Mountain Man Brewery
Jeff Dickinson
BUS 656
Case Write up #2
Mountain Man Brewing Company
Problem Statement
Mountain Man Lagers main customer is an older generation, blue-collar worker, which make up a larger percentage of the sales. In 2005 sales have dropped 2% relative to the prior fiscal year. The cause is from a stiffening competition, a market that is maturing and new products. All of these factors are stealing the customers from the Mountain Man Brewing Company (MMBC). The light beer market is starting to attract younger consumers and along with the female beer drinker. Chris Prangel, with some skepticism, thinks the light beer market is the answer to not losing anymore of the market share that MMBC has now, but he is worried because of his recent survey that his light beer will not sell. His existing customers like the old-time Mountain Man lager and wouldn’t prefer the move into a light beer market. Will this cannibalize the existing lager market share?
Alternative #1: Do nothing and see what happens. This plan would not alienate the existing customer and keep costs down for advertising on a new line of beer. Because Chris’s father believes that MMBC would not receive the same loyalty from a younger generation that the lager beer has from the blue collar worker. Survey more of the retail customers in the bars, restaurants, and nightclubs where the beer is sold now, giving a bigger share of what consumers are really looking for in a beer.
Pros: This could keep costs down on development of a new beer line, no new advertising costs, without further research.
Cons: Could cost MMBC more of the market than they have already lost. Predicting the loss of sales if using the current rate of decline, the profits for 2005 were 6.2% and if the current rate of decline in the market share that MMBC has in five years their sales will have declined by 10% and reduction in profit margin to 4.7%.
Alternative 2: Introduce the light beer call it “Mountain Man Light”.
Pros:
BUS 656
Case Write up #2
Mountain Man Brewing Company
Problem Statement
Mountain Man Lagers main customer is an older generation, blue-collar worker, which make up a larger percentage of the sales. In 2005 sales have dropped 2% relative to the prior fiscal year. The cause is from a stiffening competition, a market that is maturing and new products. All of these factors are stealing the customers from the Mountain Man Brewing Company (MMBC). The light beer market is starting to attract younger consumers and along with the female beer drinker. Chris Prangel, with some skepticism, thinks the light beer market is the answer to not losing anymore of the market share that MMBC has now, but he is worried because of his recent survey that his light beer will not sell. His existing customers like the old-time Mountain Man lager and wouldn’t prefer the move into a light beer market. Will this cannibalize the existing lager market share?
Alternative #1: Do nothing and see what happens. This plan would not alienate the existing customer and keep costs down for advertising on a new line of beer. Because Chris’s father believes that MMBC would not receive the same loyalty from a younger generation that the lager beer has from the blue collar worker. Survey more of the retail customers in the bars, restaurants, and nightclubs where the beer is sold now, giving a bigger share of what consumers are really looking for in a beer.
Pros: This could keep costs down on development of a new beer line, no new advertising costs, without further research.
Cons: Could cost MMBC more of the market than they have already lost. Predicting the loss of sales if using the current rate of decline, the profits for 2005 were 6.2% and if the current rate of decline in the market share that MMBC has in five years their sales will have declined by 10% and reduction in profit margin to 4.7%.
Alternative 2: Introduce the light beer call it “Mountain Man Light”.
Pros: