Running head: Cross Promotion of Mountain Man and Duckmen® Marketing Plan: Cross Promotion of Mountain Man and Duckmen® Michael McLain, Owen Pitrone, Michael Siegert, Marc Skinner MMKT5470 Army-Baylor University Graduate Program in Health and Business Administration Cross Promotion of Mountain Man and Duckmen® 1 1.0 Executive Summary Mountain Man Brewing Company (MMBC) is a family owned brewing company that has been producing modestly priced, popularly consumed beer for over eighty years. Due to the authentic brand, excellent taste and an image of blue-collar toughness, Mountain Man Lager has been known as “West Virginia’s Beer.” Mountain Man Lager sales account for 18% of all beer consumed in the East Central region (including Ohio, Illinois, Indiana, Michigan, and West Virginia). MMBC’s brand is extremely successful among working class males between the ages of 35-54. Though Mountain Man Lager is brewed independently, it does not have the cache of a craft or highend domestic beer brand. Nevertheless, MMBC maintains a highly loyal customer base and legacy of tradition within the East Central region. On the day following the regional advertising agency’s pitch for Mountain Man Light, one of Oscar Prangel’s old friends and hunting partners, Mr. Phil Robertson, contacted Mountain Man Brewing with a proposition. Mr. Robertson runs a company named Duck Commander, a duck hunting equipment manufacturer. In order to expand the market for his products, Mr. Robertson started to produce videos about duck hunting, for mail-order sale (Huspeni, 2013). This marketing product, aimed at the approximately 1.5 million duck hunters in the United States, has been very successful (National Flyway Council Wildlife Management Institute, 2005). Mr. Robertson is looking for an opportunity to add to his annual production budget for his Duckmen® video series. Demographic research shows that the duck hunting demographic that purchases licenses in the East Central Region is roughly 116,000 (The National Shooting Sports Foundation Research Department, 2009). Seeking fans of the Duckman® show, based on sales, has potential to capture 160,000 new consumers of Mountain Man Lager, of whom can be reached through cross-promotion. Furthermore, both the MMBC and Duckmen’s® brands are highly related, including such details as predominantly male demographics, a focus on individuality, masculinity, authenticity, familyorientation, and a preference for avoiding “yuppies” (Hunt & Brunke, 2007). The demographic mix shows by capturing only 13% of the East Central region hunters would cover the 2% decline in profits, with the possibility of short-term and long-term growth. Cross Promotion of Mountain Man and Duckmen® 2 For an annual share of the MMBC marketing budget of $140,000, Mr. Robertson is offering to make Mountain Man Lager the official beverage of the Duckmen®, until MMBC chooses to sever this tie. The $140,000 will be paid to Duck Commander at the start of each fiscal year (FY), and the Duckmen® will drink and comment on Mountain Man Lager at least 3 times in each video. Chris Prangel and his lawyer further suggest additional advertising investment towards the cross-promotion be based on semiannual increases in revenues. For every stepped increase in revenues of $1.5 million MMBC will spend an additional $200,000 on advertising the Duckmen® MMBC crosspromotion. This gives Mr. Robertson an incentive to make MMBC a part of any future Duckmen’s® ventures, regardless of how large their company grows. 2.0 Situation Analysis The purpose of this marketing plan is to develop strategic initiatives, which will re-establish MMBC as a premier regional beer manufacturer. With current revenue streams dropping roughly 2% annually, the company must strengthen and expand the brand through new initiatives or advertising campaigns. The following analysis will look at current trends and areas of improvement for MMBC. 2.1 Market Summary The market summary for MMBC will include discussions of the market demographics, needs, trends, and growth. This summary will also include discussion of MMBC market demographics and target markets. 2.1.1 Market Demographics The current market demographics for MMBC are 81% male and 19% female, with 52% of consumers coming from the 45 and older age bracket. Analysis shows potential markets within the female demographic (19% of consumers) and the younger age (less than 44 years old) group. Additionally, 72% of Mountain Man Lager drinkers have an average household income of less than $75K. The age group of 21-27 is largely untouched by MMBC and accounts for 27% of beer sales. 