The document discusses product positioning strategies for Crescent Pure, an organic energy drink acquired by Portland Drake Beverages. It analyzes positioning it as an energy drink or sports drink and examines consumer perception and market research data. It also considers positioning it as an organic beverage. The marketing team recommends positioning it as a mixture of organic and energy drink based on its benefits over drawbacks of each option. Financial projections show it would break-even in its first year with this strategy.

1. Crescent Pure
Harvard Business School Case

2. Crescent
Non-Alcoholic
Functional Beverage
PDB
Portland Drake Beverages
Manufacturer of
Organic Juices &
Sparkling Waters

3. Players
Sarah Ryan
Vice President of Marketing
PDB
Peter Hooper
Founder – Crescent
2008
Matt Levor
Director - Market Research
PDB
Michael Booth
CEO - PDB

4. Issue at hand!
To finalise a
product positioning strategy for
Crescent Pure.
Energy-drink vs Sports-drink
positioning

5. Issue at hand!
Launching of natural versions of energy
and sports drinks by country’s largest
national beverage companies in second
half of 2015
Production Capacity
Constraints

6. DecisionPlanning
Soft launch of Crescent in 3 western states (California,
Oregon & Washington) in January 2014 to beat country’s
other national beverage companies

7. GoalsGoals
Current Day : August 12, 2013
Product defining : October 1, 2013
Negotiate with beverage distributors and
retailers, to hire advertisers to develop ad
campaigns for January 2014 launch
Advertising Capital : $750,000
If break-even achieved in 2014, PDB would fund
Crescent’s national expansion in 2015

8. Ryan’s Task
Industry specifics related to
each of the two positioning options
The potential benefits and
drawbacks of each option
Final recommendations for positioning

9. U.S. Beverage Industry: Non-alcoholic
Products: water, dairy, juice, soda and functional beverages
Estimated worth (2013) : $131 billion
Projected growth (2018) : $164 billion

10. Beverage Distribution in U.S.
Manufacturer Distributor/Broker Retailer
25%
margin
40%
margin

11. Crescent Pure : History Organic, all-natural
beverage lightly infused
with organic juices, herbal
stimulants, & electrolytes
Herbal stimulants (guarana
seed & ginseng) deliver 80gm
of caffeine =
energy in 1 cup coffee = half
the energy of leading
beverages (Fright & Razor)
Sugar quotient : 70% less
than leading energy and
sports drinks
Manufacturing &
distribution from a rented
warehouse in Portland,
Oregon.
2008
Founded by
Peter Hooper, Oregon
Benefit in sales due to
locavore movement.
Distribution in 200 retail
outlets, selling 1000
cases/month priced $3.75 for
an 8 ounce can

12. Acquisition
July, 2013
Late 2012s: Michael Booth’s adult sons drinking Crescent, word of mouth publicity
Crescent’s combination of energy-enhancing, hydrating, and all-
organic ingredients made it a natural extension for PDB’s
existing organic product lines

13. Strategy
PDB to leverage
manufacturing facility, organic
suppliers, and distributor
relationships to expand
Crescent’s presence
Short-term production capacity
restraints limited PDB’s
production of Crescent to
12000 cases/month in 2014
Crescent retail price to be
$2.75, 27% below the drink’s
original selling price.
Wholesale price to distributor’s
was $29.76/case.
PDB used only 3 distributors to
ensure their profitability with
average monthly costs being
$34,000

14. Ingredients & Packaging
Sleek, tall silver 8-ounce can with simple crescent logo & lime
green and orange accents
Less sweeter than other counter-products with a hint of fruit
Serving 80-calories in different flavours including lime juice,
lemon juice, small amounts of raw cane sugar and green tea
Energy stimulants – guarana and ginseng
Electrolytes – fine grain salt
All ingredients are “certified organic”

15. CASE ANALYSIS

16. Product Positioning Options
Energy drinks
positioning
Sports drinks
positioning
Consumers demographics, perceptions, consumption habits & competitive landscape

17. Energy Drinks Positioning
Crescent delivers a boost of
energy to combat fatigue and
promote mental focus. Consumers
viewed “energy” as Crescent’s
most descriptive characteristic.
Prices of energy drinks in U.S.
vary from $2 to $5 per can based
on can size (8 oz, 12 oz, or 16 oz),
average price for
8 oz can being 2.99$
34% population had consumed a
energy drink in last 6 months.
Target segment being men 18 to
24 years old.
Projected market in 2013:
$8.5 billion
Healthier alternative to leading
brands, because of their use of
artificial sweeteners & excessive
level of stimulants and Crescent’s
organic certification & minimum
caffeine
Concern about long term viability
of this market, fall in consumption
because of negative media
attention.

