Market Analysis Summary
Over the past five years, McKnight's has seen a declining trend in sales. While some of this is due to the lack of initiative on behalf of the old management, much of this is due to the rise of microbreweries in the Portland area. Many customers are taking advantage of the proliferation of beer varieties in the U.S. (due to changes in the law on alcohol production) by seeking establishments that have unique brew styles. In this day and age of massive fragmentation and proliferation of brew recipes, innovation and experimentation is the name of the game.
4.1 Market Segmentation
The market segmentation is divided into the leading target markets. The division reflects the differences in marketing strategy that will be used to target each different market.
Middle class, "white collar" office workers from the downtown area. These are people seeking to have a drink or some quick food during lunchtime and sometimes want to show out-of-towners some of the local highlights. In addition, the pub can expect to see these types of customers dropping in for some hours after work to unwind. The growth of this market segment as demonstrated in the Market Analysis table is based on the estimated growth of business establishments in the Portland downtown area.
Late nighters and weekend partiers. These are the folks that drop by and stay for many hours socializing and drinking. Growth of this segment is based on the estimated population growth of Portland itself.
Brew Connoisseur. These customers are a relatively new type to the American scene. Although there have been beer connoisseur all over since beer was invented, until recently government regulation was such that the industry was concentrated within a few national companies such as Anheuser Busch, Coors, etc. These companies had few product lines and sought to produce large amounts of beer over very short time periods. This made for an overall low quality of domestic beers available to Americans at reasonable prices. Since deregulation the industry has rapidly fragmented, allowing small brewers to compete against the larger established companies on a local and even national level. All this has inspired new connoisseur in brewing that has revolutionized the industry. With so many new types and brands of beer available, the customer that wants to try new types is being wooed by all industry participants.

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Market Analysis

2003
2004
2005
2006
2007

Potential Customers
Growth

CAGR
"white collar" workers
3%
75,000
77,250
79,568
81,955
84,414
3.00%
Late niters and weekend partiers
3%
435,000
448,050
461,492
475,337
489,597
3.00%
Beer connoisseur
8%
120,000
129,600
139,968
151,165
163,258
8.00%
Total
4.01%
630,000
654,900
681,028
708,457
737,269
4.01%
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4.2 Target Market Segment Strategy
McKnight's Pub exists in a highly competitive industry whose environment creates low margins due to the high amounts of pressure placed upon participants from customers, suppliers, other rivals, potential entrants, and participants products. This has created a fragmented industry in which no one participant has significant market share.
Customers have an great deal of power and influence in this industry since there are virtually no switching costs.
Customers regularly go to more than one pub or bar to socialize and drink. In addition, while this pastime is very popular, the overall quality of the customer's life is unaffected if they choose to forgo pursuing it.
Finally, even with the rise of microbreweries, many customers still find that most pubs have the products that they seek,