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This is an example of how I Communicate to an executive my brand strategy. From the development of a problem to delivering key messages
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Mountain Man Brewery is experiencing declining sales for the first time in the company’s history
Central East Region
2004 2005 2006E
Market Size overall
38,678,720 37,191,077 35,703,434
Market Size MM Competes in
4,718,618 4,648,885 4,462,929
MM share (Barrels)
530,400 520,000 509,600
Profit $ $4,887,636 $4,791,800 $4,695,964
1) Age Demographics • Mountain Man’s beer drinker’s are getting older and decreasing their frequency of purchases• As Mountain Man’s beer drinker’s are aging the children of a Mountain Man drinker are not choosing Mountain Man beer as their primary choice
2) Increased presence of large multi-national brands in Mountain Man’s distribution area (Case Fact)
• Distributors supporting beer brands on basis of turnover and margins; dropping brands that do not contribute to bottom line• Large brands maintain economies of scale in brewing, transportation and marketing; Increased pressure
3) Distributors not willing to help build Mountain Man brand awareness
• Mountain Man is not a popular customer to distributors because of small market share presents • Small shipments of under 600,000 barrels annually.
Proof
Mountain Man provides a high quality beer that hard working men enjoy
Mountain Man Brewing Company•Legacy Beer
•High quality•Rich and bold flavour•Mouth watering beer•Drinkability
• Mountain Man is authentic• Best beer in West Virginia• America’s championship lager• Family owned• Strong brand image in East Central Region • Small sales force (focus- getting off premise locations)
• Old management transitioning to younger management
• Unaided response rate of 67%, men in the East Central Region know this beer!
A Mountain Man beer drinker• Blue Collar• Middle to low income men over age 45• Purchase beer at off premise location (liquor stores)• Working man (trades) (large population of workers)• Since 1925 Oscar has had the same customers, rugged, middle age men from the coal miners union.
•Brand loyalty rate of 53%
Loyal – Hard Working - Deserving Legacy – American – Gold Standard
A small amount of MMBC’s blue collar customers accounted for a large percentage of sales
“We manufacture an exceptional beer with a great brand name, we’ve never lost sight of our core customers, and we’ve never been seduced by the other guy’s market”
Mountain Man Brewery competes on similar dimensions as other beer companies
Beers Price (6-pack)~ Taste (customer’s perception)
Anheuser-Busch $5.00 Typical
Miller $5.10 Typical
2nd tier domestic $3.99-$4.99 Mid
Imports $6.00+ Mid
Coors $4.99 Typical
Mountain Man $4.99 Bold
Craft Brewers $4.99+ Bold
Price High
Price Low
Bold FlavoursTypical Flavours
Mountain Man is fulfilling the need of customers that want a high quality beer at a reasonable price.
• This places Mountain Man as a regional Craft Brewer and in direct competition with brewers like Sam Adams, Harpoon and the 50 other regional craft brewers.
•The Advantage of being a regional craft brewer is:1) Known for quality and taste2) Distribution channels are
already set up in most states 3) Customers of a Craft beer
are always loyal
• The Disadvantage of a Craft Brewery:1) High competition (980
brewpubs, 380 microbreweries and 50 regional brewers)
2) Low barrel production, therefore distributors hesitate to build brand image
Mountain Man needs alternatives to fit three core dimensions
Must reverse declining sales trend and turn a profit within two years of investment• Mountain Man is able to invest approximately $1.3 million dollars• It is expected to achieve a 12% return within two years of the investment or $156,000• The strategy needs to make financial sense for the long term sustainability of Mountain Man
The strategy can not alienate Mountain Man’s Core customers• The core of Mountain Man’s business relies on their relationships with their customers• These customers need not feel like Mountain Man’s commitment to them is in jeopardy• The strategy must hold on to current loyal customers, while producing increased profits
Fit with the Mountain Man brand• Mountain Man brews high quality beer and is known for its drinkability and bold taste • The Mountain Man brand is a man’s brand with rich heritage in the USA• The beer is packaged with a label that says to the man drinking it, that you deserve a good beer
All dimensions must be in line for Mountain Man to be successful
Launching a light beer is not for Mountain Man
Mountain Man 2005 2006 2007
Mountain Man Lager$3,087,396 $3,028,674 $2,971,127
Mountain Man Light -$1,452,395 $1,450,530
Mountain Man Profit$3,087,396 $1,576,280 $1,520,597
• Very high cost to build new light beer brand • Negative profits for at least the first two years after launch
• Does not raise MMBC’s bottom line • Does not increase chances of distributors building brand • Cost of goods is increase by nearly $5 per barrel • Very difficult to compete in light beer because all other brands are developing light beer as well • Light beer will take away facings in off premise locations from regular Mountain Man lager, decreasing sales
Light Beer Market Share
2005
Anheuser-Busch
54%
Miller 24%
Coors 11%
Other Brands 8%
Imports 2%
Mountain Man will not be able to steal market share from any of the competitors:• 90% of the light beer category is owned by the three largest beer companies in the United States
• larger advertising budget• Greater pull with distributors • Increase the bottom line of off premise stores and where beer is sold• Stronger brand image across the United States • Pull strategy marketing (people know about these light beers)
•Mountain Man is a beer for the hardworking man, and has always been a beer for the hard working man, light beer drinkers tend to be younger college students• Mountain Man is a company that focuses on building a relationship with their customers, this is not the case with a light beer drinker• Mountain Man beer is pushed onto consumers, building brand awareness of Mountain Man Light will cause MMBC to switch to a pull strategy where major brands will over power them.