18. Sports Drinks Positioning
Crescent’s hydrating elements
paired with the mental focus and
energy boost, can enhance athletic
performance.
Sports drinks come in a variety of
sizes averaging $1 & $2 for 12 oz
and 24 oz containers.
42% of the beverage drinkers
considered sports drinks as
“anytime beverages.”
Market in 2012: $6.3 billion
Crescent’s low sugar content and
all-natural ingredients can appeal
to health conscious consumers.
Crescent’s $2.75 price for an 8 oz
can is significantly higher than
those of similarly sized sports
drinks

19. Market Research
Energy Drinks Sports Drinks
Market Size 40% growth between 2010 & 2012.
2013: $8.5 billion;
Forecast 2018: $13.5 billion
9% growth between 2007 & 2012.
2012: $6.3 billion
Forecast 2017: $9.58 billion
Consumer Data Mainly consumed by males aged 18 to 34,
Parents of children,
Household income < $25,000/year
Consumed by 50% males & 33% females. 40%
men and 27% women found it refreshing. Mail
consumers – 62% (18 to 24 aged) and 77% (12 to
17 aged)
Competition Market Share: Fright(34%), Razor(27%),
Torque(16%), Stellar(8%) & remaining 15%
split between 30 independent & regional
producers
Market Share: Gleam(73%), Drip(21%) &
remaining 6% split equally among 20 producers.
Opportunity Demand for healthier food & beverage
choices having lower levels of caffeine &
purer ingredients
Market for diet and low-sugar drinks rose by 33%
from 2010 to 2012. 2012: $1.4 billion; Forecast
2017: $9.27 billion
Threats 11% of 32% consumers in last 1 year
concerned about alleged health risks
Concerns about rising childhood obesity resulted in
removal from vending machines

20. Consumer Studies
Percentage of respondents who indicated a word that described energy or sports drinks

21. Perceptual Map : Hydration vs Energy

22. Perceptual Map : Nutrition vs Taste

23. Consumer Studies: Crescent
Demographics of Crescent online consumers Percentage of respondents who described Crescent

24. Even by increasing price by
25%, the inventory of
Crescent depleted quickly
Consumer Studies: Retailer Feedback
Popular among consumer aged 18 to 30, higher
percentage of women purchased than expected
Younger men often
purchased 6 cans or more
at a time

25. Taste
Appeal to most consumers,
pleased with taste, no
unfavourable reactions.
Energy Content
25% remained concerned
after knowing that it contains
energy equivalent to 1 cup of
coffee. Younger consumers
expected higher energy
content, while older ones
happy with it.
Customer Profile
Focus on health and wellness
transcending a specific age
or demographic profile.
Price
Most participants expected
price to be above $3 due to
organic and energy
ingredients. Some
questioned PDB’s ability to
provide quality organic
ingredients at $2.75.
Consumer Studies: Focus Group Feedback
3 customer segments: women aged (25-33), men aged (18-24) & men aged (25-35)
Conducted by Matt Levor

26. New Positioning Strategy: Organic Beverage
Potential Market
Comprises of health
conscious consumers
consistently purchasing
organic and all-natural
products
Organic Beverage
Category
Included carbonated soft
drinks, coffee, tea, fruit juice,
energy drinks, milk, and soy
beverages.
Price
Organic beverages claimed
a price premium (on average
25%) over conventional
beverages of the same
variety.
Avoided traditional energy &
sports drinks because of their
ingredients & its
psychographic positioning
not resonating
with their beliefs.
Could PDB exploit Crescent’s broad
appeal with positioning that focused
on health , wellness and natural
ingredients?

27. Finalising Product Positioning
POP with Energy Drinks
• Crescent delivers a boost of
energy to combat fatigue and
promote mental focus.
• Consumers viewed “energy” as
Crescent’s most descriptive
characteristic.
POP with Sports drinks
• Crescent’s hydrating elements
paired with the mental focus and
energy boost, can enhance
athletic performance.
POD with Sports Drinks
• Crescent’s $2.75 price for an 8 oz
can is significantly higher than
those of similarly sized sports
drinks
• Low sugar content and all-natural
ingredients
POD with Energy Drinks
• Crescent Pure’s price ($2.75) is
less than the average price of
other energy drinks ($2.99)
• Absence of artificial sweeteners &
excessive level of stimulants

28. To establish Crescent Pure as
a mixture of organic and energy drink
looking at its POPs, PODs and consumers studies
Final Strategy

30. Cases produced per month = 12,000
Cases produced per year = 12*12,000 = 144,000
Selling Price/case = $29.76
Total revenue/year = $29.76*144000 = $4,285,440
Output

31. Variable price/can = $1.02
Variable price/case = 24*1.02 = $24.48
Total input production cost/year = $24.48*144,000
= $3,525,120
Input(1)

32. Input(2)
Total advertising budget allotted = $750,000

33. Profit/Loss
Output – Input(1) – Input(2)
= $4,285,440 – $3,525,120 – $750,000
= $10,320
Break-even achieved !!

34. Conclusion
To follow an “organic-energy drink” positioning strategy and
thereby achieving a profit of $10,320

35. Created by Adesh Sharma, IIT Delhi
during a marketing management internship
under Prof. Sameer Mathur, IIM Lucknow