2.1.2 Market Needs With such a specific targeted market demographic, the market needs are, as expected, are to seek new markets and demographics. The top three needs that must be addressed by the MMBC are: Maintain current market and brand loyalty Seek additional market share by appealing to the younger than 44 age demographic Appeal to a new market that has potential to increase national brand recognition Cross Promotion of Mountain Man and Duckmen® 3 Strategies for aggressively trying to capture new markets and demographics must remain true to the brand: tough, authentic, local. Prior to any expansion/advertising efforts, the first market need must be met. 2.1.3. Market Trends The general trend for beer consumption within the MMBC’s main area of distribution can be seen in the chart below. All states, with the exception of Michigan, demonstrated an increase in consumption from 2000-2005. The chart also demonstrates a relatively stable consumption, with a slight overall increase, within the U.S., during the same period. The 2% loss of revenue from the previous FY is consistent with regional and national changes in consumption (Abelli, 2007). Additionally, trends over the previous six years show U.S. light beer sales increasing at an annual rate of 4% while full-flavor beer sales have decreased by the same percentage (Abelli, 2007). 2.1.4 Market Growth There are a number of ways in which MMBC could seek to grow within their prospective market, including building the brand, shaping the market offering, delivering value, and communicating value (Abelli, 2007). Due to the largely recognized brand of Mountain Man, loyalty of current customers, and trust that the Mountain Man Lager is a premium flavor at a low price, the best way for MMBC to grow is to communicate value more effectively. Within the strategy of communicating value, MMBC needs to inform, persuade, and remind customers of the Mountain Man Lager; the primary focus must be communicating value by informing and persuading new customers to drink the MMBC lager (Abelli, 2007). In order to inform and persuade new customers a cross marketing with Duckmen® will be implemented. This will help us to move into the Eastern Central region hunter market (161,539 customers) as well as potential national exposure through the through the Duckmen® promotion videos. With the domestic beer market consisting primarily (51%) of those aged 44 or less, it makes Cross Promotion of Mountain Man and Duckmen® 4 sense for MMBC to align with a promoter that works primarily with younger age brackets but still aligns well with the MMBC brand of toughness, independence, family-oriented, and originality. Perhaps the most relevant and popular celebrity that fits into the Mountain Man brand and helps expand the market are the Duckmen® videos. 2.2 SWOT Analysis The below SWOT analysis briefly describes the strengths, weaknesses, opportunities, and threats that are currently facing MMBC. 2.2.1 Strengths Brand loyalty. Current brand loyalty for Mountain Man Lager, according to a 2005 market research study, was 53% of current potential customers. This number stands in contrast to the loyalty of other competitors such as Budweiser at 42%, and Bud Light at 36% (Abelli, 2007) Brand recognition. Mountain Man Lager has won “Best Beer in West Virginia” for eight straight years and was known by at least 67% of the state’s adult population (Abelli, 2007). Market research also showed that brand recognition in the states of Illinois, Indiana, Kentucky, Michigan, Ohio, West Virginia, and Wisconsin was comparable to other iconic brands such as Chevrolet and John Deere. Large regional market. Perhaps one of the biggest reasons that MMBC has been able to survive outside threats from significant competitors such as Anheuser Busch, is due to their large regional market. Tradition. The tradition of drinking Mountain Man lager is passed from generation to generation. While the primary consumers are 45 years of age, or older, younger adults were raised around the brand. 2.2.2 Weaknesses Large National Brewers. Anheuser Busch, Miller Brewing Company, and Adolf Coors Company maintain roughly 74% of all beer shipments within MMBC’s region. Such companies have the economies of scale, influence, and contribution margins necessary to lower prices and put pressure on smaller companies. Distributors. Distributors have become more critical on turnover and margins and are dropping companies that are not adding much to profits. MMBC does not have strong relations with distributors. Demographic Focus. More than half (52%) of MMBC’s customer base are above the age of 45. Their focus on this aging demographic indicates a shrinking consumer base. Cross Promotion of Mountain Man and Duckmen® 5 2.2.3 Opportunities The 21-27 age demographic is a growing segment of the beer market; MMBC would be wise to try and capture younger customers. Duckmen® home videos appeal to the East Region hunters, national hunters, and younger hunters. National exposure with a younger audience could