Crescent Pure Case Study Harvard Business School

1. Crescent Pure
Case Study

2. Overview

3. Company Analysis
• Peter Hooper started it as a hobby and later the market
demand made him convert it into a business by
founding Crescent in 2008.
• Distribution included 200 retail outlets in the regional
grocery chains and small privately owned cafes and
grocers.
• The company sells 1000 cases per month.

4. • An all organic beverage infused with natural juices, herbal
stimulants and electrolytes.
• Delivered same amount of caffeine, as much in a cup of
coffee.
• Contained 70% less sugar than leading energy and sports
drinks.
Product Analysis

5. SituationTo capture the market before the
launch of competitive all-natural
products.
Production capacity constraints
prevents the full scale launch of
the product.
The ‘Soft-Launch’ of Crescent in
three western states of California,
Oregon and Washington.
Time constraint to develop ad
campaigns and negotiate with
beverage distributors and retailers.
Recommendation of a suitable
positioning strategy for Crescent
to meet the benchmarks.

6. Business Team:
• Michael Booth – CEO of PDB(Portland Drake Beverages)
• Matt Levor – Director of Market Research, PDB
• Sarah Ryan – Vice President of Marketing, PDB

7. Acquisition of Crescent by PDB
• PDB’s increase in revenue due to rise in demand
for organic food and beverage led to this
decision.
• Leveraging its manufacturing facility, organic
suppliers, and distributors relationships will
expand Crescent’s market.
• Due to previous failures in premium segments,
PDB wants Crescent to be a quality with
affordability product.

8. Break Even Analysis
As per analysis, the
management’s decision to
lower the price won’t stop
the company from making
profits and can generate up
to $10,320 in the year 2014.

9. THE PROBLEM IS NOT YET SOLVED
A Positioning Strategy is yet to be decided

10. Positioning Options:
•As Energy Drink
•As Sports Drink
•As Organic Energy Drink

11. Let us do a detailed Analysis, shall we

12. Energy Drink
Characteristics
• Has grown by
40%
• Consumed
mostly by
males between
18-34
• Main
Competitors
Fright and
Razor
Opportunities
• Has a
competitive
advantage of
low sugar and
purer
ingredients
• Market size
expected to be
of $13.5 Billion
Threats
• Growing
concerns for
health and
safety.
• 85% of the
category
revenue is
captured.
*Management Recommended

13. Sports Drink
Characteristics
• Has grown by
9%
• Consumed
mostly by
young
consumers
between 18-24
and 12-17.
• Main
Competitors
Glen and Drip.
Opportunities
• Has a
competitive
advantage of
low sugar and
purer
ingredients.
• Market size
expected to
increase from
$1.4 Billion to
$2.97 Billion.
Threats
• Growing
concerns for
childhood
obesity,
removal from
school vending
machines.
• 94% of the
category
revenue is
captured.
*Management Recommended

14. Organic Energy Drink
Characteristics
• Comprises of
health-
conscious
consumers who
consistently
purchased
organic
products.
• Commands a
Premium (of
25%) over other
beverages.
Opportunities
• Capitalization
on growth of
organic
beverage
industry.
• Broader target
segmentation,
thus wider
market.
• Can obtain
higher profits
due to premium
it carries.
Threats
• The $750,000
budget for ad
campaign may
not be
sufficient.
• Evaluation of
more numbers
of distributors
and retailers.

15. So which one to select?

16. Perceptual Maps:
Crescent Pure
Crescent Pure
From the Perceptual maps, we
can infer that we cannot
position Crescent Pure as
purely an Energy Drink or a
Sports Drink

17. Demographics
0%
10%
20%
30%
40%
50%
60%
Refreshing Healthy Affordable Functional Too Sweet Suitable for
teens
Fun Natural Hydrating
Crescent Positioning Comparison
Crescent Energy Drinks Sports Drinks
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
18-24 25-34 35-44 45-54 55+
POP.PERCENTAGE
AGE RANGES
Online Customer Demographics
59%
41%
Gender Demographics
Male Female

18. Recommendation:
• PDB should take the third option and position Crescent Pure as a healthier
Organic Energy Drink.
• As per the Break-Even analysis, keeping the product affordable will not
incur losses to the company, but will generate profits.
• The Pricing should be as follows-
Retail Price- $2.75/ can
Wholesale Price- $29.76/ case (24 cans in one case)
• Advertising Budget can be $750,000
• 12,000 cases should be sold per month to reach desired profits.

19. Disclaimer
Created by Harsh Bhushan
(Manipal Institute of Technology, Manipal)
During a Market Internship
by Prof. Sameer Mathur, IIM
Lucknow.