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Mmbc

In: Business and Management

Submitted By IceAqua
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Overview
Mountain Man Beer Company (MMBC) is experiencing the first decline in sales since its establishment in 1925. Suggestions such as remaining status quo, promoting Mountain Man Lager, and introducing a light beer, may be considered to help MMBC in its future survival.

Analysis of Alternatives
To analyse the potential impact of these solutions, we have used MMBC’s SWOT analysis (Appendix 1) and STP analysis (Appendix 2).

Sales of premium beer have been declining by 4% each year since 2000.With increase in excise tax and competition from other companies, lager beer consumption is expected to decrease over the next few years. By remaining status quo, it is foreseeable that MMBC will continue to lose sales in their one and only product, Lager, due to the decrease in demand. Thus, there is a need for them to take action.

Greater marketing efforts may be injected to boost the sales of Lager. However, as the beer market is diminishing, it is likely that this will prove futile. Furthermore, MMBC has limited financial resources to fight for higher market share from the current major producers such as Anheuser Busch and Miller Brewing Company.

Despite his father’s opposition, Chris should still go into light beer, as it is hard to ignore the fact that it is a growing market, while premium beer is a declining market. The company’s ultimate aim is survival and profit maximisation, and stubbornly refusing to adapt to market trends may compromise that aim.

Profitability Forecast
In forecasting the profitability of light beer, we have made several assumptions (Appendix 3):
1. Revenue from lager will drop an annual 2%, compounded to 7% after cannibalization
2. Initial projected light beer market share growth of 0.2%, a more modest estimate from Chris’ 0.25%
3. Initial advertising budget of $1.75 million, falling to $0.9 million after the intensive…...

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