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Mountain Man Brewery is experiencing declining sales for the first time in the company’s history


                                                      1) Age Demographics        • Mountain Man’s beer drinker’s
                                                                                 are getting older and decreasing
                                                                                 their frequency of purchases
                                                                                 • As Mountain Man’s beer
                                                                                 drinker’s are aging the children of
   Proof                                                                         a Mountain Man drinker are not
                                                                                 choosing Mountain Man beer as
Central East   2004         2005         2006E                                   their primary choice
Region

Market Size    38,678,720   37,191,077   35,703,434
overall                                                2) Increased presence      • Distributors supporting beer
Market Size    4,718,618    4,648,885    4,462,929     of large multi-national    brands on basis of turnover and
MM                                                     brands in Mountain         margins; dropping brands that
Competes in                                                                       do not contribute to bottom line
                                                       Man’s distribution area
MM share       530,400      520,000      509,600       (Case Fact)                • Large brands maintain
(Barrels)                                                                         economies of scale in brewing,
Profit $       $4,887,636   $4,791,800   $4,695,964                               transportation and marketing;
                                                                                  Increased pressure




                                                                                  • Mountain Man is not a
                                                       3) Distributors not        popular customer to
                                                       willing to help build      distributors because of small
                                                       Mountain Man               market share presents
                                                       brand awareness            • Small shipments of under
                                                                                  600,000 barrels annually.
Mountain Man provides a high quality beer that hard working men enjoy


 Loyal – Hard Working - Deserving                   Legacy – American – Gold Standard


  A Mountain Man beer drinker                        Mountain Man Brewing Company
  • Blue Collar                                      •Legacy Beer
  • Middle to low income men over age                       •High quality
  45                                                        •Rich and bold flavour
  • Purchase beer at off premise                            •Mouth watering beer
  location (liquor stores)                                  •Drinkability
  • Working man (trades) (large                      • Mountain Man is authentic
  population of workers)                             • Best beer in West Virginia
  • Since 1925 Oscar has had the same                • America’s championship lager
  customers, rugged, middle age men                  • Family owned
  from the coal miners union.                        • Strong brand image in East Central
                                                     Region
  •Brand loyalty rate of 53%                         • Small sales force (focus- getting off
                                                     premise locations)

                                                     • Old management transitioning to
                                                     younger management

A small amount of MMBC’s blue                        • Unaided response rate of 67%, men in
collar customers accounted for                       the East Central Region know this beer!
a large percentage of sales
                                            “We manufacture an exceptional beer with a great brand
                                            name, we’ve never lost sight of our core customers, and
                                            we’ve never been seduced by the other guy’s market”
Mountain Man Brewery competes on similar dimensions as other beer companies

  Beers                Price (6-pack)~      Taste (customer’s
                                            perception)              Mountain Man is fulfilling the
                                                                     need of customers that want a
  Anheuser-Busch                 $5.00               Typical         high quality beer at a reasonable
                                                                     price.
  Miller                         $5.10               Typical
  2nd tier domestic           $3.99-$4.99             Mid            • This places Mountain Man as a
                                                                     regional Craft Brewer and in direct
  Imports                        $6.00+               Mid            competition with brewers like Sam
                                                                     Adams, Harpoon and the 50 other
  Coors                          $4.99               Typical
                                                                     regional craft brewers.
  Mountain Man                   $4.99                Bold
  Craft Brewers                  $4.99+               Bold           •The Advantage of being a regional
                                                                     craft brewer is:
                                                                     1) Known for quality and taste
                        Price High                                   2) Distribution channels are
                                                                           already set up in most states
                                                                     3) Customers of a Craft beer
                                                                           are always loyal

                                                                      • The Disadvantage of a Craft
                                                     Bold Flavours    Brewery:
  Typical                                                             1) High competition (980
  Flavours                                                                brewpubs, 380
                                                                          microbreweries and 50
                                                                          regional brewers)
                                                                      2) Low barrel production,
                                                                          therefore distributors
                                                                          hesitate to build brand image
                        Price Low
Mountain Man needs alternatives to fit three core dimensions

                                Must reverse declining sales trend and turn a profit
                                within two years of investment
                                • Mountain Man is able to invest approximately $1.3
                                million dollars
                                • It is expected to achieve a 12% return within two
                                years of the investment or $156,000
                                • The strategy needs to make financial sense for the
                                long term sustainability of Mountain Man




