Crescent Pure

...

the planned budget. With a budget of $5 million, PDB would need to sell 946,670 ($5million/$5.28) cases of Crescent to breakeven on the national level and the breakeven dollar sales would be $28,181,818 ($5million/17.74%). Finally, the breakeven market share for PDB would be 0.05% for sports drink and 0.06% for energy drinks. These values were determined by taking the calculated marketing budget and divide by the market share of sports drinks and energy drinks ($8.5B and $9.58B), respectively.

E. Recommendation

The factors that PDB should use to determine the positioning of Crescent are competitive similarities, product attributes (organic, low-sugar), product pricing, and marketability or promotion of product. I would recommend for PDB to market Crescent as an organic energy drink. This would appeal to a wide audience and provide an organic and healthy energy alternative which is currently not available to consumers. By focusing on this area, Crescent product would attract the 11% of consumers who were drinking fewer energy drinks due to health and safety concerns. Furthermore, the lower than average retail price would appeal to consumers who are looking for healthier choice and been affordable at the same time.

Appendix

Exhibit 1

Contribution Margin Analysis per can per case

Retail price $ 2.75 As recommended by management

Minus retail margin (40%) $ 1.10 From case (pg.2)

Retailers cost/distributors price $ 1.65

Minus distributors margin (25%) $ 0.41 From case (pg. 2)

distributor cost/manufacture price $ 1.24 $ 29.76

variable cost per can $ 1.02 $ 24.48 From case (pg.3)

Contribution margin $ 0.22 $ 5.28

Contribution margin percentage 17.74% 17.74%

Break Even Analysis

Advertising $ 750,000 PDB planned advertising budget

national average 15% PDB projection

BE level of advertising to recoup $750,000 $ 5,000,000

In put amount 6.67

BE level of sales 946,970

BE level of dollar sales $ 28,181,818

Market share (sports) $ 9,580,000,000 Market research (pg.5)

Market share (energy) $ 8,500,000,000 Market research (pg.5)

BE market share (sports) 0.05%

BE market share (energy) 0.06%