strategic brand management

C o r e C o n c e p t s o f

S t r a t e g i c B r a n d

M a n a g e m e n t

B r a n d E q u i t y M o d e l s

B r a n d V a l u e C h a i n

B r a n d P e r s o n a l i t y

3 / 1 4 / 2 0 1 3

Case Study: Mountain Man

Brewing Company

Strategic Brand

management

Concepts/Models to

solve case study

2

Table of Contents Case Study: Mountain Man Beer Company .............................................................................................. 5

Challenges for MMBC .............................................................................................................................. 5

Questions to ponder upon ....................................................................................................................... 5

Brief Solution: ...................................................................................................................................... 5

Why the category as such is undergoing such a change? What could be the possible reasons? ............ 5

Is the positioning of strong beer losing its sheen? Are people not buying the idea of strong beer? .......... 6

Is strong beer a passé? Is light beer the future? ....................................................................................... 7

Challenges for launching new products ................................................................................................... 8

Brand Dilution, Alienating your core customers ....................................................................................... 9

Could he reposition the brand? ........................................................................................................... 9

Mountain Man Lager Brand ..................................................................................................................... 9

Brand Elements ................................................................................................................................... 9

Factors influencing beer purchase ......................................................................................................... 10

Consumer Profile of a consumer – MMBC ............................................................................................. 11

Possible Solution to revive sagging sales ............................................................................................ 11

Brand salience in regional markets quite high .................................................................................... 12

Value Proposition of Mountain Man Beer Company .......................................................................... 12

Brand Judgments ............................................................................................................................... 12

Channel Support – Role of channel members in the success of brand .................................................... 13

Competitive Landscape ......................................................................................................................... 14

Major domestic producers ................................................................................................................. 14

Strengths ....................................................................................................................................... 14

Second-tier domestic producers ........................................................................................................ 14

Import beer companies ..................................................................................................................... 15

Craft beer .......................................................................................................................................... 15

The law of sacrifice ................................................................................................................................ 16

One should sacrifice one of the following: Product Line, Target Market, constant change.................. 16

One fine solution ............................................................................................................................... 16

Questions for Discussion in class............................................................................................................ 17

Team 1 .............................................................................................................................................. 17

Team II .............................................................................................................................................. 17

3

Team III ......................................................................................................................................... 17

Team IV ............................................................................................................................................. 18

Team V .............................................................................................................................................. 19

Team VI ............................................................................................................................................. 19

Should MMBC introduce a light beer? ................................................................................................... 21

What are the pros and cons for doing so? .......................................................................................... 21

Positives associated with launching Mountain Man Light using Mountain Man brand: ...................... 22

Strong Brand Salience .................................................................................................................... 22

Possible packaging and labeling efficiencies ................................................................................... 22

Mountain Man Light could re-invigorate Mountain Man Lager ...................................................... 22

Company has no other option—needs to find a way to tap into new demographic ........................ 22

Negatives associated with launching Mountain Man Light: ................................................................ 22

Brand dilution & Brand Alienation.................................................................................................. 22

Potential for cannibalization of lager brand ................................................................................... 23

Exceeds the boundary of the brand ............................................................................................... 23

Should MMBC launch Mountain Man Light? .......................................................................................... 25

What other strategic options for growth does Chris have if Mountain Man Light is not launched or is

unsuccessful? ........................................................................................................................................ 27

Market Development ........................................................................................................................ 27

Focus on existing strong beer ............................................................................................................ 28

Launching the light beer product not as Mountain Man Light, but under a different brand name ...... 28

Industry Examples ................................................................................................................................. 29

Schlitz: ............................................................................................................................................... 29

Pittsburgh Brewing: ........................................................................................................................... 29

Heineken: .......................................................................................................................................... 29

Few branding models which could be used to solve/analyze the case study .......................................... 31

Brand value Chain .............................................................................................................................. 31

Value Stages .................................................................................................................................. 32

Multipliers ..................................................................................................................................... 32

Brand Extension Model ......................................................................................................................... 33

Associated and related products brand extension strategy ................................................................ 33

How to do brand Extensions? ................................................................................................................ 34

4

Brand Revitalization strategies .............................................................................................................. 34

Ansoff’s Growth share matrix ................................................................................................................ 35

General strategies for brand extension .................................................................................................. 35

Brand Asset Valuator ............................................................................................................................. 36

How brands are built? ....................................................................................................................... 36

Differentiation is first ..................................................................................................................... 37

Relevance ...................................................................................................................................... 37

Esteem .......................................................................................................................................... 37

Knowledge ..................................................................................................................................... 37

Brand Stature ................................................................................................................................ 38

Patterns on Brand Asset valuator .......................................................................................................... 38

Leadership Brand ............................................................................................................................... 38

Eroding Brand .................................................................................................................................... 38

5

Case Study: Mountain Man Beer Company

Mountain Man brewed one beer, Mountain Man Lager, also known as ―West Virginia‘s beer.‖

Challenges for MMBC Sales of Mountain Man Beer Company are down by 2 percent.

Due to changes in beer drinkers‘ preferences, the company was now experiencing

declining sales for the first time in the company‘s history.

The overall market for strong beer is seeing a declining trend.

Questions to ponder upon 1. What do you do when your consumer‘s number dwindles?

