Crescent Pure Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Crescent Pure Case Solution

Company’s background

A resident of Crescent, Oregon, Peter Hooper identified a market potential for a nutritious, energetic beverage. Crescent was created by Peter in 2008. In the 1990s and early 2000s, healthy, all-natural foods and beverages were common in the Pacific Northwest, and Hooper considered popular energy and performance-enhancing drinks to be harmful, too sugary and artificial. He started experimenting with various components in an attempt to create a green, all-natural beverage with organic juices, herbal stimulants and electrolytes. He desired a beverage that would rehydrate, invigorate, and improve mental clarity. When Hooper noticed a rising local demand for his goods, he turned his passion into a company.

The recent purchase of Crescent Pure by Portland Drake Beverages (PDB) is an intriguing step that might enhance the company's existing market share. Due to Crescent's flexibility; Sarah Ryan has been tasked with determining whether the drink should be marketed as an energy drink or as a sports drink.

Critical Analysis

Break-Even Analysis

The break-even analysis was performed to check the reliability of PDB’s decision to acquire Crescent Pure. The wholesale price per can is 1.24 and the variable cost per can is 1.02. The wholesale cost subtracts from the variable which will give the profit of 0.22. Case shows the production of 24 can per. According to the case, the company is producing 12000 cases each month. Then annual production will be 144000 through the calculation of 12000 (cases per month). This production of 144000 cases is multiplied by the 5.28, which gives the profit of 760320 per year. After subtracting the marketing cost net profit will be 10320. After analyzing these break-even analyses; PDB acquired Crescent.

Evaluation of product positioning options

Energy drink

Individual 18-34 years and typically males are the main age range of energy drink consumers. The cost of an energy drink is around $2 to$5 per can, which is based on the can’s size and retailer outlet. The top five competitors accounted for 85% of group revenue. There was an increase in the market of energy drinks by 40% and it was projected at $8.5 billion in 2013 (Mintel, 2013). Organic certification and minimizing the usage of caffeine could help the firm in achieving effective chances and product distinction than other competitors, which will help in locating the beverage in the energy drink part. Additionally, by differentiation the imagery of energy drink and consumer engagement can be changed.

Sports drink

The market for sports drinks is larger, including a larger male and female population ranging from age of 12-24. Teenagers preferred sport drinks. 94% of the market share is shared by two top competitors and the market for sports drinks was $6.3 billion in 2012(Mintel, 2013).By positioning the product as a sports drink; the PDB may appeal to a wider audience and enhance the likelihood of rebuying of Crescent. Customers believe that the drink's components, which include: hydrating components, a reduced sugar content and natural materials, helped their bodies become healthier and more athletic.

Pros and Cons of energy drink

Recommendation

Marketing Crescent presence as an energy drink is a recommendation plan for PDB because of:

Ability to boost up energy and mental focus.
The benefits of health, because it does not contain any unnatural chemicals and utilizes caffeine from regular products with less sugar and with natural flavors.
Pricing advantage as it sells at a lower cost.
The market growth has been increasing by 40% between 2010 and 2012.

Conclusion

PDB is facing difficulties in deciding positioning strategy because each positioning has its benefits and drawbacks. Therefore the analysis is performed to decide the positioning strategy for PDB to achieve their objectives and ideas.

Positioning in energy drinks will be beneficial for them because of numerous reasons. For starters, because the market is larger in comparison to other areas; the PDB may contact more retailers and manufacturers for sales in other states. An additional reason is that Crescent is a moderate product, thus customers will get aware of the product.(Quelch & Zalosh, 2014)...................

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Crescent Pure Harvard Case Solution & Analysis