Boston Beer

Case Analysis
Siya Sharma
Introduction
The establishment of The Boston Beer Company in 1984 by Jim Koch was a ground-
breaking move that aimed to transform the American beer industry. Through the
introduction of Samuel Adams, Koch not only brought forth a leading craft beer, but also
sparked the expansion of the craft beer industry, greatly bolstering its market presence.
This initial achievement during the 1980s, encountered a significant decline by the late
1990s as the growth rates of the craft beer industry decreased to single digits. This shift
was indicative of larger changes in the market, as distributors and the overall market
started prioritising brand image and profitability margins. The Boston Beer Company found
itself facing a crucial turning point, requiring a strategic adjustment to accommodate the
changing market dynamics. This period highlighted the difficulties of maintaining growth in
the face of evolving consumer preferences and a highly competitive market. The Boston
Beer Company had to navigate through these challenges while still upholding its innovative
spirit and market position.

Problem Recognition
The story of The Boston Beer Company (BBC) in the late 1990s reflects a period of strategic
adjustment and market responsiveness. At first, the BBC's venture into the craft beer
market with Samuel Adams sparked a fresh enthusiasm for high-quality beers, leading to
significant expansion within this specialised market. This growth trajectory, however, faced
significant challenges as the company entered the public market with its 1995 Initial Public
Offering (IPO). The initial enthusiasm, reflected in a share price of $20, was quickly met
with a harsh reality as the share price dropped to $7.63 by 1997, almost cutting the
company's market valuation in half.

The decrease in stock value reflected underlying issues within the craft beer sector and the
wider beer market. The craft beer segment, which is a key market for BBC, has started to
reach a point of saturation and experience slower growth rates, in contrast to the rapid
expansion it saw in the 1980s. This situation was made more complex by changing
consumer preferences and the competitive landscape within the industry, with light beers
becoming a symbol of growth during stagnation. During the late 1990s, the light beer
segment saw a significant increase of almost 40%, which stood in stark contrast to the
slowdown in the craft beer segment. This growth was not just a passing fad but was
expected to establish light beers as the most rapidly expanding segment in a consistently
stable industry.

The acknowledgement of this issue was crucial for BBC. The company, which had
established itself as a leader in the craft beer industry, found itself facing a strategic
dilemma. Adjusting to the changing market dynamics required revaluating its core strategy
and possibly exploring the light beer market, despite it contradicting its existing brand
image and target market. The necessity of adaptation was evident, yet the way ahead was
filled with potential dangers and unknowns. Would entering the light beer market
compromise BBC's brand identity, or would it open up new opportunities for growth and
long-term success? This predicament highlighted the importance for the company to
tactfully navigate its strategic choices, finding a balance between preserving its craft beer
tradition and adjusting to the changing tastes of consumers and market dynamics.

3 C’s Analysis
Company: The Boston Beer Company's Strategic Evolution
With its strategic vision and unwavering dedication to excellence, The Boston Beer
Company has established itself as a frontrunner in the craft beer industry. Driven by a deep
love for craft beer, the company skilfully manoeuvred through the challenges of a changing
market, showcasing their ability to persevere and adjust. Despite encountering obstacles
like volatile share prices and a saturated market, BBC maintained a strong commitment to
innovation and delivering high-quality content. The company's foray into the light beer
segment, despite facing initial challenges, showcased its adaptability and eagerness to
explore new market opportunities. This demonstrates their commitment to upholding
their reputation for excellence through a diverse range of products.

Customers: Deepening Understanding of Consumer Preferences

The case document highlights the changing consumer preferences in the beer market, with
a clear trend towards lighter and more health-conscious options. The ZMET methodology
used by BBC offered valuable insights into the emotional and psychological factors that
influence consumer decisions in the light beer market. Light beer is often linked to vibrant,
sociable lifestyles, highlighting the need for brand positioning that connects with these
aspirations for a fulfilling life. The task for BBC is to utilise these insights to develop
marketing and product strategies that cater to the need for refreshment, flavour, and a
more health-conscious beer choice.

