CASE 2 : CRESCENT PURE

CASE 2 : CRESCENT PURE

1. Executive summaryProduct positioning is an important element of a marketing plan. Product positioning is the process marketers use to determine how to best communicate their products' attributes to their target customers based on customer needs, competitive pressures, available communication channels and carefully crafted key messages. Effective product positioning ensures that marketing messages resonate with target consumers and compel them to take action. (by Leigh Richards).Portland Drake Beverages (PDB) acquired Crescent in July 2013 in order to extension its existing organic product lines by launching a product which combines energy-enhancing, hydrating, and all-organic ingredients. Ryan, the vice president of marketing for PDB, was asked to provide recommendation on the positioning strategies. Two options are as follow: * Energy-drink positioning, * Sports-drink positioning.In order to have a good positioning, we have to analyze the customer needs, competitive pressures, communication channel and conveying the differentiating of the products through the selected communication channels.Based on the observations and analyzing the case .(we need to write here which product is better in the positioning segmentation)

2. Case analysis2.1 Crescent Pure (a company)Peter Hooper, a native of crescent, Oregon, saw a market opportunity for a healthy, energizing drink. He founded Crescent in 2008. Organic, all natural food a beverages became ubiquitous in the Pacific Northwest region in the 1990s and early 2000s, and Hooper found popular energy and performance-enhancing drinks unhealthy, to sweet, and artificial. He began experimenting with different ingredients in order to craft an organic, all natural beverage lightly infused with organic juices herbal stimulants, and electrolytes. He wanted a drink that would refresh, energize, and enhance mental focus. What began as a hobby became a business as Hooper saw growing local demand for his product.Portland Drake Beverages (PDB) recent acquisition of Crescent Pure is a very interesting move that could boost the companys current market. However, due to Crescents versatility Sarah Ryan has been charged with figuring out whether they should position the drink as an energy drink or sports drink.2.2 CustomersMostly, Crescent have two group of consumers which is energy drinks consumers and sport drinks consumers. The largest groups of energy drink consumers were males between 18 and 34. Parents of children were also more likely to consume energy drinks. The highest volume of energy drinks consumed was by respondents with a household income below $25,000 per year.For sports drinks consumer, roughly half of men drank sports drinks, while only a third of women did. Although 40% of men found sports drinks refreshing, only 27% of females did. Sports drinks appealed to younger consumers; 62% of those between ages 18 and 24, and 77% of those ages 12 to 17.

2.3 DistributorsIn this industry, the distribution will involve moving products from manufacturing to distributors and then the distributors will sell the products to retailer before the products deliver to consumers. Usually, distributors will markup 25% from manufacturer while retailer will markup 40% from distributors. Because of limited production capacity and in order to ensure distributors profitability sold out, PDB only used three distributors. The distributors monthly cost would $34,000 during Cresents first year. The cost includes cost of goods, marketing materials, employee training and compensation. PDB will decide which distributors to select after determine the most effective positioning for Crescent because the drinks positioning would influence where the product was sold and which distributors that PDB would select. 2.4 CompetitorsThere are two leading energy beverages on the market, Fright and Razor followed by Torque and Stellar. Table 1 and Table 2 shows the market share for each energy drinks and sports drink.CompetitorsMarket Share

Fright34%

Razor27%

Torque16%

Stellar8%

Others15%

Table 1: Energy Drink

CompetitorsMarket Share

Gleam73%

Drip21%

Others6%

Table 2: Sports Drink

3. Market researchResearch provided from three consumer surveys conducted by a private research firm, several academic reports and industry media coverage. We are using SWOT analysis to summarize the surveys.

3.1 SWOT Analysis comparison between Energy drinks and Sport drinks

STRENGHT

The market for energy drinks was growing for the period 2010 and 2012, had grown by 40%. It was estimated to be $8.5 billion in the United States in 2013 and forecasts projected that figure to reach $13.5 billion by 2018.The market for Sport drink increased only 9% between 2007 to 2012. In 2012, the market for sports drinks reached $6.3 billion in the United States and was expected to grow to $9.58 billion by 2017.From the above, Energy is expected to grow bigger in value compare to Sport drinks.

WEAKNESSESEnergy drinks market share where Fright, Razor, Torque, and Stellar accounted for 85% of category revenue (34%, 27%, 16%, and 8%, respectively). The remaining 15% was split between roughly thirty independent regional and national producers.

Gleam and Drip had 73% and 21 % market share, respectively. The remaining 6% of market share ($378 million) was split fairly evenly among roughly 20 producers.

From the above, Energy have more competitors and larger market compare to Sport drinks market share and competitors.

OPPORTUNITIESSales of energy drinks with lower levels of caffeine and purer ingredients were rising due to consumer demand for healthier food and beverage choices.

New diet and low-sugar sports drinks were growth areas for the Sport drink industry. 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. The market size for diet and low-sugar sports drinks was expected to increase from $1.4 billion in 2012 to $2.97 billion in 2017.

Energy drinks demand will be increasing as people wants more healthier food and beverage compare to sport drinks which is high in chemicals from labs engineered nutrition.

THREATSNews stories were highlighting the drinks' alleged health risks: 32% of consumers over 18 indicated they drank an energy drink in the last six months, 11% of whom were drinking fewer energy drinks than they had a year earlier, due to concerns about health and safety.

