Representatives of Portland Drake Beverages are in a fix trying to determine a product position for their newly acquired firm Crescent Pure. What should they do? A Case Study.

1. A CASE STUDY ON
CRESCENT PURE

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. We got a situation!

5. • 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.

6. Product Pos…… What?

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

8. 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.

9. 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.

10. 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.

11. 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.

12. But Wait…….!

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

14. 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.

15. 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.

16. What about as an
Organic Beverage?

17. 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………..!

18. They choose to be
An Energy Drink!

19. 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.

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

21. How about some, not Geography, Math?

22. 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?

23. 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!

24. THANK YOU!

25. DISCLAIMER
This presentation was created by Sai Srinath Rajendran of TKMCE, during a
Marketing Internship under the guidance of Prof. Sameer Mathur of IIM, Lucknow.