                                           All dimensions must be in
                                           line for Mountain Man to
                                           be successful

 The strategy can not alienate Mountain                                    Fit with the Mountain Man brand
Man’s Core customers                                                       • Mountain Man brews high quality beer and is
• The core of Mountain Man’s business relies                               known for its drinkability and bold taste
on their relationships with their customers                                • The Mountain Man brand is a man’s brand
• These customers need not feel like Mountain                              with rich heritage in the USA
Man’s commitment to them is in jeopardy                                    • The beer is packaged with a label that says to
• The strategy must hold on to current loyal                               the man drinking it, that you deserve a good
customers, while producing increased profits                               beer
Launching a light beer is not for Mountain Man


  1) Negative profits for at least the first two years
  Mountain Man                   2005         2006          2007             • Very high cost to build new light beer brand
                                                                             • Negative profits for at least the first two years after launch
  Mountain Man Lager
                               $3,087,396   $3,028,674   $2,971,127                  • Does not raise MMBC’s bottom line
                                                                                     • Does not increase chances of distributors building brand
  Mountain Man Light
                                   -        $1,452,395   $1,450,530                  • Cost of goods is increase by nearly $5 per barrel
                                                                                     • Very difficult to compete in light beer because all other
  Mountain Man Profit
                               $3,087,396   $1,576,280   $1,520,597                  brands are developing light beer as well
                                                                                     • Light beer will take away facings in off premise locations
                                                                                     from regular Mountain Man lager, decreasing sales
   2) Extremely high competition, Mountain Man is lagging
    Light Beer          2005
    Market Share                                 Mountain Man will not be able to steal market share from any of the competitors:
    Anheuser-           54%                      • 90% of the light beer category is owned by the three largest beer companies in
    Busch                                        the United States
                                                        • larger advertising budget
    Miller              24%
                                                        • Greater pull with distributors
                                                        • Increase the bottom line of off premise stores and where beer is sold
    Coors               11%
                                                        • Stronger brand image across the United States
                                                        • Pull strategy marketing (people know about these light beers)
    Other Brands        8%

    Imports             2%


     3) Light beer does not fit the Mountain Man Culture
      •Mountain Man is a beer for the hardworking man, and has always been a beer for the hard working man, light beer
      drinkers tend to be younger college students
      • Mountain Man is a company that focuses on building a relationship with their customers, this is not the case with a light
      beer drinker
      • Mountain Man beer is pushed onto consumers, building brand awareness of Mountain Man Light will cause MMBC to
      switch to a pull strategy where major brands will over power them.
Increase Mountain Man market share in East Central Region

                                                                   1) Increase facings:
  Currently:                                                       • Increase facings within the off premise channels by
  • MMBC holds less than 0.5% share in East                        targeting selected chain stores that fit with the modus
  Central Region                                                   operandi of the Mountain Man lager customer
  •MMBC currently sells 70% of their beer to off
  premise locations (liquor stores, supermarkets)                                               Will have to work hand in hand to be
  • MMBC holds top market position among                                                        successful
  lagers in West Virginia
  • 60% of their beer purchase is by blue collar                    2) Increase awareness:
  workers or $1.8 million in profit                                 • leveraging the unaided brand awareness of Mountain
                                                                    Man to 75% instead of 67%
                                                                           • ROI = $664,925 (approximately)
                                                                          • Warning- this may cost MMBC more than $1.3million




                                                    The Problems

     Value of Investment:                                                No differentiating factors from competition:
     •Strategy will return profit in due time                            • MMBC will still keep the same market position
     • It took MMBC to build an unaided brand                            and will be competing against brands on price
     awareness rate of 67% over 50 years                                 and taste
     • It will be very difficult to gain a new loyal                     • Mountain Man Lager will never have pull with
     customer quickly                                                    off premise locations to have the facings they
     • The cost of advertising and trade promotions                      want to increase growth exponentially
     will probably be more than what MMBC is                                    • due to greater pull from larger brands
     willing to spend
             • High risk, Mid to low reward                                            Position stays the same, difficult to
                                                                                       compete with larger brands on
                                                                                       facings
Enter new markets in close proximity will increase lead generation


                                                                       • West Virginia is a central hub for distribution
                                                                       channels
                                                                             •Located in the East Central Region, but situated
                                                                             better to serve in the surrounding states to the
                                                                             south and the east
                                                                                    • Virginia, Pennsylvania, Tennessee, North
                                                                                    Carolina, Maryland, New Jersey

