Crescent Pure Case Study- Harvard Business School

CRESCENT PURE
Harvard Business School Case Study Analysis

COMPANIES INVOLVED
»PORTLAND DRAKE BEVERAGES (PDB)
»CRESCENT PURE

Portland Drake Beverages
Manufacturer of organic juices and sparkling water
Aims to deliver quality organic products at
moderate prices
Successfully managed to earn $120.5 million by
2012
Currently operates under Michael Booth- CEO of
PDB

Crescent Pure
Founded by Peter Hooper in 2008 in Oregon
Non-alcoholic functional beverage
Comprises of energy enhancing, hydrating and
all-organic ingredients
Acquired by PDB in 2014

» Acquisition of Crescent Pure by PDB has given rise
to the dilemma of choosing a positioning strategy
» Analysis required on:
1. Evaluation of product positioning options
2. Pros and Cons of each option
3. Final recommendation
CURRENT SITUATION

1. PRODUCT POSITIONING OPTIONS
•Energy Drink
•Sports Drink
•Organic Drink

Product Positioning Options (1/3)
Target Age Group: 18-24 yrs
Typically costs around $2 to $5 per can
Top four competitors account for 85% of
category revenue
Estimated at $8.5 billion in 2013
Energy Drink

Target Age Group: varies from 12-24 yrs
Preferred more by teenagers
Top two competitors occupy 94% of market
share
Estimated at $6.3 billion in 2012
Sports Drink

Preferred by all ages
Newly emerging in the beverage market
Includes soft drinks, tea, energy drinks, milk
Claim on average a 25% price premium over
conventional beverages
Organic Drink

2. PROS AND CONS (1/3)
Energy Drinks

Crescent as an Energy Drink
 Positioning as an energy drink
would reinforce perceptions from
Oregon
 Rate of energy drinks market
growing by 40%
 Price of Crescent Pure will be less
than any other energy drink at
$2.75
 Contains lower caffeine and sugar
contents in comparison to its
competitors
 Cut throat competition
 General negative perception of
energy drinks popularized by the
media
 Association with alleged health-
related risks
Pros Cons

Sports Drinks

Crescent as a Sports Drink
 42% of sports beverage drinkers
considered them as ‘anytime
beverages’
 Achievement of the increasing
demand of low-sugar sports
drinks
 Wider target market from 12 to
24 yrs
 Association of the drink with
increased mental focus and
hydrating factors
 Cut throat competition
 More expensive at $2.75 for 8-oz.
than its competitors at $1 to $2
for 12-oz. and 24-oz.
 Stringent government regulations
 Relations with rising childhood
obesity
 Slow growth rate by only 9% from
2007 to 2012
Pros Cons

Organic Drinks

Crescent as an Organic Drink
 Dominate the upcoming organic
beverage market
 Secure premium prices over
other beverages
 Target all age groups
 Enjoy established brand name of
PDB as an organic beverage
manufacturer
 Scope of less competition
 Focus only on health conscious
customers would risk losing other
target groups
 Insufficient advertising budget at
$750,000
 Requirement of more distributors
and retailers
 Time paucity to execute such a
huge campaign strategy
Pros Cons

CUSTOMER ANALYSIS
0%
10%
20%
30%
40%
50%
60%
Energy Drinks
Sports Drinks
Crescent
Percentage of respondents who described
Energy Drinks, Sports Drinks and Crescent

PERCEPTUAL MAP (1/2)
Sports drinks are
viewed as high in
hydration but low in
providing energy
Energy Drinks are
perceived as high
energy but low
hydration drink

PERCEPTUAL MAP (2/2)
Sports drinks are
viewed as high in
nutrition as well as
taste
Energy Drinks are
perceived as low
nutritionally but good in
taste

3. FINAL RECOMMENDATION
Portland Drake Beverages should adopt
Organic-Energy Drink Positioning for
Crescent Pure

Crescent: Organic Energy Beverage
 Rising growth rate of the energy
drinks at 40% would be profitable
for PDB
 The upcoming organic market,
increasing demand for low sugar
drinks and the added advantage of
established brand name of PDB as
an organic drinks manufacturer
would ensure Crescent’s dominance
in the organic drinks market
 Crescent’s low caffeine
concentration along with its
natural ingredients is a strong
point of difference in comparison
to its competitors
 The fusion of a low priced energy
drink with the naturalness and
wide age acceptability of an
organic beverage would bring the
target market under one roof

FINANCIAL ANALYSIS
Wholesale Price per Can
Variable Cost per Can (-)
Profit per Can
Cans per Case
Profit per Case
Total Cases produced in 1 month
Total Cases produced in 1 year
Profit per year
Advertising Expenditure (-)
Net Profit
$1.24
$1.02
$0.22
24
24 x 0.22
$5.28
12,000
12,000 x 12
144,000
144,000 x 5.28
$760,320
$750,000
$10,320
PDB
BREAKS
EVEN!

SUMMARY
»INTRODUCTION TO PORTLAND DRAKE BEVERAGES
AND CRESCENT PURE
»SITUATION ANALYSIS: PRODUCT POSITIONING
OPTIONS, PROS AND CONS
»CONSUMER RESPONSE ANALYSIS
»FINAL RECOMMENDATION:
ORGANIC-ENERGY DRINK
»DETERMINATION OF BREAK EVEN

Disclaimer
Created by Arsha Latif, Dyal Singh College, University of Delhi
during a marketing internship under Prof. Sameer Mathur,
IIM Lucknow

Crescent Pure Case Study- Harvard Business School

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