Mountain Man Brewing Company:Bringing the Brand to LightMarket definition: American Beer Industry Market size: $75 billion industry

Industry trends: Over the previous six years, light beer sales in the United States had been growing at a

compound annual rate of 4%, while traditional premium beer sales had declined annually by the same percentage.

U.S. per capita beer consumption had declined by 2.3%, largely due to competition from wine and spirits-based drinks, an increase in the federal excise tax, initiatives encouraging moderation and personal responsibility, and increasing health concerns.

Economies of scale of large national brewers. Key consumer segment was younger drinkers (13%) who preferred light beer and accounted

for 27% consumption.SWOT analysis

Strengths Evidence ImplicationsMarket leader and established brand name.

It had held the top market position among lagers in West Virginia for almost 50 years.Ability to leverage awards as “American Champion Lager”.

Strong brand awareness motivates consumers to purchase Lager.

Strong brand equity Mountain Man Lager’s distinctively bitter flavour and slightly higher than-average alcohol content that uniquely contributed to the company’s brand equity

Mountain Man is able to leverage its brand equity and reputation to new products

WeaknessesNew brand extension will spread already thin resources of the company.

Estimated cost of $10 million to $20 million in TV advertising.

Company will face financial problems if the new product fails to take off.

Company does not have the budget to compete in the light beer advertising market.

Funds needed for advertising campaign, staff costs and ongoing marketing expenditure

Important to come out with a good marketing campaign that effectively utilise all the resources.

OpportunitiesOpportunity to reach younger demographic and increase lifetime customer value

Light beer was a newer, fast-growing product category and the only beer categorydemonstrating consistent growth

Light beer would help MMBC gain share in on premiselocations: restaurants and bars.

ThreatsRisk of canalization of core brand

Fear that retailers would not grant Mountain Manincremental shelf space

Substitute the light product for the lager product.

Alienation of core customer through new brand that might not be in line with their aspirations of MMBC

Mountain Man Light would alienate the core customer base

Eventually erode and dilutethe Mountain Man brand equity

Problems & Solution Evaluation

Core problem: Deciding whether or not to launch the new product, Mountain Man light.Supporting evidence: Financial projections showed regional revenue growth of the light beer product at 4% annually and Mountain Man steadily growing its share of the regional light beer market by a quarter of a percent each year off of a 2006 base market share of 0.25%.

Evaluation of possible solutions:Solution Pro’s Con’sLaunch Mountain Man light via brand extension

- Capitalize on the already established brand name of Mountain Man-Reduces the risk of failure given the established awareness and trust-Reinforce the consumers perception of the parent brand name

-Risk of product cannibalisation -Erode sales of Mountain Man lager-Limited budget and resources to compete with large breweries

Recommendation: Launch the new product via the 4 Ps.Strategies ElaborationProduct Brand name of Mountain light brew will stand out as compared to

competitors in the light beer market.Label should portray a fresh and young image since the target segment is young adults. Bold and vibrant colours could be use to attract attention and higher recall rate.The bottle should use a lighter shade such as light green to differentiate from the dark brown bottles of Mountain Man lager. The light green used also indicated a lower alcohol content of a new brand extension.

Promotion Bar mats to be distributed to bars and retail outlets carrying light brew and Mountain Man lager.

Place Research showed that Product line extensions actually helped brewers obtain greater shelf space for products and created greater product focus among distributors and retailersThere is a need to increase distribution among bars which is only 30% of current sales.Need to target locations that are frequent by the young adults.

Price Need to observe competitors pricing strategy and carry out market research to determine the optimal pricing. It is important to price Mountain light brew not too low in order to break even quickly and not to price it too high for fear of low sales.

Justification: There are certainly risks involve in launching a new product, but banking on the withering demand for a single product is not going to guarantee profitability for the Mountain Man Beer Company. The Light beer market is the gateway necessary to attract new consumers, and a stepping stone to introduce them to Mountain Man Lager. Where the product association with Mountain Man Lager may be too strong in terms of flavour, directly attracting affluent light beer drinkers can broaden the brand identity of Mountain Man Beer Company as a quality brewer within their region.