Mountain Man Beer Case Study is a case on marketing and new product introduction from HBR. Chris Prangel has recently joined his family-owned business and realized that the single SKU beer popular among blue collared employees is facing a decline in sales. The case narrates his journey and dilemma to launch a new product to counter declining sales.
Mountain Man Beer Case Study: Brief Introduction
Mountain Man, a brewing company founded in 1925, over the years managed to gain a large share of the lager beer market for about 50 years due to its reputation. of quality and tasty bitter taste. Advancing the years the company is in decreased of sales of its product (lager beer) by 4% and at the same time there is a great growth of light beers which make up 50% of the total sales of the beer market. The company is led by Chris Prangel who must make innovative decision regarding the brand.
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Mountain Man Beer Case Study: Problem Definition
Faced with a change in consumer preferences, the company is in a situation where it must decide whether to expand its product line to enter the beer market. light or maintain the commitment to its current line of beers.
Mountain Man Beer Case Study: Launch Analysis
Taking into account the current situation of Mountain Man Beer Company, we can determine that the introduction of Light Beer to its product portfolio could result in a great benefit for the company due to the growth of this product segment or within the market. In addition, light beer accounted for 50.4% of volume sales during 2005 across the industry.
The key to the success of a product launch is anchored in planning, direction, organization, and control. It is essential to take into account the needs of consumers so that they can have an effective return and as a consequence produce profits. Currently, the brand transmits quality values to the consumer so that a launch of a new product can have an impact in two ways:
- The brand could increase its sales through a more effective positioning within the mind of the consumer.
- The alternative would be that the product is not equivalent to the quality standards of the Mountain Man Lager product so that the overall brand perception is affected, as well as the values that it transmits to consumers.
Launch Pros
- Regional light beer project revenue growth of 4% per year.
- Spectacular implications for brand creation.
- Increase in sales (segment of young people who consume light beer, key consumption target for beer companies made up of young people 21-27 years old (that do not yet have established fidelity)
- Helps you get more shelf space for your products
- Creating greater product focus among distributors and retailers
- Growth of the light beer category that had been steadily increasing market share and represents 50.4% of sales by volume during 2005
(29.8 2001)
- Strategically important segment for the future of Mountain man beer company.
- Light beer newest and fastest-growing product category
- Only light beer category that showed consistent growth.
- Helps increase participation in places where it was consumed in the lime: restaurants and bars
Launch Cons
- Costs:
- $750,000 in an intensive advertising campaign
- $ 900,000 in incremental annual costs
- Increase in sales staff and constant marketing expenses.
- Lower contribution margin than Mountain Man Lager
- Difficulty reaching a sales volume of light beer competition brands such as Miller and Coors Light due to the large sales and advertising force.
- Risk of getting lost in the sea of introductions of new products.
- Product introduction takes time, resources, and attention away from the main product which is the main income.
- Possibility of losing sight of main consumers by letting themselves enter the competing market.
- Loss of Mountain Man Lager sales due to retailers not giving Mountain Man more gondola space and replacing lager product boxes with lager boxes light.
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Mountain Man Beer Case Study: Alternatives
To help Chris, we understand that there are four strategy options that could be applied in the company: launch Mountain Man Light, invest in Mountain Man Lager, launch Mountain Man Light under another mark or take no action.
Launch Mountain Man Light
The more optimal and risky option is where the company launches the light version or the same Mountain Man brand. We understand that a brand launch could provide, with the company’s support, new consumers, as well as increased revenue and profits. On the other hand, this could cause cannibalization between products and cause the company to incur additional expenses such as advertising.
Invest in Mountain Man Lager
Conservative option, where the company does not launch the new light version and invests the money in improving the existing Mountain Man Lager beer. This alternative provides the possibility of continuing the business tradition, investing in the reinforcement of the brand by the target customer without affecting the culture or incurring extraordinary expenses. On the other hand, it could be not accepted and cause losses, as well as suffer a decrease in market share.
