1. Mountain Man Brewing Company: Bringing the Brand to Light
Prepared by: Olena Gapon
December 5, 2014 1

2. First time in the Mountain Man’s history the revenue is falling by 2% due to the changing tendencies in the market
Tendencies in the industry
Why they affected Mountain Man
Over last 6 years light beer sales has been growing at 4% rate annually (in 2005 “light beer” category takes 50.4% of volume sales) while traditional premium beer sales has declined at 4% annually
Mountain Man is a premium lager beer
Glut of products in the market
In the whole beer market in East Central Mountain Man takes only 1.4% market share (exhibit 1)
Large national brewers put pressure on smaller regional breweries
Mountain Man is a comparatively small regional brewery that does not have enough capacity to compete with national brands
Due to discriminating small brands by distributors, many independent breweries in East Central have been closing
Mountain Man is a small brand that provides lower gross margin to distributors due to limited capacity of distribution and lack of financial and marketing resources than big companies are able to do
Changes in beer drinkers’ preferences and overall changes in consumer segments
Mountain Man’ current target audience is very specific that influences other beer drinkers’ perception about the brand (the image of “working man” beer)
Increasing health concerns among the consumers
Mountain man is perceived as “stronger” beer, and has higher than average alcohol content
Big companies are introducing more new products to the market
Mountain Man keeps to a single- brand product strategy
Aging demographics
Mountain Man is targeting consumers of the age of years old
US beer consumption is decreasing by 2.3% due to competition from wine and spirits- based drinks
Mountain Man is presented exclusively in beer market 2

3. If Mountain Man keeps Mountain Man Lager, it will be profitable only if the market share does not change, otherwise, the company will face loss
Year
2005
2006
2007
2008
2009
Market size (barrels)
4,648,885
,645
,55
,153
,19
Mountain Man Lager market share stays the same (11%)
11%
Revenue
$ ,00
$ ,08
$ ,52
$ ,74
$ ,09
Net Income
$ ,00
$ ,23
$ ,03
$ ,24
$ ,06
Mountain Man Lager market share decrease by 0.5% annually
10% 9%
$ ,09
$ ,08
$ ,34
$ ,57
$ ,02
$ ,34
$ ,00
$ ,40
Mountain Man Lager market share decrease by 1% annually 8% 7%
$ ,17
$ ,39
$ ,10
$ ,28
$ ,23
$ ,57
$ ,13
$ ,32
If the market share stays the same, the company will stay profitable, however, revenue still will be falling
If the share falls by 0,5% every year, the company will face the loss in 2009
If the share falls by 1% every year, the company will face the loss in 2007
*East Central Region, “other 2nd tier premium & popular brewers” (exhibit 2)
Even if the share will stay stable, Mountain Man’s revenue will still keep falling 3

4. Mountain Man should launch new product in the growing “light beer” market as it is profitable segment in the industry and even a small market share will bring high revenue
Segments
sold barrels
market share
2nd tier brewers
13%
light beer
50%
others
37%
total
Mountain Man Lager’s segment
Potential segment for Mountain Man
If the company gains at least 3.3% market share in the “light beer” market, the net income would be equal to holding 11% market share in the “2nd tier premium brewers segment in which the company currently operates.
Beer segments
Market Size of the segments
Mountain Man share
Revenue
Net Income
2nd tier premium brewers
4,648,885
11%
$ ,00
$ ,00
Light beer
18,744,303
3.3%
$ ,90
$ ,53 4

5. Launching in “light beer” segment will bring Mountain Man to the national level in long term and provides it a sustainable competitive position
Opportunities
Threats
Mountain Man will capture younger generation of drinkers who constitute 27% of total beer consumers
Current customer perception about the brand will be a significant barrier in gaining new target audience
As these customers are not loyal to any brand yet, Mountain Man can turn them into company’s loyal ones
New customers don’t have certain beer preferences yet, so they are likely to try different brands
As the brand awareness increases, more distributors will be interested to carry Mountain Man brand
Mountain Man can still not be able to compete with big national competitors who are more attractive to distributors
Having a substantial regional position, Mountain Man will have a capacity to compete in the national market
In the national market the competition is high, and the existing companies already have stable competitive position
Expanding market share will bring company growing market share, high competitive market position, and constantly increasing revenue
The company’s growth may be slower than expected which may damage company’s capacity to compete 5

6. Mountain Man should target young consumers with its new “light beer” product
New Target Audience
Age: years (27% of total beer consumers (constitute 13% of adult population), and the number is constantly growing)
“the first- time drinker demographic”
not brand loyal yet
spend twice as much per capita on alcoholic beverages than older consumers
prefer light beer
consume in quantity
buy mainstream products
While purchasing consider: taste, price, the occasions of drinking, perceived quality, brand image, tradition, local authenticity
Reasons why Mountain Man should target new audience
can increase the number of company’s loyal customers
new product will bring the company into new bigger market which is constantly growing
will help the company to increase its revenue and total net income 6