Brief Solution:

Ansoff‘s Matrix provides strategic direction to grow. It talks about

1. Increasing market penetration in the existing market

2. Market Development (go to market strategy in new markets)

3. Investing resources on New Product Development

4. Diversifying your business into new categories

Why the category as such is undergoing such a change? What could be the

possible reasons? Two examples

1. Watch as a category have seen decline, owing to substitute products such as Mobile

phones and other gadgets

2. Camera as a category has faced competition owing to the arrival of camera as a feature

in most mobile phones. Also, mobile phone is a product which is lives with you 24/7

unlike a camera.

6

Is the positioning of strong beer losing its sheen? Are people not buying

the idea of strong beer?

If yes, one idea could be to do reminder advertising and showcase that real men

consume strong beer.

2. What could you do to arrest the shrinking market of strong beer?

Knee jerk reaction from the case

Chris wanted to launch Mountain Man Light, a ―light beer‖ formulation of Mountain Man Lager,

in the hope of attracting younger drinkers to the brand.

Young drinkers were already aware about MMBC. However, it was not in the consideration set

of the consumer, probably because of positioning (beer for coal miners).

At first, the market research should be done to find out the reasons for the decline of strong

beer market. Could anything be done to revive/resuscitate/revitalize the strong beer as a

category? Should all the players (who provide strong beer) unite and fight to save the category?

First, Chris should work on the following problem statements

1. Emergence & Growth of a new category – light beer

2. Is that the reason for the loss of revenue in the strong beer category?

3. Why the strong beer category is shrinking?

7

Is strong beer a passé? Is light beer the future? Cues from the case study

Over the previous six years, light beer sales in the United States had been growing at a

compound annual rate of 4%, while traditional premium beer sales had declined annually by the

same percentage.

Who are its core customers?

Focus Group Discussion

Market research decisions should be taken with care. Types of research techniques to be

deployed should be discussed at length.

Interpretation of findings is a challenge. Market research with pedigree of quality research,

should be commissioned.

Why do you like Bajaj as a brand?

I don‘t know. I just like it. Hamara Bajaj. I trust Bajaj, because it‘s an Indian brand.

Analysing Focus Group Comments (These statements could be analyzed in greater detail, in

terms of consumer profile, consumer motivation et al)

1. A man in his fifties leaned into the facilitator and declared, ―Mountain Man Light? Come

on, I‘m not interested in light beer. Just don‘t mess with Mountain Man Lager.‖

This customer may be a loyal customer of Mountain Man Beer. As a brand, we need to ensure

that this customer is not alienated with the launch of light beer.

Also, fifties is not an age when, a marketer could change consumer‘s preference. Should we

take into account this customers point of view.

2. A man in his early thirties, dressed in jeans and a camouflage shirt, stared at a mock

advertisement and shouted, ―Fancy barbecue parties, with puppies running around….

What do they have to do with Mountain Man?‖

8

What could be associations of Mountain Man Beer Company in the mind of this consumer?

What could be said about this customer?

3. A man, in his mid-twenties and fashionably-dressed, said, ―Sounds pretty corporate… I

think the beer is too strong for me anyway. I‘ll leave it to these guys to drink.‖

Might be a customer, who could display preference for Mountain Man Light.

4. A woman in her early twenties wearing low-rise jeans and a trendy T-shirt commented,

―Mountain Man is kind of ‗retro cool.‘ I like light beer and Miller Lite is so passé. I would

definitely try Mountain Man Light.‖

Response of this customer owing to strong brand resonance with Mountain Man Beer

Company. This customer is a light beer drinker and is looking out for something different.

Challenges for launching new products Only 10 -20 % chance of success. Huge risk of launching a new product.

―Look at what new product lines gets you… 90% more products, 90% more chance you‘ll kill

your core brand.‖

You might kill your existing brand. Fear of brand cannibalization (Launch of new brand kills the

sales of existing brand)

1. Coke Zero gets a large percentage of its customer base from Diet Coke drinkers and

from Coca Cola drinkers. This means that Coke is eating itself in order to sell Coke

Zero.

2. When Apple introduced iPad, this took sales away from the original Macintosh.

Launch of a new brand, affects the sales of your existing brand.

What is your core brand?

A strong beer

This is line extension

9

Brand Dilution, Alienating your core customers Chris wondered how the men in the photograph would react to a billboard picture of yuppies

consuming Mountain Man Light. Could Mountain Man command as much pride for the brand

from his generation as it had from his father‘s? Moreover, could he reposition the brand to

drive sales of Mountain Man Light to young people without eroding the core brand equity of

Mountain Man Lager?

Could he reposition the brand? You stand for strong beer, and you want to reposition your beer as light beer. The brand

equity of Mountain Man Lager will take a beating for sure.

If he replaces Mountain Man Lager all together with Mountain Man Light, the brand might go

the same way as New Coke brand failure. What do you think? Come up with pros and cons.

Mountain Man Lager Brand

Old family brew recipe using a meticulous selection of rare, Bavarian hops and unusual strains

of barley, resulting in a flavorful, bitter-tasting beer which the Prangel family launched as

Mountain Man Lager. Perceived quality of beer was high.

Brand Elements To accentuate the beer‘s dark color, it was packaged in a brown bottle, with its original 1925

design of a crew of coal miners printed on the front.