Launch Mountain Man Light under another brand
Protectionist option, where the company creates the product under the name of another brand so as not to compromise the positioning of the original product and fight in the two beer markets, but It should seek to position light beer from scratch. This completely separates the two brands and positions the target audience based on market research.
On the other hand, it may not be accepted as it would not have backing from the original brand, as well as incur production, branding, and extensive advertising expenses.
Do not take any action
The less optimal and conservative option since they do not launch the light version and on the other hand do not reinforce the Mountain Man Lager brand, thus continuing with the current strategy so as not to compromise with actions that They hurt the profits of the company. If this option is realized, the company does not disburse additional money, the positioning remains the same as well as the business culture. On the other hand, this could have an impact on a large decrease in customers and market share by not incorporating itself within the trends followed by consumers, existing the possibility of fading into the beer market.
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Recommendation
After analyzing the different strategies, our recommendation is to relaunch the brand with a Mountain Man Light beer aimed mainly at a new market niche that includes young people in the age range of 21 to 27 years, considered the primary target. This allows us to address the sector of consumers of light beer and without brand loyalty, therefore, sales would increase.
Our proposals are directly related to the people associated with our original positioning, but based on retro, bohemian, and hipster culture, among others, so that will attract the attention of the expected consumer. It should be considered that these proposals do not have certain points in their favor such as expenses, that advertising is a long-term investment so that You will see the return on it immediately, there is an uncertainty of the recovery time, and that the creation and branding of a young style can affect the current positioning.
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Launch Strategy
We understand that MMBC should carry out Mountain Man Light and we propose that an expectation campaign be made, creating concern towards the launch of the new product.
We recommend that it be based on easy-to-remember phrases or concepts associated with the brand and that this be worked in conjunction with future advertising that is rooted in Mountain Man Light.
Possible example
Place billboards in strategic locations with the highest flow of young people within West Virginia, so that as many people as possible see the campaign of expectation and Generate word of mouth to Boca. Later, carry out advertising campaigns via TV and radio.
After several weeks of holding a launch event, we visualize it at a party, aimed at the primary target, where the product at first hand and the positioning of Mountain Man Light will be shown, who will not lose the identity of the company but will highlight factors that young people recognize are superior Res. A few weeks after the event, we will seek to use sales channels and social events, where the product will be tasted and tested blind so that they see that it is a beer that should not envy the larger version and in turn show that they are better beers than the competition in the beer market light.
Mountain Man Beer Case Study: Business Analysis
Mountain Man Beer Case Study: SWOT analysis
| Strengths | Weaknesses |
| Recognized as quality beer in the market thus achieving a high reputation and various awards. First place among lager beers in West Virginia for 50 years. Respectable market share. The main clientele considers Mountain Man Lager to be the best-known regional beer on the market. High recognition for its loyalty (53% higher than the rest of its competitors) Tasty beer with a bitter taste. A high percentage of alcohol compared to its competitors. | It had a single product that was mostly intended for a clientele such as workers over 45 with low and middle incomes. The market focused specifically on a region of the United States. Only regional brands that had not expanded their products. |
| Threats | Opportunities |
| The distributors of the brand managed various brands therefore this avoided the reinforcement of the Man Lager Brand. Health concerns. Federal consumption tax. Initiatives that sought to moderate consumption. The competition had increased in the region due to the nullity of laws that allowed stores to start to offer beers with great discounts. – New products could hurt Mountain Man Lager’s sales. | The United States represents the market with the highest consumption of beer worldwide. Industry studies revealed that consumers between the ages of 21 and 27 represented a key consumer segment. Growth of the light beer category (50.4% volume for 2005). The only category showing consistent growth. Young consumers had a preference for light beers. – Observers show that new products introduced new consumers while maintaining the old ones. |
Major domestic producers with a 74% market share in the Mountain Man region.
| National Competitors | Competitive Market Share in Barrels by Brewery |
| Anheuser Busch | 42% |
| Miller Brewing Company | 23% |
| Adolf Coors Company | 9% |
- Second-tier domestic producers with a 12.5% market share in the East Central region (Pabst Brewing Company and Genessee).
