Boston Beer Company Analysis Boston Beer Company founded in 1984, along with many other big league giants have decisions to be made in regards to the direction they wish to take their brand. Brand extension or brand stretching is a marketing strategy in which a firm marketing a product with a well- developed image uses the same brand name in a different product category. Brand extensions have been used successfully by many corporate giants, such as Arm & Hammer with the starting product being baking soda and extensions such as laundry detergent.
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However, extending the brand isn’t always as lucrative as it may appear. Arizona, an exceptional beverage maker decided to branch off into dips with minimal success. The appeal of strategic growth often can hinder a corporation’s ability to see reality. Now, Boston Beer Company faces the tough decision of once again extending their brand into an existing segments of light beer, “llghtshlp. ” Lightship was Introduced In 1987 as the companys second product when light beers were exploding onto the market place. “lightship” beer exploded and sales shortly followed.
In a taste test done among other giants such as Amstel light, Heineken, and Miller Lite, ninety out of a hundred people preferred the taste of “lightship. ” At only ninety-eight calories, a full-bodied, full flavored, award-winning beer would seem to have infinite success. However, after peaking at around 12,000 cases per month in 1991, the demand in shipments steadily decreased to 3,000 In April of 1998. With a plethora of Information on consumer preferences, trends, past & current data, and expert analysis, Boston Beer company faces some tough ecisions with where to take the company.
One important factor to consider is whether or not to designate more marketing resources towards “lightship. ” With that being said, its critical to analyze past as well as future trends to make a well informed decision on designating more marketing resources and finances towards the product. I don’t think dedicating more resources to “llghtshlp” will prove to be more lucrative for the Boston Beer Company In the long run. One concernIs that, their flagship product Boston Lager could see a decrease in sales and return.
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Their Boston Lager is esponsible for 60% of their sales in the market and dedicating more resources towards their lightship product could hurt their flagship product exponentially more than lightship could benefit them. Also, BostonBeer Company has carved a niche in the Sam Adam’s craft beer market where they dominate. Dedicating more marketing resources to a product which Is competing with other giants (Amstel light, Miller scale advantages over it’s competitors in the craft market and dominating that segment could prove more lucrative in the long run.
Another important question to sk is whether or not BBC should reposition how they market “lightship. ” I do believe there are some tangible items that couldVe or would help the “lightship” products success. For example the products physical packaging doesn’t scream light beer. This can be deceiving to consumers as the majority of decisions are made with our eyes. Aside from that, it’s not marketed as ” Sam Adams Lightship”, rather Boston “Lightship. ” In my mind, your losing customers that are loyal to the Sam Adams brand. After all, the majority of consumers don’t realize Sam Adams is Boston Beer
Company and vice versa. Your customers that are loyal to the brand and have those feelings of pride, inner self worth, and Yankee toughness from purchasing Sam Adams abandon Boston “lightship” because it doesn’t create that same experience for them. It also hurts their brand awareness. In terms of price point, I don’t think it advisable to lower the price in order to appeal toa wider consumer base. BBC is known for quality, higher priced craft beers. Lowering their prices to appeal to a mass market could be detrimental to their brand equity in the long term.
Lightship” should be discontinued because it isn’t contributing to BBC in terms of brand equity, brand loyalty, brand awareness, or financially. Apart from their climax of sales in 1991 of 12,000 cases, the steady decrease in sales should be indicative of consumer’s feelings towards the “lightship” product. The “lightship” product has failed even given fair opportunity to compete in the marketplace. Therefore, I would abandon the name “Boston lightship” and try competing in the light beer market place under different promotional & packaging techniques.
I think its imperative that Boston Beer Company does compete in the light beer segment of the market for several reasons. Although Sam Adams “regulars” account for a large portion of sales, these consumers also typically have a portfolio of other beers in which they indulge including light beers. This is an opportunity for Sam Adams “regulars” to still keep their brand loyalty, and experience that inner self worth without sacrificing the qualities of a full body full flavor beer.
Another important reason BBC should compete in the light beer arket is that 5 out of top 10 beers were premium light beers. Although its unlikely BBC will ever be known for premium light beers, it’s possible to gain market share with the right branding, marketing, and use of its efficient distribution channels. Even if BBC gains a small percentage of market share in that segment it will still create brand awareness, which will have an overall positive effect on the brand equity. Also important to note, it’s imperative to compete in a market even if its not where your dominant market shares are.
It prevents the competition from becoming complacent and dominating that segment of the market, which could ultimately lead to controlling other segments of the market. Often times qualitative data can conflict with quantitative data. This is exemplified in the case where light beers exploded on the market and had grown steadily since 1980 from 13% to 40 % in 1997. Although these trends and fgures showed a significant opportunity in that segment of the market, it proved other factors are present in consumer’s behavior rather than Just quantitative approaches.See More on Brand