Competition: Strategic Positioning in a Competitive Landscape

The beer industry is highly competitive, with many players entering both the craft and light
beer segments. Established competitors such as Amstel Light pose significant challenges
due to their extensive marketing resources and wide distribution networks. To thrive in
this competitive landscape, BBC must adopt a strategic mindset. It should prioritise
standing out by offering high-quality products, telling compelling stories about its brand,
and capitalising on its rich craft beer history to establish a distinct presence in the light
beer industry. The company must also navigate the competitive pressures by improving its
marketing strategies and distribution capabilities to effectively reach and engage its target
consumer base.

SWOT Analysis
Strengths:
The Boston Beer Company has always prioritised product quality, which has consistently
distinguished it from its competitors. By conducting over 100 quality-control tests and
implementing a distinctive freshness date stamp on every bottle, BBC has gained a
competitive edge that appeals to consumers' growing desire for high standards and
openness in the products they choose. In addition, the company's clever utilisation of
contract brewing has resulted in cost efficiencies while maintaining high quality. This has
allowed for quick expansion and adaptability in production to meet the needs of the
market.
Weaknesses:
The delayed response from BBC to the changing consumer preference from craft to light
beers has proven to be a significant weakness. This delay led to a damaged brand
reputation and a decrease in sales, emphasising a possible lack of market trend analysis
and flexibility in product development and marketing strategies. In addition, the lack of a
strong marketing campaign and a well-defined positioning strategy for its light beer
offerings, like Boston Lightship, has hindered the product's ability to reach a wide market
and gain recognition among consumers.

Opportunities:
The increasing demand for light beers provides a great chance for BBC to broaden its range
of products and gain a larger market share in this segment. With its strong brand image,
BBC can set itself apart in the market by appealing to health-conscious consumers and
highlighting the refreshing qualities of its light beer offerings. Market research suggests a
growing demand for light beers that combine great flavour with health benefits. This
presents an exciting opportunity for BBC to innovate and cater to these consumer
preferences.

Threats:
The main challenge facing BBC is the decreasing demand for craft beers, which have been
the company's speciality. This widespread trend poses a challenge for BBC as it strives to
broaden its range of products and adjust to evolving consumer preferences. In addition,
the light beer market is highly competitive, with well-known brands like Amstel Light
holding a strong position. This poses a major challenge for BBC as they strive to make a
mark in this segment.

Research Methodology
The market research design implemented by The Boston Beer Company, involving Harvard
MBA students to analyse its presence in the light beer market, showcases a thorough
approach to comprehend the complexities of introducing a new product. At first, a
thorough investigation was conducted to discover the factors contributing to the decrease
in sales of Boston Lightship since its introduction in 1987. This phase was crucial for
understanding not only the symptoms of the sales decline but also for delving into the
underlying market dynamics and consumer perceptions that influenced this trend.

As the research progressed to a more descriptive phase, the attention turned towards
gaining a better understanding of BBC’s position within the competitive landscape of the
light beer segment. By conducting a range of interviews, surveys, and emotional
association studies, the research sought to understand the traits, preferences, and actions
of individuals who enjoy light beer. This step was crucial in mapping out the segment's
consumer profiles, gaining insights into their taste preferences, and understanding the
emotional connections they have with light beer brands.

Nevertheless, the research methodology's focus on qualitative techniques, although

providing in-depth and valuable insights, had its drawbacks when it came to measuring
market opportunities and consumer preferences on a broader level. This approach, while
useful for gaining initial understanding and generating hypotheses, highlighted the
importance of a more well-rounded research design. Integrating quantitative methods
could enhance the qualitative findings, providing a wider market perspective and
facilitating decision-making based on data. This integration is vital, particularly in the
context of new product research. It is crucial to grasp market size, consumer
segmentation, and potential demand to effectively strategize and position the product.

Recommendations
1. Utilising Advanced Analytics and Big Data
In order to thrive in the dynamic and cutthroat beer industry, The Boston Beer Company
would greatly benefit from harnessing the power of advanced analytics and big data. By
examining large amounts of data from various sources like social media, sales data, and
online consumer behaviour, valuable insights into consumer preferences and market
trends can be obtained. Using predictive analytics, BBC can stay ahead of the curve in the
light beer industry by recognising new trends, adapting its products to meet changing
consumer preferences, and maximising its marketing efforts. Utilising big data enables a
more agile and adaptable approach to market research, empowering the company to
predict shifts in consumer behaviour and make necessary adjustments to its product
development pipeline.

