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Decision Problem for Boston Beer Company

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Part1The main decision problem for Boston Beer Company is whether or not it should remain in the light beer market. This is followed by four subsidiary decision problems if the answer to main problem is yes: should BBC create a new light beer brand, and if so what positioning should it take, should they keep Lightship, and if yes, should BBC maintain or change Lightship’s positioning.

The research problems are as follows: it is profitable for BBC to remain in the light beer market, what are the growth trends, what role does light beer play in the retail scene, what types of people drink light beers, what are their values, is the positioning of Lightship in line with what light beer drinkers seek, and if not it is feasible to change its positioning? The research design is three parts.

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The first consists of one-on-one qualitative research interviews with retailers to find out more about the retail scene. The interviews are loosely structured with no set questioning frame.

The second part is a quantitative blind taste test survey with questions about their brand choices. The third part is a qualitative individual research using ZMET. The HBS team use a survey to pick people whom then use selected images to create a light beer experience collage. Data collection starts off with obtaining information on the light beer market. Using secondary resources the HBS students summarised data on historic growth percentages, future growth prospects with respect to other beers and future consumer trends.

Data collection for retailer interviews is simple and loosely structured with the HBO student taking note of typical answers and scenarios. For the taste testing, data is organized in charts by gender and drinking habits with the taste rankings listed behind. The ZMET method collects data by looking for key themes within the pictures and narration. The sampling plan for the retail interviews are based on national and large regional customers. The exact number is not revealed. There are 46 participants for the taste testing who are all part of the HBS community. The ZMET volunteers are also sampled from the HBS community. ,700 males and females, ages 25-39 are surveyed for beer brand preferences and drinking habits. Of 400 replies, 12 (7 men and 5 women) are selected based on diversity of preferences and background. Key findings of the retailer research are the following: customers want branded products with an image, Amstel Light gets more shelf space than Lightship, and Lightship is isolated from the SAM flagship brand. In the taste testing survey, ranking preferences are tallied and averaged. The results show that Lightship is consistently highly ranked across all demographic segments.

In the ZMET method, the study team takes the key themes of the volunteers’ collages and summarizes the ideas with their own collage. The analysis revealed the following: customers associate light beer with the colors of red, white and blue to symbolize energy and celebration, it is simple which can be positive or negative, light beer also does not usually cause drunkenness and bloatedness, light beer is thirst-quenching, people want to conform and be different at the same time, and finally, there is a tension between control and the release of inhibitions. Part 2 1.

BBC should engage in the light beer market for several reasons. First of all, the light beer market is expected to grow in the coming years. In 1997, the light beer shipment was already 40% of the total beer shipment. While spending resources on the light beer brand may draw energy from the core brand, if the light beer market continues its growth, the light beer brand may grow to rival the volume of Boston Lager. The strong market leads to the next point which is potential revenue. The high end light beer market opportunity could net BBO with total revenue of $24,410,994.

This is a significant sum of almost 12% of total sales in 1997. The projected 134,000 barrels is also well over the 60,000 barrels per year cut off point of economical production. In addition, Samuel Adams does not have a prominent light beer to pair with the core brand. A light product would increase sales in restaurants and bars. Furthermore, retailers are allocating more shelf space to light beer in response to its heightened popularity. More shelf space equates to more opportunities for sales. Finally, Miller projected that consumers would upgrade their preferences to high-end brands.

As a quality craft beer company, BBC will definitely enjoy increased profitability should this outlook become true. BBC should re-enter the light beer market by first abolishing the Boston Lightship brand. Not only is it an economical burden (fewer than 3,000 cases in sales does not meet the 5,000 cases cut off point), but also its brand image is virtually non-existent, and its product design contrasts with the values of light beer drinkers. While the weak image can be bolstered with increased marketing efforts, a flaw in the product design would be too much to fix. Therefore, a new light brand is proposed.

This new product should differ from Lightship in many aspects. Firstly, the new product should incorporate the brand Samuel Adams. This will create brand awareness with an already well respected product. Extensive marketing efforts during the introduction of the product phase should be used to help the new brand pick up speed. Additionally, incorporating the Samuel Adams image will satisfy the desire of drinkers for social status. While the taste is certainly one of Lightship’s strengths, it should be toned down slightly for the people who desire a cool refreshing taste.

The beer label should also be redesigned with red and blue lettering on a white backdrop as opposed to the dark murky blue in Lightship’s label. Calorie content should also not be a big concern when formulating the product. Finally, to help propel sales in the retail scene, incentives should be given to retailers for placing the new beer along with the flagship brand and giving the light product more shelving space. The SAM products should also be near its competitors – most importantly, Amstel Light. 2.

The taste tests reveal the quality of Lightship’s taste, bad labelling consensus, and the general anonymity with beer drinkers. The last point is important in deciding for a new product bearing the Samuel Adams brand name. Stamping the new light beer with the Samuel Adams brand will instantly make it recognizable as a merchandise of quality with many industry accolades. Most importantly, the taste tests reveal Lightship’s strongest point against competitors – its desirable flavour. Therefore, to maintain that edge, the new beer should emulate that taste to some degree if not exactly.

