GLOBAL MANAGEMENT TRAINEE

Individual Role Play Exercise

GOOD BEER

PARTICIPANT MATERIALS

During this role play simulation, you will be in the role of the manager responsible for
Good Beer Brewing Company’s craft beer product line. The Company has been
considering the introduction of new craft beer products to the current craft beer product
portfolio. Your team has been testing marketing a number of craft beers, with the
ultimate goal of identifying two craft products to the current product portfolio.

The COO of Good Beer has asked to meet with you today to discuss your
recommendations regarding the two new craft products to be added to the current
portfolio, as well as your plans for a marketing campaign to introduce those two new
products. You have 20 minutes to review the attached materials related to this issue.
Following that 20-minute preparation period, you will have 7 minutes to present your
recommendations and plans to the COO, and 8 minutes to respond to questions from
the COO.

Today is May 6th of this year.

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 E-mail
Date: May 4th, This Year
Subject: Craft Products
To: You, Craft Beer Product Portfolio Manager
CC:
From: Pat Gordon, COO Good Beer Brewing Co.

I know that you and your team have been test marketing a number of new craft beer products
with the idea of introducing two new craft beers to our current craft product portfolio. I would like
to meet with you on May 6th to discuss your new product recommendations. In preparation for
that meeting, please review the current competitive landscape, data on test market results and
internal operational issues that may impact the new product introduction. During our discussion,
I would also like you to present proposals on a marketing plan to introduce the two new craft
products.

The goal of this new product introduction is to increase the total net revenue of our craft product
line by 25% during this next fiscal year. In achieving this goal, you should focus on three
important elements of our business: increasing product volume of craft products without
exceeding the maximum monthly capacity of our brewery, increasing market share of the craft
products from the anticipated 24% of the craft beer market to a 30% market share, and
increasing profitability. Your performance will be measured based on your ability to positively
impact these three elements.

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 E-mail
Date: May 4th, This Year
Subject: Summary of Current Products
To: You, Craft Beer Product Portfolio Manager
CC:
From: Jan Winters, General Manager, Smithfield Brewery

Per your request, attached is data related to the craft products in our current product portfolio.
As you know, the Smithfield brewery, the brewery where all our craft products are produced,
can brew up to 12,000 Hectoliters (HL) of product per month. At the current time we have
excess capacity to add craft products, as long as we do not exceed our current limit of 12,000
HL per month. In the attached data charts, I have provided Sales and Costs for the last 12
months and Projected Net Revenue for the next 12 months for the current portfolio of craft beer
products. I have also provided our anticipated production volumes for the next 12 months, by
product and season.

I am pulling together data on the craft products we test marketed, and will be following up with
that information shortly.

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 Data
Uploaded: May 4th, This Year

Subject: Data on Current Products

Access: You, Craft Beer Product Portfolio Manager

Access:

From: Jan Winter, General Manager, Smithfield Brewery

Current Craft Beer Products

Sales, Costs and Projected Net Revenue by Product

Current Products Sales Cost Projected Net Revenue

(Last 12 Months) (Last 12 Months) (Next 12 Months)
Spring Fever Lime $819,300 $305,000 $491,461
Harvest Light $2,702,850 $1,335,000 $1,435,992
Boulder Brown Ale $707,350 $181,000 $504,404
White Ale $1,185,000 $495,000 $639,100

Anticipated Production in Hectoliters (HL)

By Season and Product, Next 12 Months

Current Product Fall Winter Spring Summer

Spring Fever 3,000 2,500 7,000 9,000
Lime
Harvest Light 8,000 9,000 13,500 15,000
Boulder Brown 6,000 6,000 3,000 3,000
Ale
White Ale 8,000 7,000 4,000 3,000

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 E-mail
Date: May 5th, This Year
Subject: Increasing Ingredient Costs
To: You, Craft Beer Product Portfolio Manager
CC:
From: Paula Tobin, Purchasing Manager, Good Beer

I understand that you are considering a number of new craft products for inclusion in our
portfolio of products. Therefore, I wanted you to be aware of upcoming increases in some
ingredient costs. These increased costs will impact the net revenue associated with some of
the new craft products. I have just received word of these cost increases from our vendors, so
they have not been figured into the anticipated revenue (next 12 months) for any of our test
marketed products.

The prices associated with roasted malt will be increasing over and above the amount we
anticipated when we did our cost projections for the next 12 months. The same is true of a
variety of hops known as Saaz hops. The increases of these two ingredients will impact the
following products:

Boulder Pilsner (which uses Saaz hops to produce a traditional style pilsner beer)
Boulder Oatmeal Stout (which uses roasted malt to produce a dark color and rich flavor)

The increase in these ingredients will result in a 1.5 percent increase in projected costs for
Boulder Oatmeal Stout, and a 1 percent increase in projected costs for Boulder Pilsner. When
making decisions about the craft products to add to our product portfolio, I would encourage you
to consider the impact of these cost increases on the overall cost of the product.

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 E-mail
Date: May 5th, This Year
Subject: Test Marketed Products – Results
To: You, Craft Beer Product Portfolio Manager
CC:
From: Jan Winters, General Manager, Smithfield Brewery

As a follow-up to my email from yesterday, I have provided information (in the attached data
tables) regarding the craft products that we have been test marketing. The attached data
includes target age groups, projected sales, and projected net revenue by product over the next
12 months. I have also included a projection of volume, in HL, that would need to be brewed
each season for each product. Keep in mind, our total brewing capacity is 12,000 HL per
month. So, when selecting new craft products, it important to select those products that
maximize the volume being produced by the brewery, while ensuring that our total product
portfolio does not exceed our production capacity at any time during the year. I hope this
information is helpful as you prepare for your meeting with Chris.

