Mountain Beer Brewery Company - A New Brand Of Beer In The Market (Research Paper Sample)

Introducing a light beer in the United States market, Chris has to evaluate both the merits and demerits of taking such an approach. The advantage of perpetrating into the market, with a potential of almost $38 billion annually, this will lead to an expected increase in revenue. The venture will help meet the growing demand for youth and distributors who make 28% of the market hence making Mountain Man popular in pubs and restaurants. On the contrary, advertising expenses will increase hence weaken the brand image. Operational costs like marketing, Selling, general and administrative expenses at $750,000 and $900,000 respectively will rise thus reducing the company's profitability. It is recommended to launch a light beer by brand extension. The company should give price offers and discounts to retailers who buy in large quantities. Distribution and advertising of the new brand should be done frequently to get it known by the young generation. Mountain Man light projected revenue analysis; Net revenue(2005):$50440000, Barrels sold 520000, price per barrel $97. With 0.25% annual market share, light beer share (2005):$18,744,303 with 4% compound annual growth rate. In 2006, $19,494,075 Mountain Man Brewery Company market share, $48735, Mountain Man Brewery Company revenue from Light beer($48,735*97)=$4,727,295. 2007, $20,273,838, market share, $101,369, Revenue from light beer(101,369*97)=$9,832,793. Break-even analysis; Break-even point=Fixed cost/Variable cost. (900000+750000)/(66.93+4.69)*1650000(97-71.62). =65,012 barrels. Therefore, in the initial period by introducing mountain light, revenue generation will be low, but over the years after gaining brand loyalty, revenue will grow significantly. Mountain Man Brewery Company should adopt pricing for promotion strategy, which entails offering discounts or vouchers. Also, pricing for market strategy can help the company stand out from the competitors. To increase the market share for Mountain Man Brewery Company, given that Mountain Man lager is preferred by the working class males in East-central region and West Virginia, target more youth. It should use its market dominance in West Virginia for the old brand to persuade its loyalist to try the new beer. Repeated sales campaigns, promotions, and increased sales force...