PRESENT

MM6016
Branding and Marketing Communication

BRINGING THE BRAND TO LIGHT

29111311 Haidir Afesina 29111363 Wirania Swasty 29111384 Chairunnisa M. 29111387 F X Kresna Paska 29111398 Aqsa Adhiperwira 29111400 Fajar Liem

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HIGHLIGHTS
Chris Prangel has returned home to manage the marketing operations of Mountain Man Brewing Company (MMBC) Experiencing declining sales for the first time in its history
due to changes in beer drinkers' taste preferences

Want to launch Mountain Man Light, a "light beer attracting younger drinkers

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MMBC

A family-owned business which brewing bitter-tasting beer

Brewed one beer Mountain Man Lager, also known as West Virginias beer Mountain Man Lager's brand equity is a key

Popular among blue-collar workers

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TIMELINE

2006
2005 1960s 1925
Founded by Guntar Prangel MM Lagers entrenched throughout East Central US Selling over 520,000 barrels Generating revenues over $50 million down 2% Top market position Best Beer in West Virginia; for its 8 year straight Best Beer in Indiana Winner of Americas Championship Lager Oscar Prangel retired Taken over by Chris Prangel wanted to launch Mountain Man Light

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INDUSTRY ANALYSIS
(PORTER 5 FORCES)
Threat of new Entrants Local Beer & craft beer Lots of big & famous competitor Customer loyalty of product competitor

Supplier Power Lots of supplier (raw material) Low switching cost

Rivalry Competition Local & Import Beer

Buyer Power Price Sensitivity Product Undifferentiated

Threat of Substitutes

Wine Spirits

The beer market is matured, the revenue is dynamic

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PERCEPTUAL MAPS
The Occasions being celebrated vs Quality among competitors
The occasion being celebrated
+

Brand awareness vs Price among competitors

Brand Awareness +

Import beer
Specialty Brewers Major Domestic producers + Quality MMBC Price

Major Domestic producers

Import beer

+
Specialty Brewers

Second-tier domestic producers

MMBC

Second-tier domestic producers

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PERCEPTUAL MAPS
Taste vs Local Authenticity among Competitors
Taste

MMBC Specialty Brewers

Import beer Major domestic producers

Local Authenticity

+
Second tier domestic producers

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COMPETITION

Mountain Man Lager

Source: http://en.wikipedia.org/wiki/Beer_style

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MARKET SHARE
Exhibit 6. Light Beer Market Shares

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MMBC CBBE PYRAMID

53% brand loyalty rate
As good a beer as you could get anywhere Loyal customer feel this is the part of their life, Habit from generation

Best Beer in West Virginia

Focused on quality, Won beer championship, Use original ingredients Recognizable brand

Local Authenticity, Legacy

Independet family owned brewing company, Old company MMBC

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WHAT HAS MADE MMBC SUCCESSFUL?

WHAT IS DISTINGUISHES IT FROM COMPETITORS?

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KEY SUCCESS
Manufacture an exceptional beer with a great brand name
Mountain Man was as recognizable a brand among working-class males in the East Central region The good perception of quality and the brand loyalty it cultivated

Never lost sight of their core customer

Never been seduced by the other guys market

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WHAT ABOUT THESE FACTORS ENABLED MMBC TO CREATE SUCH AS A STRONG BRAND?

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MMBC AS A STRONG BRAND

Consistency of taste and quality
The uniqueness (bitter flavor and slightly higher-than-average
alcohol content)

Its history and its status as an independent, familyowned brewery to create an aura of authenticity Positioning the beer with its core drinkers
Blue-collar, which tended to be very loyal

Invested in a number of branding activities to build brand equity with core consumers

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WHAT HAS CAUSED MMBCS DECLINE IN SPITE OF ITS STRONG BRAND?

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MMBCS PROBLEMS
It has lost 2% of its revenue base annually (2005) aging demographic in the shrinking premium segment trend (customers are over age 45)
Sales and profits ($)
Introduction Growth Maturity
Decline Sales

Profits

Losses-investment

Time

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FACT FINDING

BEER INDUSTRY
Over the previous six years, light beer sales in the US had been growing at a compound annual rate of 4%, while traditional premium beer sales had declined annually by the same percentage

Since 2001, US per capita beer consumption had declined by 2.3%

Competition from wine and spirits-based drinks, an increase in the federal excise tax, initiatives encouraging moderation and personal responsibility, and increasing health concerns

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FACT FINDING BEER INDUSTRY CONT.