7. Even though the risk to lose current target audience is high, Mountain Man should use its name to launch and promote the new product as it will increase the chances of becoming profitable quickly
Advantages to use Mountain Man name in the new product positioning
Disadvantages to use Mountain Man name in the new product positioning
The company is known for its quality
The only company’s product, Mountain Man Lager, is recognized as “Best beer in West Virginia”, “Best beer in Indiana”, and “best- known regional beer” what positively affects the customer perception of the company
Younger drinkers (company’s new target audience) are well aware of the brand and show appreciation for the brand’s association with an independent brewery
New product will not cannibalize the current one as the target audiences are completely different
Mountain Man reputation will help the new product to enter more distribution channels
New product may damage brand equity
The distributors may be interested in “light” beer rather than in the core company’s product which will lead to space cannibalization
The product is perceived as “working men beer”
The new product does not align with the current company’s positioning
Launching new product may offense company’s current target audience
Mountain Man name is a significant attribute in the new product’s strategy as the brand awareness among beer consumers in East Central is high 7

8. Premium Light by Mountain Man
Mountain Man should launch a sub-brand “Premium Light by Mountain Man” under company’s name as it will help the new product to have high brand awareness immediately
Mountain Man Light
Premium Light by Mountain Man
New Light
Advantages
Company’s market reputation
Sounds like product extension of Mountain Man
Sounds like separate product under Mountain Man brand
The name emphasizes the “premium” quality of the new product
The name will not suffer from current consumers’ perception of the product as of the one exclusively for “blue collars”
Disadvantages
Consumers perceive Mountain Man brand still as a strong beer product for “blue collars”
Without using Mountain Man name, the new name sounds like a completely new product in the market
Using Mountain Man name in the name for the new product will transfer these attributes to the new product
Mountain Man’s core attributes are authenticity and quality 8

9. “Premium Light by Mountain Man” should be launched in mainstream channels with an average price
Mountain Man should put efforts into placing “Premium Light by Mountain Man” in every “beer” point of sale
Channels
Supermarkets and liquor stores
Breweries and restaurants
How to persuade distributors to place the product
Distributors already know Mountain Man brand, so company’s reputation will persuade them to place the new product of the company
Give them an opportunity to get a minimum possible inventory
Provide them with additional refrigerators for the new products
Put higher than average price for the product, so that distributors will have bigger margin
How it will be presented in the channel
The product will be placed on the shelves next to its main competitors: Corona Light, Anheuser- Busch, Bud Light, and Amstel Light
There will be additional refrigerators around the store exclusively for “Premium Light by Mountain Man”
The refrigerators should be surrounded by Mountain Man print advertising
The new product will be positioned as premium domestic light beer
The company should create a separate department for the new product which should include a manager who deals exclusively with distribution 9

10. The main advertising channel for “Premium Light by Mountain Man” should be outdoor advertising, television, and digital
Advertising channels
Advantages for “Premium Light by Mountain Man”
Disadvantages for “Premium Light by Mountain Man”
Television
Big audience can be reached in the same time
High expenses
Radio
Short broadcast time
New target audience does not listen the radio much
Social Media
New target audience is highly presented in the channel and get a lot of information from there. Low expenses
The company cannot completely control
Print magazines and newspapers
Due to big audience, low price to contact 1 consumer
May not appeal to the readers
Outdoor
Good “reminding” tool to increase brand awareness. Will attract current beer consumers
High expenses. Will not be effective to attract new consumers
Word- of- mouth
Consumers’ recognition
Television, Social Media, and Outdoor are the most relevant advertising channels to promote “Premium Light by Mountain Man” because they will contact the target audience with the highest repeat rate
The approximate advertising expenses will be at least $750,000 for 6 months, or $1.5 million for a year, what is absolutely affordable budget for Mountain Man Company (as its net present value will still be high) 10

11. Mountain Man should keep supporting its core Mountain Man Lager product as it is targeted towards very specific group of beer consumers who show high brand loyalty
Current customers profile:
rugged, middle- aged men, blue- collar, particularly miners, middle- to- lower income, over 45 years
Why it is important to keep them:
58% of customers are extremely brand loyal and bring company the most of the revenue.
Current customers will feel that the company takes care about them, not only focusing on the new product. So, they will not feel offended, and the brand equity will not be damaged
Mountain Man should extend its product line with new packaging variations of Mountain Man Lager, not changing the taste and positioning 11