Mountain Man Lager was priced similarly to premium domestic brands such as Miller and

Budweiser and below specialty brands such as Sam Adams.

Brand played a critical role in the beer-purchasing decision. When selecting beer, consumers

considered several factors: taste; price; the occasion being celebrated; perceived quality; brand

image; tradition; and local authenticity.

10

Factors influencing beer purchase

Taste

Price

Occasion being celebrated

Perceived quality

Brand image

Tradition

Local authenticity

11

Consumer Profile of a consumer – MMBC

MMBC relied on its history and its status as an independent, family- owned brewery to create

an aura of authenticity and to position the beer with its core drinkers—blue- collar, middle-to-

lower income men over age 45.

Consumer Profile

Blue collar

Middle to lower income men over age 45

Want to consume beer after a physically strenuous day at work

Possible Solution to revive sagging sales

One solution could be to change the brand elements such as labels, packaging, and brand

revitalization through reminder communication.

As, in the case study it is mentioned that there is a strong brand awareness of MMBC even

among youngsters. However, probably don‘t want to associate themselves with drinking beer of

MMBC owing to association of blue collar worker drink.

Example, scissors brand revitalization. To express modernity (coal miners picture might be

acting as a detractor).

12

Brand salience in regional markets quite high In a recent study in West Virginia, this audience had rated Mountain Man Lager as the best-

known regional beer, with an unaided response rate of 67% from the state‘s adult population. In

2005, Mountain Man Lager won ―Best Beer in West Virginia‖ for its eighth year straight (it also

won ―Best Beer in Indiana‖) and was selected as ―America‘s Championship Lager‖ at the

American Beer Championship.

Possible Solution:

Mountain Man Beer should target new markets with similar demographic profile – lower to

middle class consumers. Ansoff‘s Matrix to be discussed here. Market development in other

parts of the country.

Value Proposition of Mountain Man Beer Company Brand awareness was one cornerstone of the brand‘s success with blue-collar consumers.

Market research showed that Mountain Man was as recognizable a brand among working-class

males in the East Central region as Chevrolet and John Deere. The other cornerstones were

the perception of quality in Mountain Man Lager and the brand loyalty it cultivated.

Brand Judgments There were ranges of subjective attributes that defined the quality of Mountain Man, like its

smoothness, percentage of water content, and ―drinkability‖—but it was Mountain Man Lager‘s

distinctively bitter flavor and slightly higher- than-average alcohol content that uniquely

contributed to the company‘s brand equity.

One participant in the recent focus group seemed to have spoken for many customers: ―My

dad drank Mountain Man just like my granddad did. They both felt it was as good a beer as you

could get anywhere.‖

It‘s just like - the best man can get.

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Channel Support – Role of channel members in the success of brand

Mountain Man‘s distributors also handled Anheuser Busch and numerous specialty beer

products. Because these distributors tended to focus on servicing their main customer, they

would not reliably strive to build Mountain Man‘s brand. MMBC therefore established its own

small sales force, which didn‘t just help push the brand; it proselytized, focusing on one ultimate

objective: getting off-premise locations (like liquor stores or supermarkets) to embrace

Mountain Man. Blue-collar males purchased 60% of the beer they drank at off-premise

locations. Mountain Man sold 70% of its beer for off-premise (liquor stores) consumption,

consistent with average industry sales through this channel.

Refer Brand Value Chain to understand the role of channel partners in the creation,

maintenance and enhancement of brand equity

Food for thought

Why Samsung has become such as successful brand? Are channel members giving them an

edge?

Channel members are aggressive in their sales approach.

1. How the launch of the movie ―Vishwaroopam‖ was affected, when they met active

resistance from channel partners (Big Screen owners – PVR)?

2. How channel members could pose a threat to brands?

Bottom line

It‘s very important to take along channel members in the brand journey. They could decide the

success of the brand. As they help in brand activation, product launch (brand launch). They also

act as a touch point to give brand experience to end consumers as well as to other stakeholder.

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Competitive Landscape

Major domestic producers Major domestic producers consisted of a handful of companies who competed on the basis of

economies of scale in production and advertising. This highly concentrated segment of the

market was dominated by three companies: Anheuser Busch, Miller Brewing Company, and

Adolf Coors Company. Together, these companies accounted for 74% of 2005 beer shipments

in Mountain Man‘s region.

Strengths

Economies of scale, expertise, financial clout, channel dominance – could give better margins to

distributors

Second-tier domestic producers Second-tier domestic producers consisted of medium-sized competitors, such as Pabst Brewing

Company and Genessee which, similar to the major domestic producers, sold their beers

nationally to distributors and retailers. In addition, there were smaller, regional players that

produced between 15,000 and two million barrels of beer per year and generally limited

distribution to areas surrounding their plants, selling their beer to regional distributors and

retailers. By November 2005, there were roughly 30 regional breweries in the United States.

These companies followed the same product and marketing strategy as the major domestic

producers, but lacked the financial and marketing resources to defend their brands as

aggressively. The second-tier domestic producers accounted for 12.5% of beer shipments in the

East Central region in 2005.

15

Import beer companies Import beer companies from Germany (Beck‘s, for example), Holland (Heineken), Canada

(Molson), and Mexico (Corona) traditionally served the needs of sophisticated beer drinkers

who desired more flavorful, bitter-tasting beer products. They operated at a distinct

disadvantage relative to domestic competitors due to higher shipping costs, weaker distribution

networks, an inability to control product freshness, and margin reduction due to weakening of

the U.S. dollar. In 2005, import companies controlled about 12% of the region‘s market.

