Facing decline in revenues , Chris Prangel has to take a decision to launch a anew product. What should he do?

1. Bringing the
brand to light

2. What was the
Mountain Man
Brewing Company?
Who were the
key
characters?

3. Key Players:
• CHRIS PRANGEL - Recent
MBA graduate soon to inherit
MMBC.
• OSCAR PRANGEL - owner
and president of MMBC

4. ABOUT THE COMPANY
•Founded in 1925 by Gunther Prangel.
• Core customers - blue collared men
over age 45.
•Known as “WEST VIRGINIA’S BEER”
•Had a strong brand image with various
accolades to its name.
•Generated revenue of over $50 million
and sold 520,000 barrel^2 of Mountain
Man Lager in 2005.
•Price $2.25 for 12 ounce beer in bars
and $4.99 for a pack at stores.

5. •Family owned business.
•Targeted Blue collared workers in the premium segment
over the age of 45.
•Sold at off premise locations.
•Followed grassroots marketing to create brand awareness.
•Core attributes of brand- Authenticity ,quality and unique
West Virginia toughness.
•Distinct bitter flavor of beer and greater alcohol content.
•Effective bottling and packaging.
Why is it a success?

6. Situation Analysis
•Revenues were down by 2% relative to
2004.
•Arcane laws were repealed ,leading to
decreasing shelf space
•Competition from larger national brewery
brands giving out deep discounts.
•Change in beer drinker preferences.
•Growth in “ light beer category”, almost
doubling volume sales to 50% in 2005 as
compared to 29.8 % in 2001.
•Change in consumer dynamics - Younger

7. Main Competitors
Main Competitors include
Anheuser Busch, Miller Late who
have a strong brand portfolio and
great financial resources to fund
their marketing and advertising
campaigns .

8. Objectives of the case
How to secure company’s future with changing
customer preferences?
How to introduce newer product? Within same
brand or different?
How to market the newer product?
How could it compensate for losses in core
product sales and also act as a booster?

9. STRENGTHS
Brand awareness(West
Virginia’s beer)
Loyal customers
Authenticity, quality and
uniqueness
Strong presence at off
premise locations.
WEAKNESS
Single revenue product
Shrinking target customers
Lack of financial resources.
Weak presence at on
premise locations.
OPPORTUNITIES
Brand extension in light
beer market
Tap potential younger age
customers
Stronger brand image
Expanding distribution and
sales channels
THREATS
Ageing target market
Increase federal taxes
Deep pocketed
competitors
Changing customer
preferences and dynamics
Decline in revenue

10. OPTIONS FOR CHRIS
PRANGEL?
Mountai
n Man
Light
Mountai
n Man
Lager

11. •Expand market
share
•Diversify brand
portfolio
•Enhance core brand
value and image
•Deliver greater
customer value
•Attract health
conscious customers
and women
Cons
• Alienate core
customers
•Brand dilution
•Cannibalize sales of
MM lager.
•Target market shared
by larger breweries
•Increased
production cost
Pros
•Maintain their loyal
customer base
•Stick to their brand
image
•Maintain top position
in premium beer
segment
•No cannibalization
risk
Cons
•Might force
company out of
business.
•Ageing
demographic in
shrinking premium
beer segment
•Cannot compete
against deep
pocketed
MM LIGHT MM LAGER

12. Light Beer Sales Evaluation
Year 2005 2006 2007 2008 2009
Light Beer
Consumptio
n
18,744,303 19,494,075 20,273,838 21,084,792 21,928,184
CAGR 4% 4% 4% 4%
Estimated
growth(0.25
)
0.25 0.5 0.75 1.0
Estimated
sales in
barrels
48,735 101,369 158,136 219,282
Estimated
revenue($9
7/
barrel)
$4,727,295 $9,832,793 $15,339,192 $21,270,338

13. Mountain Man Light
Breakeven analysis for Mountain Light beer(2006-
2007)
Variable Cost Calculations
• Variable cost of MM lager = $66.93
• Variable cost of MM light = $ 66.93+ $ 4.69 = $71.62
• Price /barrel = $ 97
• Net profit margin = $ 25.38 ($ 97- 71.62)

14. Mountain Man Light
Fixed cost calculations(without cannibalization)
Initial advertising campaign cost = $750,000
Incremental SG&A cost (2006-07) = $900,000*2= $18,00,000
Total fixed cost = $2,550,000
Fixed cost calculations(with 20% cannibalization+
2% loss)
Cost from cannibalization( 22% for 2 years) =$437,226
+$341,036 =
$778,262
TFC(with cannibalization) = $3,328,262

15. Mountain Man light
To breakeven(without cannibalization)
• Total Breakeven volume = Fixed costs/Net profit margin
=$2550000/$25.38
= 100,473 barrels
• Total breakeven revenue = Total Breakeven volume * price/barrel
= $ 100,473 *$97
= $9,74,581
To breakeven (with cannibalization)
• Total breakeven volume = Fixed costs/ net profit margin
= $ 3328262/$25.38
= 131,137 barrels
• Total Breakeven revenue = Total breakeven volume *price/barrel
= $131,137*$97
= $12, 720,308

16. Mountain Man Light
Mountain Man Light beer will break even in both
scenarios by end of 2007
• Revenue needed to breakeven (with
cannibalization)
= $9,745,881
• Revenue needed to breakeven(without
cannibalization) = $12,720,308
Estimated revenues for Mountain Man Light beer
• For 2006 = $ 4,727,295
• For 2007 = $9,832,793
• Total revenues at the end of 2007 = $ 14,560,088

17. Launch Light beer under a new
brand name
PROS
• Attract potential
customers
• Greater revenue
• No brand dilution
• Lesser core product
erosion
CONS
• Increased advertisement
expenditure
• Difficult to market newer
brands
• New strategy for
packaging, labeling,
divisions etc.
• Compete with already
established brands in
light beer category

18. Launch Light beer under the same
brand name
PROS
• Low advertisement
and production cost
• Greater revenue
• Greater brand
recognition by
consumers
CONS
• Brand dilution
• Core product
cannibalization
• Loss of core
customers

19. Marketing Strategy
The appropriate 4P mix to be followed.
PRODUCT
•Attractive product design
• Separate labeling and
demarcation of lager and light
bottles.
•Trendy name and slogan for both
products.
•Maintain same quality as Lager
PRICE
•Use appropriate pricing strategy for
12 ounce beer and 6 packs
considering market price trends
•Same price at all on premise
locations.
•Offer retailers incentives by giving
supplier discounts to increase shelf

20. PLACE
•Continue sales of MM lager at off
premise locations.
•Sell MM Light through on premise
locations to reach younger
demographic and women
Promotions
•Continue grassroots marketing for
Lager.
•Extensive advertising campaigns
both online and offline.
•Employ youth icons to endorse Light.
•Use communication channels like
concerts as well as radio/tv.
•Use offers and promotions to
increase customer product trial.

21. Conclusion
• A 0.5% capture of market share is
possible by 2007 with the given market
situation considering cannibalization of shares.
• Therefore, Chris should go ahead with
his decision to launch Mountain Man Light under
the same brand name.
• He should devise an effective marketing
strategy using the 4P mix to enhance brand
image and provide value to newer as well as
core customers.

22. DISCLAIMER
Created by Shruti
Sinha, DTU DELHI,
during a marketing
internship by Prof.
Sameer Mathur, IIM
Lucknow.