Sarah Ryan is the VP of marketing for Portland Drake Beverages(PDB). In July 2013, PDB have acquired a product called Crescent Pure which is an all organic beverage with hydrating and energy enhancing abilities. Michael Booth, the CEO of PDB has asked Ryan to come up with a positioning strategy to market their new product i.e. Crescent Pure. With its energizing as well as hydrating ingredients Crescent pure maybe positioned as an energy drink or a sports drink. Some of the leading players in the beverage industry are coming up with their own all-natural sports and energy drinks in early 2015. As a result, Ryan has been tasked come up with a positioning strategy in six weeks by October 1st to market Crescent Pure and depending on the marketing position PDB had to hire advertisers and negotiate with retailers and distributors for a three-state launch in Oregon, California and Washington for January 2014 before a nation-wide launch. Also, they had an ad-budget of $750,000 which would serve as a benchmark for the year earnings and a profit would incline them for a nation-wide launch.
1. What factors should influence the positioning of Crescent?
Here are the major factors that influence the positioning of Crescent-
• Market Size
Between 2010 to 2012 the market size for energy drinks had grown by 40%. It was estimated to be $8.5 billion in 2013 and forecasted to grow up to $13.5 billion by 2018. Whereas, the sports drinks market had a growth of only 9% between 2007 to 2012. In 2012 the market reached $6.3 billion in the US and was estimated to reach $9.58 billion in 2017.
• Consumer Segmentation
The largest consumers of energy drinks were a group of males between the ages 18-34. Parents of some kids consumed energy drinks as well. A household with average income of $25,000 had the highest volume of energy drink consumption. In case of sports drinks, it found more liking among the younger consumers. 62% were between the age 18-24 while 77% between the ages 12-17. Out of them 60% men found it refreshing unlike the 27% women.
• Market Competition
In energy drink market, Fright, Razor, Torque and Stellar owned 85% of revenue with the remaining 15% divided among thirty independent producers.
The sports drink market was shared by Gleam and Drip with 73% and 21% respectively. The rest 6% was fairly split among 20 producers.
There are three alternative ways in which PDB can position Crescent Pure. The first is they can market it as an energy drink. The second way is to market the drink as a sports drink. Finally, they can market it as an organic beverage.
2. What are the pros and cons of positioning Crescent as an energy drink, a sports drink or a healthy organic beverage?
A] Crescent pure as an energy drink-
• The market for energy drinks was growing by 40% and is forecasted to reach $13.5 billion by 2018.
• In an informal survey at a music festival in Oregon the market perception of Crescent was that of an energy drink. This perception could be further enhanced.
• Average price of an 8-ounce can is $2.99
• Young and enthusiastic consumer group of men between the ages 18-24
• Energy drinks with lower caffeine and healthier ingredients is an advantage over other competitors.
• 85% of the market share was occupied by the top 4 brands namely Fright, Razor, Torque and Stellar
• Alleged health risks were a downside for the energy drinks market.
• 11% of consumers consumed less drinks than earlier year.
B] Crescent pure as a sports drink-
• The has reached a $6.3 billion in 2012 and forecasted to reach $9.58 billion in 2018
• Sports drinks were considered to be anytime drinks.
• A wider group of consumers as compared to energy drinks.
• Sports drinks with low sugar content had grown by 30% and the market size of low sugar sports drinks was forecasted to increase from $1.4 billion to $2.7 billion in 2017.
• 94% of the market share was occupied by top 2 brands namely Gleam and Drip.
• Childhood obesity was a big concern which led to removal of sports drink from vending machines at school in beginning of 2014.
• Average price for an 8-ounce sports drink can is $1-$2 which is much lower compared to Crescent pure.
C] Crescent pure as an organic beverage-
• Market had a growth for products having all natural and organic ingredients.
• Premium pricing (25% over regular conventional beverages.
• Consumers were willing to pay for organic products considering the health benefits.
• Loss of important consumer segments if the sole purpose is the focus on health benefits.
3.Select one of the three positioning alternatives.
4. Based on your answer to question 3, develop a positioning statement: To (target segment and need) our (brand) is (concept) that (point of difference) and a slogan.
Sarah Ryan should recommend PDB to position Crescent pure as an organic energy drink. Crescent can be a healthier alternative to other energy drinks because of its all-natural ingredients. As a result, PDB can market Crescent not only to the younger age groups but also can wider its target segment to all age groups. Also having a price of $2.75 as compared to average price of energy drinks i.e. $2.99 crescent is a cheaper option.
Unlike the other energy drinks which contain artificial sweeteners with excess caffeine, Crescent has formulated 80 mg caffeine (one cup of coffee) with healthy ingredients and also boasts a low sugar composition. Positioning Crescent as an organic energy drink will solidify the existing perception of Crescent consumers in Oregon.
An organic energy drink can definitely be a breakthrough in the energy drink market. The slogan to market Crescent would be “A source of natural energy”. PDB can the market Crescent as an energy drink retaining its original organic label for their three-state launch. Further they can go for the national launch if all of the PDB's goals are met.
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