Craft beer The craft beer industry was divided into four markets: brewpubs, microbreweries, contract

breweries, and regional craft breweries. They all brewed beer using traditional malt ingredients,

were independently owned, and by definition produced less than two million barrels annually.

Brewpubs were restaurant/bar establishments with over 25% of their beer products brewed

and consumed on site. In 2005, more than 980 brewpubs operated in the United States,

accounting for 10% of the craft brew volume. Microbreweries traditionally operated in limited

distribution networks.

74%

12%

12%

2%

Sales

Major Domestic Beer 2nd Tier Domestic Beer Import Beer Craft Beer

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The law of sacrifice

One should sacrifice one of the following: Product Line, Target Market,

constant change Constant Change means, you do not change your strategy, you continue with your existing

strategy (i.e. maintain the status quo)

One fine solution

Do not introduce light beer product line; continue ―status quo‖ strategy.

Advantages

1. Will not tarnish brand image with existing customers

2. Will not have large initial SG&A expenses to pay for new product

3. Contribution margin per barrel will remain lower.

4. Can continue to advertise as family owned business with only one product.

Will not have to compete with large distributors of light beer such as Anheuiser-Busch, Coors

Brewing Company and Miller Brewing Company

1. Can continue to focus on what they know best, producing premium beers

2. Can continue using sales force to push product at off-site distributors

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Questions for Discussion in class

Team 1 Explore the concept of brand equity, how it is created, and how brands can be used as

platforms for growth taking the example of Mountain Man Beer Company.

1. From the case, identify the asset categories for Mountain Man Beer Company – Brand

Awareness, Brand Loyalty, Perceived Quality, and Brand Associations.

2. Identify brand performance, brand imagery, brand judgments, brand feelings & brand

resonance for Mountain Man Beer Company.

3. What are the elements of a strong brand? Identify brand elements of Mountain Man

Beer Company.

Team II Explore concept of a product line extension using an existing brand name and inherent risks

and benefits.

1. Give 2 line extension examples, from Indian brands (such as Kingfisher, Bud Weiser) in

the alcoholic category. Explain the risks which these brands faced, and benefits accrued

owing to their courageous decision of line extension.

2. Explore concepts of cannibalization and brand alienation.

3. Who are Mountain Man Lager‘s core customers? How would a line extension such as

Mountain Man Light alienate them?

Team III

Concept of the ―finite‖ life of a brand vs. the long-term success of a brand related to the skill

and insight of the marketer.

1. How could you revive/resuscitate/revitalize a fatigued/dying brand? Illustrate at least 5

strategies of brand revitalization.

2. Share examples from Indian/Global markets where the mother brand has adopted brand

revitalization strategies. ( at least 2 examples)

3. Explain in brief, scissors brand revitalization strategy. Do you think the same strategy

might work for the brand Mountain Man Lager?

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Team IV Concept of congruent vs. incongruent line extension

1. Discuss the brand extension model, which we have discussed in previous class – Brand

fit, brand enhancement, new offering using at least two examples.

2. What is corporate/mother branding strategy? What is individual branding? Give two

examples of each and discuss its successes. Also illustrates the merits and demerits of

each.

3. Using the model stated above, discuss the line extension opportunity for Mountain Man

Beer Company in Light Beer Category. Discuss all the elements stated in the illustration

– Brand, Add Value, New offering & enhance brand.

4. Discuss Ansoff‘s Growth Matrix using Mountain Man Beer Company current standing

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Team V Difficulty in choosing between qualitative and quantitative data in making key strategic decisions

Interpret the following consumer comments

1. A man in his fifties leaned into the facilitator and declared, ―Mountain Man Light? Come

on, I‘m not interested in light beer. Just don‘t mess with Mountain Man Lager.‖

2. A man in his early thirties, dressed in jeans and a camouflage shirt, stared at a mock

advertisement and shouted, ―Fancy barbecue parties, with puppies running around….

What do they have to do with Mountain Man?‖

3. A man, in his mid-twenties and fashionably-dressed, said, ―Sounds pretty corporate… I

think the beer is too strong for me anyway. I‘ll leave it to these guys to drink.‖

4. A woman in her early twenties wearing low-rise jeans and a trendy T-shirt commented,

―Mountain Man is kind of ‗retro cool.‘ I like light beer and Miller Lite is so passé. I would

definitely try Mountain Man Light.‖

Analyze the core components (functional and emotional aspects) of the Mountain Man brand

and why the brand commands such a loyal following. Examine the situation facing Mountain Man

which has led Chris, the protagonist, to consider the launch of Mountain Man Light. Develop an

argument regarding whether or not Mountain Man Brewing Company should launch Mountain

Man Light based on an assessment of the pros and cons associated with the launch.

Team VI What has made MMBC successful? What distinguishes it from competitors?

What is distinctive about MMBC‘s product? What is distinctive about MMBC‘s customers? How

is MMBC‘s promotion different and effective?

