Mountain Man Brewing Company

bus earth create from raw stuff companionship To Chris Prangel From 001706975 CC David Nasser Date 3/4/2013 Re Bringing the Brand to aerial Comments For the first epoch in the comp anys history, muddle Man Brewing Company is experiencing declining exchanges in result to changes in beer drinkers preferences. Mr. Prangels response to this trouble is introducing a groundless beer form of the popular Lager. In the past hexad historic period, the light beer application as increased at an yearbook come in of 4% while sales of traditional beer has been declining annually by 4%. Although this seems like a probable solution, there are two major(ip) problems Mr.Prangel is facing 1. ) push-down store Mans current rear trade will not approve of this wise beer, and 2. ) bringing in a light version of the bay window Man Lager could ruin the spot construe and ultimately destroy the eminent society. ken Mans biggest marking market currently, and pretty much since it star ted in 1925, is males ages 45-54. Most of these males are blue-collar, unwearying males. It has been cognize as West Virginias Beer known for its authenticity, quality and its toughness. To the junior beer drinkers, the market the light beer appeals to, view Mountain Man beer as besides strong and a working mans beer.Not only do the young beer drinkers drop their negative thoughts ab out(p) Mountain Man developed, only if the blue-collar customers account for a huge percentage of sales. The brand subjection rate for Mountain Man Lager is 53% which is higher than any of its competitors. The light beer appeals to the younger generation, especially the females, and Mountain Man Lager has unendingly appealed to the older, rugged, blue-collar male. The appearance of Mr. Prangels dilemma is very evident. Based on the evidence, Mountain Man should not introduce the light beer.The light beer industry is growing, that screwingt be denied, however for Mountain Man, it is not in the ir best following yet. Although the quantitative reasoning is included below, it would be in Mountain Man Brewing Companys best interest to wreak the $750,000 and knock off it elsewhere create a new beer (non-light) that can appeal to more than the current target market without losing its brand image, spend more money for advertising to the younger beer- inebriety market. Mountain Man Brewing Company motivations to have a wider target market in the lead introducing a completely new product that could potentially destroy the caller if it were unsuccessful.THE PROS AND CONS OF INTRODUCING A LIGHT BEERThe most beneficial pro of introducing Mountain Man Light will be reaching the younger beer drinkers. It is shown that the younger beer drinkers transport the light beer better, and also in their twenties, usually havent attached to a brand yet. Mountain Man is very well-known by the younger beer drinkers, however, they tend to buy and consume in quantity the Mountain Man Lager is not on their top preference, along with other lagers and full-flavor beers. Introducing this light beer could reach the younger beer drinkers and potentially lead to brand dedication amongst them. A few cons could be losing brand loyalty amongst the older generation, losing sales of the Mountain Man Lager due to cannibalization, and a lower division margin.THE BRAND NAME OF A LIGHT BEERIf the light beer were introduced, the name Mountain Man Light is not the best option for the market Mountain Man is already in. A 53% loyalty rate is heavy(p) for a guild that produces one flavor of a brew. If the company that they have seen as for years as a rugged, authentic, West Virginias Beer, puts out a light version, its image could be lost immediately. In response to the introduction of a light beer by Mountain Man, it was the man in his fifties and early thirties that found it to be absurd. fragment EVEN AND BREAK EVEN IN MARKET SHARE IN 2 YEARSBy tutelage the same price for light as t he lager, breakeven in dollar pith is almost $10,000,000 which then translates into 100,473 barrels. Within two years, Mountain Man Light will have to produce almost $10,000,000 in sales and sale 20% of what Mountain Man Lager has worked almost a snow to sale. As for the market share, Mountain Man Light will need to gain a 26% of the market share in 2 years to break even.This seems very unrealistic since the pencil lead brand light beer now consumers 32. 9% and the second leading brand holds 17. 8% of the market. Mountain Man Light will have to become the second leading brand in the market within only 2 years (assuming that the sales of light beer save to grow annually by 4%).CANNIBALIZATION RATEBecause Mountain Man Lager produces so many units and produces such high sales already, the difference in cannibalization of 5% to 20% is pretty solid (almost 1,000,000). Two year contribution with a 5% cannibalization rate is $32,895,226. 2 compared to $31,988,859. 59 with a 20% canniba lization rate. This is a major loss in sales of the Mountain Man Lager. If cannibalization is inevitable, the lower percentage of cannibalization is the best option, it yields a higher contribution. Anything above 20% is unnecessary and definitely not worthy introducing the Mountain Man Light.BUDGET FOR THE LAUNCHThe budget of $750,000 added onto the $900,000 already annual cost of SG& ampA costs is not appropriate. Not only is it adding that money onto the annual SG&A costs, it adds $4. 9 more per barrel in covariant costs. Yet, the price of the light will still be the same as the lager. It will produce a 60% awareness level for Mountain Man Light, however, reduces the contribution margin by 16% the price the Great Compromiser the same and cost of goods sold increases. Adding an expense like $750,000, a company should expect it to be better for the company. A 16% decrease in the contribution margin is not good for a company like Mountain Man that has its one specialty product in which it is known for.THE LAUNCHAlthough it is not recommended to introduce this Mountain Man Light because of the previous state concerns, Mountain Man should not stop there and let the company fail. Mountain Man can take their $750,000 and introduce another beer only if not a light beer. Keep the authentic, rugged brand image by introducing a different type of brew that will continue to appeal to the target market. Mountain Man should try to increase its target market with its original idea before it tries to introduce a new brand.If this is not ideal, the $750,000 can be spent on gaining, and retaining, a younger, beer drinking crowd. There is always a way to appeal to a younger crowd, Mountain Man needs to find the window of opportunity and take those consumers. With the high awareness of Mountain Man Lager by the younger beer drinker, however, Mountain Man could change their marketing strategy and discover a way to appeal to the younger market. Contribution of Lager and Light Breakeven in Dollars and Units (Barrels) Market Share Cannibalization of 5% Cannibalization of 20%