Pros: By harnessing the power of advanced analytics and big data, the Boston Beer
Company gains a comprehensive understanding of consumer behaviours and preferences.
This approach provides up-to-the-minute insights, allowing for swift adjustments to market
fluctuations. It utilises existing data, which could potentially decrease the necessity for
extensive new primary research.

Cons: This approach demands a substantial investment in analytical tools and skills, which
could be quite different from more conventional market research methods. Dealing with
the immense volume of data can be quite overwhelming, requiring advanced filtering
techniques to uncover valuable insights.

2. Industry Research Collaboration

Participating in collaborative research with academic institutions or other industry partners
offers a valuable opportunity for The Boston Beer Company. This collaboration has the
potential to provide access to cutting-edge research methodologies, new insights into the
beer market, and a more profound understanding of the light beer consumer base.
Collaborative projects can delve into topics like consumer attitudes towards light beer, the
influence of branding on consumer decision-making, and the efficacy of different
marketing channels. These collaborations can greatly enhance the market research efforts
of BBC by combining academic insights with practical industry knowledge, resulting in a
more informed approach to developing new products.
Pros: Collaborating with academic institutions or industry partners can offer valuable
opportunities to explore cutting-edge research methodologies and gain a diverse range of
insights from both academic and practical perspectives. Additionally, it provides the
opportunity to distribute costs among collaborators for larger research endeavours.

Cons: It can take a lot of time to establish partnerships and coordinate collaborative
research projects. There could be potential hurdles when it comes to intellectual property
and data sharing agreements, requiring careful navigation.

3. Consumer Panels and Longitudinal Studies

By incorporating consumer panels and longitudinal studies, The Boston Beer Company can
gain valuable and continuous insights into consumer preferences and behaviours. Through
consistent interaction with a wide range of consumers, BBC is able to monitor shifts in
opinions towards light beer, assess responses to innovative product ideas, and gain
insights into the various factors that impact buying choices. This approach not only
provides immediate feedback on consumer trends but also creates a valuable database for
making informed strategic decisions in the future. Longitudinal studies are highly valuable
in gaining insights into the evolution of consumer preferences and identifying significant
long-term trends that may have an impact on the light beer market.

Pros: Engaging with consumer panels and conducting longitudinal studies provide a deep
understanding of how consumer preferences change over time. This approach creates
extensive data repositories that can provide valuable insights for making strategic
decisions, giving a forward-looking perspective on market trends and consumer
behaviours.

Cons: These studies can be quite demanding, requiring a significant investment of time and
money. There is also the concern of participants dropping out over time, which can impact
the consistency and dependability of the data.
These suggestions aim to improve The Boston Beer Company's market research
capabilities, ensuring that its strategies for launching a new light beer product are based
on thorough, up-to-date, and practical insights. By embracing a diverse range of strategies
for market research, BBC can enhance its ability to understand consumer demands and
effectively navigate the highly competitive beer industry.

Conclusion
The thorough analysis of The Boston Beer Company's strategic journey highlights the
crucial importance of extensive market research in successfully navigating a changing
industry. The analysis has revealed that a combination of conventional and cutting-edge
research methods is crucial. Using big data, BBC can quickly understand changing
consumer preferences, enabling them to adapt swiftly to market trends. Collaborative
research, possibly with academic institutions, offers the opportunity to utilise innovative
research methodologies and gain insights from various perspectives, which can greatly
enhance the company's strategic decision-making. Meanwhile, studying consumer panels
and conducting longitudinal studies provide valuable insights into the long-term changes in
consumer preferences, giving the company an advantage in its planning. However, there
are certain drawbacks associated with these methods, such as the need for significant
investment in analytics and the challenges of overseeing continuous consumer studies.
Market research is essential for the BBC to stay ahead of the game, allowing them to
understand the market and find new opportunities for growth. With the integration of
these cutting-edge research strategies, BBC is well-positioned to uphold its legacy of
ingenuity, embracing the future while staying true to its origins in craft beer and remaining
a strong contender in the market.