1- What is Chris considering doing and what factors will he have to align to be successful?
With Mountain Man Beer Company (MMBC) experiencing recent declining sales for the first time in its history representing a 2% loss in revenue the previous year and prospect of continuous decline, Chris is considering launching Mountain Man Light Beer as a brand extension aligned with changes in beer drinkers’ preferences, seeking to maximize market coverage while minimizing brand overlap and at same time avoiding any brand equity damage, as its core consumer segment is quite different from the new targeted consumer segment.
With this plan Chris expects that MMBC regains the beer market leadership in the U.S. East Central Region.
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MMBC has a large market with very strong brand image based on product attribute, a clear defined consumer segment and also potential consumers appreciate brand’s association with an independent brewery.
5- Should MMBC introduce a light beer?
Yes, based on a) market trend predicted by industry observers, current company trend of 2% lost of annual revenue; and b) increase of the light beer sales over the past 6 years at an annual compound rate of 4%; it seems that Mountain Man Light beer launch is the right way to go way to go.
Nevertheless there are marketing tools like brand tracking which provide visibility of brand equity and brand performances in a day-to-day basis facilitating decision-making during the execution of the marketing programme.
a. What are the pros and cons for doing so?
Pros:
• Access to younger drinkers’ segment where there isn’t an established loyalty to any particular brand of beer, and are bigger consumer (twice as much as the 35+years old)
• Access to female beer drinkers, in the younger and other age demographics segments.
• Brand extension will leverage the core brand by getting more shelf space with distributors and retailers and eventually improving sales.
• The product life cycle seems to be transitioning from a maturity to saturation and declining stage, hence the necessity to introduce new products while the brand is still strong and can be leveraged.
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