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Market Analysis: We Need To Perform Market Analysis For All 3 Places (California, Washington and

PDB is considering acquiring Crescent, a low-calorie, low-sugar beverage containing caffeine from herbal stimulants. To launch Crescent successfully, the document outlines analyses of the market, commercial feasibility, distribution, market size, and advertising budget for California, Washington and Oregon. A break-even analysis shows Crescent will be profitable, with retailers earning a 40% gross profit margin. Current market conditions like competition from new products and negative media could impact positioning. Points of differentiation for Crescent compared to energy and sports drinks include being healthy, organic and lower in sugar.

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shivam chugh
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287 views3 pages

Market Analysis: We Need To Perform Market Analysis For All 3 Places (California, Washington and

PDB is considering acquiring Crescent, a low-calorie, low-sugar beverage containing caffeine from herbal stimulants. To launch Crescent successfully, the document outlines analyses of the market, commercial feasibility, distribution, market size, and advertising budget for California, Washington and Oregon. A break-even analysis shows Crescent will be profitable, with retailers earning a 40% gross profit margin. Current market conditions like competition from new products and negative media could impact positioning. Points of differentiation for Crescent compared to energy and sports drinks include being healthy, organic and lower in sugar.

Uploaded by

shivam chugh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Reasons for Acquisition of Crescent by PDB’s

1. Low Calorie beverage


2. 70% less sugar than energy and sports drinks
3. contains as much as caffeine as one cup of coffee
4. Energy boost is delivered through all-natural herbal stimulants
5. at an affordable price of 2.75 per 8 oz - best option for quality organic product

To have a good positioning, we must analyze the customer needs, competitive pressures,
communication channel and conveying the differentiating of the products through the selected
communication channels

We will look at the following parameters to have a complete overview regarding the launch of Crescent
drink:

Market Analysis: We need to perform market analysis for all 3 places (California, Washington and
Oregon) where product is going to be launched, i will give us a better idea in terms of how to position
our product and take advantage of all the facilities available. This market analysis will include the
demographics data as well as perception data for all types of drinks available.

Commercial Feasibility: We need to have a look at the variable and fixed cost component for our drink
and use the Advertising Budget accordingly. To decide whether mentioned product is profitable or not
and to the extent it is profitable we need to perform Breakeven analysis. We will determine the
breakeven quantity which is must to avoid losses in any condition and further calculate profit margin
from all 3 perspectives Retailers, Dealers and Producer. Gross Profit margin will give us a better idea of
our whole commercialization strategy.

Break Even Analysis (in $)


Advertising Budget 750,000
Retailer Price (Per Can) 2.75
Variable Cost (Per Can) 1.02
Wholesale price 1.24
Profit per can 0.22
Contribution Margin Per Case 5.28
Breakeven Quantity 142045
Factory Capacity (Monthly) 12000
Factory Capacity (Annually) 144000
   
Manufacturer's Selling Proce 1.24
COGS 1.02
Manufacturer's Gross Profit 17.742%
   
Distributor's Selling Proce 1.65
COGS 1.24
Dealer's Gross Profit 24.85%
   
Retailer's Selling Proce 2.75
COGS 1.65
Retailer's Gross Profit 40.00%
   
Profit per Case 5.28
Profit per month 63360
Profit per year 760320
Advertising Cost 750000
Profit 10320

Looking at this breakeven analysis we can conclude that product is profitable and Retailer’s profit
margin is well above the desired level.

Distribution: Company needs to both medium of distribution online as well as offline. They already have
a good presence in offline and it needs to be leveraged. Target segment of this product is 18-30 years
old, hence online distribution channels is must for such purposes. Crescent is offering distribution
margin of 24.85% which is very close to 25% margin which is prevalent in the industry. PDB is relying
only on 3 distributors for their launch due to limited production facility, to compliment this online
distribution can help them save cost and provide effective method too.

Market Size: This market is growing rapidly with CAGR of 9.6%, market for energy drinks is expected to
reach 13.5 Billion and Sports drink 9.5 Billion by 2018. There are lot of growth opportunities available

Advertising Budget: We need to use the advertising budget mentioned above properly and make the
best use of it, as it is clearly mentioned in the case that they are working on a tight schedule hence
appropriate use of time and budget is expected to make this launch a success.

Current market conditions which can impact our positioning are as follows:

1. Fierce competition in both sports drink as well as energy drink segment.


2. Competitors are going to launch their product in 2015.
3. Negative media campaign against both energy and sports drink segment which can reduce the
expected sales.
4. Organic industry is emerging and rapidly growing.

We have listed down Point of Differentiation and Point of Parity for both types of drinks

Crescent Pure Vs Energy Drink Crescent Pure Vs Sports Drink


POP POD POP POD
Refreshing Healthy High Nutrition Low Sugar
Mental Focus Organic Hydrating Nature Healthier
Energizing Low Sugar Enhanced Performance Expensive
Kills Fatigue 1 Cup Coffee Beans
Has caffiene 2.75 vs 2.99

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