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Crescent Pure

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HBS Case

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Crescent Pure

  1. 1. CRESCENT PURE Harvard Business School Case
  2. 2. What is Crescent Pure
  3. 3. Company History Founded by Peter Hooper, a native of Crescent, Oregon in 2008
  4. 4. What is Portland Drake Beverages
  5. 5. The Situation
  6. 6. Portland Drake Beverages acquired Crescent to expand into the rapidly growing functional beverage segment (energy and sports drinks)
  7. 7. Embark on a soft launch of Crescent Pure in three states Spend $750,000 on advertising Use that figure as benchmark earning goal PDB plans to…
  8. 8. The Decision
  9. 9. Which positioning strategy maximizes Crescent’s revenues?
  10. 10. A closer look at Crescent
  11. 11. Herbal stimulants delivered 80mg of caffeine, roughly the same as a cup of coffee
  12. 12. All Crescent’s ingredients are certified organic
  13. 13. Priced at $2.75 per can, Crescent reflects PDB’s strategy of delivering quality organic products at affordable prices
  14. 14. Who are Crescent’s consumers and what do they think about it?
  15. 15. So, How to position Crescent?
  16. 16. 3 Options Energy Drink Sports Drink Organic Beverage
  17. 17. Market Size 40% growth within 2 years Estimated to reach $13.5 billion Consumer Data Males between ages 18 and 34 Parents of children Competition Fright, Razor, Torque and Stellar account for 85% market share Opportunity Consumers are demanding healthier food choices Threats Decrease in consumption due to concerns about safety
  18. 18.   
  19. 19. x Low energy content x Consumption has fallen due to negative media attention about health risks
  20. 20. Sports drink
  21. 21. Market Size Only 9% growth in 5 years Expected to reach $9.58 billion Consumer Data 50% of men and 30% of women Appeals to younger customers (ages 12 – 24) Competition Gleam and Drip have 73% and 21% market share respectively Opportunity Diet and low sugar sports drinks are growth areas Threats Concern regarding childhood obesity and high calorie drinks
  22. 22.  
  23. 23. x Crescent’s price is significantly higher that of competitors x Two competitors have a total of 94% market share
  24. 24. Organic beverage
  25. 25. Reinforces original positioning of PDB Organic beverages claim a 25% price premium
  26. 26. x Caffeine is typically not present in organic beverages x Product is poorly differentiated x Implementation is difficult due to limited budget and short time constraint
  27. 27. The Recommendation
  28. 28. Position Crescent as a Healthy Energy Drink
  29. 29. Target segment Young health conscious consumers
  30. 30. Crescent is positioned as a healthier alternative to leading brands
  31. 31. Will also attract consumers who consistently purchase organic or all-natural products
  32. 32. Break even analysis
  33. 33. Margin per can $1.24- $1.02 = $ 0.22 Margin per case = $0.22 x 24 = $5.28 Earning goal = $750,000 Number of cases to be sold to breakeven= 142046
  34. 34. Production Capacity 12000 cases per month = 144000 cases per year If all cases are sold, profit will be (144000-142046) x 5.28 = $10317.12
  35. 35. Breakeven is possible
  36. 36. Created by Lorraine Alvares, NIT Goa, during a marketing internship under the guidance of Prof. Sameer Mathur, IIM Lucknow.

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