Hockley Valley Brewery co. INC Harvard Case Solution & Analysis

Hockley Valley Brewery co. INC Case Solution

Abstract

Hockney Valley Brewing co. Inc. is a microbrewery located in Rural Ontario.The company started to provide a recognition to the village on the basis of quality Dark beer offered by the company. The company has been started by two of the founding members with an aim to cater the beer market through its multi-product offerings.

At current the company offers 5 Products that cater the needs and taste of different segment. Currently the company has moved to Evansville, where in summers it came across with high sales in the category of its light Ale beer, which is shocking to the company as it has been number 1 in offering the dark beers, while the scenario is totally different in Evansville market. The cofounders are facing a deadlock whether to launch a new product to cater the market demand which will come with the cost of disturbing the brand identity of the company, while on the other hand, it should extend the product line and develop a new marketing mix for the product.

Hockney Valley faces immense competition for 2 of the market competitor for which the company has to devise the new marketing mix.In which the prime focus will be on promotional activities, pricing and Distribution strategy.

Problem/Issues

The company has been accompanied with the aggressive growth in sales for its light ale beer in summers in Evansville, while the company has been the leading player of Dark Beer, for which it received the award from Canadian Breweries. Since the company has to align and cater the new target market, there are certain issues pertaining to the strategy.

Basic/Primary Problem

  • The dilution of brand Image- The brand identity of the company will be at stakes if it launches a light Ale beer in Chancellorsville Hockney is associated with DARK beer and has strong value proposition.

Secondary Problems

  • The cost of producing the Hockney classic is far higher than the other 5 beers offered by the company.Although the direct cost is equal to the other brand yet the holding and procuring cost is higher (Six weeks)
  • The pricing strategy to price the new product which will cover the high operating cost of the product while remaining competitive with the two competitors of the market.
  • The company has to double the sales margin by the end of 2014.

Data Analysis

Porter 5 forces Model

Bargaining Power of the Buyer

The bargaining power of the buyers is high, because the market is concentrated with many other players who are offering the same product at relative prices. Also the switching cost to the alternative is also very low, while there are other substituent the market which makes the bargaining power of the buyer high.

Bargaining Power of the Supplier

The bargaining power of supplier is low, as the company owns its own breweries house in village side while it have its own equipment to prepare the Beer. It possess expertise to develop the taste and innovation in the beer.

Extent of Rivalry

The threat of rivalry is high. There are two most strong competitor present in the market, among which oneĀ  have its own flagship store to distribute the beer while the other have strong distribution networks and brand image that help to leverage the benefits from retail stores, and pubs.

Threat of New Entrant

The threat of new entrant is medium, as the market of Canada is attractive for the beer breweries business and that the government has lowered the entry barrier. In addition, the setup cost is also not very high, which make the chance of new entrant entering the, market relatively high.

Hockley Valley Brewery co. INC Harvard Case Solution & Analysis

 

Threat of substitution

The threat of substitute is high, as the market have other players that are offering the same beer, while the market have other offering of alcoholic beverages,also juices and Soft institutionalizes the Light Beer.

Position Map

 

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