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Case Analysis on Crescent Pure
- 1. BRAND POSITIONING CRESCENT PUREHarvard Business School case analysis
- 4. PORTLAND DRAKE BEVERAGES Michael Booth CEO, PDB Matt Levor Director, Market Research Sarah Ryan VP, Marketing
- 6. NON-ALCOHOLIC FUNCTIONAL BEVERAGE • ENERGY-ENHANCING • HYDRATING • ALL-ORGANIC INGREDIENTS
- 7. NON-ALCOHOLIC FUNCTIONAL BEVERAGE • ENERGY-ENHANCING • HYDRATING • ALL-ORGANIC INGREDIENTS $3.75 8-ounce can
- 8. But what’s in a can of Crescent pure?
- 9. Lemon juice Fine Grain Salt Ginseng Guarana Green tea Raw cane sugar Lime juice Herbalsupplement relieves fatigueand boostsconcentration Guarana seeds contain 2x concentration of caffeine found in coffee beans
- 11. 55+ yrs 2% 25-34 yrs 36% 35-44 yrs 15% 45-54 yrs 3% 18-24 yrs 44% Median Household Income = $42,500 Female 41% Male 59% Other 46% College Degree 54%
- 12. Refreshing Healthy Affordable Functional Too sweet Suitable for Teens Fun Natural Hydrating 0 12.5 25 37.5 50 29 38 19 8 9 47 29 22 35
- 13. PDB acquired CRESCENT PURE
- 14. PDB acquired CRESCENT PURE BUT WHY???
- 15. VIABLE BRAND EXPANSION for PDB’s existing organic product line National beverage companies planning to launch all natural versions of sports and energy drinks Growth in ENERGY and LOW-CALORIE sports drink segments Majority of the consumer segments are shifting to healthier and natural alternatives
- 17. I have to develop a positioning strategy for Crescent in 6 weeks but I can’t make up my mind! ENERGY DRINK ALL ORGANIC HEALTH DRINK SPORTS DRINK Sarah Ryan ? ?? ? ? ?
- 18. Hypothesis 1 Crescent as an Organic health drink
- 19. GROWING DEMAND FOR ORGANIC BEVERAGES & PRODUCTS MUCH LARGER sustainable consumer segment Crescent price much lesser than premium pricing of other organic drinks
- 20. BUT…
- 21. Not enough time to execute a campaign for such a broad strategy
- 22. An ad budget of $750000 is not enough
- 23. There would be more distributor and retailer evaluations to do
- 24. Hypothesis 2 Crescent as a Sports drink
- 26. • Sports drinks appeal to younger customers • Expected to grow 34.2% in 5 years • Wider consumer base than energy drinks STRENGTHS Weaknesses • Limited market of young consumers • Slow growth rate • Not popular among older consumers Threats Opportunities • Increasing child obesity rates hampering sports drink circulation among youngsters • High growth rate for diet and low sugar sports drinks • stealing spotlight from traditional sports drinks
- 27. Market share 73% Market share 21% market leaders have a strong hold in this segment
- 28. better tasting than Drip but has lower energy and hydration level Thus it’ll be harder for Crescent to compete with Gleam because of its exceptional taste
- 29. CRESCENT OTHER SPORTS DRINKS $2.75 $1-$2
- 30. Most of Crescent’s attributes fall in line with a sports drink Crescent has an upper-hand in being natural But we see that Crescent will not be able to compete with its pricing Consumers don’t see it as suitable for teens despite sports drinks being popular amongst teens
- 31. Hypothesis 3 Crescent as an Energy drink
- 33. • Massive lucrative market size • Expected to grow 37.03% in 5 years • price range of $2 - $5 is affordable STRENGTHS Weaknesses • Smaller consumer base than sports drinks • Not popular among older consumers Threats Opportunities • Due to high calorie and sugar content, energy drinks are receiving a negative image. • Sales of lower caffeine content and organic drinks are on the rise • consumers are looking for healthier alternatives
- 34. CRESCENT OTHER SPORTS DRINKS $2.75 $2-$5
- 35. Points of PARITY
- 36. SIMILAR PRICE RANGE Crescent caters to the same consumer demographies
- 38. CRESCENT OTHER ENERGY DRINKS • Minimal caffeine content (80mg of caffeine) • Certified organic ingredients • Less sweeter due to natural sources of sugar • Excessive contents of caffeine • Usage of artificial sweeteners and stimulants • More production of energy than Crescent • Products considered too sweet by consumers
- 39. CRESCENT might just be as an Energy Drink!
- 40. Other 15% Stellar 8% Torque 16% Razor 27% Fright 34% Even spread of competition will be easier for Crescent to penetrate Competitive spread Energy drinks
- 41. Energy Drink Consumers are looking for healthier and natural alternatives
- 42. HEALTHY INGREDIENTS GOOD TASTE SLIGHTPICK-ME- UP Focus group studies suggest that consumers get exactly what they want from Crescent
- 43. Retailer feedback suggests that Crescent is among consumers aged between 18-30
- 44. Conclusion The evidences confirm that Sarah should develop a positioning strategy to market Crescent as an organic energy drink . By narrowing her strategy to one choice, PDB can operate their market positioning within their fixed ad budget of $750000
- 47. Ad Budget : $750000 Production limit : 12000 cases / month Case limit : 24 cans / case Cost per 8-ounce can : $2.75 PER CAN EARNINGS:- Earnings by retailer : $ 1.1 Earnings by distributor : $1.65 Earnings by Crescent : $1.24 Variable Cost : $1.02 Profit per can : $1.24 - $1.02 = $0.22 Breakeven Point = 750000 / (1.24-1.02) = 3,409,091 cans / year i.e 142045 cases / year Production limit (in years) : 12000 * 12 = 144000 Potential earning : 144000 * 24 * 0.22 = $760320 Profit : $760320 - $750000 = $10,320
- 48. CRESCENT can break even after the first year with a possible profit of $10,320
- 49. THANK YOU
- 50. DISCLAIMER Created by Smaran Mahesh, PES University Bangalore, during a marketing internship by Prof. Sameer Mathur, IIM Lucknow