Restrictions On The Advertising Budget

The relevance of demand and supply in economics cannot be overstated given that the two are considered some of economics' most fundamental concepts. In this text, I explain both the demand and supply for Anheuser-Busch's products. Further, I identify some of the substitute and/or complementary goods for Anheuser-Busch's products.

One of the biggest problems companies may face is keeping up with the current trends and habits of all customers in their respective age groups. In a time period where trends can change as rapidly as they come, that makes it even harder for smaller and more domestic companies to compete with the larger, more known brands. This is especially true for the beer market, where the younger population consumes the more than 27% of all beer consumption in the United States and that number is still growing. In addition, these adults age 21-27 spend twice as much per capita compared to beer drinkers over the age of 35 and is projected to

“The beer industry in the United States generates $75 Billion in annual sales.” (Abelli, 4)

     The brewing industry was once held to competition among many breweries in small geographic areas. That was almost a century ago. The U.S. brewing industry today is characterized by the dominance of three brewers, which I will talk about in this paper. There are many factors today that make the beer industry an oligopoly. Such factors include various advancements in technology (packaging, shipping and production), takeovers and mergers, economies of scale, barriers to entry, high concentration, and many other factors that I will cover in this paper. Over the course of the paper I will try to define an oligopoly, give a brief history of the brewing industry, and finally to show how the brewing industry today is an

In most schools, corporate companies have funded to educational institutions through corporate sponsorships by promoting the company’s advertisements of a store or restaurant into their school. Most of the times advertisements have an impact of the school if it is either in a positive or in a negative way. Schools mostly benefit from advertisements by corporations, as well do the companies that are being promoted through school. (Thesis) The advertising of corporate companies is beneficial in receiving new ideas and financial money for renovations in campus are sponsor, however, the negative impact may be the issue in irritating the customers with their promotion and the fact that there is more junk food than nutritional food provided for students in school.

New Belgium is, however, the third-largest craft brewery in the nation, with estimated sales of over $100 million, equaling approximately 700,000 barrels of beer per year. An analysis of the craft beer industry as a whole suggests that there is continued growth potential for New Belgium. Exhibit 5.1 of the New Belgium Brewing (B) case shows that craft beer is the fastest growing segment of the U.S. alcoholic beverage market, with an increase in market share of over 100 percent from 1999-2011. It is also an industry whose customers tend to be extremely loyal, making them less likely to view craft beer as a commodity. Consequently, craft beer has a higher probability of being immune to competition from inferior goods and substitutes. This is particularly applicable to New Belgium’s target market of “beer connoisseurs” that appreciate the high quality and taste of craft beer and who include “executives, lawyers, and accountants” with the continued ability to pay higher prices for craft beer, enabling the craft beer industry to achieve gross margins of up to 30 percent (Clark & Rogler, 2013).

20. (Perfect Competition and Efficiency) Define productive efficiency and allocative efficiency. What conditions must be met to achieve them?

Despite the strong brand and strategic position that MMBC created, the company experienced a decline in revenue of 2% in 2005 (Abelli, 2007, p. 4). The decline is due to changes in beer drinking patterns, markets, and demographics in the region as well as the U.S. in general. The change in beer drinking in 2005 included a decrease in intake of beer in general. This was due to competition from wine and spirits as well as new national health recommendations to decrease alcohol consumption for improved health (Abelli, 2007, p. 4). Premium beer consumption was down 4%, but light beer use was up 4% (Abelli, 2007, p. 10). This movement of consumer purchasing practice, makes adding a light beer product attractive. Overall beer consumption was down in the U.S., and this trend was true in MMBC’s region as well. See Figure 1. This graph shows beer consumption in West Virginia, MMBC’s home state,

We spent $1,245,000 on advertising this period, $50,000 more than the previous year. We found out we spent so much on advertising but the spread of spending on different media outlets were incorrect. As a result, we would allocate our spending differently for 2017. A large amount should be put into magazines and none into internet. According to the market research, magazines are the most effective method path in reaching customers. Furthermore, we increased our spending on branding from $250,000 to $275,000. We increased branding for this year in hopes it will continue to enhance overall brand awareness. As a result, we spent $25,000 more on branding for this year. However, the firm in first place spent almost double in branding compared to ours and it has clearly done the trick. Our company will continue to discuss branding spending moving forward. One problem that cost us this year was the increased price of the mountain bike. The price of $775 was the most expensive and we did not see the increase in sales we were

The problems in the market is that sales and market share has declined slightly over the past years and in the past 12 months the competition has increased, new brands has entranced the market. However on the beer market the big and well-known brands are controlling the market, and consumer often tend to choose a brand they recognize. Therefore it is important that the brand is identifiable to the public (Marketline 2015, p. 21). This

- The industry grow is staggered (less than 1%). This will result in a market share competition that will benefit the companies who have the means to survive, e.g. the means to lower their costs.

Over the last twenty years, there has been a craft beer revolution and the New Belgium Brewing Company has been at the forefront of this evolution within the beer industry. Throughout the history of business, there has been “Blue Oceans” created within the larger established “Red Oceans”. “Blue oceans denote all the industries not in existence today—the unknown market space, untainted by competition” (Kim & Mauborgne, 2004). The craft beer market is considered a blue ocean because it was an untapped sector of the beer industry, which has created a new market space within the beer industry.

The competitive market of producing beer has reached a new level of global monopoly. Anheuser-Busch is no longer an “American” owned beer producer since InBev transnational bought the American company in 2008 (Larson, 2017). But Anheuser-Busch wasn’t the only brew company to merger across borders. In 2007, Miller and Coors merged under South African Breweries, making beer loving Americans subject to an oligopoly, running the beer industry further and further away from American soil. Additionally, according to SABMiller, in 2012 only four firms accounted for approximately half of the global sales of beer, and 70% of revenues (SABMiller, 2012). The beer industries is achieving global dominance due to apparent strategic changes including: expansion of market share, economies of scale and leverage on market prices.

As the world’s largest brewer, AB Inbev has the ability to compete in new and foreign markets as a strong threat. Due to their enormous capital and expansion-based strategy, they can enter any market as a challenger and shutdown competition to become the leading brewer in this market. As an aggregated note we can also see this in domestic or already dominated markets because due to economics of scale they can achieve differentiated products at a low cost.

Beer Company 2 is a brewer of “seasonal and year-round beers with smaller production volume and higher prices” that “outsources most of its brewing activity” (pg. 120). It is financially conservative, and has undergone a “major cost-savings initiative to counterbalance the recent surge in packaging and freight costs” (pg. 120).