1) Negative profits for at least the first two years
2) Extremely high competition, Mountain Man is lagging
3) Light beer does not fit the Mountain Man Culture
Increase Mountain Man market share in East Central Region
Currently: • MMBC holds less than 0.5% share in East Central Region•MMBC currently sells 70% of their beer to off premise locations (liquor stores, supermarkets) • MMBC holds top market position among lagers in West Virginia • 60% of their beer purchase is by blue collar workers or $1.8 million in profit
1) Increase facings: • Increase facings within the off premise channels by targeting selected chain stores that fit with the modus operandi of the Mountain Man lager customer
2) Increase awareness:• leveraging the unaided brand awareness of Mountain Man to 75% instead of 67%
• ROI = $664,925 (approximately)• Warning- this may cost MMBC more than $1.3million
Will have to work hand in hand to be successful
Value of Investment: •Strategy will return profit in due time • It took MMBC to build an unaided brand awareness rate of 67% over 50 years• It will be very difficult to gain a new loyal customer quickly • The cost of advertising and trade promotions will probably be more than what MMBC is willing to spend
• High risk, Mid to low reward
The Problems
No differentiating factors from competition:• MMBC will still keep the same market position and will be competing against brands on price and taste• Mountain Man Lager will never have pull with off premise locations to have the facings they want to increase growth exponentially
• due to greater pull from larger brands
Position stays the same, difficult to compete with larger brands on facings
Enter new markets in close proximity will increase lead generation
• West Virginia is a central hub for distribution channels
•Located in the East Central Region, but situated better to serve in the surrounding states to the south and the east
• Virginia, Pennsylvania, Tennessee, North Carolina, Maryland, New Jersey
2005 Population (in Millions)
Tennessee 5.9
Virginia 7.5
N.Carolina 8.6
Maryland 5.8
New Jersey 8.6
Pennsylvania 12.4
2005 Population (inMillions)
West Virginia 1.8
Ohio 11.4
Illinois 12.6
Indiana 6.2
Michigan 10.0
•By Entering these six other states MMBC’s population of potential users increases by 48.8 million people and approximately 24.4 million males• These states are easily accessible via major highways running through West Virginia • Strong presents of hard working men that fit MMBC target customers
Mountain Man Brewing Company heard the call from hard working American men for a beer that is accessible and of award winning stature, which is why Mountain Man Brewing Company is expanding their distribution network
High Quality
Low Quality
Large Distribution Network
Small Distribution Network
Price High
Price Low
Bold FlavoursTypical Flavours
Anheuser –BuschMillerCoorsSecond Tier DomesticMountain ManImportsCraft
•Mountain Man is competing in war that they can not win, with dimensions of price and flavour• By changing the dimensions that they compete on, MMBC can now create a competitive advantage for themselves among Craft brewers
• By positioning themselves as a high quality beer with a relatively large distribution network, it decreases competition for MMBC and makes their award winning lager accessible to hard working men • Mountain Man is heavily reliant on their current customers, by increasing their distribution network MMBC will gain new brand loyal customers
2005
2006
Enter new markets in close proximity will increase sales and build the Mountain Man brand
Entering new markets will lead to stronger relationships with distributors• Increased sales • Giving the distributors more work will increase their bottom line and return a greater profit
• They will be more helpful building MMBC’s brand in the states that Mountain Man distributes too• MMBC will have a stronger presence on the east coast which can lead to future distribution nationally
Increased amount of awareness among target age• MMBC will be able to target a larger broader base of 40+ year olds • Greater chance to build brand awareness through gaining access to a larger population • As sales increase and overall profit increases there is opportunity to build brand loyalty amongst target customers
Do what MMBC does well• Brewing a high quality lager should be shared with all surrounding states • MMBC will gain recognition for their award winning lager on a larger national presence • MMBC will be one of few Craft brewers to have a large scale presence in the United States
2006E 2007E
Investment $1.3MM $1.3MM
Revenue $4.3 MM $7.2MM
Profit $282, 315 $451,704
Barrel 16,500 33,000
Process:• Enter one new state every year starting with Pennsylvania • Keep same amount of facings and focus on off premise locations (70% of distribution) • Leverage relationships with distributors and use them as a collaborator • Increase sales force in new states to push the product • Penetrate pricing strategy to show value and maintain customer loyalty with current customer