Mountain Man Case Analysis

Problem statement: With the changes in beer drinking preferences, the Company is facing decline in sale of 2% annually. With the change in state laws, the competition is stiffening, big industry players are driving small firms out of business, and distributors and retailers are dropping smaller brands. Mountain Man customer base is aging and it needs to find an alternative.

Situation Analysis: MMBC has been building a strong brand for the last 75 years. Its beer is based on high alcohol content, a bitter taste and dark brown bottle packaging. Its initial main customers were blue collar working men with a mid-low income level. Yet, market forces has emerged a younger drinking force that want a lighter beer. The situation currently, based on the 5C model is as follows:

1. Company: MMBC has been able to build brand equity of 75 years of high quality product beer with its single product, Mountain Man Lager. It has been able to achieve sales of USD50m in 2005. The Company is the top leader in West Virginia and has considerable market share in other Eastern regional brewery. Its product image in the market is based on bitter taste, strong alcohol content, authenticity and tradition. Currently, the Company is facing decline in sales of 2% in line with the decrease in the market of premium beers of 4%.

2. Collaborators: The Company has its own sales force that focuses on pushing the brand to off-premise locations. Its distributors are not promoting the brand because they carry larger competitors which are more profitable. In addition, retail shelf space is limited to Mountain Man Lager, and accordingly, introducing a new product might cannibalize sales of existing product.

3. Competition: The Competition that the Company faces is split into 4 main categories: (a) Major domestic producers such as Anheuser Busch, Coors and Miller have a market share of almost 75% of premium beer and 84% of light beer. Their strength is based on economies of scale in production, distribution and advertisement. (b) Second tiers domestic producers such as Pabst and Genessee who are small and more regional. They are not as strong financially as the major producers and account 12% of the beer market. (c) Import beer companies such as Heineken and Corona who have difficulty competing locally due to high import costs and exchange rate fluctuations. They account for 12% of the beer market. (d) Craft beer which are numerous small pubs and regional breweries that account for 1.5% of the market.

4. Customers: The current customers of MMBC are low-to-mid income blue collar or working men over the age of 45. Main target market is located in West Virginia and other Eastern regional areas. The main buying location of the target market is off-premise. This core customer base did not state any brand preferences in bars and restaurants. Small percentage of the loyal customers accounted for a large percentage of sales. Accordingly, a market research suggested