greater increase revenue, and yet only 13% of regional hunters (who were not drinking the beer already) need to be capture in order to cover the 2% decrease in revenue. MMBC would need to rebuild their brand recognition and loyalty with a new customer base, and must use caution not to lose their current brand loyalty. The expansion with a light beer risks losing many of MMBC’s core customer group and taking the brand in a direction from which it cannot return. Although this is a growing segment, it simply does not match well with the brand of Mountain Man. The risk of losing a core competency is too great. Perhaps the greatest, short-term opportunity for MMBC today is a cross-marketing effort with Duckmen® to tap into the national/young hunter market which already aligns well with the Mountain Man brand. 2.2.4 Threats The decrease in beer consumption is of some concern to the MMBC. Although a longstanding trend is yet to be developed, changes to customer behavior, such as drinking wines or trying to live a healthier lifestyle can hurt MMBC sales. The increasing demand for light beer has diminished the consumption of full-flavored, full-calorie beers by nearly 4% annually (Abelli, 2007). Additionally, larger corporations demand a large share of the regional and national beer market (more than 75%). 2.3 Competition Both regional and national brands compete with MMBC for beer sales, but the light and fullflavor beers largely target different segments of the market. Four major threats to Mountain Man’s are: Major domestic producers. Anheuser Busch, Miller Brewing Company, and Adolf Coors Company account for roughly 74% of beer shipments in the Eastern Central region (Abelli, 2007). Second-tier domestic producers. Pabst and other medium-sized competitors account for roughly 12.5% of shipments in MMBC’s region. There were an estimated 30 regional brewers in this area. Cross Promotion of Mountain Man and Duckmen® 6 Import beer companies. Beck’s, Heineken and other imported beers controlled roughly 12% of the region’s market share in 2005 (Abelli, 2007). The additional costs associated with importing their beer put them at a disadvantage as compared to national and regional breweries. Craft beer industry. While only commanding about 1.5% of the overall barrel sales in the Eastern Central Region, this industry offers local, authentic brews when compete directly with MMBC. 2.4 Product Offering The sole product being offered by MMBC is the Mountain Man Lager. By offering only one product, the brewery has been able to achieve superior brand loyalty and recognition, while also helping the company to focus on improving efficiency and promotion around their premier lager. However, this lack of product diversity also opens MMBC to many risks. MMBC is directly tied to the successes and failures of the Mountain Man lager. 2.5 Keys to success Remain Loyal to Those Loyal. Do not lose sight of the brand by overstretching your reach into new demographics and markets. MMBC must remain loyal to the brand (even if they expand) as an independent, family-owned brewery with a quality and authentic tasting beer. Seek New Customers. The company cannot simply maintain the status quo and expect to be profitable. Their current target demographic is shrinking and the age bracket that offers the greatest returns (21-27) is largely untouched by MMBC and the rest of the fuller-flavor beer companies. 2.6 Critical issues As previously discussed, scale of the target market (age and sex), decreasing revenue streams, shrinking age demographic, and pressure from regional and nationwide competitors are all issues facing MMBC. Perhaps the two greatest of these are the specificity of their target demographic and their decrease in revenues. Duckmen® promotions can help to reach a younger demographic of hunters as well as aid in expansion into new regions nationally. Meanwhile, the Duckmen® brand closely aligns with MMBC’s. 3.0 Marketing Strategy We recommend seeking the younger demographic and growing area of influence by using Duckmen® video campaigns as an advertising platform. We do not recommend expanding into the light beer market at this time, but remain amenable to that move after MMBC captures costumers in the younger age demographic and reverse their declining revenues. The cross-promotion strategy via celebrity promotion with the Robertson family of Duckmen® fame will capitalize on their Cross Promotion of Mountain Man and Duckmen® 7 established customer base, popularity, and brand recognition/loyalty to expand our market reach and share. 3.1 Mission Mountain Man Lager is known as “West Virginia’s Beer.” The Mountain Man Brewing Company brews a strong, distinctive beer, and believes so strongly in the quality of Mountain Man Lager, that it brews no other beer. Their mission is to be the East Central Region’s beer of choice. 