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 Data
Uploaded: May 5th, This Year

Subject: Data on Test Marketed Products

Access: You, Craft Beer Product Portfolio Manager

Access:

From: Jan Winters, General Manager, Smithfield Brewery

Target Marketed Products: Anticipated Sales and Revenue by Product

Test Marketed Seasonal Target Age Projected Sales Projected Net Revenue
Product Group (Next 12 Months) (Next 12 Months)
Home Brew 56+ $950,000 $395,000
Might Micro 35-55 $820,000 $495,000
Crisp Craft 25-35 $1,550,000 $682,000
Turtle Lager 35-55 $717,000 $497,000
Boulder Oatmeal Stout 56+ $986,000 $502,000
Harvest Honey Wheat 21-25 $613,000 $306,000
Boulder Pilsner 21-25 $401,000 $215,000
Harvest Pale Ale 25-35 $838,000 $410,000

Anticipated Volumes (in Hectoliters) Next 12 Months

By Product and Season

Test Marketed Seasonal Fall Winter Spring Summer

Product
Home Brew 5,750 5,500 5,750 5,750
Might Micro 4,500 4,500 4,750 4,750
Crisp Craft 4,000 5,000 6,500 7,500
Turtle Lager 2,500 2,000 3,000 3,000
Boulder Oatmeal Stout 6,500 6,500 3,500 2,000
Harvest Honey Wheat 4,500 4,500 3,000 3,000
Boulder Pilsner 2,500 2,500 3,000 3,000
Harvest Pale Ale 4,500 4,500 5,000 4,000

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 E-mail
Date: May 5th, This Year
Subject: Customer Base By Age Group
To: You, Craft Beer Product Portfolio Manager
CC:
From: Lana Curren, Manager, Sales

Per your request, below I have summarized Good Beer’s current customer base by age group

56+ years old: 19%

35 – 55 years old: 27%
25 - 35 years old: 30%
21 – 25 years old 24%

As you can see from the above data, the 56+ year olds represent the smallest percentage of our
customer base (19%). As a result, Sales has implemented a major push to increase sales in
the 56+ age group. As you are considering craft products to add to our portfolio, I hope you will
give careful review to the products that target this age group.

For next year, based on our anticipated volume of current product sales, we anticipate
controlling 24% of the craft beer market. Based on beer sales throughout the industry, each
4,458 Hectoliters of beer sold represents 1% of the current beer market.

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 E-mail
Date: May 6th, This Year
Subject: Marketing Budget
To: You, Manager Product Portfolio
CC:
From: Randall Westbrook, Manager, Marketing

As you think about your plans for introducing two new craft products into our portfolio of
products, please don’t limit your ideas to our traditional methods of marketing products (e.g.,
radio and TV spots, print advertising, and billboard and bus stop ads). I want you to develop an
innovative approach to the marketing of these two new craft products. I believe that in order to
keep up with changes in media and the delivery of advertising content, we need to find new
ways of promoting our products. I believe that applying new innovative approaches to
marketing these products is the only way to ensure we achieve our target of 25% net revenue
growth over last year.

I am working with the Marketing Director to develop a marketing budget for these two new craft
products, but at this point I do not want our creativity to be limited by a specific budget number.
When you meet with the COO today, you should have multiple innovative, yet practical, ideas
for marketing the two new craft products. Your creative ideas will help us determine the
appropriate budget for these two products.

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 E-mail
Date: May 6th, This Year
Subject: Competitor Insights RE: Craft Beers
To: You, Manager Product Portfolio
CC:
From: Ricki Mendoza, Manager, Marketing

Since you have been asked to recommend two new craft products for our portfolio, I thought
that some information on the competition’s actions related to craft products might be of interest.
I have provided information on our four largest competitors.

1) In recent months, all four of our competitors have tended to focus their product
development and their marketing on beers that sell more in the Spring and Summer.

 Rocky Mountain Brewing Company recently introduced 2 new craft products that we
believe are likely to appeal to consumers during the spring and summer months: ,
Pike’s Peak Wit Beer and Front Range Ginger.

 Johansen Brewery have targeted their radio and TV spend on Spring and Summer
holidays and are promoting existing products that are popular in summer months.

 Alberta Brewing Company has followed an approach similar to Johansen and is

specifically targeting spring and summer events and activities.

 Southwest Brewing has created two new products that seem geared toward Spring
and Summer Consumption: Southwest Pilsner, a slightly sweet, malty and hoppy
tasting larger, and Southwest Cactus & Lime a crisp light beer with cactus and lime
flavors.

2) There is greater emphasis on sweet and flavored beers, in addition to Southwest’s new
product, Johansen has introduced fruit flavor beers and Alberta Brewing Company has
introduced a Vanilla Ale. Johansen’s and Alberta’s new products are part of the portfolio
featured in these competitors’ Spring/Summer radio and TV spends.

3) There seems to be some reduction in the production of heavier beers (porters, stouts,
etc.) particularly those products that are targeted at the Winter holiday season.

 Johansen Brewery eliminated their Holiday Spiced Porter product

 Southwest Brewing has ceased production of Pumpkin Brown Ale

 Rocky Mountain Brewing Company has eliminated marketing funds for their Honey
Stout and there are rumors that they will soon be eliminating that product.

 On the other hand, Alberta Brewing Company recently introduced Old Irish Stout and
has been marketing the product aggressively.

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 4) There seems to be an increased focus on consumers who are 56 years or older.

 Rocky Mountain Brewing Company’s Pike’s Peak Wit Beer and Front Range Ginger
are both geared toward the 35 to 55 and the 56+ market.

 Johansen Brewery has targeted their print advertisement to magazines favored by

readers 56 or older.

 Alberta Brewing Company’s recent introduction, Old Irish Stout, is targeted toward
the 56+ market.

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