Team V

1. What has caused MMBC‘s decline in spite of its strong brand?

2. Describe the market MMBC serves and the beer market in general.

3. Describe the competition and MMBC‘s threats.

4. What is the likely future of competitive brewers? What are MMBC‘s

market/competitive position? Use a two dimensional perceptual map to describe the

20

position of Mountain Man Beer Company – Old Consumer, Young Consumer & Light

Beer, Strong Beer.

Solution

Mountain Man Lager is consumed largely at home (70% of sales are off-premise) by blue-collar

men in the East Central region of the United States. It is clear that the consumers of Mountain

Man strongly identify the beer with their social grouping and they view the beer in some ways

as an extension of themselves—working-class, tough, and down-to-earth.

Mountain Man is a regional beer which is also important to drinkers of the product. It is not

perceived to be a ―corporate‖ beer brand but rather is a local, authentic brand with a strong

heritage. The relationship between Mountain Man Brewing Company and consumers of

Mountain Man Lager is an intense and active relationship which Mountain Man management has

fostered over the years through its grass-roots marketing activities. The management team

clearly knew what the brand represented and where it had been, and based on that, felt that

they knew where the product could or could not go from there.

Brands are recognized by marketers as valuable assets. The value of a brand is created through

consumers being familiar with brands and holding favorable, strong, and unique brand

associations in memory. (Keller, 1993)

Creating, maintaining and reviving a brand are a challenge. Brand building is an art as well as

science.

Great brands have the following strong elements

Trust, emotions, and an enduring relationship

Great brands establish enduring customer relationships and typically have a lot to do

with emotions and trust rather than functional aspects which can be copied.

21

There are tangible / functional elements of Mountain Man‘s beer that make it unique in the

marketplace. However, it is important to emphasize that in the case of Mountain Man Lager,

the symbolic, emotional, and intangible aspects are important to what the brand represents.

Consumers may purchase particular brands and show preference for these brands, because the

brands give meaning to their social classification and help to signal membership in desired social

groupings.

Should MMBC introduce a light beer?

Even the proposition of introducing a light beer by creating a new brand name is alluring. The

costs and feasibility is a challenge.

What are the pros and cons for doing so?

It is obviously tempting for Chris to suggest extending the Mountain Man brand to go after this

growing segment of the beer market, given the circumstances that Mountain Man Brewing

Company finds itself in.

With revenues declining and an aging customer base, Chris is justified in his concerns

about Mountain Man‘s future.

Over the previous six years, light beer sales in the United States (and in the region) have

grown at a compound annual rate of 4%, while traditional premium (lager) beer sales

have declined by 4%.

It seems compelling to leverage the Mountain Man brand in order to facilitate the acceptance of

Mountain Man among light beer consumers. Indeed, the extension of a brand to another

product in a category can be a powerful way to grow the top line.

(The question then becomes whether Oscar Prangel‘s reluctance to introduce the light beer is

based on a realistic assessment of the brand‘s growth and extension potential, or whether there

is some older-generation conservatism mixed in.)

22

Positives associated with launching Mountain Man Light using Mountain Man

brand:

Strong Brand Salience

Known brand name therefore reduces risk of new consumers trying brand for first time

Easier to convince retailers to stock and promote Mountain Man Light because of strength of

Mountain Man Lager.

The introductory marketing campaign does not have to create awareness of both the brand and

the new product but can concentrate on the new product—Mountain Man wouldn‘t have the

resources to commit to introducing a new brand into such a competitive industry. Launching a

new brand costs $10 million to $20 million

*** Heineken spent $50 million in the spring of 2006 to launch its premium light brand and this

was also just a line extension using the Heineken brand, not even the launch of a new brand, so

one can only speculate about what the launch of a differently named light brand would have

cost.)

Possible packaging and labeling efficiencies

Mountain Man Light could re-invigorate Mountain Man Lager

Company has no other option—needs to find a way to tap into new demographic

Negatives associated with launching Mountain Man Light:

Brand dilution & Brand Alienation

Would dilute Mountain Man Lager brand equity—lose the tight association and specific meaning

among its consumers

Core consumers could begin to question the integrity and meaning of the brand to which they

have such a strong association and could become alienated from the brand—―it no longer

signals what I thought‖

23

Potential for cannibalization of lager brand

Revenue from Mountain Man Light may simply result from consumers switching to Mountain

Man Light from Mountain Man Lager, or retailers refusing to offer incremental facings so overall

cases in a certain percentage of retail outlets do not go up.

Exceeds the boundary of the brand

What has made Mountain Man a strong brand is exactly what limits the brand‘s ability to be

extended because of the strong brand associations that have been created over the years—

what is positive for Mountain Man Lager

Full-flavored, authentic, working class, the ―real thing‖ will be negative in the extended context

of a light beer product—trendy, light, young, modern.

Also, the fact that the beer is dark, bitter, and has a higher alcohol content with a product label

that shows a crew of coal miners is not a fit with the light beer demographic and its taste

preferences.

There is an interesting discussion around the concept of cannibalization. One might argue that

Mountain Man Light is unlikely to cannibalize Mountain Man Lager since the lager beer drinkers

may have little overlap with the light beer drinking population, and the launch of the product in

fact opens up a new segment for the company to tap into.

Having said that, there is a real risk that the light product may cannibalize some portion of the

lager sales base simply because retailers may not provide additional facings for the product

(case alludes to this) and therefore retailers will take fewer lager cases if asked to take light

cases as well. This is where the real risk of cannibalization probably lies.