Sport drinks is creating concern regarding rising childhood obesity rates resulted in government-mandated guidelines to remove high-calorie sugary drinks and snacks, including sports drinks, from school vending machines beginning in 2014.

The above threats shows that energy drinks create less health risk compare to sport drinks.

4. Segmentations and TargetingSegmentation and Targeting Portland Drake Beverages (PDB) recent acquisition of Crescent Pure is a very interesting move that could boost the companys current market. However, due to Crescents versatility Sarah Ryan has been charged with figuring out whether they should position the drink as an energy drink or sports drink. The main age range of energy drink consumers are between 18-34 years old and are typically male, while the sports drink market is larger, including a larger male and female population ranging from age of 12-24. Hooper had set up an online store, anticipating a future focus on online sales. Chart 1 and chart 2 shows the study of online sales based on gender and ages.

Chat 1: Gender of Crescent Online Consumer

Chart 2: Age Range of Crescent Online Consumer

Based on the chart above, it shows that most of the consumers are male because male actively involved in sports. In term of age, 44% of the consumers are age ranges from 18-24 years old while 36% are age ranges from 25-34 years old. Market research has found that the largest group of energy-drink consumers were males between ages 18 and 34. Parents of children were also more likely to consume energy drinks. Besides, the highest volume of energy drinks consumed was by consumers with households income below $25,000 per year. Roughly half of men drank sports drink, while only a third of women drank sports drink. Although 40% of men found sports drinks refreshing, only 27% of females did. Sports drink appealed to younger consumers 62% of those between ages 18 and 24 while 77% of those ages 12-17. So that, PDB determined that younger, health-conscious consumers who regularly consumed energy or sports drink were potential prospects for Crescent. Compare to other competitors, most products they offered is not a healthy alternative for energy drinks. Most of these drinks are full of high fructose corn syrup and loaded with extreme amounts of caffeine. Crescent give the consumers a healthy alternative to this option. The trend these days is towards more organic and healthier choices. Crescent gives the option for a healthy version of an energy drink which is much needed. The Energy Drink market is growing at a much faster rate than the sport drink market as well as the fitting into a much better price point for marketing. With the market for these energy drink being on average $2.99 the price of $2.75 for crescent is below the market average as well as being a slight bit different by marketing a healthy alternative option to most other sport drinks on the market now. 5. Positioning

Definition on Positioning by Wikipedia:The marketing activity and process of identifying a market problem or opportunity, and developing a solution based on market research, segmentation and supporting data. Positioning may refer the position a business has chosen to carry out their marketing and business objectives. Positioning relates to strategy, in the specific or tactical development phases of carrying out an objective to achieve a business' or organization's goals, such as increasing sales volume, brand recognition, or reach in advertising.

The positioning charts are extremely helpful in attempting to figure out where there are new opportunities in the market and also what consumers typically like. For example, in Exhibit 1 there is a big space in the low energy, low hydration quadrant. However, that does not seem like it would be a very popular drink. Instead, there is a large market opportunity for a hydrating drink with a medium amount of energy attached. In Exhibit 2, we once again find a large.

Crescent is an all-nature organic energy drink and that is how it should be positioned. This positioning strategy reaches our target market and falls into locvore movement that is trending throughout the US. Energy drinks are often packed with chemicals that lead to serious health issues. Crescent will be launched as a healthier alternative to other energy drinks but still at a very affordable price. Often times people chose to avoid organic products because of the price but if the drinks are positioned at a moderate and affordable price than Crescent will be able to be profitable and successful with their drink

Though the market is dominated by a few large competitors, Crescent Pure has the capability of penetrating the market with competitive advantage of being healthier, more hydrating, organic and cheaper than the competition. Crescent Pure has an energy drink that is more suitable to consumer trends than the competitors brands. With low brand recognition, Crescent Pure will face a tough time educating consumers who are scared from the bad media attention in the energy drink segment. To be successful, they will need to successfully communicate to the consumers that it is a healthier and certified organic alternative to the industry average. Another competitive disruptance Crescent faces is the consumer perception that the drink does not provide enough energy. Crescent will need to communicate that they supply the same amount of energy in a bottle/can of their product as a cup of coffee. With limited marketing budget of $750,000, Crescent will need to be a effective as possible in educating their targeted consumers with their products features and benefits.

6. Recommendations The recommended plan of action for PDB is to market Crescent Pure as an energy drink Ability to boost energy and mental focus Health benefits where contain no artificial chemical and uses caffeine from natural products with much less sugar together with natural flavors Pricing advantage as it sell it at a lower cost Trending market growth by 40% between 2010-2012

7. Conclusion

As a conclusion, the Crescent Pure as well-known as beverage which delivers a boost of energy to combat fatigue and promote mental focus Positioning Crescent as on energy-enhancing beverage.With the passage of time they increases its strength and reduces the weaknesses. The company very much emphasis on the energy drinks to keep its name in the market.

8. References

1. Marketing Management by Kotler Keller2. http://en.wikipedia.org/wiki/Marketing3. http://www.marketingmagazine.co.uk/4. http://www.businessdictionary.com/definition/marketing.html5. https://quizlet.com/71569488/crescent-pure-case-hbs-flash-cards/6. https://prezi.com/_msrkrod9m3o/crescent-pure/7. http://writingbureau.net/case-analysis-crescent-pure/

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