Blue - People
Purple - Notes
Green - PDB
Red - Competitors
Orange - Decisions
Sarah Ryan - Vice President of Marketing, Portland Drake Beverages (PDB).
PDB - Manufacturer of organic juices and sparkling waters.
Positioning: After segmenting and targeting. Where in customers’ minds the product occupies relative to competing products.
Crescent: Non-alcoholic functional beverage, impending launch in three U.S. markets.
Acquired in July 2013.
Energy-enhancing, hydrating, all-organic ingredients.
Energy drinks vs. Sports drink(hydrating)
PDB’s competitors: Planned to launch all-natural versions of own sports/energy drinks in second half of 2015.
PDB: Due to production capacity constraints, national launch only in early 2015. Soft launch in Jan 2014 in Cali, Oregon, Washington (15% of demand).
Michael Booth - CEO, PDB.
Tasked Sarah Ryan to:
(1) Evaluate and recommend positioning strategy.
(2) Define product by Oct 1.
(3) $750,000 advertising budget. Benchmark earnings goal.
In order to form:
1. Industry specifics related to both options
2. Potential benefits and drawbacks of each option
3. Final recommendation.
Target: Maximize revenue.
Third option: Healthy and organic roots
Due date: Monday, September 16.
Beverage industry: Non-alcoholic
Includes: Water, dairy, juice, soda and functional beverages. Value: $131 billion. Projected growth: $164 b by 2018.
History: Suffered during recession as customers restrained spending. Current: Many new products launched in segment in 2012. More entrants expected. Distribution:
Either (A): “Big box” retailers – own product distribution systems for purchasing, transporting and stocking. Or
(B): Small to medium retailers –
“Manufacturers” to “Distributors” (Mark up 25%),
“Distributors” to “Retailers” (Mark up 40%).
(1) Sometimes stocked items, else only delivered upon order.
(2) Maintained relationships w/ retailers
(3) Included products they expected to have high demand in their
(4) Niche segments w/ manufac. And retail. Including organic. Crescent Pure: Company history
Peter Hooper – Crescent Founder in 2008.
Market opportunity: Healthy, energizing drink.
Didn’t like: Performance enhancing drinks as were unhealthy, too sweet and artificial. Liked: All natural. Something that would energize, refresh and enhance mental focus. Half of the energy than leading competitor beverages; Fright and Razor. 80mg of caffeine(herbal stimulants: guarana seed and ginseng) 70% less sugar quotient (from organic, raw cane sugar) than leading energy and sports drinks, on average. 12 months after launching business, Hooper secured legal protection for proprietary recipe. Manufactured and distributed in small batches, regionally.
Promotion: Farmer’s markets, local food shows, pursued local retailers. Demand: High percentage supported Healthy, organic food choices. Sales: 1,000 cases per month. $3.75 for an 8-ounce can.
Booth’s sons discovered crescent through Word of Mouth.
Feedback: Refreshing, energizing, healthier, allowed them to remain productive. Consumer demand for organic F&B rising. PDB Revenue rising.
PDB wanted to expand suite of organic products through acquisitions. Early market entrants would be able to steal market share. PDB had economies of scale; manufacturing ability, organic suppliers, distributor r/s. Pricing: 27% below original selling price. Stupid, right?
Followed entire catalogue of penetration pricing. Not necessary!
Existing consumer base willing to buy at original price. Wholesale price: $1.24
Variable costs: $1.02
Selection of distributors – 3 only because of limited prod. Capability and to ensure distributor profitability. Estimated distributor cost: $34,000.
However, positioning determines place determines distributors selected. Ingredients and Packaging
Sleek, tall silver 8-ounce can with simple crescent...
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