Acquisitions can be tricky. Companies need to assess what markets to enter, and which products and services are needed for those markets. While it is common for food and beverage companies to use acquisitions to gain market share, it can be a tad trickier when combining technology companies. A key consideration is that companies find synergies that can be capitalized on when combining organizations.
A recent acquisition of interest is the purchase of fitness tracker pioneer Fitbit by search engine giant Google for an estimated $2.1 billion. The acquisition moves Google into a better position in the wearable technology market and gives Fitbit access to more resources, technology, and marketing. (However, there are still some outstanding issues with government regulators; use by Google of Fitbit data for advertising purposes is a concerns to regulators.)
Fitbit is a familiar company to most college students. Founded in 2007, the company makes watches and bracelets to track health information; it has an estimated 20 million active users. New Fitbit products include Fitbit Stress, featuring stress management tools and an ECG app to assess heart rhythm. Fitbit’s products are carried in 39,000 retail stores in 100 countries. Annual revenue in 2009 was $1.4 billion.
Fitbit’s overall market share has decreased dramatically since the introduction of Apple Smartwatch. Its market share of 4.7% is significantly lower than the market leader Apple at 31.7%, followed by Xiaomi and Huawei.
How do you track your fitness?
Group Activities and Discussion Questions:
- Discuss the four key marketing strategies: product development, market development, market penetration, and diversification.
- Discuss diversifications/acquisitions as a marketing strategy. When is this effective? When is it not effective?
- Show Fitbit’s Web site and products: https://www.fitbit.com/global/us/home
- Show Google’s products’ Web site: https://about.google/intl/en_us/products/
- Do these two companies complement each other? If so, now?
- Divide students into teams. Have each team develop a promotional plan that the companies can use to promote their combined value to customers.
Source: Associated Press; CNN News; Wall Street Journal; other sources