It is relevant to note that cannibalization isn‘t always a bad thing—it may be better for MMBC

to be losing sales to itself, from one product to another in its portfolio, instead of to a

competitor‘s light beer if that is the direction of the business overall.

24

The risk of alienation is a separate one and would be a two-step process. First, the launch of

Mountain Man Light would erode the core brand equity and alienate the traditional consumers,

so blue-collar men would drink less Mountain Man Lager. Then, sales of Mountain Man Light

would take off among a new customer base, but the volume achieved would not be enough to

make up for the alienated core Mountain Man Lager drinker. It‘s possible, however, that the

introduction of Mountain Man Light would help to revive and stimulate the sales of the existing

lager brand.

The Mountain Man brand may not be transferable either to the light beer product category or

the typical light beer demographic segment.

This has implications for the launch of Mountain Man Light, as these may not be qualities that

this group would associate with the light version of the beer. In addition, younger beer drinkers

who consume light beer may not want to associate themselves with the Mountain Man Light

brand due to its link to certain social groupings, which they do not consider to signal their

social classification. The current blue-collar drinkers of Mountain Man Lager may be unwilling to

emotionally bond and ―trust‖ any light beer, even a light version of Mountain Man.

In addition, typical light beer consumers (younger professionals, of both sexes) may not want to

associate themselves with the Mountain Man Light brand due to the lack of fit between their

―social class‖ and its traditional blue- collar image. They neither feel any natural affinity

themselves toward the brand, nor may they want to ―be seen‖ by their peers in a nightclub or

restaurant drinking this ―stodgy‖ brand.

The social image of the beer goes both ways. The two consumer groups under discussion

(traditional lager vs. light beer drinker) are very different, in both demographic and

psychographic terms.

25

For all of these reasons, the Mountain Man brand may not be transferable to this product

category or the light beer demographic segment because it appears to be too incongruent.

Should MMBC launch Mountain Man Light?

There is a real irony in Mountain Man‘s dilemma. The aging lager consumer and growing light-

beer market point to an obvious need to expand into light beer—yet one may argue that

regardless of the financial assumptions, the qualitative issues in this case outweigh the

quantitative.

Simply put, the market may not accept the Mountain Man brand and label on a light beer. The

$750,000 advertising budget may develop initial brand awareness of Mountain Man Light, but it

won‘t be sufficient to position it as something different from Mountain Man Lager.

If the taste buds of drinkers have come to associate ―Mountain Man‖ to mean lager (dark,

bitter, and high alcohol content), can any amount of advertising convince them to accept the

taste and visual features of light beer instead?

The only possible way around this to mitigate risk and provide for acceptance of the product is

to develop a communication program that builds on the legacy reputation of the original

product, while expressly describing the new, light product attributes.

Refer:

Brand Asset Valuator (Differentiation, Relevance, Esteem, and Knowledge)

Brand Value Chain – Program Multiplier

Beer‘s packaging also creates a clear association in the drinker‘s mind. The Mountain Man name

has come to be associated with a dark bottle with images of coal miners—and that will not

immediately translate to light beer.

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If indeed the company does go forward with the Mountain Man Light launch. The focus on this

approach should be to attract new customers without alienating the core Mountain Man

customer and finding ways to deal with the potential for cannibalization in off-premise retail

outlets.

The company might focus on spending the $750,000 advertising funds on alternative outlets

such as blogs, podcasts, product placement, etc. Other ways to mitigate risk might be to

package Mountain Man Light differently and to work with distributors and retailers to ensure

that the product receives incremental facings. If MMBC can command only a certain amount of

total shelf space, then cannibalization seems inevitable if lager bottles need to be removed to

make room for light-beer bottles. However, MMBC may be able to use its sales force to work

with distributors and retailers to ensure that this does not happen or to limit distribution of the

product only to retail outlets that will provide incremental shelf space.

Otherwise, the company could focus on new accounts and more on-premise opportunities to

avoid this risk.

Finally, the company could consider introducing a different type of ―light‖ product, possibly a

mid-strength lager with reduced alcohol content without changing the lager taste, which might

appeal more to the existing blue-collar core consumer of Mountain Man lager and mitigate

some of the alienation risk.

Thus, the company could keep existing packaging but implement a slightly different marketing

campaign, and it is much easier to sell something that reflects a taste and image that haven‘t

changed dramatically to the people already drinking the lager product.

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What other strategic options for growth does Chris have if Mountain Man

Light is not launched or is unsuccessful?

Following could be growth strategies for Mountain Man Brewing Company

1. Geographic expansion

2. Raise price

3. Advertising for MMBC

4. Other products

Assuming the company wants to grow organically, there are a few options Chris could pursue.

Market Development He could distribute Mountain Man Lager nationally. However, this would spread promotional

dollars too thinly and Mountain Man has no ―legacy‖ or experience outside of the East Central

region. Chris could consider expanding Mountain Man Lager within the existing geography—the

East Central region. One distribution option here might be to license the lager brand to a

private company developing upscale pubs and taverns in the East Central region. However,

there may be little overlap with the existing customer base.

