Crescent Pure Case Study
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Transcript of Crescent Pure Case Study
Harvard business school case analysis – crescent pure
Crescent purePeter Hooper founded Crescent Pure in 2008
All natural organic juice infused with herbal stimulants, delivered 80mg caffeine
Sugar quotient was 70% lesser than sports and energy drinks on average
Sold 1,000 cases per month. 8-ounce can retailed for $3.75 apiece
Sold out before inventory was replenished, sold out even when retailers hiked prices by 25%
High demand among men as well as women
Portland drake beverages(pdb)Manufacturer of organic juices and sparkling water
Revenues hit $120.5 million in 2012
Part of the $131 billion beverage industry
Wanted to expand into the functional beverage (sports and energy) sector through acquisition
Acquired Crescent in July 2013
CEO of PDB, Michael Booth entrusted Sarah Ryan, VP of Marketing with the brand positioning of Crescent.
Production capacity constraints restricted them to a soft launch in 3 states in January 2014
Major beverage companies to launch organic energy drinks in 2nd half of 2015
PDB wanted to enter that market early
Advertising budget - $750,000
Product positioning to be defined by 1st, October 2014.
Important factors
Market positioning options
Energy Drink
Sports Drink
Organic Drink
Energy drink marketPros
Projected market -$8.5 billion, growing at 40%, to reach $13.5 billion by 2018
Avg price for 8 ounce can - $2.99
Enthusiastic consumers – Men of 18-24 years old
Sales of energy drinks with lower levels of caffeine and purer ingredients rising due to demand for healthier drinks
ConsNegative marketing – health risks
Top 4 brands occupied 85% market share.
Only 32% of consumers had an energy drink in past 6 months
11% of them decreased consumption due to health risks
Sports drink marketPros
Market revenue -$7.5 billionExpected to grow to $9.58 billion in 2017
Attracted a wider consumer base than energy drinks
Consumers – 62% aged b/w 18-24, 77% aged b/w 12-17
Increasing demand for diet and low sugar sports drinks. Market grew by 33% in 2yrs
Market size for diet sports drinks expected to increase from $1.4 to $2.97 billion in 2017
ConsNegative marketing – Childhood obesity.
Top 2 brands occupied 94% market share.
Slowing market – increased only by 9% between 2007 and 2012
Avg $1 to $2 for 12 & 14 ounce containers respectively
Only 27% of consumers are females
Perceptual map of sports and energy drinks w.r.t. hydration vs energy
Perceptual map of sports and energy drinks w.r.t. nutrition vs taste
organic drink marketPros
Growing market for products with natural and organic ingredients
Target a wider consumer base
Command a premium pricing (25% more than conventional beverages)
Focus is one quality ingredients. Hence target consumers who are willing to pay more for quality
ConsSole focus on health and quality - lose out on other important customer segments
Appeal to wide range of customers not feasible on $750,000 budget
More distributors and retailers to be evaluated – time won’t permit
Demographics of Crescent online consumers Age ranges
18–24 44% 25–34 36% 35–44 15% 45–54 3% 55+ 2% Male 59% Female 41% College degree - 62%
Household income (median) ~ $42,500
Percentage of respondents who described Crescent
Descriptor Refreshing 35% Healthy 22%
Affordable 29% Functional 47% Too sweet 9% Suitable for teens 8% Fun 19% Natural 38% Hydrating 29%
Crescent – customer perception
Feedback on crescent
Retailer FeedbackTheir inventory of Crescent depleted quickly
Popular among customers aged 18 to 30
Higher percentage of women purchasers than anticipated
Stocks got depleted even when prices where hike by 25%
Customer FeedbackTaste appeals to most consumers
Only 25% remained concerned about lower amount of caffeine
Perceived well as a healthy alternative to energy drinks
Good taste, healthy ingredients and slight pick-me-up : consumer thumbs up.
energy organic
Organic energy drink
Reasons for such positioning
Consumers viewed “Energy” as Crescent’s most descriptive character
Positioning Crescent as and energy drink would reinforce existing perceptions from Oregon
Contains healthy ingredients, low sugar, yet packs a punch – 80mg caffeine
Energy drinks contained artificial sweeteners and excessive levels of stimulants
Crescent, as an organic energy drink can be a healthier alternative to these energy drinks
Advantages of such positioning
Avg pricing of energy drinks are $2.99 per 8 ounce can. Crescent, at $2.75 is a cheaper and lucrative option
Energy drink market is booming, growing at 40% and customers are already looking for healthier alternatives
Interest in Crescent’s natural ingredients reflected focus on health and wellbeing, thus transcended age groups and demographic profile.
Can make inroads into the organic drink market by brand extension
Cost Area Amount
Wholesale price / can $1.24
Cost price / can $1.02
Profit / can $0.22
Number of cans / case 24
Profit / case $5.28
Production of number of cases / month 12,000
Profit / month $63,360
Profit / year $760,320
Advertising costs $750,000
Net Profit $10,320
BREAK EVEN? YES!
BREAK EVEN ANALYSIS
Disclaimer Created by Aniketo Ghosh, Heritage Institute of
Technology, Kolkata during a marketing internship under Prof. Sameer Mathur, IIM – Lucknow.