Boston Beer Company: Light Beer Decision Case Solution

2. Problem Statement

The Boston Beer company (BBC) originated in 1984 had developed itself to become a beer- producing company with about twenty different beer kinds. This diversified portfolio catered to a variety of different audiences. The company’s reach was over nineteen countries and had a wide network of distributors. The company had been highly successful and profitable. The diversified product line had had presented several challenges for the company. Some of the products were seemingly not sustainable for the company including a variant called Lightship which was a light beer. The sales had been declining because of wrong targeting, high competition, and no strong brand image. The company needed a strategy to make this product sustainable.

3. Analysis

The problem identified with the currently targeted audience was that the craft beer audience did not prefer the light beer. The company had defined the craft beer segment and was most popular because of this segment. The craft beer was stronger with no additives of rice, stabilizers, or water to lighten it. The audience of the craft beer was high-income individuals who were willing to pay more for the craft beer than lesser for the light beer. The low-calorie advantage seemed to have no significant effect on the choice of the targeted audience. Therefore, if the low-calorie had to be marketed, it had to be marketed to the right audience to whom this advantage was relevant.

Light beer is one of those industries that are rapidly growing. The option to discontinue this product would, therefore, be an opportunity lost for the company. The development of this product would, however, give several short as well as long-term advantages to the company. The short-term advantage would be increased profitability because of the growing market. If the product is positioned rightly and the marketing is done effectively, the long-term advantage would be to gain a significant market share.

4. Strategic Alternatives

The first strategic alternative is to reposition the brand. The findings of the research conducted showed that the target audience of Amstel, the light beer that has 38.5% of market share in the light beer industry. The income of the targeted audience of Amstel is $50,000+. Lightship is at a premium price and has a higher quality. The positioning should be such that the people in the age group of 25-44 who are financially stable come under the targeted audience. The advantage of this would be that they would appreciate the high quality and afford the high price. Also, with the market growing, it would mean an opportunity for the product to become the choice of the audience. Also, the current customers of Sam Adams are 80% male that would be the target in this alternative. The image of macho and rough would be relatable to the target audience.

The cons of this alternative are that there is a lot of competition in the light beer industry. The product with the largest market share, Amstel, presents a huge challenge for the company. The differentiation should be based on quality. Otherwise, it would be a compromise on the taste of the product. Also, the market potential for the product at this price would be lower since 45.3% beer drinkers have an income of less than $35,000. The cumulative of the beer drinkers above $50,000 income is 36.7%.

The other alternative is to narrow the target audience to female beer drinkers and launch it as a separate product and not under the Sam Adams brand. The advantage of this option would be that the brand’s perception of a macho and rough man would not affect the new product. The men prefer craft beer as opposed to women who prefer a light beer in social gatherings. The target income category in the this strategic alternative would be $50,000+ which is the same as discussed above and is the category which prefers quality products and is willing to pay for it because of no income constraints. With this income category, it is analyzed that the social gatherings would be more as compared to unemployed or low-income females.

The female drinker according to the research comprised of 20% of the customers of Sam Adams. The behavioral research conducted showed that beer had had a perception of a male drink rather than a female drink. Also, the occasion in which the beer is consumed among females is only social events. The low-calorie advantage does not matter to these women because there is a low preference for beer.