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					New Century Brewing:
      Brief Case Summary
New Century Brewing founded in 2000 by
Rhonda Kallman
Two products: Edison, a premium light beer and;
Moonshot, a caffeinated beer
 Moonshot was launched in 2004, as a light
pilsner with 45 mg of caffeine
Marketed toward 21 to 25-year-old with
disposable income, promoted in nightclubs and
bars
Moonshot was re-launched in 2005 with a new
image and 69 mg of caffeine
 Brief Case Summary Cont…
Three large international brewers released their own
caffeinated brands
Anheuser-Busch’s BE had non-beer flavor that beer
drinkers found repulsive
Campaigns were soon launched outlining health risks of
mixing alcohol and caffeine
With no capital and no advertising, the company’s limited
resources were devoted to Moonshot
To be successful, Kallman would need to increase
awareness of product and overcome consumer
resistance
              Video
http://www.youtube.com/watch?v=iySSjJ1
g0B4&eurl=
                 Questions
Has anyone tried rum and Coke?
Has anyone tried Red Bull and vodka?
Has anyone tried caffeinated beer?
   What did you think of it?
   Would you be interested in trying it?
Who is the target market?
        Industry Analysis
Beer is a mature market
Generic sales remained flat in 2005
Craft beer sales growing at 7% a year
Low-carb diets influence trends (Atkins)
Most growth is in low-carb beers
Customer preferences shifting towards
locally brewed beers
        Industry Analysis
Most other caffeinated beers contain
coffee and are dark
Moonshot is a unique light bodied pilsner
It has value because it is different than
competition
Strong threat of substitution from other
beverages
Strong threat of new entrants due to
growing craft beer market
        Industry Analysis
Exit barriers relatively low due to lack of
capital and investment
Strong buyer power due to Moonshot’s
need for exposure
Supplier power relatively weak due to size
of business
No complement exclusivity, however
product/service within restaurant/bar
industry are applicable
        Strategic Positioning
Refers to the ways managers situate a
firm relative to its rivals along important
competitive dimensions
Purpose is to reduce the effects of rivalry
& improve profitability
Firm’s choice of position depends upon:
   Firm resources & capabilities
   Industry structure
         Strategic Positioning Model
              Low Cost       Differentiation




Broad       LOW-COST     DIFFERENTIATION
           LEADERSHIP
            FOCUSED
            LOW-COST         FOCUSED
Narrow
           LEADERSHIP    DIFFERENTIATION
          Class Exercise
What strategic position has New Century
Brewing taken with respect to Moonshot?
What are the drivers of this strategic
position?
What are the threats to this strategic
position?
Is this strategy attractive for New Century
brewing?
What strategic position has New
Century Brewing taken with respect
to Moonshot?
 Focused Differentiation:

    Unique product of a high quality caffeinated
     light-bodied pilsner manufactured under a
     patented process

    targeted toward a small segment of the beer
     market; 21-25 year olds with disposable
     income
    Drivers/Threats of Focused
           Differentiation
        Drivers                Threats

Premium brand image
                         Failing to increase
                         buyer’s willingness to
Unique styling           pay higher prices
                         Underestimating
Unusually high quality
                         costs of differentiation
                         Overfulfilling buyer’s
                         needs
                         Lower-cost imitation
    An Attractive Strategy?
Target market is not big enough to be
profitable and offers little growth potential
Industry leaders already have a presence
in the niche
Multi-segment competitors can easily put
capabilities in place to meet needs of the
niche & mainstream customers at
minimum cost
Few niches available within industry
     An Attractive Strategy?
Little room for focusers to avoid each other in
competing for same customers
Other rivals are attempting to specialize in the
same target market-segment leading to
overcrowding
New century cannot compete effectively against
challengers & goodwill has not been built up
Preferences & needs of the niche shift over time
Differentiating on the basis of something that
does not enhance a buyer’s well-being or
perceived value
Case Questions
#1: How can New Century Brewing create
        more brand awareness
Packaging: the product needs to stand out
in today’s competitive marketplace
Logo: an icon, logotype and colour palette
Target a different market, e.g.
college/university students
Promotion
Rename
#1: How can Moonshot differentiate itself
   from other caffeinated beverages?
Unique taste
Quality manufacturing
Top-of-the-line image and reputation
This differentiation can be created through
product R&D and marketing, and sales.
#2: What are the Opportunities and Threats
           of Caffeinated Beer?
Opportunities:                       Threats:
 Energy drinks are already             Energy drinks: known to
 popular mixers in night clubs          taste bad and are
                                        expensive
     Energy drinks are one of the
      fastest growing beverage         BE received bad reviews
      categories                       Health Risks
     2004 energy drink revenues       MADD Campaign
      grew to 2 billion
     2004: more then 200 energy
                                            The beer gives a false
      drinks were sold in the US            impression it will keep
      alone                                 drivers awake enough
                                            to drive drunk
 “There is not much innovation
 in the beer industry. This is         Canadian caffeinated
 something NEW” (Kallman)               brands taste like real lager
                                        beer
                                       Target market has little
                                        brand loyalty
Survey
#3: What Strategic Alternatives will help sell
 Moonshot to a wider range of customers?

Re-Launch Moonshot
  Rename (Moonshot  Moonshine?)

  Change the Label

Target high energy night clubs (“Rave’s” and
“after hours” bars)
Focus more on women
 Sponsor Parties, Collage events, Taste Tests in
Stores, “Consumer Labels”, “Beer caps”
Diversify the product line
  Create other products such as ciders and teas
#4: Is Caffeinated beer just a fad?
Energy drink market is still growing
Micro brewing industry is growing
Caffeinated beer is a newer idea than
energy drinks, therefore they have more
room to grow
Rum and Coke! Combination of alcohol
and caffeine has been around forever.

				
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