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Given these factors it will be hard for MMBC to sustain its profitability in the
short and long terms with a single revenue driver represented by Mountain
Man Lange.
Argument 2: There is an unmet market demand.
Historically, MMBCs average customer has been a blue collar, lower to
middle income (between $25,000 and $75,000 a year) male over 45 years of
age, who prefer traditionally brewed beer. This customer base typically
purchases
60%
of
their
beer
from
off-premise
locations,
such
as
supermarkets and liquor stores. Mountain Man Lager drinkers are among the
most loyal customers in the market with a brand loyalty rate of 53%.
However, the only non-super-premium domestic type of beer market that has
been increasing is the light beer market, which has seen a 4% CAGR of light
beer sales over the past 6 years due to the consumption by the youth. First
time drinker demographic (21-27 years) represents the most lucrative
market for the beers companies, as this group accounted for 27% total beer
consumption and has yet been growing, but what is more important from the
marketing perspective is that this group does not have an established brand
preference.
Argument 3: Brand extension would undermine the core of existing
brand equity:
MMBC has been renowned for delivering a premium craft beer and embraces
a status of an independent, family-owned brewery. Given its high brand
loyalty rate, there is a considerable risk associated with diversification into a
new brand category that would serve a completely different customer base.
The current associations with the brand that probably make up for such a
high customer loyalty are traditions-based, dark craft beer, appropriate to
drink after work with your fellows or in front of TV. But in order to serve the
youth the MMBCs marketing message would have to transform into cool,
easy-to-socialize-with, light and more consumable, trendy beer. These, as
can be seen, represent radically different sides of a brand perception that
can create an ambiguity in consumers mind and by doing so can even
alleviate the sales of existing product.
sales;
Gaining presence in on-premise locations: extending their distribution
channels over off-premise venues, thus hypothetically increasing the
revenue;
Launching the light beer line does not require initial investment in PPE
products;
An attractive market is attractive for everyone, including major
established players who enjoy larger financial resources and stronger
brand awareness, so given this there can be an anticipation of
increased competition within large domestic beer brands and regional
breweries;
Increased inventory, SG&A, packaging costs;
Increased advertizing costs;
Constant market releases of light beer brands by large brands;