3.2 Marketing Objectives Create a cross-promotional partnership with the Robertson family of Duckmen® Capture more of the young adult age demographic (21-27) Expand current off-premise facings to further expand brand recognition Long-term penetration into Wal-Mart and Costco through association with Duckmen® 3.3 Financial Objectives Reverse the 2% shrinking revenue stream into a 1% growth annually over the next five years Maximize production, shrink current excess capacity, meet anticipated growth in market demand Increase profits 3.4 Target Markets The current core consumer group of Mountain Man Lager is “blue-collar, middle-to-lower income men over age 45” (Abelli, 2007). Overall, men comprise 81% of Mountain Man Lager consumption. The 45-54 age bracket, our core consumers, account for 32% of Mountain Man Lager consumption, which is an industry leader. The “first-time drinker” makes up approximately 17% of Mountain Man Lager consumption, but the youngest bracket (age 21-24) makes up only 2%. MMBC needs to target this younger age demographic as well as the regions associated with Duckmen® marketing. 3.5 Positioning Mountain Man Brewing Company will continue to brew the East Central Region’s premier lager while continuing to promote the long-term, authentic legacy of what Mountain Man Lager represents. Re-positioning the brand with Duckmen® requires little to no changes in target audience or advertising. Cross Promotion of Mountain Man and Duckmen® 8 3.6 Strategies Our primary objective is to establish a cross-promotional association between Mountain Man Lager and Duckmen®. Based on our market analysis, one of the greatest limitations to market growth is lack of shelf space at off-premise locations (70% of all Mountain Man Lager sales). They directly compete with the big three – Anheuser-Busch, Miller, and Coors – and their distribution channels directly limit our facings. A cross-promotion with Duckmen® will increase both brand awareness and provide opportunities for more prominent shelf placement (due to our crystal ball projected popularity of Duckmen®, otherwise known as Duck Dynasty). Future deals for shelf space could include Wal-Mart or Costco, which would also represent additional distribution channels and established customer bases. The message that Mountain Man Brewing Company will seek to convey is that they brew the American East Central Region’s most authentic beer, using only the finest ingredients, and have since 1925. This message will be communicated through a variety of mediums. First, market research informs us that word of mouth is the most effective method to increase brand awareness in the East Central Region and particularly among the core customer base. Therefore, they must leverage sales and brand recognition garnered from Duckmen® to secure additional, more prominent shelf space. Duckmen’s® promotional videos will appeal to younger demographics of duck hunters, with potential for future promotions via YouTube®, Google® AdSense, and Facebook® advertisements. Long-term, a cross-platform mobile application will help customers to find establishments that sell Mountain Man Lager, as well as provide coupons or rebates to incentivize purchases. 3.7 Marketing Program The Mountain Man Brewing Company’s marketing program is comprised of pricing, distribution, advertising/promotion, and customer service. Pricing. This will be based on a per-product retail basis. Distribution. Mountain Man Brewing Company will use both direct-to-consumer and direct-to-retailer distribution models. Advertising and promotion. Several different methods will be used, to include promotional duck hunting videos, internet, and grassroots efforts. Customer Service. Mountain Man Brewing Company stands behind its product, and will provide world-class customer service to both consumers and retailers. Cross Promotion of Mountain Man and Duckmen® 9 3.8 Marketing Research Mountain Man Brewing Company recently employed the services of a market research firm. The research firm reported three main findings. First, Mountain Man Lager is known as “West Virginia’s Beer,” with authenticity, quality and a unique toughness of character as core brand attributes. Second, grassroots marketing was more effective than traditional broadcast advertising. Finally, a small percentage of loyal customers accounted for 53% of all sales. The greatest probable return on investment in marketing will come from expansion of brand recognition within the hunter community, as well as potential exposure with the younger age demographic of hunters. 