Mountain Man Brewing Company Case Exam
Recommendation:
Mountain Man Brewing should create a new market strategy and introduce a line extension of Light Beer to expand their portfolio and create new sales among non-existing customers. This line extension will target the younger drinkers and women in the East Central Region and will increase sales and create profit within 2 years.
Rationale:
1. Light beer sales will be profitable within 2 years. The first year MMBC will lose $486,374. However, in 2007, the second year, MMBC will gain $1,520,341 in profit. See Appendices 6 and 7.
2. Currently, MMBC can afford the line extension. If MMBC were to wait a few years, there might not be any profit to pay for a line extension.
3. Light beer sales are growing at a 4% CAGR. In 2001, light beer accounted for 29.8% of beer sales. In 2005, light beer now accounts for 50.4% of beer sales. See Appendix 3.
4. Women are included in the target market for Light Beer making up 42% of sales. In the East Central Region, women consume 21% of the barrels sold and 27% of the Light Beer Barrels sold. See Appendix 9.
5. The young drinkers (age 21-27) consist of 13% of the population and 27% of beer sales. This age group mainly consumes light beer and has not established any brand loyalty. Ages 21-35 also consume 20% of the barrels sold in the East Central Region. See Appendix 9.
6. MMBC sales are declining by 2% annually. Introducing a light beer would increase revenue. See Appendices 1 and 2 for sales declining. See Appendix 4 for potential profits for Light Beer.
7. The young drinkers send two times as much per capita on alcoholic beverages than the consumers over 35 years of age. This age group is expected to grow by almost four million by 2010.
8. MMBC has high awareness among young drinkers but low purchasing preference. This shows that there is an opportunity for MMBC to capture this group with a new light beer.
9. MMBC is a regional second tier beer and many young adults appreciate
Mountain Man Brewing should create a new market strategy and introduce a line extension of Light Beer to expand their portfolio and create new sales among non-existing customers. This line extension will target the younger drinkers and women in the East Central Region and will increase sales and create profit within 2 years.
Rationale:
1. Light beer sales will be profitable within 2 years. The first year MMBC will lose $486,374. However, in 2007, the second year, MMBC will gain $1,520,341 in profit. See Appendices 6 and 7.
2. Currently, MMBC can afford the line extension. If MMBC were to wait a few years, there might not be any profit to pay for a line extension.
3. Light beer sales are growing at a 4% CAGR. In 2001, light beer accounted for 29.8% of beer sales. In 2005, light beer now accounts for 50.4% of beer sales. See Appendix 3.
4. Women are included in the target market for Light Beer making up 42% of sales. In the East Central Region, women consume 21% of the barrels sold and 27% of the Light Beer Barrels sold. See Appendix 9.
5. The young drinkers (age 21-27) consist of 13% of the population and 27% of beer sales. This age group mainly consumes light beer and has not established any brand loyalty. Ages 21-35 also consume 20% of the barrels sold in the East Central Region. See Appendix 9.
6. MMBC sales are declining by 2% annually. Introducing a light beer would increase revenue. See Appendices 1 and 2 for sales declining. See Appendix 4 for potential profits for Light Beer.
7. The young drinkers send two times as much per capita on alcoholic beverages than the consumers over 35 years of age. This age group is expected to grow by almost four million by 2010.
8. MMBC has high awareness among young drinkers but low purchasing preference. This shows that there is an opportunity for MMBC to capture this group with a new light beer.
9. MMBC is a regional second tier beer and many young adults appreciate