PDB acquired Crescent Pure to expand its organic product line. Sarah Ryan must choose a positioning strategy for Crescent Pure's launch in 3 markets. The options are energy drink, sports drink, or organic drink. Consumer research shows perceptions of energy drinks as unhealthy while sports drinks are seen as low-energy. An analysis of the markets finds opportunity in the growing energy drink and organic drink segments. Ryan recommends positioning Crescent Pure as an organic energy drink to leverage its reputation and avoid competition, which is supported by a break-even analysis showing profits will exceed PDB's $750,000 goal.

1. z
A Harvard Business School Case Study

2. Which are the companies involved?
Crescent Pure & Portland Drake Beverages
How?
Crescent Pure was acquired by PDB in 2013.
Why?
The CEO of PDB felt it important to expand PDB’s
trusted
and popular suite of organic products.

3. A Brief History of ‘their’ Time
Crescent Pure
Founder: Peter Hooper in 2008
• Saw market opportunity for a
healthy, energizing drink.
• Crafted an organic, all-natural
beverage lightly infused with
organic juices, herbal
stimulants, and electrolytes.
Portland Drake Beverages
CEO: Michael Booth
Vice President of Marketing:
Sarah Ryan
Director of Market Research:
Matt Levor

4. z
Sarah Ryan
Michael Booth
Matt Levor
Vice-President ( Marketing) , PDB
CEO, PDB
Director of Market Research,
PDB

5. z
 Michael Booth, PDB’s CEO has tasked Sarah Ryan
with evaluating possible positioning strategies for
the launch Crescent Pure (newly purchased by
PDB) .
 Sarah has to evaluate 3 possible positioning of
Crescent - Sports drink, Energy drink or Organic
drink and give her recommendation.

6. • They’ve got an impending launch of Crescent Pure in 3
U.S. markets,
California, Oregon, and Washington
• Production capacity constraints limit PDB to produce only
12000 cases/month.
• A benchmark earning goal of $750000, the budget for
advertising
during 2014, is expected.
• Ryan has only 6 weeks to finalize a product position
strategy.

7. z The BIG Picture
 PDB core values : Quality, Affordable organic beverages.
 In order to beat its competitors , PDB is planning a ‘soft’ launch of
Crescent Pure in 3 states , to prepare for the major launch next
year.
 It has set a target of $750,000 in revenues to consider Crescent
Pure a success.

8. z
Possible Positioning Options
Energy Drink Sports Drink
Organic
Drink

9. Product Position Strategy
Energy Drink?
Sports Drink?
Or
Organic Beverage?

10. z
Market Analysis – Energy Drinks
THREATS
Alleged health risks,
reduced consumption
OPPORTUNITIES
Consumers want low
caffeine and more
natural ingredients
COMPETITION
Razor, Fright,
Torque and Stellar
hold 85% share
MARKET SIZE
Estimated worth $13.5 billion by 2018.
Majority consumers in ages 18-34

11. Crescent Pure as an Energy Drink
Yay!
• 34% of the population regularly consume Energy Drinks.
• The market size grew by 40% during the periods 2010-12 and is expected
to grow by 59%
during 2013-18.
• Competitors were not being viewed as providing significant benefit to
consumers.
• Consumers demand for healthier foods and beverage options were on the
rise, meaning
those having lesser amount caffeine like Crescent could get advantage.
• Average price of Energy drinks were $2.99, higher than the $2.75 set by
Crescent.

12. z
Market Analysis – Sports Drinks
THREATS
High sugar content,
concerns regarding
obesity
OPPORTUNITIES
Newly launched low-
sugar and diet drinks
have gained customers
COMPETITION
Gleam and Drip hold
about 90%of market
share
MARKET SIZE
Expected to reach
$9.58 billion by 2017

13. Crescent Pure as an Energy Drink
Meh!
• News stories highlighted drinks’ alleged health risks.
• Top brands accommodated 85% of market share.
• Only 32% of consumers over 18 indicated they drank energy
drinks in the last six months.
• 11% of consumers had fewer drinks in the last year due to
health concerns and safety.
• Children were more inclined to drink sports drinks.

14. z
Market Analysis – Organic Drinks
THREATS
Low advertising spend will
cause lack of brand
recognition
OPPORTUNITIES
Consumers have become
health-conscious, embrace
organic drinks
COMPETITION
No major brands in
competition currently,
nascent segment.

