Mountain Man

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DEPARTMENT OF ACCOUNTANCY UNIVERSITY OF ILLINOIS MEMORANDUM TO: Mr. Chris Prangel FROM: Merik Ducker - Section AE1 - Group 8 DATE: September 22, 2015 SUBJECT: Product Launch: Mountain Man Light INTRODUCTION The memorandum will analyze the proposed new product launch of Mountain Man Light (MMLight) for Mr. Chris Prangel, the future owner of the Mountain Man Beer Company (MMBC). More specifically, the memorandum will consider the advantages and disadvantages of launching MMLight, as well as a cost-volume-profit analysis of the proposed new product launch. The memorandum will conclude with recommendations for Mr. Prangel’s consideration. MMBC’S GOALS AND BRAND IMAGE MMBC has retained leadership among premium lagers in West…show more content…
Further, MMBC should deploy grass-roots marketing like social media for the launch of MMLight to avoid costly broadcast marketing and to appeal to the anti-corporate attitudes of the younger demographic revealed in the marketing focus group. On-Premise Location and New Customers To further decrease the likelihood of cannibalization and to diversify its location offerings and customer base, the memorandum recommends that MMBC launch MMLight into on-premise locations (such as bars and restaurants). Industry observers remark that the crucial consumer segment for beer companies are younger drinkers ages 21-27 years who are not yet loyal to a brand of beer. Women and younger drinkers typically prefer light beer. These groups frequently visit on-premise locations and represent an exciting market for MMBC. For questions or concerns, please feel free to e-mail or call 217.381.9578. APPENDIX Exhibit 1: Breakeven Analysis | 0% Cannibalization | 5% Cannibalization | 20% Cannibalization | | 2006 | 2007 | 2006 | 2007 | 2006 | 2007 | Breakeven Number of Barrels of MMLight | 65,012 | 35,461 | 95,201 | 65,046 | 185,766 | 153,800 | Total Forecasted Number of Barrels in Light Beer Market | 19,494,075 | 20,273,838 | 19,494,075 | 20,273,838 | 19,494,075 | 20,273,838 | Breakeven Percent Share of Light Beer Market for MMLight | 0.33% | 0.17% | 0.48% | 0.32% | 0.95% | 0.76% | The breakeven

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