Mountain Man lager has been a long standing premium beer distributed in the central east since 1925. The company has built a brand image around its blue-collared, middle-aged workers by relying on the authenticity of their family owned business to position themselves with their core customers. Recent changes in beer drinker preferences have resulted in a decrease in sales for the first time in the company’s long history. Chris Prangel has returned from earning his MBA and is in line to inherit the family business. With the aid from his father and other key members in the organization, he must decide the best direction for the future of the company based on the current market conditions.
DECISION TO BE MADE:
With the reduced sales for Mountain Man Lager over the past years, Chris must decide on the future of the company. He will need to decide if pursuing a new customer base by introducing a light beer would yield immediate dividends (within 2 years), or if remaining with the “status quo” strategy would be enough to keep the company profitable. He would need to decide on a strategy that did not alienate the existing loyal customer base while enticing new younger drinkers with a new product.
ALTERNATIVES: Do not introduce light beer product line, continue “status quo” strategy.
Will not tarnish brand image with existing customers
Will not have large initial SG&A expenses to pay for new product. Contribution margin per barrel will remain lower.
Can continue to advertise as family owned business with only one product. Will not have to compete with large distributors of light beer such as Anheuiser-Busch, Coors Brewing Company and Miller Brewing Company. • Can continue to focus on what they know best, producing premium beers. • Can continue using sales force to push product at off-site distributors.
With shrinking market, total profit...