harvard business case study on mountain man brewing company
TRANSCRIPT
CASE STUDY
HARVARD BUSINESS SCHOOL CASE
MOUNTAIN MAN BREWING COMPANY:
BRINGING THE BRAND TO LIGHT
MOUNTAIN MAN:
THE COMPANY AND THE BRAND
•Founded by Guntar Prangel in 1925.
•Flavorful, bitter-tasting beer.
•Mountain Man LAGER.
KEY
PLAYERS ?
•OSCAR PRANGEL – President & Owner, MMBC.
•CHRIS PRANGEL – a recent MBA graduate, stood to inherit MMBC in 5 years.
PRESENT
SITUATION ?
•Mountain Man LAGER – Best Known regional beer
•Won“Best Beer in West Virginia”
•Americas’Championship Lager
• 2% decline in revenues for 1st time.
• Growing light beer market.
• Key consumer segment – young drinkers, 21-27 years of age.
So What Is
MOUNTAIN MAN
“Missing” Out On ?
YOUNG DRINKERS
FEMALE DRINKERS
MOUNTAIN MAN’S COMPETITION
OBJECTIVES
How To
SURVIVE
In This Very Competitive
Beer Market ??
• Younger beer drinkers well aware of the brand, showed appreciation.
• Mountain Man relied on grass-roots marketing.
• 53% Sole brand loyalty rate, higher than competitors.
CHRIS’S
PROJECTIONS
• 2% annual revenue base loss of Mountain Man Lager.
• 4% annual regional revenue growth of light beer.
• 0.25% increase in market share of regional light beer.
• 0.25% base market share in 2006.
FINANCIAL IMPLICATIONS• Cost / Barrel of Mountain Man Lager = $66.93
• Cost / Barrel of Mountain Man Light = ($66.93 + $4.69) = $71.62
• Market Price / Barrel = $97 ( Exhibit 1 )
• Advertising Costs = $750,000 ( 6-months advertising )
• Incremental SG&A Costs = $900,000 annual
FINANCIAL IMPLICATIONS
FINANCIAL IMPLICATIONS• Break Even barrels to cover Advertising and SG&A costs = ( $750,000 + $900,000 ) / ( $97 - $71.62 ) = 65,012 barrels ( for the 1st year)
• Break Even barrels to cover negative impact on MML sales = 61,609 barrels (@10% cannibalization)
• Total Break Even barrels = ( 65,012 + 61,609 ) = 126,621 barrels
FINANCIAL IMPLICATIONS4% Light Beer consumption growth per year &0.25% market share growth per year for MMB:
FINANCIAL IMPLICATIONS
• Total break Even Barrels = 126,621 barrels
• Total barrels sold in 2 years, i.e. 2006 & 2007 = ( 48,735 + 101,369) = 150,104 barrels
REVENUES RISE THEREAFTER !!
CONCLUSION
LAUNCH
MOUNTAIN MAN
LIGHT
THANK YOU
DISCLAIMERCreated by Sankalp Agarwal during an internship in
Marketing Management under Prof. Sameer Mathur, IIM Lucknow.