Question.

Crescent was a non-alcoholic functional beverage with an impending launch in three U.S. markets. PDB acquired Crescent in July 2013; the drink's combination of energy enhancing, hydrating, and all-organic ingredients made it a natural extension for PDB's existing organic product lines. However, PDB's management team disagreed about which of two viable positioning strategies would maximize Crescent's revenues. Some felt the drink's energizing ingredients supported an energy-drink positioning, while others felt that due to the drink's hydrating elements, a sports-drink positioning made more sense.

PDB planned to embark on a "soft launch" of Crescent in three western states (California, Oregon, and Washington) in January 2014. PDB projected that these three states represented 15% of national functional beverage demand.

PDB was under pressure to define the product by October 1 in order to negotiate with beverage distributors and retailers, and to hire advertisers to develop ad campaigns in time for the January 2014 launch. PDB planned to spend $750,000 on advertising for Crescent in 2014 and used that figure as a benchmark earnings goal. If 2014 profits met or exceeded the goal, PDB would fund Crescent's national expansion in 2015.

US Beverage Industry: Non Alcoholic

In 2013, the non-alcoholic beverage marketwhich included water, dairy, juice, soda, and functional beverages was estimated to be $131 billion and was projected to grow to $164 billion by 2018.2 This market had suffered due to restrained consumer spending during the economic recession, but the trend was slowly reversing as the economy recovered. Many new products were launched in the segment by 2012. This wave of introductions was expected to continue into the foreseeable future.

Distributing food and beverage products, which involved moving products from a manufacturing site into the hands of consumers, entailed many steps and varied by the size and influence of both retailers and manufacturers. In 2013, the largest U.S. retailers, known as "big box" retailers, often had their own product distribution systems in place to handle purchasing, transportation, and stocking.

Specialization was common among brokers and distributors, and they often forged relationships with retailers and manufacturers within a niche segment. Some distributors focused on organic products. Others developed expertise in ethnic or gourmet offerings. When selling to consumers, retailers added an average mark-up of 40% to products purchased from distributors.

Ingredients and Packaging

Packaged in a sleek, tall silver 8-ounce can with a simple crescent logo and lime green and orange accents, Crescent was a clear-coloured liquid. Its taste included a hint of fruit arid was is sweet than most fruit juice, cola, sports drinks, and energy drinks. Each can contained one 80-calorie serving. For flavour, Crescent contained lime juice, lemon juice, and small amounts of raw cane sugar and green tea.

Ryan's Approaches:

Energy Drinks: Crescent delivers a boost of energy to combat fatigue and promote mental focus Positioning Crescent as on energy-enhancing beverage would reinforce existing perceptions from Oregon, who an informal consumer survey conducted at an outdoor music festival indicated consumers viewed "energy" as crescent's most descriptive characteristic. Prices for energy drinks in the U.S. range from $2 to $5 per can, based on can size (8 oz., 12 oz., or 16 oz.) and retail outlet. The average price for 8 oz. of energy drink is $2.99, above our $2.75 price point. Thirty-four percent of the population said they consumed an energy beverage in the last six months; the projected market for energy drinks in 2013 is $8.5 billion. Most advertising for energy drinks targets the most enthusiastic consumers, men 18 to 24 years old. Visually startling imagesthink extreme sports participantspaired with loud rock music (when audio is available), reinforce a message that implies "Our drinks help you do everything you want to do (even risky things!)."

I think Crescent's organic certification and minimal (as compared to leading competitors) caffeine content provide strong differentiators for the energy market. Our drink is a healthier alternative to leading brands, whose artificial sweeteners and excessive levels of stimulants are likely to prompt a subset of consumers to switch to healthier options.

Sports Drinks: In 2012, the market for sports drinks was $6.3 billion; 42% if sports beverage drinkers considered sports drinks "anytime beverages" and did not associate them only with exercise. They attracted a wider consumer base than did energy drinks, and regular users consumed them more often.

Sports drinks come in a variety of sizes and average $1.00 to $2.00 for 12-oz. and 24-oz. containers, respectively. Generally, ingredients include water, sugar, and salt.

Crescent's hydrating elements, paired with the mental focus and energy boost, can enhance athletic performance. It can also stave off post-workout fatigue if consumed after exercise. (Fright and Razor, the market leaders, are touted as performance enhancing by 'extreme sports'" professionals.) Perhaps Crescent's low sugar content and all-natural ingredients can appeal to health-conscious consumers seeking healthier "anytime" beverages that are free from artificial ingredients and sweeteners. Crescent's $2.75 price point for an 8-oz can will be significantly higher than are those of similarly sized sports drinks, so our positioning and advertising will hew to build the case for its premium price.

Levor's Key Findings:

Taste: it appears Crescent's taste appeals to most consumers. While some participants were notably more pleased with the taste, there were no unfavorable reactions.

Energy content: About half the participants were initially concerned about the energy component. Once their learned the energy content was equal to the caffeine found in a cup of coffee, only 25% remained concerned. Older consumers said that they liked that Crescent was a healthy alternative to high-calorie, sugary energy drinks. Some younger consumers noted that Crescent had less energy than they had hoped.

Customer profile: Several consumers said that Crescent was exactly what they wanted in a beverage: healthy ingredients, good taste, and a slight pick-me-up. This interest appeared to reflect a focus on health and wellness, and transcended a specific age or demographic profile.

Price: Most participants knew the prices of competitive options and figured that due to Crescent's organic and energy ingredients, the price would be above $3.00. Most were happily surprised, but some questioned PDB's ability to deliver quality organic ingredients at $2.75.

Question: Should Crescent be positioned as an energy, sports, or health drink?

Provideat least 2 reasons for your choice and also 1 reason why the other two choices were not selected.