Sarah Ryan, VP of Marketing at PDB, must decide whether to position Crescent Pure as an energy drink, sports drink, or organic health drink. The document provides market research on the size and growth of the energy drink and sports drink markets. If positioned as an energy drink, Crescent Pure would have $51 million in sales, but high caffeine and concerns over health may be issues. As a sports drink, it could achieve $19.5 million in sales, targeting a younger demographic. Based on expenditures and revenues, positioning it as a sports drink may be most viable. The assistant recommends Crescent Pure be positioned as a sports drink or, if an organic drink, more market research is needed to support that decision.

1. CRESCENT PURE
Harvard Business School
Case

2. THE MANAGEMENT
Sarah Ryan, Vice President,
Marketing
Michael Booth, CEO, PDB
Matt Levor, Director of Market
Research
THE COMPANY
Portland Drake Beverages

3. The Present
Situation
• PDB acquired Crescent Pure
• Want to re-launch it’s product on a
National Level
• Reposition the current brand of
Crescent Pure

4. The Dilemma
Whether to Position Crescent Pure
as a
• Energy Drink
• Sports Drink
• Organic Health Drink

5. Crescent
HistoryType: Organic all natural beverage
USP: 70% less sugar than rivals
Price: $3.75 for an 8-ounce can
Major Market: Oregon
Consumer’s feedback : “Refreshing,
healthy & functional”

6. The Targets
Step 1: Launch Crescent Pure in 3 states :
California, Oregon and Washington
These states cover 15% of national
functional beverage demand
Step 2: Cover at least advertising revenue of
$750,000 in 2014
Step 3: If step 2 target met, launch
Crescent Nationally

7. Market
Research
US Non – Alcoholic Industry
Present value : $131 billion
Projected to grow to $164
billion in 2018

8. There is a rise of non-alcoholic beverage from
$ 131 bn(2013) to $ 164 bn(2018)
Thus Annual growth rate : 5 %
Market size in 2014 = $ 137.55 bn
Consider 3 states – California, Oregon, Washington
where Crescent intends to launch = 15% of
National share = 15% of $ 137.55 bn
= $ 20.63 bn
Some Data
Analysis
(according to data given)

9. Now
for Energy Drink
15% for minor producers = 15% of $
20.63 bn = $ 3.09 bn
Assume all 30 minor producers
present
Therefore each producer has
market roughly of $3.09 bn/30 = $
0.103 bn
or $ 103 million

10. & Now
for Sports Drink
6% for minor producers = 6% of $ 20.63 bn =
$ 1.218 bn
Assume all 20 minor producers present
Therefore each producer has market
roughly of $1.218 bn/20
= $ 60.9 million

11. But Wait
Should Sarah position Crescent
as a
Energy Drink
Or
Sports Drink

12. Or
should she consider
her third option of
promoting
Crescent
as an
Organic Health Drink

13. Market
ResearchEnergy Drink
• Market Size : $ 8.5
billion (2013)
• Growth : approx.
20 % per annum
• Forecast : $ 13.5
billion in 2018
Sports Drink
• Market Size : $ 6.3
billion (2012)
• Growth : approx.
1.8 % per annum
• Forecast : $ 9.58
billion in 2017

14. Market Research
contd.Energy Drink
• Competitors :
Together, Fright,
Razor, Torque, Stellar –
all constituting 85%
market share
• Space remaining :
15 % shared by 30
small brands
• Opportunity :
Sales of energy drinks
with lower amount of
caffeine on rise
Sports Drink
• Competitors :
Gleam – 73% Drip –
21% market share
• Space remaining :
6 % shared by 20 small
brands
• Opportunity :
New Diet and low
sugar sports drinks on
rise

15. Threats
Energy Drink
Concerns about
health and safety
due to sugar and
caffeine
Sports Drink
Rising childhood
obesity and
government
mandated
guidelines

16. If she considers Energy
Drink positioning
We need
to do some
high school maths

17. At National
Level
(according to data given)According to Energy Drink Market
Analysis and a 1.8% growth per
annum
8.5 10.2 12.24 (in billion $)
2013 2014 2015
15% share by minor producers make it
$ 1.53 billion
Divide it by 30 (no. of producers) and
we get $ 0.051 billion or $ 51
million

18. Energy drink average pricing in market
is $ 2.99 but Crescent Pure is priced at
$ 2.75.
This means customers will have
perceived value of low quality and
doubt the authenticity of organic
content.
Organic content attracts 25%
But, some
considerations

19. High caffeine content are a great
reason of concern as indicated by blind
test and previous market research.
Customers also rank Energy drinks low
on certain characteristics like
Refreshing, Healthy, Affordability, Teen
suitability, Hydrating
Compared to
Sports Drink

20. Long – term viability
a great reason to
worry
For
Energy
Drink
Positioning

21. For Details
refer
Table 1
Exhibit 1
Exhibit 2

22. If she considers
Sports Drink
positioning
Some more
maths

23. At National
Level
(according to data given)
According to Sports Drink Market
Analysis and an approx. 20% growth
per annum
6.3 6.413 6.528 (in billion
$)
2012 2013 2014
6% share by minor producers make it
$ 0.39 billion
Divide it by 20 (no. of producers) and
we get $ 19.5 miilion

24. Some
Considerations
Sports drink average pricing in market is $1 -
$2 but Crescent Pure is priced at $ 2.75
attracting a premium pricing.
Relatively younger customer base.
Major consumers aged 18-24.
Most perceived Sports drink as more
Refreshing, Hydrating, and teen suitable
Than
Energy Drinks

25. But
PDB
has already some
failure with
Premium Pricing
Strategy

26. A Broader View
Promoting Crescent
Pure as an
Organic
Product

27. Crescent Pure’s
Already ‘+’ Points
• All Natural Ingredients & Herbal stimulants –
Ginseng & Guarana, Raw cane sugar
• 70% less sugar
• Limited Caffeine – 80 mg
• Much better customer Reception
• Already Established organic player

28. So ,
What should
she finally do
?

29. As per
Expenditures & Revenues
are considered

30. Expenditures
1. Advertising :
$750,000
per annum as of 2014
2. Distributor costs :
$34,000 per month * 12
=
$408,000
per annum as of 2014
Total Costs = Advertising + Distributor costs
=
$1,308,000

31. Revenues
Pricing at Retail : $ 2.75 per can
Variable cost per can = $ 1.02/can
Variable cost per case = $1.02 * 24 =
$ 24.48
Price to wholesaler = $ 29.76/case
PDB’s earning per case = $ 5.28/case
Monthly Income = $ 5.28 * 12000 = $
63360
Annual Income = $ 63360 * 12 = $
760,320

32. Personal View Point
• Sarah Ryan should consider positioning
Crescent Pure as a Sports Drink
• If she thinks positioning it as an Organic
Drink, she should support it with more
Market Research and Analysis based on
Data

33. Thank You