The Mountain Man case study outlines the brand's history, successful sales in the beer market, and challenges posed by changing consumer preferences and competition. To address declining popularity among younger demographics, the company plans to launch a product line extension, Mountain Man Light, while considering the potential risks of cannibalizing its existing brand. Financial projections reveal that while the brand may face challenges with higher levels of cannibalization, there is potential for profitability if cannibalization remains below 5%.

1. MOUNTAIN MAN
Case Study

2. INTRODUCTION
 Started by Guntar Prangel in 1925.
 1960’s Mountain Man Lager- reputed as quality beer- east central region of the US.
 By 2005-
• Revenue over $50 million,
• Over 520000 barrels sold
• “Best beer in West Virginia”, “America’s championship lager”
Price-
• $2.25 for a 12 ounce serving of draft beer in bar.
• $4.99 for a six pack in local convenience store

3. SEGMENTATION BY COMPANY
 Blue collar males
• 60% of beer was purchased at off-premise locations
 Taste preferences
• People who prefer strong and bitter tastes.

4. DIFFERENTIATORS FOR BLUE-COLLAR
 Distinctively bitter flavor and slightly higher than average alcohol content
 Smoothness
 Percentage of water content
 “Drinkability”

5. ALTERNATIVES TO GO FOR?
• STATUS QUO
• LAUNCH
PRODUCT LINE EXTENSION
SUB-BRANDING

6. COMPETITIOR’S PROFILE
 MAJOR DOMESTIC PRODUCERS
• Anheuser Busch, Miller Brewing Company, Adolf Coors Company
• Together occupied 74% beer shipment
 2ND TIER DOMESTIC PRODUCERS
• By November 2005, roughly 30 breweries in US
• Accounted for 12.5% of beer shipments in East Central region
 IMPORT BEER COMPANIES
• Germany-Beck’s, Holland- Heineken, Canada- Molson, Mexico-Corona
• Controlled about 12% of the regions market

7. COMPETITIOR’S PROFILE
 CRAFT BEER INDUSTRY
• Brewpubs- over 25% of their beer products brewed and consumed on site, 10% of craft beer
volume
• Microbreweries- operated in limited distribution channels, 12% of craft beer volume
• Contract breweries- manufactured for client firms, 16% of craft beer volume
• Regional craft breweries- producing more than 15000 barrels annually, accounted for remaining
62% of craft beer market

8. THREATS
 Threat of new entrant
• Local Beer & craft beer
• Lots of big & famous competitor
• Customer loyalty of product competitor
 Threat of substitutes
• Wine and spirits
 Rivalry competition
• Local and import beer(Germany- Beck’s, Holland-Heineken, Canada- Molson, Mexico-
Corona)

9. PROBLEM ANALYSIS
 Change in Beer drinking population preferences.
• Age group 21- 44 years (both men and women prefer something light)
 Young generation consider it for working class and baby-boomer generations
• It is Retro cool
 Will introduction of mountain man light erode core brand equity ?
 Choosing between internal and external cannibalization.
 Will the perception of younger beer drinkers change towards Mountain Man
brand?

10. CHOSEN OPTION
LAUNCH MOUNTAIN MAN LIGHT--- PRODUCT LINE EXTENSION
 High brand equity
 High brand awareness- among young generation also
 In short-run would not require investment in plant and equipment.
 Avoid losing market share to competitors.

11. FINANCIAL ANALYSIS
• Cost of mount man light = 71.62
• Price =97
• Advertisement cost= 750000
• INCREMENTAL SG&A COST = 900000 p.a.
BREAK EVEN UNITS TO COVER ADVERTISEMENT, SG&A
COST=750000+1800000/25.38
=100472

12. FINANCIAL IMPLICATIONS
4% LIGHT BEER CONSUMPTION GROWTH PER YEAR (ESTIMATE) 0.25% GROWTH OF MARKET SHARE OF
MMB(ESTIMATE)

13. ESTIMATE LOSS TO MOUNTAIN MAN LAGER

14. ESTIMATE LOSS TO MOUNTAIN MAN LAGER
Breakeven units by mountain man light to cope up with the losses= (loss of mountain man lager /contribution per unit of
mountain man light)
Contribution per unit of mountain man light =25.38

15. CONCLUSION
After 2 years (at end of 2007)
Estimated mount light sale = 150104
Total break even sales at (10% cannibalization)=162081
Break even sales at (5% cannibalization )=131276
Conclusion
So, the company would not be able to generate any contribution at the end of 2007 if the
cannibalization would be at 10% or above but if the cannibalization would be at 5 % than it will
generate contribution at the end of 2007.

16. THANK YOU