A. Segmentation and Targeting
When Looking at what market should be targeted the thing that stuck out most was there is not a healthy alternative for energy drinks. Most of these drinks are full of high fructose corn syrup and loaded with extreme amounts of caffeine. Crescent give the consumers a healthy alternative to this option. The trend these days is towards more organic and healthier choices. Crescent is just that. It gives the option for a healthy version of an energy drink which is much needed. The Energy Drink market is growing at a much faster rate than the sport drink market as well as the fitting into a much better price point for marketing. With the market for these energy drink being on average $2.99 the price of $2.75 for crescent is below the market average as well as being a slight bit different by marketing a healthy alternative option to most other sport drinks on the market now.
When Looking over the two perceptual Maps the thing noticed is that most of these products hit extremes of each category. For example a sport drink is high on the hydration level but low on the energy. As for the energy drink the case is the exact opposite. When looking at nutrition and taste the nutrition and taste are higher on sports drinks and energy drinks are low on nutrition but the 50/50 on the taste. When looking at crescents studies it would seem that they would be the best case for the average consumer as they would be better than average in all of these categories. The nutrition would be higher than the sports drinks and close to what swish and drip are pertaining to nutritional value and the taste would also fall higher similar to Drip or Razor. When looking at the Hydration and Energy Crescent would also be above average for both. With the equivalent of a cup of coffee’s worth of caffeine Crescent would fall similar to where torque and Drip are for energy levels.
As for looking at hydration; Crescent would be up closer to the sports drinks with is electrolytes and natural ingredients closer to where Glean and Watr+ are. Each marketing promotion has positive’s and negative’s. When marketed as an energy drink there is the Pros of being a drastically growing market which has grown by 40% already and is projected to hit 13.5 billion by 2018 as well as no single product being marketed as a healthy alternative energy drink. Another pro is that the cost of the product is less than the market average. The con of an energy drink market would be that current news stories are highlighting the health risks of Energy drinks and the diminishing number of consumers who are now drinking them. The sports drink market have a much larger population of consumers ranging from younger ages of 12-24.
Also with the average sports drink being much cheaper people may not be willing to pay the $2.75 for a sports drink. With Crescent being an all organic product being an alternative to high fructose corn drinks would increase their market audience. The threats would be the increase in childhood obesity who make up a large portion of the sport drink market the option of just proving water to children is easier and more economically sound for parents rather than continually paying for sports drinks. Lastly as an Organic Drink they are able to market it as a healthy sports/energy drink for the body continuous adult who wants to stay away from non-organic products. This also works as a con where if they market solely to this small group of people they may be losing a lot of consumers who may be avoiding the new fad of vegan, healthy organic products.
C. Contribution Margin
The contribution margin per case of Crescent would be $5.28 or 18%. This is figured by taking the selling price per can and minusing the cost per can. Which would bring the profit of 22 cents per can and a case of 24 would bring the profit to $5.28 per case. You would then take that number and divide it by the Price per case of $29.76 which would give you 18% profit.
To match the national level of marketing it would require putting in 6.66 times the budget that it took to market 15% which would be a total marketing budget of 5 million dollars. With a Total budget of 5 Million dollars it would take selling 946970 Cases of Crescent to break even on the National Level. To address the break-even market share for energy would be .07% of the Market Share. This is figured by taking the Market of 9.58 Billion dollars and dividing that by the Marketing budget of 5 Million Dollars.
The factors that should be used to determine positioning are, Similarities in competitors, Forecast of market increase, pricing of products and marketability of product. I would Recommend Marketing Crescent as an organic energy drink. This would apply to a large number of people and would give a different option to the Energy Drinks that are currently on the market. This product could increase the consumers ideas of what energy drinks are; especially focusing on bringing up the areas of healthiness, hydration and natural. With these area’s only having the highest percentage at 11% Crescent would be a great product to diversify the market. Having a below average market price for product pricing makes Crescent an even better market to explore. Crescent provides a great break from the normal high fructose high caffeine energy drinks while still hydrating and tasting great.