Yogesh Puri
Mountain Man Beer Co. (MMBC) Questions
1) What has made MMBC successful?
The MMBC focused on one group the blue-collar people only and always strived to satisfy it. It always focused on building its brand equity. The quality features of its beer like amount of water content, smoothness, bitter flavor and higher than average alcohol content contributed towards its success.
2) What threats does MMBC face despite its strong brand?
a) The decrease in beer consumption by 2.3% because of competition from wine and spirits-based drinks, increase in federal excise tax, increasing health concerns.
b) Import and craft beers started to take hold in MMBC territory.
c) Distributors were becoming choosier about which smaller brand to be carried.
d) The large players were spending heavily to maintain their own sales levels in the premium segment.
3) If they adopt a “status quo” approach and continue on as they are what will the operating margin be in 2010? Take into account forecasted sales changes (assume that fixed expenses won’t change).
4) Should MMBC introduce a light beer? What are the pros and cons for doing so?
MMBC should not introduce a light beer.
Pros:
a) It will require around $4.69 more per barel to produce light beer. It would save this amount.
b) The cost of advertising would be saved which is around $10-20 million on TV advertising alone.
c) Creating a brand awareness would require another $750,000 which will be saved as well.
d) The company will be able to continue focusing on its main product. The core customer will not be alienated.
Cons:
a) The light beer is showing consistent growth in the market. By not producing it the MMBC will not be able to diversify its product line and will not be able to exploit its demand.
b) It will not be able to gain share in on-premise locations: restaurants and bars.