Problem Statement
The case study of Crescent Pure reveals that since its acquisition of PDB Beverages, the company suffers from the evident absence of clear positioning in the market. This makes it challenging for Crescent Pure to determine how to communicate the advantages of its products to the audience and compel people to take action (Percy 58). A new effective positioning strategy would help company leaders identify in which segment it is going to compete and what opposition it is expected to meet. Effective redefining and segmenting must be performed in the nearest future to avoid losses of profit. The cost of decision implementation should not exceed the budget of $750,000, which implies that no room for errors is left (Smith 124). Thus, Crescent Pure has to solve its positioning problem to stay competitive and generate revenue.
Analysis of the Problem
A closer look at the indicated positioning problem reveals that there are several complicating factors (Smith 133):
- The drink is already sold in Oregon and has its audience. This means that the company should refrain from dramatic changes in order not to scare people off.
- The initial goal of the company was to create an organic drink with stimulating herbs and electrolytes, which cannot be ignored when deciding what kind of positioning should be used to achieve maximum effectiveness.
- The majority of the state population stands with a healthy diet. Their commitment to organic food should affect the choice of a positioning strategy.
- The current target audience consists of people aged 18 to 25. The choice of further policy should be predetermined by the peculiarities of these consumers.
- According to various surveys, functional, natural, and refreshing are the major qualities the product features. The problem is that sports drinks positioning would be centered on refreshing while energy drinks strategy would emphasize functionality neglecting natural components.
Evaluation of Potential Solutions
The first possible solution is to position the company as a producer of an energy drink. It has the following benefits (Campbell 14):
- the market of energy drinks has expanded by 40% from 2010 to 2012;
- their average price is $2.99, which will allow the company to have a competitive advantage as it sells the products for 2.75 per item;
- the major group of energy drinks customers consists of men – the same as the current target audience of Crescent Pure;
- another competitive advantage the company will get is its organic certification.
However, this decision also has several drawbacks (Campbell 15):
- since the product is already in the market, its repositioning may perplex its customers;
- promoting energy drinks would mean abandoning health and safety values;
- the competition is too high and accounts for 85% of the revenue in the field;
- there is a lot of negative attention to energy drinks, which can tell on the popularity and lead to a falling demand;
- energy drinks are associated neither with health nor with affordability; this may undermine the image of Crescent Pure.
The second alternative is to position Crescent Pure as a sports drink. There are the following advantages of this solution (Percy 84):
- 42% of consumers think that you do not have to engage in sports activities to drink sports drinks;
- such drinks are widely considered to be refreshing, which increases the target audience (50% of men and more than 30% of women regularly consume sports drinks);
- people who exercise in a gym value sports drinks for their ability to give energy;
- again, the competitive edge will be achieved due to the company’s organic certification.
Disadvantages of the solution include (Percy 87):
- the company will lose its competitive advantage in terms of price, which is much higher than that of other sports drinks producers selling their products for $1-$2;
- two major companies account for 73% of the overall revenue;
- additional costs will be brought about because of re-packaging as the competitors use 12-24oz containers (in comparison to Crescent Pure’s 8oz cans).
The third option is to choose diet sports to drink positioning. The pros are (Stobart 135):
- customers are becoming increasingly concerned with health issues; a diet sports drink could be a perfect solution satisfying their needs;
- the alternative will not tell on the finance of the organization;
- the production of diet drinks has grown by 22% within two years (between 2010 and 2012).
However, the following disadvantages are possible (Stobart 136):
- such drinks are no longer allowed to be sold by vending machines in schools, which deprives the company of a considerable number of customers;
- the target audience of diet sports drinks consists of teenagers between 12 and 17, and most of the time they cannot be reached being at school;
- teenagers rarely have enough money to become loyal customers.
Finally, the fourth and most effective solution is to position the company as a manufacturer of organic drinks. This solution is expected to be beneficial for the following reasons (Smith 144):
- 38% of customers think that the drink is healthy and natural;
- organic drinks can be sold at a higher price leading to an increase of the turnover;
- citizens of Oregon are known for adherence to health trends;
- PDB already produces organic juices; it would be rather understandable for the customer that the company continues with its organic line;
However, despite the advantages of this solution, there are some shortcomings (Smith 145):
- customers believe that a high-quality organic drink can be made within the price limit of $3, which means that new pricing may fail;
- the target market may be narrowed.
The Chosen Solution and its Justification
It would be reasonable for PDB to use the last option as the company is already in one third in the soft launch sector and has already received its organic certification. Moreover, this solution would guarantee committed customers since people leading a healthy lifestyle are loyal to it. The demand for healthy products is increasing each year, which promises good prospects (Stobart 155).
The company could choose sports or diet sports alternatives; however, the legislation keeps a large teenage audience out of reach. Moreover, it would be costly to change the design of the package. These expenses can be avoided if the company decides to retain the consumers that it already has instead of trying to win new ones, which would be much more challenging (Stobart 155).
To successfully implement the new strategy, the company should include information about its organic certification on the package for it to be visible to the customer. Besides, the drink should take its place in a row of the organic drinks to develop positive associations of the customer (Stobart 156).
Works Cited
Campbell, Bill, et al. “International Society of Sports Nutrition Position Stand: Energy Drinks.” Journal of the International Society of Sports Nutrition, vol. 10, no. 1, pp. 2013, pp. 1-34.
Percy, Larry. Strategic Integrated Marketing Communications. Routledge, 2014.
Smith, Andrew. The Oxford Encyclopedia of Food and Drink in America. OUP USA, 2013.
Stobart, Paul. Brand Power. Springer, 2016.