Chris Prangel, a recent MBA graduate, has returned home to West Virginia to manage the marketing operations of the Mountain Man Beer Company, a family-owned business he stands to inherit in five years. Mountain Man brews just one beer, Mountain Man Lager, also known as "West Virginia's beer" and popular among blue-collar workers. Due to changes in beer drinkers' taste preferences, the company is now experiencing declining sales for the first time in its history. In response, Chris wants to launch Mountain Man Light, a "light beer" formulation of Mountain Man Lager, in the hope of attracting younger drinkers to the brand. However, he encounters resistance from senior managers. Mountain Man Lager's brand equity is a key asset for Mountain Man Brewing Company. The question is whether Mountain Man Light will enhance it, detract from it, or irreversibly damage it. Learning Objective:
To explore brand equity: its creation and using brands as platforms for growth; the risks and benefits of a product line extension (including congruent vs. incongruent extensions) using an existing brand name; and the concepts of cannibalization and brand alienation. To practice marginal analysis, breakeven analysis, net present value (NPV) analysis, and sensitivity analysis, emphasizing the difficulty in choosing between qualitative and quantitative information in making key strategic decisions. Subjects Covered:
Brand equity; Brand management; Breakeven analysis; Consumer marketing; Demographics; Forecasting; Margins; Marketing; Metrics; Present value; Product differentiation; Quantitative analysis Setting:
* Geographic: West Virginia
* Industry: Alcoholic beverages
Mountain Man Brewing (MMB) has been successful with only one beer, Mountain Man Lager, but consumption has decreased. The decrease in sales for this beer has caused a decrease in profits, since it is their only product. Mountain Man needs to consider a change in their positioning strategy to increase sales and profits to keep the business successful.
Alternative #1: Create, promote and sell Mountain Man Lager Light Pros: It gives them the use of their name that is already well known and liked in their current market area. It creates a light beer for the younger target market that drinks light beers. Cons: It could result in customers switching from regular to light, which would decrease sales of the Lager even more to cannibalize that product. It could also make customers disappointed with them following the trends. It would not even put a dent in the competition for the major name brands. They risk losing their current reputation for being unique with a good stand-alone product, which may also push dedicated customers away.
Alternative #2: Create, promote and sell a new light beer, but use a different name Pros: It won’t take away from the name of the Mountain Man Lager. It still gives them a product that is more common for a new market of younger drinkers. It gives them the ability to purse the larger market for light beers that has greatly grown. Cons: It may still take away from their own Lager beer with current customers switching to the light beer. It still would hardly put a dent in the power of the major competitors, if at all, so it is not likely to pull away a large amount of their competitors’ sales to their own product.
Alternative #3: Keep only the Lager beer and broaden the target market into more States Pros: It keeps their product focus on their successful beer and keeps them unique. It keeps them from having to create something new and start from scratch...
Mountain Man Brewing Company
Mountain Man Brewing Company (MMBC) also known as “West Virginia’s Beer”. MMBC developed its brand equity as a symbol of toughness, authenticity, quality and uniqueness this with several other factors made MMBC successful. This legacy was started by Guntar Prangel in...