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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

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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


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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


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Video

  • http://www.youtube.com/watch?v=iySSjJ1g0B4&eurl=


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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?


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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


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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


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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


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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



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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?


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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


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Drivers respect to Moonshot?

Premium brand image

Unique styling

Unusually high quality

Threats

Failing to increase buyer’s willingness to pay higher prices

Underestimating costs of differentiation

Overfulfilling buyer’s needs

Lower-cost imitation

Drivers/Threats of Focused Differentiation


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An Attractive Strategy? respect to Moonshot?

  • 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


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An Attractive Strategy? respect to Moonshot?

  • 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


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Case Questions respect to Moonshot?


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#1: How can New Century Brewing create more brand awareness respect to Moonshot?

  • 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


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#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.


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Opportunities: caffeinated beverages?

Energy drinks are already popular mixers in night clubs

Energy drinks are one of the fastest growing beverage categories

2004 energy drink revenues grew to 2 billion

2004: more then 200 energy drinks were sold in the US alone

“There is not much innovation in the beer industry. This is something NEW” (Kallman)

Threats:

Energy drinks: known to taste bad and are expensive

BE received bad reviews

Health Risks

MADD Campaign

The beer gives a false impression it will keep drivers awake enough to drive drunk

Canadian caffeinated brands taste like real lager beer

Target market has little brand loyalty

#2: What are the Opportunities and Threats of Caffeinated Beer?


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Survey caffeinated beverages?


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#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


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#4: Is Caffeinated beer just a fad? wider range of customers?

  • 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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