blue collar patrons.
What enabled MMBC to create such a strong brand?
To quote the Mission Statement, “Mountain Man is still standing because we manufacture an exceptional beer with a great brand name, we’ve never lost sight of our core customer, and we’ve never been seduced by the other guy’s market.” MMBC stands for such unique qualities that have been the boilerplate for developing an enriched brand with strong equity. For almost 50 years it held the top market share for lagers of West Virginia in the majority of the states where it was distributed distinguishing them in prime position among competitors. Research of working-class males determined that MMBC was as recognizable as leading manufacturers Chevrolet and John Deere in the East Central region. Besides successful branding efforts in a large market, MM Lager was priced with an extremely competitive Every Day Value below specialty brands, but above premium domestic brands. This allowed for an aura of authenticity distinguishing it as higher quality than Miller and Budweiser, for instance, all while gaining incremental revenues from the craft brewers like Sam Adams. MMBC could generate increased turns at registers without having the deep pockets of their competitors.
What has caused MMBC’s decline in spite of its strong brand?
Analysis of MMBC’s business model requires the backdrop of the U.S. beer industry. Since 2001, U.S. per capita beer consumption has declined by 2.3% due to increasing competition from wine and spirits-based drinks. MMBC’s revenues are down 2% relative to the prior fiscal year. The current state of the company and market conditions suggests that a single product line may be unsustainable. As of 2005, MMBC was the only major regional beer company to not expand beyond its flagship lager product. A segment of the population was still interested in MMBC, but that segment, while loyal, was aging. The rate at which MMBC was building new consumers was only going to replace a fraction of their current buyers. Distributors were discriminating about which smaller brands they would carry, and the percentage of new consumers by age group was continuing to decrease.
There have also been numerous uncontrollable circumstances that have been attributed to MMBC’s decline despite their...