Boston Beer Company

7 Pages   |   1,072 Words

Boston Beer Company: Light Beer Decision
Case Study Analysis

Introduction

Jim Koch founded the Boston Beer Company, which brews handcrafted, and full flavored beers. This company produces America’s leading brands in beer. The company uses the conventional four vessel process by means of the world’s premium natural ingredients. The company has more than 30 different styles of award winning beer. Boston Beer Company has the honor of winning more awards in the internationally held beer tasting competitions than any other brewery in the entire world.  The company uses the same brewing procedures that great-great grandfather of Jim Koch used in the 1800s.

The Boston lightship

The Boston Beer Company introduced its second product in 1987 and named it the Boston Lightship. With this product, the company made ground and stepped into the light beer industry. The light beer contains only 98 calories because of which it won the World Champion Reduced Calorie Lager award in the World Beer Championships, in 1994, 1995, 1996 and 1998. The Boston Beer Company enjoyed instant success of its new brand. It was extremely hopeful and confident that it will also keep doing well in the light beer market like its other successful and most acknowledged product, the Samuel Adams.  (Tremblay and Tremblay, 2005)

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Q#1

Despite of its instant success, the Boston Lightship was not able to make a strong and permanent impact on the minds of light beer lovers. Boston Beer Company was able to sold 12000 cases of Boston Lightship each month because people appreciated its taste. As in the year 1991, the sale of this brand was at its peak, but it started to decrease and ultimately by the year 1998 the company was only able to sell 3000 cases of Boston Lightship per month. The Boston Beer Company has seen enormous potential in the light beer segment of this industry and initially had this feeling that just like its other brands it will also make the Lightship a success, however, this was not the case. According to the officials of the Boston Beer Company, they had invested quite heavily in the light beer segment under their brand the Boston Lightship in the years 1988-1992. (Tremblay and Tremblay, 2005)
But the product failed to benefit the company in the longer run. Under normal circumstances, the company ceases the production of the products whose monthly sale goes below 5000 cases, as it is not feasible economically. Therefore, the company seemed a bit reluctant to look back and start investing again in the Boston Lightship.
            The careful analysis of the Boston Lightship issue showed a number of reasons why this brand was not as successful as the Samuel Adams. It is a reality that year by year the sales graph of Lightship kept on decreasing. Critics have openly claimed that the Boston Lightship has a much better taste then its rival the Amstel Light. But the reason why it failed to leave an impact on the market was entirely because of the failed marketing plan. (McConville, 2006)

Q#2

It is to be noted that light beer consists of the five of the top ten bestselling beers in the supermarkets. It has a huge sale volume. Therefore, it would be a shame if the Boston Beer Company decides not to continue with its production. If the product is performing well in the market, the company should improve its other qualities to help this product to grow. This would, in turn, boost the sales of the organization. Since light beer is one of the top selling beers, the company should target this market and capture it as well.
Boston Beer Company should target beer drinkers who like to drink light beer. Such people would be those who are trying to drink less, and those who are just starting to drink beer. This would be effective target marketing for the company, as this segment is the one who drinks light beer.

Q#3

It can be recommended that the Boston Beer Company should develop a new strategy for its light beer segment to capture this target segment. The major proof of this claim is that the Boston Lightship was able to won several awards on the basis of its classy taste. Surveys were conducted on beer tastes, and light beer drinkers have openly declared that the taste offered by the Boston Lightship is much better than the other light beer brands, like the Bud Light, Coors Light and the Amstel light. People regarded the beer’s color and the smell as the best of all. (Christine, 2006) Various blind test events held in Canada as well as USA with the result that Lightship was the top in light beers. The Lightship failed to conquer the light beer market despite all the positives it had. The reason was that the Boston Beer Company failed to develop and initiate a strong marketing and management system for it. It was found out through various studies that Amstel Light had an exceptionally strong image on the minds on its customers. Its brand image was particularly strong. The beer saw increasing sales though people were not too fond of the taste. On the contrary, the Boston Lightship was best in taste, yet it failed. This happened simply because of its poor marketing. Its brand awareness among the masses was nearly zero, which is the biggest reason of its declined sales. (Tremblay and Tremblay, 2005)

 
Customer Discovery Framework
Customers /type of characteristics Light Beer - - -
 
Product Hypothesis Light Beer is a popular but low volume product
Customer Problem Hypothesis  Customers do not want to try light beer - - -
 
Distribution & Pricing Hypothesis Distribute to supermarkets where people actually buy beer. Price should be similar to regular beer for people to give light beer a try - - -
 
Demand Creation Hypothesis Target those people who are very new to beer; and would like to taste it before indulging - - -
 
Market characteristic
Hypothesis
Light beer is new to the market and many people do not consider light beer as actual beer - - -
 
Recommended Target Customers People who are new to beer, or who are trying to avoid hard drinks - - -
 
 

 
Reference
Tremblay, C and Tremblay, V. (2005). The U.S. Brewing Industry: Data and Economic Analysis. MIT Press.
McConville, C. (2006). The Toast of JP. The Boston Globe. Retrieved March 4, 2012, from http://www.boston.com/news/local/massachusetts/articles/2006/02/17/the_toast_of_jp/

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