                                                                            2005                Population (in
          2005                    Population (in                                                Millions)
                                  Millions)
                                                                            Tennessee           5.9
          West Virginia           1.8
                                                                            Virginia            7.5
          Ohio                    11.4
                                                                            N.Carolina          8.6
          Illinois                12.6
                                                                            Maryland            5.8
          Indiana                 6.2
                                                                            New Jersey          8.6
          Michigan                10.0
                                                                            Pennsylvania        12.4




                          •By Entering these six other states MMBC’s population of potential
                          users increases by 48.8 million people and approximately 24.4
                          million males
                          • These states are easily accessible via major highways running
                          through West Virginia
                          • Strong presents of hard working men that fit MMBC target
                          customers
Mountain Man Brewing Company heard the call from hard working American men for a beer that is
accessible and of award winning stature, which is why Mountain Man Brewing Company is expanding
their distribution network

     2005                    Price High

                                                                                    Anheuser –Busch
                                                                                    Miller
                                                       Bold Flavours
                                                                                    Coors
  Typical
  Flavours                                                                          Second Tier Domestic
                                                                                    Mountain Man
                                                                                    Imports
                                                                                    Craft
                             Price Low




                                                                                      High           2006
                                                                                      Quality



•Mountain Man is competing in war that they can not win,
                                                                       Small                               Large
with dimensions of price and flavour                                   Distributi                          Distribution
• By changing the dimensions that they compete on, MMBC                on                                  Network
                                                                       Network
can now create a competitive advantage for themselves
among Craft brewers
        • By positioning themselves as a high quality beer with                        Low
        a relatively large distribution network, it decreases                          Quality

        competition for MMBC and makes their award winning
        lager accessible to hard working men
        • Mountain Man is heavily reliant on their current
        customers, by increasing their distribution network
        MMBC will gain new brand loyal customers
Enter new markets in close proximity will increase sales and build the Mountain Man brand


  Entering new markets will lead to stronger relationships                                2006E         2007E
  with distributors
  • Increased sales                                                         Investment    $1.3MM        $1.3MM
  • Giving the distributors more work will increase their
  bottom line and return a greater profit                                   Revenue       $4.3 MM       $7.2MM
         • They will be more helpful building MMBC’s brand in
                                                                            Profit        $282, 315     $451,704
         the states that Mountain Man distributes too
         • MMBC will have a stronger presence on the east                   Barrel        16,500        33,000
         coast which can lead to future distribution nationally

                                                  Increased amount of awareness among target age
 Process:                                         • MMBC will be able to target a larger broader base of 40+
 • Enter one new state every year starting with   year olds
 Pennsylvania                                     • Greater chance to build brand awareness through gaining
 • Keep same amount of facings and focus on       access to a larger population
 off premise locations (70% of distribution)      • As sales increase and overall profit increases there is
 • Leverage relationships with distributors and
 use them as a collaborator
                                                  opportunity to build brand loyalty amongst target
 • Increase sales force in new states to push     customers
 the product
 • Penetrate pricing strategy to show value and       Do what MMBC does well
 maintain customer loyalty with current               • Brewing a high quality lager should be shared with
 customer
                                                      all surrounding states
                                                      • MMBC will gain recognition for their award
                                                      winning lager on a larger national presence
                                                      • MMBC will be one of few Craft brewers to have a
                                                      large scale presence in the United States

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Communicating Brand Strategy By Mark Reisler

