Analysis of Crescent Pure case study

1. CRESCENT PURE
BRAND POSITIONING
HARVARD BUSINESS SCHOOL CASE

2. All About Crescent Pure
Founded by Peter Hood in 2008
Non Alcoholic Beverage
Hydrating and Energising
Low Sugar quotient
Distributed in 200 retail outlets
Retailed at $3.75 for 8-ounce can
High Demand in Oregon

3. Introducing
Portland Drake Beverages (PDB)
 Manufacturer of Organic juices and Sparkling Water
 Earned Revenue of $120.5 million by 2012
 High Consumer demand due to Health values and Pricing
Acquired Crescent Pure in July,2013

4. Expansion of existing product line
Why this Acquisition??
Competitors planning to launch all natural versions
of their drinks
High demand for low calorie drinks

5. Key Players of
PDB – Crescent Pure Brand Positioning
 Michael Booth
CEO , Portland Drake Beverages
 Sarah Ryan
Vice President of Marketing, Portland Drake Beverages
 Matt Levor
Director of Market Research, Portland Drake Beverages

6. Present Situation of PDB
Planned “Soft Launch” of Crescent in three western states by Jan’14
Washington California Oregon
Represents 15%
of
National Functional Beverage Demand
Advertising
Budget
$750,000

7. Objective of the Case
Ryan to evaluate the
Positioning Opportunities
for Crescent and recommend a
Positioning Strategy
to the executive team
Why this case?

8. Objective of the Case
Product Positioning Options
Energy
Drink
Sports
Drink
All Organic
Drink

9. Objective of the Case
Key Insights Needed
•Market specifics
1.
•Pros and Cons of each option
2.
•Final Recommendation
3.

10. Hypothesis
Crescent
as an
Energy Drink

11. SWOT ANALYSIS ~ Energy Drink
Strength Weakness
ThreatOpportunity
• Can reinforce already existing
consumer perception
• Price range – $2.75 is less than
the average price in the market
• Organic Certification and low
caffeine content
• Projected market growth from
$8.5 billion to $13.5 billion in 5
years
• Increase in demand for healthier
options.
• Increase in sales for lower
caffeine content beverages.
• Consumer base in lower than
that of sports drinks
• Popular only among the age
group of 18-24.
• Negative Media Attention for
health related risks
• Competition from major players
in the market and upcoming
launch of healthier drinks
nationally
• Only 32% consumption of
energy drinks in the last 6
months.

12. Price Comparison as Energy Drink
Crescent Price Average Market
Price
$2.75 $2.99

13. Analysis as Energy Drink – Hydration Vs Energy
High Market Share by
competitors yet
Crescent is more
hydrating value

14. Analysis as Energy Drink – Nutrition Vs Taste
34% market
share
27% market
share
High Competition yet
Nutrition value is
higher

15. Hypothesis
Crescent
as a
Sports Drink

16. SWOT ANALYSIS ~ Sports Drink
Strength Weakness
ThreatOpportunity
• Large Consumer base than
energy drinks
• Market expected to grow from
$6.3 billion to $9.58 billion by
2017
• Appealed to a wider age group
mostly youngsters
• Increase in demand for healthier
options.
• Increase in sales for lower
caffeine content beverages.
• Slower growth rate when
compared to Energy Drinks
• Consumer perception that these
are meant for athletes and sports
persons
• Not popular among older age
groups.
• Concerns for child obesity rates
• Competition from major players
in the market and upcoming
launch of healthier drinks
nationally

17. Price Comparison as Sports Drink
Crescent Price Average Market
Price
$2.75 <$1.00 - $2.00

18. Analysis as Sports Drink – Hydration Vs Energy
21% market
share
73% market
share
High
Competition

19. Analysis as Sports Drink – Nutrition Vs Taste
Competitor product’s
taste is on a positive
side

20. Hypothesis
Crescent
as an
Organic Drink

21. Hypothesis
Crescent as an Organic Drink
• Broader Approach
• Timing factor
• More Distributors to
evaluate
• Excessive advertising
budget needed
• Increased Demand
for Organic Drinks
• Existing brand
knowledge among
consumers
• Competitive Pricing

22. Final Recommendation
Energy Drink Sports Drink
Vs
Competitive Price in its market Higher Price in the Market
Consumers in the same
demographic age group
Consumers in the same
demographic age group
Competitors market share
spread almost evenly
2 Competitors dominate the
market share
Consumption rate lower
compared to sports drink
Higher consumption rate
Nutritional Value higher than
its competitor
Nutritional Value similar to its
competitors
Projected demand is higher Projected demand is higher

23. CRESCENT MIGHT DO WELL IN
THE CONSUMER MARKET AS
AN
ENERGY DRINK

24. Can PDB fund
Crescent’s national
expansion in 2015??

25. Break Even Analysis
Whole Sale Price to
Distributor
Distributor Price
25%
Retail Price
40%
$1.24 $ 1.65 $2.75

26. Break Even Analysis $2.75
Crescent Production – 12,000 cases per month
Cost per case - $29.76 per case
Cost per Can - $ 1.24 per can
Variable Cost - $ 1.02 per can
Profit per can - $ 0.22 per can
No. Of Cans per case - 24
Earnings per case – $5.28 per case
Monthly Profit - $63,360
Yearly Earnings - $ 760,320
Break Even Point - $ 750,000
Yearly Profit - $ 10,320
Advertising
Budget
$750,000
Crescent can break even after first year with
annual profit of $10,320

28. Created by Aashritha Sripathi, Osmania Univeristy during a
Marketing Internship under
Prof. Sameer Mathur, IIM Lucknow
DISCLAIMER