Name: SENTHIL N VELU

ID # 1403024
Case # Mountain Man Brewing Company
Background:
Chris Prangel Legacy brew with a strong brand Premium segment market leader in West
Virginia for almost 50 years Known as West Virginias beer Family owned business
Popular among blue collar working men MMBC Recent MBA graduate stood to inherit
MMBC in 5 years
Present situation
High brand equity in premium segment, mostly sold at off-premise location 2% decline in
revenue 4% growth in light beer segment due to youth preference. Anheuser Bush, Miller
brewing Co. and Adolf Coors possessing 74% market share of the overall brewing
market. They have 84% market share in the light beer market. They rely heavily on
broadcasting market as well product diversification to create barriers of entry for other
brands Competition.
Market research study findings Authenticity, quality, and a unique West Virginia
toughness were core attributes of the brand Awareness among young people but
considered as strong and working mans beer Grass roots marketing more effective Blue
collar customers were very loyal and accounted for a large sales percentage
What should Chris Do?
Option 1 Introduce light beer under Mountain Man brand name.
Pros - Increase in revenue, Low advertisement costs, Cater untapped market
Cons - Product cannibalization, Brand erosion, Loss of core customers
Option 2 Introduce light beer under different brand name
Pros - Increase in revenue, Cater untapped market, No brand dilution
Cons - High advertising costs, Difficult to build new brand name, Light beer already has
a strong presence
Chris Estimate
Costs SG&A costs : $900,000 annually Advertising : $750,000 for intensive six month
advertising Variable cost per barrel of Mountain Man Lager : $66.93 Variable cost per
barrel of new light beer : $66.93 + $4.69 = $71.62 Market price per barrel of new light
beer : $97

Revenue Market price per barrel of new light beer: $97

Revenue per barrel: $97 - $71.62 = $25.38 Total investment : $1.65 million Break even
volume = 1,650,000/25.38 = 65,012 barrels
Capture 0.25% market share every year
New product can get lost in the sea of new product introductions by big companies The
projections may be overly optimistic Advertising cannot be as aggressive as big
companies. The product is expected to cover all its investment costs and become
profitable past 2007 Launching Mountain Man Light can also increase awareness and
uplift the brand value.
Conclusion Chris Prangel should go ahead and launch Mountain Man Light