  • 1. Mountain Man Brewery is experiencing declining sales for the first time in the company’s history 1) Age Demographics • Mountain Man’s beer drinker’s are getting older and decreasing their frequency of purchases • As Mountain Man’s beer drinker’s are aging the children of Proof a Mountain Man drinker are not choosing Mountain Man beer as Central East 2004 2005 2006E their primary choice Region Market Size 38,678,720 37,191,077 35,703,434 overall 2) Increased presence • Distributors supporting beer Market Size 4,718,618 4,648,885 4,462,929 of large multi-national brands on basis of turnover and MM brands in Mountain margins; dropping brands that Competes in do not contribute to bottom line Man’s distribution area MM share 530,400 520,000 509,600 (Case Fact) • Large brands maintain (Barrels) economies of scale in brewing, Profit $ $4,887,636 $4,791,800 $4,695,964 transportation and marketing; Increased pressure • Mountain Man is not a 3) Distributors not popular customer to willing to help build distributors because of small Mountain Man market share presents brand awareness • Small shipments of under 600,000 barrels annually.
  • 2. Mountain Man provides a high quality beer that hard working men enjoy Loyal – Hard Working - Deserving Legacy – American – Gold Standard A Mountain Man beer drinker Mountain Man Brewing Company • Blue Collar •Legacy Beer • Middle to low income men over age •High quality 45 •Rich and bold flavour • Purchase beer at off premise •Mouth watering beer location (liquor stores) •Drinkability • Working man (trades) (large • Mountain Man is authentic population of workers) • Best beer in West Virginia • Since 1925 Oscar has had the same • America’s championship lager customers, rugged, middle age men • Family owned from the coal miners union. • Strong brand image in East Central Region •Brand loyalty rate of 53% • Small sales force (focus- getting off premise locations) • Old management transitioning to younger management A small amount of MMBC’s blue • Unaided response rate of 67%, men in collar customers accounted for the East Central Region know this beer! a large percentage of sales “We manufacture an exceptional beer with a great brand name, we’ve never lost sight of our core customers, and we’ve never been seduced by the other guy’s market”
  • 3. Mountain Man Brewery competes on similar dimensions as other beer companies Beers Price (6-pack)~ Taste (customer’s perception) Mountain Man is fulfilling the need of customers that want a Anheuser-Busch $5.00 Typical high quality beer at a reasonable price. Miller $5.10 Typical 2nd tier domestic $3.99-$4.99 Mid • This places Mountain Man as a regional Craft Brewer and in direct Imports $6.00+ Mid competition with brewers like Sam Adams, Harpoon and the 50 other Coors $4.99 Typical regional craft brewers. Mountain Man $4.99 Bold Craft Brewers $4.99+ Bold •The Advantage of being a regional craft brewer is: 1) Known for quality and taste Price High 2) Distribution channels are already set up in most states 3) Customers of a Craft beer are always loyal • The Disadvantage of a Craft Bold Flavours Brewery: Typical 1) High competition (980 Flavours brewpubs, 380 microbreweries and 50 regional brewers) 2) Low barrel production, therefore distributors hesitate to build brand image Price Low
  • 4. Mountain Man needs alternatives to fit three core dimensions Must reverse declining sales trend and turn a profit within two years of investment • Mountain Man is able to invest approximately $1.3 million dollars • It is expected to achieve a 12% return within two years of the investment or $156,000 • The strategy needs to make financial sense for the long term sustainability of Mountain Man All dimensions must be in line for Mountain Man to be successful The strategy can not alienate Mountain Fit with the Mountain Man brand Man’s Core customers • Mountain Man brews high quality beer and is • The core of Mountain Man’s business relies known for its drinkability and bold taste on their relationships with their customers • The Mountain Man brand is a man’s brand • These customers need not feel like Mountain with rich heritage in the USA Man’s commitment to them is in jeopardy • The beer is packaged with a label that says to • The strategy must hold on to current loyal the man drinking it, that you deserve a good customers, while producing increased profits beer
  • 5. Launching a light beer is not for Mountain Man 1) Negative profits for at least the first two years Mountain Man 2005 2006 2007 • Very high cost to build new light beer brand • Negative profits for at least the first two years after launch Mountain Man Lager $3,087,396 $3,028,674 $2,971,127 • Does not raise MMBC’s bottom line • Does not increase chances of distributors building brand Mountain Man Light - $1,452,395 $1,450,530 • Cost of goods is increase by nearly $5 per barrel • Very difficult to compete in light beer because all other Mountain Man Profit $3,087,396 $1,576,280 $1,520,597 brands are developing light beer as well • Light beer will take away facings in off premise locations from regular Mountain Man lager, decreasing sales 2) Extremely high competition, Mountain Man is lagging Light Beer 2005 Market Share Mountain Man will not be able to steal market share from any of the competitors: Anheuser- 54% • 90% of the light beer category is owned by the three largest beer companies in Busch the United States • larger advertising budget Miller 24% • Greater pull with distributors • Increase the bottom line of off premise stores and where beer is sold Coors 11% • Stronger brand image across the United States • Pull strategy marketing (people know about these light beers) Other Brands 8% Imports 2% 3) Light beer does not fit the Mountain Man Culture •Mountain Man is a beer for the hardworking man, and has always been a beer for the hard working man, light beer drinkers tend to be younger college students • Mountain Man is a company that focuses on building a relationship with their customers, this is not the case with a light beer drinker • Mountain Man beer is pushed onto consumers, building brand awareness of Mountain Man Light will cause MMBC to switch to a pull strategy where major brands will over power them.