Key consumer segment was younger drinkers (21-27 years of age) who preferred light beer and accounted for more than 27% of total beer consumption

The trend was growth in the light beer category

Accounted for 50.4% of volume sales in 2005

In aging demographic, the premium segment of the beer market were shrinking

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FACT FINDING MMBC

Brand played a critical role in the beer-purchasing decision Recent study in West Virginia, the audience rated Mountain Man Lager as the best-known regional beer Consumers considered: taste, price, the occasion being celebrated, perceived quality, brand image, tradition, and local authenticity MMBC relied on its history and its status as an independent, family-owned brewery to create an aura of authenticity MMBC positioning the beer with its core drinkers (blue-collar, middle-to-lower income, men, over age 45)

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FACT FINDING MMBC CONT.

There were ranges of subjective attributes that defined the quality of Mountain Man Lager, like its smoothness, percentage of water content, and drinkabilitybut it was Mountain Man Lagers distinctively bitter flavor and slightly higher-thanaverage alcohol content that uniquely contributed to the companys brand equity

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SHOULD MMBC INTRODUCE A LIGHT BEER?

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MMBCS BUSINESS STRATEGY

In response due to declining on sales, MMBCs options: whether or not to launch the new product
Mountain Man Light a light beer formulation of Mountain Man Lager

Yes

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Strengths
Market leader and established brand name Strong brand equity

Weakness
New brand extension will spread already thin resources of the company MMBC doesnt have the marketing budget to compete in the light beer market

Opportunities
Younger demographic and increase lifetime customer value Light beer appealed to women

Threats
Risk of canalization of core brand Alienation of core consumer through new brand that might not be in line with their aspirations of MMBC

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IS MOUNTAIN MAN LIGHT FEASIBLE FOR MMBC?

FEASIBILITY OF MOUNTAIN MAN LIGHT

Nett revenue: $50,440,000 Barrel sold 520,000 Selling price per barrel $97 0.25% Market Share Every Year Light beer market share in 2005: 18,744,303 With 4% CAGR: 2006: 19,494,075 MMBC market share: 48,735 2007: 20,273,838 MMBC market share: 101,369 MMBC Revenue from light beer 2006: 48,735x97=$ 4,727,295 MMBC Revenue from light beer 2007: 101,369 x97=$ 9,832,793

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Feasibility Analysis
Break Even Point = Fixed cost/Variable cost ($900k +$750k)/($66.93+$4.69) $1.650k/$(97-71.62) = 65,012 barrels
2% declining sales 5% canibalization 10% canibalization 20% canibalization 2005 2006 $ 50,440,000.00 $ 49,431,200.00 $ 46,959,640.00 $ 44,488,080.00 $ 39,544,960.00 2007 $ 48,442,576.00 $ 46,020,447.20 $ 43,598,318.40 $ 38,754,060.80

2% declining sales 5% canibalization 10% canibalization 20% canibalization

2005 2006 2007 $ 50,440,000.00 $ 49,431,200.00 Loss $ 48,442,576.00 Loss $ 46,959,640.00 $ 2,471,560.00 $ 46,020,447.20 $ 2,422,128.80 $ 44,488,080.00 $ 4,943,120.00 $ 43,598,318.40 $ 4,844,257.60 $ 39,544,960.00 $ 9,886,240.00 $ 38,754,060.80 $ 9,688,515.20

Revenue From Light Beer

$4,727,295.00

$ 9,832,793.00

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SHOULD MMBC LAUNCH MOUNTAIN MAN LIGHT?

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MOUNTAIN MAN LIGHT

Yes, targeted to young consumer 21-27
27% of total beer consumption & spending twice as much per capita on alcoholic beverages than consumers over 35 years of age

The light beer category accounted for 50.4% of volume sales in 2005, compared with 29.8% in 2001 To grab a potential 0.25% market share annually from the regional light beer market

The projected regional revenue growth is at 4% annually

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MOUNTAIN MAN LIGHT MARKETING MIX

Product
Brand name Mountain Man Light Packaged in a green bottle to differentiate from its lager The green bottle also indicated a lower alcohol content

Price

Need further market research to determine the optimal pricing

Promotion

Grass-roots marketing by word of mouth

Place

On-premise locations: restaurants and bars

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EVALUATION OF MMBCS OPTIONS

Launch Mountain Man Light through brand extension

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