Crescent Pure Discussion Questions: 1. Given that Crescent is PDB’s first entry in the US sports and/or energy beverage markets, what markets, what must PCB do in regard to Crescent’s pending pen ding launch?
Before the launch of Crescent Pure, PCB will have to devise a positioning strategy. Given the unique qualities of Crescent Pure, it can be positioned in three different ways. Crescent Pure contains hydrating elements which could support the positioning as a sports drink. Crescent’s $2.75 price is relatively higher than the average price in this segment. If Crescent Pure positions the drink as a sports drink, they will have to sell the drink at a lower price in order to compete in this sector. While the low sugar content and certified organic label can be leveraged to gain a competitive advantage. Another positioning strategy could be to position Crescent as an organic, all-natural drink. As the drink is certified organic, the company c ompany can promote the health advantages of consuming an organic drink versus non-organic. There is a growing market for organic products, and specialty grocers who only sell certified organic products can be targeted. However, having a broader range can confuse the product and drive them towards more specifically positioned products. This will lead to increase in advertising expenditure and cause delay in the launch of product as there would be more distributers and retailers to evaluate. The caffeine content of Crescent is equivalent to a cup of coffee. This could be used to position it as an energy drink. The energy market showing a 40% growth in two years and a growing health-conscious market trend. The negative publicity due to alleged health risks related to energy drinks can provides an opportunity to position Crescent as all-health organic energy drink. 2. What Factors influence the positioning of Crescent? Price Range: The price range for each type of drink is different. Prices for energy drink varies from $2
to $5 per can, based on can size and retail outlet. The average price for 8 oz. of energy drink is $2.99, whereas it is relatively lower in sports drink category. The “organic beverages” category enjoy a premium price range (on average 25 %) over conventional beverages of same variety. The positioning of Crescent would depend on the price range that company wants to set. Market growth: The positioning will also depend upon the expected market growth in each category.
Energy drinks market is growing rapidly whereas the growth has been slow in sports drinks market. But forecasts suggest that both markets are expected to grow in next 4-5 years. The organic beverage market has also shown growth in 2013. Competitive structure: The energy drink market is fragmented between various producers whereas
sports drinks market is highly concentrated. This can influence i nfluence the positioning of Crescent as gaining market share would be depend upon the competitive structure. Threats: Negative media attention has affected the regular consumption of Energy drinks. And
government regulations would affect the sales of sports drinks to its largest consumer segment. These factors do require attention before positioning of the product.
Customer Value: Positioning will also depend on the values customers place for a product in particular
category. Crescent’s organic certification and minimal caffeine content provide strong differentiation in the energy drinks market. Whereas, it’s hydrating elements, low sugar content and all-natural ingredients appeal the consumers in sports drinks market. Company needs to decide that what factors define their product more fittingly and could help them in capturing market share. 3. Given the segments what segments should Crescent be targeted by?
Crescent should be targeted at the males aged 18-34 and with household income below $25000 per year. Since this is the largest group of energy drink consumers and compared to the average price of 8 oz. of energy drink that is $2.99, the same can is priced at $2.75 by Crescent which gives an advantage to Crescent as the maximum number of energy-drink consumers belong to household with income below $25000. These consumers are likely to be price-sensitive and thus its price below the average market price in energy drinks sector provides it with an opportunity to acquire new customers and expand its market share. With people becoming more health-conscious and making their food and beverage choices accordingly, sale of energy drinks such as those by Crescent with lower levels of caffeine and organic ingredients, was bound to increase. The segment mentioned above also consists of people in the age group between 25-34 who were of the opinion that the product offered by Crescent was healthier compared to other energy drinks as it had less calorie and sugar content. This segment could also prove to be profitable. As competition here is from Fright (37%), Razor(27%), Torque(16%), and Stellar(8%) which when compared with the competition in sports drinks segment, where 94% of the market share is between 2 companies, is more fragmented and hence there is a better chance for the Crescent to gain a foothold and make profits in this segment.
4. What are the pros and cons of positioning Crescent as an energy drink; a sports drink; or a healthy organic beverage?
Energy Drink
Pros
Cons
Crescent is Low on sugar. 70% less sugar than competitors
Low on Energy. 25% of people in focus group sessions were concerned about the low energy content.
Priced at $2.75, less than average price( $2.99) for the category Only 50% caffeine content compared to leading brands, demand for low caffeine drinks is increasing. Differentiated Product offering. No similar product in the category currently. Market expected to grow further from $8.5 bn (2013) to $13.5bn (2018)
High Industry Competition Negative Media Attention has led to fall in regular consumption of the category. Only 32% respondents consumed in last 6 months, out of which 11% are drinking less frequently Customers question the ability of the company to provide quality organic products at a lower price
“Energetic” was the most associated characteristic with Crescent in a consumer survey conducted at Oregon Category expected to grow from $ 6.3 bn (2012) to $ 9.58 bn (2018)
Sports Drink
Organic Functional Drink
Diet & low sugar drinks are growing and are expected to more than double from $1.2bn (2012)- $2.97bn (2017) 42 % consumers consider “Sports Drinks” fit to be consumed at any time and not just after physical exercise. Higher % of consumers buy the product frequently
Crescent ($2.75 for 8 0z) is priced much higher than other drinks ($1 for 12 oz.) in the category Company didn't have good experience with premium pricing in previous product launches. Customers question the ability of the company to provide quality organic products at a lower price
Low competition: Growing Industry, not many offerings in the current market
Consumers looking specifically for sports or Energy drink might reject the product
Can charge a premium for the product as willingness to pay for organic products is high
Category size is small and reaching breakeven might be difficult
Natural extension of company’s existing product lines
Without focus on a particular segment, brand may get diluted