  • 6. Increase Mountain Man market share in East Central Region 1) Increase facings: Currently: • Increase facings within the off premise channels by • MMBC holds less than 0.5% share in East targeting selected chain stores that fit with the modus Central Region operandi of the Mountain Man lager customer •MMBC currently sells 70% of their beer to off premise locations (liquor stores, supermarkets) Will have to work hand in hand to be • MMBC holds top market position among successful lagers in West Virginia • 60% of their beer purchase is by blue collar 2) Increase awareness: workers or $1.8 million in profit • leveraging the unaided brand awareness of Mountain Man to 75% instead of 67% • ROI = $664,925 (approximately) • Warning- this may cost MMBC more than $1.3million The Problems Value of Investment: No differentiating factors from competition: •Strategy will return profit in due time • MMBC will still keep the same market position • It took MMBC to build an unaided brand and will be competing against brands on price awareness rate of 67% over 50 years and taste • It will be very difficult to gain a new loyal • Mountain Man Lager will never have pull with customer quickly off premise locations to have the facings they • The cost of advertising and trade promotions want to increase growth exponentially will probably be more than what MMBC is • due to greater pull from larger brands willing to spend • High risk, Mid to low reward Position stays the same, difficult to compete with larger brands on facings
  • 7. Enter new markets in close proximity will increase lead generation • West Virginia is a central hub for distribution channels •Located in the East Central Region, but situated better to serve in the surrounding states to the south and the east • Virginia, Pennsylvania, Tennessee, North Carolina, Maryland, New Jersey 2005 Population (in 2005 Population (in Millions) Millions) Tennessee 5.9 West Virginia 1.8 Virginia 7.5 Ohio 11.4 N.Carolina 8.6 Illinois 12.6 Maryland 5.8 Indiana 6.2 New Jersey 8.6 Michigan 10.0 Pennsylvania 12.4 •By Entering these six other states MMBC’s population of potential users increases by 48.8 million people and approximately 24.4 million males • These states are easily accessible via major highways running through West Virginia • Strong presents of hard working men that fit MMBC target customers
  • 8. Mountain Man Brewing Company heard the call from hard working American men for a beer that is accessible and of award winning stature, which is why Mountain Man Brewing Company is expanding their distribution network 2005 Price High Anheuser –Busch Miller Bold Flavours Coors Typical Flavours Second Tier Domestic Mountain Man Imports Craft Price Low High 2006 Quality •Mountain Man is competing in war that they can not win, Small Large with dimensions of price and flavour Distributi Distribution • By changing the dimensions that they compete on, MMBC on Network Network can now create a competitive advantage for themselves among Craft brewers • By positioning themselves as a high quality beer with Low a relatively large distribution network, it decreases Quality competition for MMBC and makes their award winning lager accessible to hard working men • Mountain Man is heavily reliant on their current customers, by increasing their distribution network MMBC will gain new brand loyal customers
  • 9. Enter new markets in close proximity will increase sales and build the Mountain Man brand Entering new markets will lead to stronger relationships 2006E 2007E with distributors • Increased sales Investment $1.3MM $1.3MM • Giving the distributors more work will increase their bottom line and return a greater profit Revenue $4.3 MM $7.2MM • They will be more helpful building MMBC’s brand in Profit $282, 315 $451,704 the states that Mountain Man distributes too • MMBC will have a stronger presence on the east Barrel 16,500 33,000 coast which can lead to future distribution nationally Increased amount of awareness among target age Process: • MMBC will be able to target a larger broader base of 40+ • Enter one new state every year starting with year olds Pennsylvania • Greater chance to build brand awareness through gaining • Keep same amount of facings and focus on access to a larger population off premise locations (70% of distribution) • As sales increase and overall profit increases there is • Leverage relationships with distributors and use them as a collaborator opportunity to build brand loyalty amongst target • Increase sales force in new states to push customers the product • Penetrate pricing strategy to show value and Do what MMBC does well maintain customer loyalty with current • Brewing a high quality lager should be shared with customer all surrounding states • MMBC will gain recognition for their award winning lager on a larger national presence • MMBC will be one of few Craft brewers to have a large scale presence in the United States