Strategy Simplified S18E15: Intro to Casing (6 of 10): McKinsey Market Study Case – Premium Pricing for Beer
Jun 9, 2025
A legacy beer brand faces a dramatic 15% sales drop, with consumers favoring seltzers over traditional brews. The discussion dives into competitive positioning and pricing strategies, exploring how premium pricing could rejuvenate growth. Insightful analysis reveals how fewer sales at higher prices may lead to greater profits. The importance of market research and storytelling in pricing decisions is emphasized, offering a playful yet rigorous approach to consulting challenges. Tune in for a mix of strategic insights and market dynamics!
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Brand Sales Decline Exceeds Market Trend
- The client's beer brand sales declined 15% last year despite the US beer market only declining 2% annually.
- This sharp decline indicates specific issues with the brand's pricing or market positioning rather than overall market trends.
Clarify Revenue vs Volume Decline
- To diagnose revenue decline, clarify if it's a drop in volume or price by confirming whether the 15% decline was in revenue or units sold.
- Understanding this distinction sets a clear direction for further analysis.
Pricing Position Causes Market Confusion
- The client's beer price at $15 sits between premium competitors priced at $20 and their cheaper own brands at $10.
- This middle pricing position causes brand confusion and weakens competitive appeal on both ends of the market.