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Focus on existing strong beer Another option might be to focus on reversing the company‘s declining market share of the

lager product. By repurposing the advertising and promotion budget intended for the light beer

($750,000 for first six months and $900,000 annually SG&A), Mountain Man could conceivably

stop the 2% decline in revenue. The extra marketing dollars could convey Mountain Man‘s

―heritage‖ or ―legacy‖ value. The additional argument here is that the $750,000 in advertising

that Chris is planning to spend to launch the light beer is high compared with the national

average of $4.98 per barrel spent by all brewers in 2005.2 In addition, a $1 increase in the price

per barrel of the current lager product would result in a $520,000 increase in revenue, more

than offsetting the 2% revenue drop. However, this assumes that there would be no negative

volume consequence associated with raising price.

Also, given the slow decline in the number of independent breweries, there is some long-term

merit to MMBC patiently waiting for the ―inevitable‖ bankruptcy of some of its similar-size

competitors and continuing as a ―profitable survivor‖ in the traditional lager market. Perhaps

this would allow it to consolidate and grow its lager share slowly just outside the region, but

not nationally.

Launching the light beer product not as Mountain Man Light, but under a

different brand name

This would solve the problem of the ―incongruent‖ lager beer image/customer base, but it

means that the company would be starting from scratch in building a new brand which would

take longer, cost a lot more, and might not be any more successful in the end. The company

could also consider using the Mountain Man brand to enter a new category, but as a small

company with limited resources and capabilities (beyond its capabilities in the beer category) it

is doubtful the company would pursue that option.

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Industry Examples

The following examples from the beer industry provide interesting context.

Schlitz: In the 1970s Schlitz, the No. 2 U.S. brewer, tried to improve its standing by simultaneously

running advertising aimed at two demographic groups: college students and blue-collar workers.

The ―confused‖ positioning strategy backfired and sped up the brand‘s demise. (Other reasons

included a cheaper brewing process that produced an ―inferior-tasting‖ product, as well as an

employee strike that led to financial difficulties).

Pittsburgh Brewing: In the late 1970s, Pittsburgh Brewing, a regional brewer of Iron City beer, was one of just 40

breweries left. The brewery introduced a new light beer, IC Light, marketed to young,

sophisticated beer drinkers. Not only did IC Light succeed among the target audience (both

men and women), but sales of the light beer also revived sales of the lager, Iron City, and saved

the brewery. (Note that the Iron City name was shortened to IC Light for reasons of branding

(to break the association with Pittsburgh) and production (to fit onto the bottle cap). IC Light

remained a top regional seller for the anniversary in 2003. Over time, however, the TV

advertising muscle of the national light beers caused the company‘s market share to erode.

Pittsburgh Brewing went through several acquisitions and ultimately was forced to file for

bankruptcy in 2005.

Heineken: In March 2006, when the Mountain Man case takes place, the Dutch brewer Heineken

introduced a Premium Light beer into the United States, priced above domestic light brews. As

of January 2007, observers were evaluating this as a positive move. Instead of cannibalizing sales

of the lager product, the light beer had positively stimulated its sales. In the packaging, the

green Heineken bottle was retained, but it was given a slimmer, more modern look.

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The TV advertising highlighted the revamped bottle and conveyed an aura of sophistication,

instead of using the humor or attractive singers usually featured in U.S. light beer ads. The most

difficult aspect of the launch appeared to be coming up with the formulation and ingredients of

the beer itself (which took 20 tries), a mix of the tastes and colors that both traditional

Heineken lager drinkers and U.S. light-beer drinkers would like.

As the above illustrates, brand extensions using established brand names to introduce product

into the light-beer segment have been successful. Sam Adams also introduced Sam Adams Light,

and consumers accepted both products without damage to the brand. Recently, several other

quality imported beer companies have launched light products using established brands. Time

will tell whether those launches become successes in the very competitive light-beer space.

However, companies do have to be careful about not stretching the brand across too many

products within a category. Budweiser may be approaching that pain point with the launches of

Bud Light, Bud Ice, and Bud Dry—where do these products leave Bud regular?

Finally, Mountain Man should learn a cautious lesson from the Schlitz story, where the

―confused‖ positioning strategy of the product backfired and sped up the brand‘s demise.

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Few branding models which could be used to solve/analyze the case

study

1. Customer Based Brand Equity Model

2. Brand Value Chain

3. Brand Asset Valuator

4. Brand Revitalization Strategies

5. Brand Extension Strategies

6. Ansoff‘s Growth Share Matrix

Brand value Chain

Broader perspective than just the CBBE model

The brand value chain is a structured approach to assessing the sources and outcomes

of brand equity and the manner by which marketing activities create brand value.

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Value Stages

Marketing program investment

Any marketing program that can be attributed to brand value development

Customer mindset

In what way have customers been changed as a result of the marketing program?

Market performance

How do customers respond in the marketplace?

Shareholder value

Multipliers

Program quality multiplier

The ability of the marketing program to affect customer mindset

Must be clear, relevant, distinct, and consistent

Customer multiplier

The extent to which value created in the minds of customers affects market

performance

It depends on factors such as competitive superiority, channel support, and customer

size and profile

Market multiplier

The extent to which the value generated through brand market performance is

manifested in shareholder value

It depends on factors such as market dynamics, growth potential, risk profile, and brand

contribution

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Brand Extension Model

Associated and related products brand extension strategy

The popularity of brand extensions, which apply an established brand name to a new product in

the same product category (line extension) or in a different product category (category

extension), has been fueled in part by the rising cost of introducing new brands and by the

growing realization among companies that their brand investments can be leveraged.

