Reference no: EM132919872

Problem 1. Identify all of the fixed costs (validate your understanding of fixed costs from MKT 2206) associated with Molson Canadian 67 Sublime. When discussing each fixed cost identify the specific cost from the case. Explain why these are considered fixed costs

Problem 2. Identify all of the variable costs (validate your understanding of variable costs from MKT 2206) associated with Molson Canadian 67 Sublime. When discussing each variable cost identify the specific cost from the case. Explain why these are considered variable costs.

Problem 3. What is the break-even (provide a number) for Molson Canadian 67 Sublime? Explain the breakeven. Reference your text for the BE formula.

Problem 4. Given the positioning strategy and target market as discussed in the case, comment on the appropriateness of the price of $12.25 as set by Molson Coors Canada.

Mini Case

In an attempt to combine two of the biggest recent trends in mainstream brewing - ultra-low calorie and lime/citrus flavoured - Molson Coors Canada unveiled Molson Canadian 67 Sublime in the Spring 2011 and this new beer was voted best new consumer beer product by Canadians in 2012. This strategy is largely built on the desire to broaden their consumer target market beyond the traditional 25- 45 year old male demographic.

Molson Canadian 67 Sublime is a premium light beer with a hint of refreshing Lemon-Lime flavour and 67 calories per 341ml bottle. That's about half the calories of wine or mixed drinks. Sublime is unexpectedly different. It's the beer you drink when you wouldn't usually choose beer. It's a beer that is perfectly at home on an upscale patio, the golf course, the dock or wherever Canadians reach for a refreshing taste out of the ordinary. The target market for this new lemon/lime beer is women and men 25 - 55 years old with post-secondary education earning an individual income of $65,000 or more annually in Canada.

Molson Coors invested an additional $1 million in advertising for the 1st year, $5 million (amortized over 20 years) in their plant to manufacture this new beer and have hired a manager to oversee the production with an annual salary of $35,000. A new product manager was also hired with an annual salary of $40,000 to manage the Sublime launch and ongoing marketing activities. Labour costs for a six pack of Sublime are $1.50 per unit, raw materials $2.10/unit and distribution $6.00/unit. The LCBO and Beer Store sell a six pack for $12.25.