- Imported beer company from Germany with a 12% market share in the region (Beck, Heineken, Molson, Corona).
- Craft beer industry with a market share of 1.5% of the total market.
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Mountain Man Beer Case Study: Segmentation
Main clients: working class with low incomes over 45 years.
Context
- The United States was the most beer-consuming market in the world at the time. Its sales were more than $75 billion annually in 2005.
- U.S. beer consumption per capita suffers a decrease of 2.3%
- Wine and spirits begin to be consumed more in the United States
- Federal excise tax increases
- Initiatives that encourage moderation and personal responsibility are implemented
- Health concerns increase
- 18.3% of beer sales in the United States were concentrated in the eastern central region.
- In some states in the region (including West Virginia), old laws were amended limiting promotions on retail sales. As a result, retail stores sold beer at deep discounts.
- Light beers in 2005 accounted for 50.4% of sales by volume, compared to 29.8% in 2001.
The demand for beer is inelastic in the market because large economic fluctuations do not affect the consumption of this product.
Collaborators
- 70% of Mountain Man’s beer is sold outside the factory through distributors.
- They established their own sales force to get outlets outside the factory such as liquor stores and supermarkets.
Mountain Man Beer Case Study: Marketing Mix
| Product | Price |
| Make striking packaging so that without changing the essence of the brand it is possible to capture the attention of the target. Change the shape of the bottle. | Position Mountain Man Light as a more elite product next to Mountain Man Lager, highlighting Its lower percentage of calories and different bottle making it more striking in the eyes of different targets. So it would be setting a slightly higher price than the Mountain Lager. |
| Place | Promotion |
| Implement the same distribution channel that Mountain Man Lager has, to achieve greater gondola space in the establishments and achieve more consumers. Implement the same distribution channel that Mountain Man Lager has, so that in the Establishments of wholesalers and retailers The product manages to obtain a greater shelf space, attracting the attention of the customer and resulting in a greater possibility of sale of product. Make another distribution channel only directed towards Mountain Man Light, stores with hours extended, petrol pumps, specific bases. Use channels to reach our young target, they can be sporting events or concerts and social networks. Since | Free trials at sporting events, as well as parties. Perform blind tests, so that the consumer sees the quality of beer and that should not envy anything to the competition. |
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Profitability Analysis
Profitability analysis of light beer for the Mountain Man brand from 2005-2008
| Years | 2005 | 2006 | 2007 | 2008 |
| Consumption of light Beer | 18,744,303,00 | 19494075,00 | 20273838,00 | 21084972,00 |
| Growth of light Beer | 4% | 4% | 4% | |
| Growth Estimate if MM Light Beer | 0.25% | 0.5% | 0.75% | |
| Sales Estimates of Barrels of beer | 48735,00 | 101369,00 | 158136,00 | |
| Estimated Profits of MM | 4727295,00 | 9832793,00 | 15339192,00 |
Profitability analysis without cannibalization
| Price per Barrel | 97 | Fixed Cost | 255000000 |
| Variable Cost | 71.62 | Barrels Needed for Profitability | 100472.81 |
| Net Profits | 25.38 | Breakeven Numbers | 9745862.88 |
Profitability analysis with 20% cannibalization plus a 2% loss
| Price per Barrel | 97 | Fixed Cost | 2987226,00 |
| Variable Cost | 71.62 | Barrels Needed for Profitability | 1177000,00 |
| Net Profits | 25.38 | Breakeven Numbers | 11416900,00 |
| Cannibilization+loss on Net Profits for the year 2005 | 437226,00 |
The data on the investment made to market light beer and the growth estimates, give an estimated return on investment in a time horizon of two years. Even taking into account cannibalization, marketing the breed means obtaining benefits from the 3rd year.
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Samrat is a Delhi-based MBA from the Indian Institute of Management. He is a Strategy, AI, and Marketing Enthusiast and passionately writes about core and emerging topics in Management studies. Reach out to his LinkedIn for a discussion or follow his Quora Page