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Mountain Men Brewing Company (Mmbc) Solution For Revenue Decline

1453 words - 6 pages

Situation
As you are aware, Mountain Man Brewing Company (MMBC) is a craft brewing and local distribution company located in West Virginia. Its signature product, Mountain Man lager, features a distinctive bitter taste. It is a product that has garnered for the company regional acclaim, a loyal customer base, and numerous awards. This company developed a brand image and reputation among the blue collared and middle age men, while maintaining the unique and authentic family business model based on quality and toughness. In 2005 Mountain Man was generating revenues of 50 million dollars, selling 520,000 barrels. That said, changes in the market have affected MMBC capital. MMBC is experiencing a decline in revenue and market share. It is essential to analyzes and examine the possible strategy of introducing a “light” beer into MMBC’s product line in order to recapture market share.
. Given the decrease in sales for the past year, there is a need for a strategic analysis. As illustrated, the two options are either to introduce a light beer, or continue with the current strategy and hope that the company remains profitable. Light beer is growing in popularity throughout the country as a nation that is becoming more health-conscious and looking for new ways to indulge without the attendant side effects. Light beer sales are growing at an annual rate of 4% per year, while sales for premium beer declined by 4%. The light beers had already gained 50.4% of total beer sales and Mountain Man was not capturing this market opportunity. On the other had, MMB had established its reputation based on the sales of premium beer to a target market. Therefore, the introduction of light beer could affect the image and reputation of the company. Also, with lower revenue, it will be more difficult to incur new cost in advertising and the production of the new product. Another driver for loss sales is competition, which in this market is divided into four different categories. Major and second-tier domestic producers, import beer companies, and specialty brewers. Given the situation MMBC is facing, a coherent decision needs to be executed.
Potential Advantages of Adding a Light Beer
The potential advantages of adding a light beer to MMBC’s product line are:
1. Appeal to a previously unserved market segment: health-conscious drinkers
2. The inherent advantage of an expanded product line (consumer choice)
3. Opportunities for new marketing strategies
4. Appeal to a younger and/or more upper-class demographic
Potential Disadvantages of Adding a Light Beer
The potential disadvantages of adding a light beer to MMBC’s product line are:
1. Dilution of the product’s image as a working man’s beer
2. Dilution of the company culture
3. Cannibalization—no benefit is conferred if an existing consumer simply switches
4. Changeover costs must be incurred and could take a long time to recoup
Analysis of Advantages
Simply because of light beer’s growing popularity nationwide, there is...

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