Case study on CRESCENT PURE

Objective

How should the company PDB, should position its new acquisition CRESCENT PURE.

OPTIONS AVAILABLE

1. Energy drink2. Sports Drink3. Organic Drink

LET US ANALYZE EACH OPTION

ENERGY DRINKS

What are they?

Deliver a health benefit that is immediately effective and

detectable.

WHY PEOPLE LIKE IT?

deliver a benefit that consumers can quickly see or feel. It is a key way of creating brand loyalty. 

Males between the ages of 18 and 34 years consume the most energy drinks, and almost one-third of teens between 12 and 17 years drink them regularly.

Who like it the MOST

The average price for 8 oz of energy drink is $2.99 or above

SALES OF ENERGY DRINKS IN THE US

ISSUES BEING FACED

Caffeine use may be associated with anxiety, sleep problems, digestive problems,

elevated blood pressure, and dehydration.

Competitors

Competition from different producers

FRIGHTRAZORTORQUESTELLAROTHERS

27%

34%

15%

16%

8%

Sports drinks

MAIN PURPOSE

Athletes actively training and competing lose water

and electrolytes by sweating, and

expending energy.

So, Sports Drink served this purpose.

$1.00 to $2.00 for 12-0z and 24-oz can

STATISTICS

Roughly, half of men drank sports drinks, while only a third of

women did.

40% of men found it refreshing, while only 27% of females did.

MEN WOMEN0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

Series 3Column2Column1

Competitors

COMPETITORS IN SPORTS DRINK MARKET SHARE

GLEAM

DRIP

Other 20 producers

21%6%

73%

COMPARISON Between Energy and Sports drinks based on terms which describe

them

Energy drinks

Sportsdrinks

In 2013 In 2018(estimation)

$8.5 Billion

$6.3 Billion

$13.5Billion

$9.58 Billion

Organic and Healthy drinks

New health option

available

Attracts huge number of customers

The BEST example to look at is : ......

Crescent Pure

Key Aspects• Healthy• Refreshing• Energizing• Enhancing mental locus

Key Aspects• Low caffeine content• Low sugar levels• 80-calorie serving

Ingredients

• Organic juices• Herbal stimulants• Electrolytes• Guarana seed • Ginseng

Pricing

3.75$ for an 8-ounce can

Demographics of Crescents Customers

• We have seen the following issues for each of Energy drinks, Sports drinks and Organic Drinks

What are they?Merits and DemeritsCompetitors • we have also seen CRESCENT PURE

company’s strategies and products.

What if we position it as an Organic drink?

To understand the impact of organic substances on people, a SURVEY or MARKET RESEARCH can be carried out

Marketing Research Process

• Step 1: Define Problem, search alternatives and research objectives

Why should we introduce it as an organic drink?

Why not as Energy or Sports drink?

The previous details help us to look into this matter

Step 2: Develop Research Plan

Collect primary or secondary data or both!

In this case, Crescent online customers were given a link to an ONLINE SURVEY

Step 3: Collect the information

Survey Results

Results of FEEDBACK

• Quick depletion of inventory• Sold out even if the price was increased by

25%• Most of the consumers were aged 18-30

Step 4: Analyze the information

From survey , 3 main features which should not be missed out are: FUNCTIONAL

REFRESHING

NATURAL

PDB should be careful about

• Premium pricing: It was a flop when PDB experimented to utilize it.

• PDB volume, rather than mark-ups drove the company’s product sales.

ANALYSIS (1/5)

• So, the price should be around 25% less than Crescent’s original retail price.

• (25/100)*3.75$=2.81$

• Wholesale price should be much less i.e 1.24$ per can.

• So, per case 1.24*24=29.76$

ANALYSIS (2/5)

• PDB’s selling price = $2.75• Variable costs = $1.02

Gross margin per can = $1.73

Total Gross Margin = 1.73*(12,000cases*24can/case) =498,240$

ANALYSIS (3/5)

• Fixed costs = 34,000$(includes costs of goods, marketing materials, employee training, and compensation)

• Advertising per month = $750,000/12 = $62,500

TOTAL FIXED COSTS = 34,000+62,500 = 96,500$

ANALYSIS (4/5)

Therefore, PROFITS =$ (498,240 – 96,500) = $401,740 per month

ANALYSIS (5/5)

BEP Analysis

BEP(Break even point)

BEP = Fixed cost Selling price – Variable cost = $ 96,500 $2.75 - $1.02 = 55,780 cans = 2324 number of cases

By observing all this analysis, we can eliminate the option of positioning it as a SPORTS DRINK, due to its very mediocre PRICING(i.e $1 for 12oz)

CRESCENT PURE should rather be released as a ORGANIC ENERGY DRINK(combining the merits of both the drinks)

And PDB should manufacture at least 2324 cases each month to avoid loses according our PRICE STRATEGY

S U M M A R Y

OBJECTIVES and OPTIONS

AVAILABLEENERGY DRINKS

SPORTS DRINKS

ORGANIC DRINKS

(CRESCENT PURE)

BREAK EVEN ANALYSIS

Disclaimer Created by Vaishnavi Lakkaraju, GNITS,

during marketing internship by Professor Mathur, IIM LUCKNOW.