Bringing the Brand to Light

Who are the eminent personalities of the

company and what does the brand stand for?

OSCAR PRANGEL-President and Owner

CHRIS PRANGEL-MBA Graduate,Head of Marketing Operations

Company History

• Founded in 1925 by Guntar Prangel. • Mountain Man brewed one beer,Mountain Man Lager,also called “West Virginia’s beer”. • By the 1960s,Mountain Man Lager was well established as a quality brew in the East Central region of the United States. • The beer was packaged in a brown bottle,with its original 1925 design of a crew of coal miners printed on the front. • Mountain Man Lager was priced similar to premium domestic brands and below speciality brands. • The primary customer base of the brand included blue-collar,middle to lower income men aged over 45.

What Does the Brand stand for?

Mountain Man has relied on its history and status as an

independent,family-owned brewery to create an aura of

authenticity and to position the beer with its core drinkers.

CORE ATTRIBUTES OF THE BRAND

•AUTHENTICITY

•QUALITY

•UNIQUE WEST VIRGINIA “TOUGHNESS”

HOUSEHOLD INCOME

UNDER $25K

$25K-49.9K

$50K-74.9K

$75K-99.9K

$100K+

GENDER

MALE

FEMALE

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10

20

30

40

50

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AGE

Profile of Mountain Man Lager Drinkers

MARKET FINDINGS

By 2005,the company was generating revenues of over $50 million and selling over 520,000 barrels of the lager beer. The mountain Man Lager won the “Best beer in West Virginia” for the eighth straight year in 2005 and was selected as America’s Championship Lager. The Brand awareness , equity and the loyalty it cultivated were the cornerstones of its success. The sole brand loyalty rate for Mountain Man Lager was 53%,higher than any other competitive product.

MARKET

COMPETITION

Competitive Market Shares in Barrels by Brewer East Central Region Anheuser-Busch 15,620,252 42.0% Miller 8,553,948 23.0% Coors 3,347,197 9.0% Other 2nd tier Premium & Popular Brewers 4,648,885 12.5% Craft/Specialty Brewers 557,866 1.5% Imports 4,462,929 12.0% Total 37,191,077 100% Note: Sales in barrels of wholesale shipments.

The Company faced certain

Situational Threats in 2005

Analysis

Since 2001,U.S. per capita beer consumption declined by 2.3%.West Virginia repealed arcane laws, thereby resulting in large discounts being given and smaller brands being neglected.

Change in beer drinker preferences.The light beer category was steadily gaining market share accounting for more than 50% in 2005

Younger consumers preferred light beer and they constituted the key consumer segment for beer companies.

MOUNTAIN MAN’S 2005

REVENUES WERE DOWN 2%

RELATIVE TO THE PRIOR FISCAL

YEAR.

Chris Prangel has 3

choices:

Try to revive the company’s

fortunes through the lager

brand.

Introduce a lighter version

of the lager brand under a

new name.

Introduce the brand

extension as Mountain Man

Light.

OBJECTIVES

1.

• To find out whether it is economically feasible and sustainable to launch Mountain Man Light.

2.

• To market new products efficently in order to compensate for losses in core product sector.

3. • To develop with changing preferences

without affecting its loyal customer base.

SWOT ANALYSIS OF THE BRAND:

Strengths: Brand awareness,loyal consumer base,strong presence in off premise locations.

Weakness: No brand portfolio diversification,revenue totally dependant on single product,customer base concentrated in a single section.

OpportunitiesThe lighter version of the brand extension can help connect with younger consumers. Generate greater revenue and help in globalizing the brand.

Threats: Competitors possessing greater financial prowess,beer consumption on the decline.

MAINTAINING STATUS QUO

Single Product Centric.No risk of cannibalization. However,not feasible to attract new customers and increase brand loyalty. Steady loss in revenues by 2% every year. Consumer base degrading in this already shrinking beer industry. Strong competition.

Therefore ,maintaining status quo is not a viable option…..it is like a time

bomb which will eventually render the

company out of business.

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 .

Consumption by Type of Beer EAST CENTRAL REGION %Total 6-yearCAGR

Premium Beer 7,326,642 19.7% (4%) Popular 4,351,356 11.7% (5%) Imported Premium 4,462,929 12.0% +6% Superpremium (craft and high-end domestics) 2,305,847 6.2% +9% Total Barrels 37,191,077 100.0%

Potential segment for Mountain Man

MOUNTAIN MAN SHOULD TARGET YOUNG CONSUMERS WITH ITS NEW “LIGHT BEER” PRODUCT New Target Audience • Age: 21-27 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 for targeting 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

PROS

•Mountain Man will capture younger generation of drinkers who constitute 27% of total beer consumers • As these customers are not loyal to any brand yet, Mountain Man can turn them into company’s loyal ones • As the brand awareness increases, more distributors will be interested to carry Mountain Man brand •Having a substantial regional position, Mountain Man will have a capacity to compete in the national market • Expanding market share will bring company growing market share, high competitive market position, and constantly increasing revenue

CONS

•Current customer perception about the brand will be a significant barrier in gaining new target audience • New customers don’t have certain beer preferences yet, so they are likely to try different brands •Mountain Man can still not be able to compete with big national competitors who are more attractive to distributors • In the national market the competition is high, and the existing companies already have stable competitive position •The company’s growth may be slower than expected which may damage company’s capacity to compete

LAUNCHING LIGHTER EXTENSION OF THE

BEER BRAND UNDER A NEW NAME

ADVANTAGES DISADVANTAGES Increase in income Greater marketing costs. Introduction to new market segments without Difficult to establish a brand any prior negative customer perceptions. from scratch. No chance of brand dilution. Very competitive light beer segment.

Without using Mountain Man’s name,the new brand will find it very difficult to survive and break even will take more than 10 years.

Launching the extension as

Mountain Man Light Beer

ADVANTAGES •The company is known for its quality •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 .

DISADVANTAGES •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 new product does not align with the current company’s positioning • Launching new product may offend company’s current target audience

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

BREAK EVEN ANALYSIS Cost per Barrel: Variable Costs - $66.93 Extra Costs - $ 4.69 Total costs - $71.62 Total Revenue - $50,440,000 Total Sales in Barrels-520,000 Selling Price=(Total Revenue/Total Sales in Barrels)=$97 Revenue per Barrel=$(97-71.62)=$25.38

Light Beer market share growth-4% Initial Market Share of Mountain Man-0.25% Increase in Market Share per year-0.25% Initial Advertisement & SG&A Costs-($750,000+$900,000) Therefore,Costs for 2 years-$750,000+2*$900,000=$2,550,000 Required Barrel Sales in 2 Years-100473 Estimated Barrel Sales in 2 Years-149744

CONCLUSION:

CHRIS PRANGEL SHOULD GO AHEAD AND

INTRODUCE MOUNTAIN MAN LIGHT.