What Factors Should Influence the Positioning of Crescent?

Marketing Project

What factors should influence the positioning of Crescent?

• Segment’s attractiveness: market size and thus profitability. Crescent has found that volume sales was more successful so focus should be on volume and not just markup.
• Competition in the chosen segments/markets
• Geographical markets/preferences: Crescent’s health properties were valued in Oregon, but they may not be in other (Eastern) states
• The age range and demographics of potential customers
• Size/growth of different markets
• Choice of distributers and existing relationships (channel is very hard to change!). Crescent has to partner with more distributors in order to expand.
• Production capacity limits
• Cannibalization of any existing PDB products

How is the market segmented? At what segment should Crescent be targeted?

The market for beverages according to the case is segmented based on major functional attributes of the drinks themselves instead of the attributes of potential customers. The two major segments seem to be Energy drink buyers and Sports drink buyers in the functional drinks category (vs alcoholic beverages). Instead of product characteristics, if we look at the profiles of the customers, the attributes that would be better to segment on would include: age range, sports vs energy/focus needs, income, and perceived value for organic ingredients.

Given that Crescent’s main differentiators of being organic, minimal caffeine, and somewhat expensive (at least for the sports drink category), Crescent should target consumers who are relatively higher income and value organic/healthy ingredients. The age range of Crescent online customers is largely in line with existing Sports and Energy drink customers so that is not a segmentation variable to focus on. Also, given that Crescent has both hydrating and energy properties, this is not useful to segment on. We also see that the median income for Crescent buyers is $42K, much higher than the frequent purchasers of energy drinks ($25K).

What are the pros and cons of positioning Crescent as an energy drink, a sports drink, or a healthy organic beverage? Which one would you choose?

Energy drink:

Pros:

• Strong differentiation of organic certification and minimal caffeine (can be used to advertise better)
• Larger market than sports (8.5B vs 6.3B) with faster growth
• More players owning market so better chance of becoming a leader
• Crescent drink is cheaper than competitors
• Packaging: can size is a better fit for existing market

Cons:

• Being cheaper than competition can also cause price pressures from competition
• New stories about health risks of energy drinks could lead to decreased segment growth

Sports drink:

Pros:

• Low sugar and all natural can appeal to health conscious
• Low sugar segment growing
• Wider consumer base could lead to higher volume if product successful, especially internationally
• Opportunity to bring more women into this category with Crescent’ health advantages

Cons:

• Two major players in market so harder to become top player
• Government is restricting this category in general so consumer perception could be negative
• Significantly higher Crescent price than average would need strong justification
• Packaging size is much smaller than current market size can deter value buyers

Healthy organic drink:

Pros:

• Potential new market segment for a “generic” healthy drink, can become market taker
• Can become the premium brand here and set the tone and lifestyle message
• Can play on the government regulation and media scares of the other unhealthy drinks

Cons:

• Cresent doesn’t have the ad budget to launch this
• Would take a lot longer to launch
• Would require more distributors and retailers
• Big risk of trying to create a new market with a message that may be lost
• The organic “health” market may be smaller than the other two

I would choose to position Crescent as an Energy Drink primarily because of the fast growth in that market, combined with Crescent’s strong differentiation, which provides a higher chance of becoming a larger player.

Given your choice of target market(s) and positioning, briefly describe the marketing mix elements that PDB should implement