The taste test shows a new label is needed. The ZMET research gives further insight to the design of the label by suggesting specific colors (red, white and blue) that are representative of the light beer drinking experience. The ZMET collages also expose the refreshing quality of light beer. White is then chosen to be the dominant color on the label for its closeness to refreshment, as compared to red and blue. The invigorating quality also affects the decision to use a toned down version of the Lightship formula for the new beer. A clearer taste also reflects the many mentions of water in the collages.

Finally, the ZMET research touches on the importance of a quality brand as a status symbol closely related to the American experience, which further validates the decision to use the Samuel Adams brand. The contribution of the consumption data to my recommendations is a heavy one. The positive data substantiates the decision to stay in the light beer market and sheds light on possible future growth patterns. Without the consumption data, choosing to stay in the light beer market would become a risky venture for BBC. The retail research helped direct the strategy for product placement in a retail setting.

COO Martin Roper states that demonstrated sales get distribution and distribution nets sales. A major downfall of Lightship is its poor retail exposure. This is why a starting incentive/discount is proposed to give the new light beer proper shelving space and better placement in relation to competitors so that potential consumers do not just walk out with pack of Buds Light or Miller Lite without even contemplating about BBC’s light beer. Additionally, the research reveals “on premise” customers want well branded products that reflect positively on oneself.

This further contributes to the decision to use the Samuel Adams brand. 3. The multi-level need diagram (shown in Exhibit 1) presents three main needs: acceptance, achievement and control. They in turn, lead to the final encompassing construct of emotional satisfaction. A minor destination construct of boredom is derived from the simplicity of light beer. People believe that occasionally, light beer is too bland. Of the three needs, the sense of achievement appears to be the most dominant with the most number of constructs and linkages under its umbrella.

Thirst quenching and coldness are properties of a refreshing drink, which is usually used as a reward for an accomplishment. Celebration is a means to reward oneself and as a declaration of achievement. The American experience is also associated with achievement because it relates to a story of success. It is interesting to note that energy is linked to both celebration and control because energy is needed to celebrate and lack of it deprives one of control. Without energy one cannot do anything including controlling oneself.

There are four additional originator constructs that lead to control: simple, group activities, not drunk, and individuality. The simple taste of light beer does not crowd the palate or distract the consumer from larger activities. Consumers feel they are in control by being able to balance drunkenness and the release of inhibitions. Group activities require control to function – more specifically, individuals cannot be drunk. Individuality leads to control as well because it is required to draw the line where conformity ends and self identity begins.

Group activities also lead to acceptance because participating as a group requires some degree of conformity. When one conforms, one is accepted. Acceptance, the lesser of the three main needs, is also derived from weight management, and a quality brand. The former leads to a better physical image and the latter leads to a better perceived social status from others. Both appear to be required for social acceptance. 4. The market research in general yielded useful information and new insights. However, of all the different research methods used, it is ZMET that shines the most.

More specifically, by unearthing the values of a typical light beer consumer, ZMET is able to locate the biggest reason for Lightship’s falling performance and pave the road for a new potential light offering. The taste test offers some information on consumer thoughts on Lightship’s taste, but it may all be redundant. It is already known that Lightship had a flavourful taste from a previous taste testing and the many industry accolades it had garnered. The taste test in the research merely confirms it. In fact, the taste test was more useful in revealing things other than flavour like the unattractive label and the lack of brand awareness.

In addition, the taste results were averaged, which may skew interpretation since the difference between first and second may not be the same as third and last. The retail research is not much better in discovering new insights. The main contribution of the research is on shelf space. BBC’s COO already stated poor sales gets poor distribution and it is known Lightship has low sales, thus it is easy to conclude without research that Lightship is not well distributed. The research also reveals information on how consumers pick brands.

While this data may be new, it is also covered in ZMET, thus further emphasizing the redundancy of the retail research. To ensure that the recommendations help BBC management the HBS team could have probed more deeply into BBC’s mission statement and purpose. The recommendations were made under the goal of business profitability, thus certain proposals (like the diluted taste of the new light beer) does not take into consideration Jim Koch’s zeal for full-flavoured craft beers. By knowing BBC’s direction in its products, the marketing research could have been more specifically designed.

For example, if Jim Koch did not want to have a watery beer product, then the ZMET approached would not have been needed to uncover the ideal light beer. Rather, focus groups could be used to determine whether people would buy a full-flavoured light beer or not. Since the research has already been completed, what can be done now to ensure the recommendations are in line with BBC’s direction is to go over the suggestions with the executive management and reconcile any differences. While this is happening, the financial outlook should be constantly reassessed because after all, full-flavoured or not, a light beer needs to make money.

Cite this Decision Problem for Boston Beer Company

Decision Problem for Boston Beer Company. (2018, Feb 28). Retrieved from https://graduateway.com/decision-problem-for-boston-beer-company/

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