Man Brewing Firm Case Solution
Recommendations
The healthy truth of Mountain Man Beer is that the lager sales are anticipated to drop by at least 2% per year. Due to inactively growing division in the light beer industry Mountain Beer is required to-exp and its product portfolio to repay for likely cuttings in the future sales of liters.
Apromotion drive in the Middle East domain will value about $ 850,000 annually. Additional sales, general and administrative costs (SG&A) will be $ 950,000 yearly. Even considering the 6% loss on Mountain Man Lager sales; there should be enough barrels of the light drink sold within 2 years to overcome the losses incurred because of the introduction of small beer.
- The company should launch Mountain Man Light with brand extension, without changing the name.
- It should introduce a new product, using a new marketing combination (Product, Price, Local Promotion)
- Advertise a new product using the same old name at every online platform and on every social networking site.
- It should offer discounted prices when the products are purchased in large quantities to convince the stock sellers and to bring an efficacy in the promotion.
- Give proper installation and packaging.
- Have more presence in places, such as: bars and restaurants that often cater the market segment comprised of younger generation.
Analysis
Calculates the Value of Each Barrel
- Income in 2005 $ 50440000
- Number of barrels sold = 520,000
- Price per barrel = $ 97
- Price of Premium beer = Simple beer price
Value ofper small beverage bottle = $ 97
Contribution Margin in each Barrel
- Value of per small beer bottle= $ 97
- C= ($ 66.93)
- Additional Value per Barrel = ($ 4.69)
- M = $ 25.38
Breakeven Point in Number (06, 07)
| Break Even Calculation | ||
| Starting A.D Value | $850,000 | |
| SG & A (2006) | $950,000 | |
| SG & A (2007) | $950,000 | |
| T.F.C | $2,750,000 | |
| C.M Per Unit | 25.38 | |
| B.Vol = Fixed cost/CM | $108,353 | |
| Value Of Each Barrel | 97 | |
| Breakeven In Amount | $10,510,244 | |
Conclusion
- In terms of negative impacts and finances; the Man Brew Company should introduce MM Light Beer.
- It should start the beer with a different product to avoid damage to the Mountain’sname.
- The main significance should be over the buying list, so that less beer could be found in strategic restaurants etc.
- Knowing the key aspects of marketing the products among the younger generation, without emphasizing much over the market segment comprised of adult.
Appendix
| Income Statement | ||||
| 2006 | 2010 | |||
| M.S | 1.34% | 1.13% | 0.21% | |
| P.Per Unit of the Product | $97.00 | $97.00 | ||
| Quantity Sold (Barrels) | 509,600 | 470,039 | $ 39,561.00 | |
| Sales | $49,431,200.00 | $45,593,765.00 | $3,837,435.00 | |
| TVC | $34,107,528.00 | $31,459,698.00 | $2,647,830.00 | |
| G.M | $15,323,672.00 | $14,134,067.00 | $1,189,605.00 | |
| FC | $9,645,920.00 | $9,645,920.00 | ||
| Total Advertising | $1,350,000.00 | $1,350,000.00 | ||
| O.M | $4,372,752.00 | $3,138,147.15 | $1,234,604.85 | |
| O.I | $151,320.00 | $151,320.00 | ||
| Net Income After Taxes (35%) | ||||
| $2,714,680.00 | $1,941,437.00 | $773,243.00 | ||
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