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How to do brand Extensions? 1. Identify current brand Image, Associations, Personality

2. Map out what products & services would fit these associations

Examples

McDonald‘s has associations with fun & kids, fast delivery of consistent

Food, Big Macs, and fries. The fun and kids might suggest a theme park, a line of toys,

or a day-care centre.

Virgin – Over the top attitude

Harley Davidson – Machoism, Rugged – tough, Outdoorsy

3. Companion Product

a. Gillette Razor, Shaving Gel, Shaving Brush

b. Colgate Toothpaste & Toothbrush

4. Common User

a. Johnson & Johnson :

i. Baby Soap, Cream , Oil, Shampoo, Powder, Wipes

5. Distinctive Attitude/benefit/expertise

a. Mr. Clean : Toilet Cleaner, Floor Cleaner

b. Dettol : Soap, Hand-wash, band Aid, Shaving cream

6. Personality

a. HD* - Macho

b. MTV - Hip

Brand Revitalization strategies • Increasing Usage

• Finding New Users

• Entering New Markets

• Repositioning the brand

• Augmenting the Product/Services

• Removing fatigued brands

• Extending the brand

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Ansoff’s Growth share matrix

General strategies for brand extension

1. Introduce the same product in a different form.

2. Introduce products that contain the brand‘s distinctive taste, ingredient, or component.

3. Companion products for the brand. Example: Colgate Toothbrush, Gillette Shaving Gel,

Razor, Brush

4. Capitalize on the firm‘s perceived expertise. Example: Apple Inc. Easy to use, Cool, Hi

Tech, trendy

5. Reflect the brand‘s distinctive benefit, attribute, or feature. Example: Lysol‘s

―deodorizing‖ household cleaning products, Dettol

6. Capitalize on the distinctive image or prestige of the brand. Example: Calvin Klein

clothes, Levi‘s – Wallets, Belts.

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Brand Asset Valuator

How brands are built?

BAV is one of the most extensive research programs on branding ever taken. To date over

100,000 consumers across 32 countries have been interviewed. Information on more than

13,000 brands has been collected providing up to 56 different scales and dimensions of

consumer perception.

When building a brand, Differentiation comes first. Then Relevance. Then Esteem and,

ultimately, Knowledge. But the real action takes place in the relationships between these

measures. Managing the relationships between the measures is the key to brand health. The

relationships illustrate a brand's intrinsic value, its ability to generate margin, and its ability to

insulate against competitive substitution

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Differentiation is first

The starting point for all brands is differentiation. It defines the brand and distinguishes it from

all others. Differentiation is how brands are born. As a brand matures, BrandAsset ® Valuator

finds that Differentiation often declines. It doesn't have to happen. Even after reaching maturity,

with good management, a brand can perpetuate its Differentiation. A low level of

Differentiation is a clear warning that a brand is fading.

Relevance

If a brand isn't relevant, or personally appropriate to consumers, it isn't going to attract and

keep them - certainly not in any great numbers. BrandAsset ® Valuator shows that there is a

distinct correlation between Relevance and market penetration. Relevance drives franchise size.

(Household penetration)

Brand Strength

The relationship between a brand's Relevance and Differentiation represents brand strength,

which is a strong indicator of future performance.

Relevant Differentiation - remaining both relevant and differentiated - is the central challenge of

every brand. It is critical for all brands and all over the world.

Esteem

BrandAsset ® Valuator's third primary measure (or pillar) is Esteem - the extent to which

consumers like a brand and hold it in high regard. In the progression of building a brand, it

follows Differentiation and Relevance. It's the consumer's response to a marketer's brand-

building activity. Esteem is itself driven by two factors: perceptions of quality and popularity, and

the proportions of these factors differ by country and culture. BrandAsset ® Valuator tracks

the ways in which brands gain Esteem, which helps us consider how to manage consumer

perceptions

Knowledge

If a brand has established its Relevant Differentiation and consumers come to hold it in high

Esteem, brand Knowledge is the outcome and represents the successful culmination of building

a brand. Knowledge means being aware of the brand and understanding what the brand or

service stands for. Knowledge is not a consequence of media weight alone. Spending money

against a weak idea will not buy Knowledge. It has to be achieved.

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Brand Stature

As Brand Strength was found in the relationship between Relevance and Differentiation, Brand

Stature is discovered in the combination of Esteem and Knowledge. Brand Stature indicates

brand status and scope - the consumers' response to a brand. As such, it reflects current brand

performance and is a strong strategic indicator. For example, Esteem rises before Knowledge

for a growing brand. If rankings show the opposite relationship, a problem may have been

identified

Patterns on Brand Asset valuator

Leadership Brand

Eroding Brand

Differentiation goes down first. Think about Nokia in Indian Market (Continuous decline of

market share – 75 %, 62 %, 37.5 % …)

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The brand's highest pillar is Knowledge, indicating that the brand is well understood by

consumers. However, lower Esteem, Relevance and Differentiation indicate that the basis for

choice is fading. Examples include: Commodity brands, Former leaders

David A. Aaker’s Brand Equity Model

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Brand Personality Scales

References

Kevin Lane Keller‘s – Strategic Brand Management

David A. Aaker – Managing Brand Equity

Brand Asset Valuator – YR