4.0 Financials For fiscal year 2005, the Mountain Man Brewing Company spent $1.35 million on advertising. This equated to 2.7% of their total revenue and included radio, print and outdoor advertising methods. By accepting the deal with the Duckmen® video company, as offered by Mr. Robertson, the $140,000 annually, in perpetuity, is significantly less than the $750,000 that the light beer marketing campaign would have required. Furthermore, by moving the marketing into the home video market, the radio and print budget can be reduced by the $140,000. Assuming that the expanded customer base is even 13% of the East Central Region’s duck hunting populace, an increase of 21,000 customers will more than cover the 2% loss of profits (The National Shooting Sports Foundation Research Department, 2009). The additional investment towards the crosspromotion, based on semiannual increases in revenues ought to create additional revenue over time. For every stepped increase in revenues of $1.5 million MMBC will spend an additional $200,000 on advertising the Duckmen® MMBC cross-promotion. 5.0 Controls MMBC will establish regional sales objectives with financial incentives for managers, drivers, and merchandisers. MMBC will use the Duckmen® cross-promotion to establish new offpremise sales locations. Regional sales teams will work with off-premise locations to place and maintain MMBC and Duckmen® cross-promotion displays. MMBC will evaluate sales quarterly to monitor effectiveness of the Duckmen® cross-promotion with MMBC and increase advertising investment based on performance. MMBC will monitor consumer response to the Duckmen® crosspromotion through social media and the customer service center. 5.1 Implementation MMBC will initially invest $140,000 a year in perpetuity for a period of two years. This will consist of advertisement in Duckmen® duck hunting videos, with the option to expand to the Cross Promotion of Mountain Man and Duckmen® 10 internet, print and other media. Additional advertising investment towards the cross-promotion are based on semiannual increases in revenues. For every stepped increase in revenues of $1.5 million MMBC will spend an additional $200,000 on advertising the Duckmen® MMBC cross-promotion. 5.2 Marketing Organization MMBC headquarters is responsible for expanding chain store off-site locations offering Mountain Man Lager. MMBC will use regional sales teams within existing markets to expand offsite sales at independent locations. Sales teams will have authority to approach independent store managers to add sales sites and expand MMBC shelf space. MMBC headquarters will provide guidance to regional teams for how to position MMBC as an attractive addition for independent store locations. Financial incentives and increased independence will encourage regional sales teams to effectively market and display MMBC 5.3 Contingency Planning Investment in the Duckmen® cross-promotion will terminate after five years unless MMBC revenues have increased by 5% from the 2005 baseline. If semiannual revenues decline by 5% after the first year, MMBC will select the least costly option between terminating the Duckmen® crosspromotion and financing the minimum required advertising. 5.4 Difficulties and Risks MMBC operates in a market with many competitors vying for the same customers. MMBC is not large enough to match advertising investments with national beer producers. Small regional beer companies represent a constant threat to MMBC core market. MMBC will face difficulties in expanding off-site shelf space. The risk to MMBC is the dual pronged threats presented by national and regional beer companies, which can erode market share. Changing consumer tastes are also a risk to MMBC. 5.5 Worst-Case Risks The worst-case scenario for MMBC is the loss of brand loyalty and a failure to attract first time MMBC customers. If MMBC’s cross-promotion with Duckmen® alienates loyal consumers, the primary strength of MMBC will be fractured. If Duckmen®, or the Robertson family, become entangled in a public controversy, the cross-promotion may reflect poorly on the Mountain Man brand. Cross Promotion of Mountain Man and Duckmen® 11 References Abelli, H. (2007). Mountain Man Brewing Company: Bringing the Brand to Light. Harvard Business School Brief Cases, 1-12. Hunt, K. M., & Brunke, K. D. (2007). A study of waterfowl hunters at the Monsanto farm and wildlife management center. Stuttgart: Human Dimensions and Conservation Law Enforcement Laboratory Forest and Wildlife Research Center, Mississippi State University. Huspeni, A. (2013, September 20). How the Robertsons of Duck Dynasty conquered America. Retrieved from Entrepreneur: http://www.entrepreneur.com/article/228498 National Flyway Council Wildlife Management Institute. (2005). National duck hunter survey. Washington, D.C.: Wildlife Management Institute. The National Shooting Sports Foundation Research Department. (2009). A portrait of hunters and hunting license trends: National report. Newtown: The National Shooting Sports Foundation.