15. Crescent Pure as a Sports Drink
Yay!
• Sports drink appealed to younger consumers aged 12-17 and 18-24 who are
larger in number.
• Diet and low-sugar sports beverages, which did not exist before 2009, had
grown by 33%
between 2010 and 2012, taking market share from traditional Sports Drinks.
• Consumer perceptions of what they could potentially get from a sports drink
was higher than
that from an energy drink.
• Attracted a wider consumer range than Energy Drinks.

16. Crescent Pure as a Sports Drink
Meh!
• Average price of a sports drink was between $1 & $2, whereas that of Crescent
was set to be $2.75.
• Their demography included lesser market appeal for women for the type of
drink.
• Concern regarding rising childhood obesity rates resulted in government-
mandated guidelines
• to remove high-calorie sugary drinks.
• Only 6% of market share was available to dominate when taking into account
current top brands.
• Market increased by only 9% during the period 2007-12 and was expected to
increase by only 52%
• as opposed to 59% for Energy Drinks.

17. Being an Energy Drink, Crescent Pure,
• Can tap into the market being occupied by Energy Drinks
• Can differentiate itself by claiming to be derived from organic roots
being all-organic.
• Use media influence regarding health to advantage.
• Be a cheaper alternative of Energy Drinks.

18. z
Crescent Pure vs. Energy Drinks
Points of Parity
• Refreshing
• Energizing
• Caffeine content
• Kills fatigue
Points of
Difference
• Organic
• Low Sugar
• $2.75 vs $2.99

19. z
Crescent Pure vs. Sports Drinks
Points of Parity
• High Nutritional value
• Keep Hydrated
• Enhance Performance
Points of Difference
• Low Sugar
• Healthy alternative

20. But Wait…….!

21. z
Consumer Analysis

22. Perception of Energy Drink & Sports Drink Perception of Crescent Pure
Among Consumers Among chosen online respondents

23. z

24. Consumers’
Perception of
an Energy Drink is
a low hydration,
high energy mix
while that of a
Sports Drink is a
low energy
drink providing
hydration benefits.

25. z

26. Consumers’ Perception
of
an Energy Drink is a
tasty,
low nutrient mix while
that of a
Sports Drink is a tasty
as well as
a provider of nutritive
benefits.

27. z

28. What about as an
Organic Beverage?

29. z
Recommendation
 Crescent Pure should be positioned as an Organic,
healthy sport drink to capture a much wider market (
ages 18-60) .
 This will help the company avoid competition in Energy and
Sports drinks segments and capitalise on its reputation of being
organic and healthy.

30. It would suit very well,
But
Crescent Pure already has a reputation as an
energy enhancing drink providing hydrating effect
with all-organic ingredients,
So
They won’t need to establish Brand Position
IF………..!

31. z
Break-even Analysis

32. They choose to be
An Energy Drink!

33. z
 Variable cost of 1 can is $1.02 . After applying a margin profit of 18%, prize per can to
the distributor will be $1.24
 This implies a net margin of (1.24 – 1.02) = $0.22 profit per can .
 Company’s production = 12,000 cases per month.
 Net Revenue : 0.22*24*12*1200 = $760320 , in one year .
 Net Profit = Net revenue- Advertising budget = 760320- 75000
=$10,320
The analysis shows that PDB will be able to break even in the given time and
turn a profit of $10,320

34. Wait a minute! What about
the Earning Goal of
$750,000?

35. Break-Even Analysis
• PDB’s wholesale price to distributors: $29.76 per case (or $1.24 per can )
• Cans per case: 29.76/1.24 = 24 cans
• Variable costs per can: $1.02
• Profits per can: $0.22
• Number of cases planned to be sold in a month: 12,000 (12,000 X 12 in a year)
• Number of cans planned to be sold in a year: 12,000 X 12 X 24 = 3,456,000 cans
• Profits from sales in a year: 3,456,000 X $0.22 = $760,320
So who was talking about Earning Goals
again?

36. Earnings in a Year: $760,320
Advertisement Budget: $750,000
Net Profit: $760,320 - $750,000 = $10,320
So, Yes, the firm Breaks Even before a year is
completed!

37. z
Summary
 Companies Involved
 Characters Involved
 Situational Analysis
 Possible product positioning options – Energy drinks, Sports
drinks, Organic drinks
 Consumer Analysis
 Recommendation
 Break-even Analysis

38. z
Created by Shantanu Pandey, from Delhi
Technological University, during an internship
under Professor Sameer Mathur, IIM Lucknow
DISCLAIMER

39. THANK YOU!

40. z