Tag Archives: Acquisitions

Wear Lululemon Gear While Working Out on Mirror

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 (consider Pepsi’s recent purchase of Rock Star beverages), it can be a tad trickier when combining other companies. A key consideration is that companies find synergies that can be capitalized on when combining organizations. Recently, Lululemon may have found a good acquisition as it expands beyond athletic apparel to acquire fitness equipment manufacturer Mirror.

Mirror is a high-tech, interactive mirror that streams workout classes, offers live classes and on-demand classes, plus more intensive one-on-one personal training session. Mirror launched in 2018 (and received an investment from Lululemon in 2019). The Mirror equipment is a low-profile mirror – yes, a mirror – priced at $1,495 purchase plus a $42 monthly membership fee. Personalized training is $40 per session. Lululemon has a strong brand and loyal customer following. In addition to its trendy athletic gear, it offers fitness classes in stores and online.

The acquisition is happening at a time when Americans have been impacted by Covid-19 and are working out at home instead of going to the gym. Even with new safety measures, many people are opting out of gym memberships in favor of home workouts.

Shall we work out inside today?

Group Activities and Discussion Questions:

  1. Discuss the four key marketing strategies: product development, market development, market penetration, and diversification.
  2. Discuss acquisitions as a marketing strategy. When is this effective? When is it not effective?
  3. Show Lulemon’s web site: https://shop.lululemon.com/
  4. Show Mirror’s web site: https://www.mirror.co/
  5. How do these two companies complement each other?
  6. Divide students into teams. Have each team develop a promotional plan that the companies can use to promote their union.

Source: Associated Press; CNN News; New York Times; other sources

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Pepsi Buys Rockstar

Energy drinks are still a growth market, particularly as consumers shift away from sugary sodas and towards lower-calorie drinks. To gain market share, beverage companies are increasingly looking for new categories of drinks. And towards that end, PepsiCo recently acquired Rockstar Energy Beverages for roughly $3.85 billion dollars.

Acquisitions are a common way of entering new markets with new products. But acquisitions can also be problematic. Rockstar and Pepsi have decidedly different looks and branding, as well as different target markets and products. In addition to energy drinks, Rockstar makes sugar-free and low-calorie drinks, plus organic and fruit juice beverages.

The energy drink category is one that continues to grow, including new entrants such as Bang and A-Shock. And of course, Coca-Cola is in the mix with Monster. According to Mintel, energy drink and energy shot sales are approximately $13.5 billion; the market grew nearly 30% between 2013 and 2018.

Now that’s energy!

Group Activities and Discussion Questions:

  1. Discuss acquisitions as a marketing strategy. When is this effective? When is it not effective?
  2. Show Rockstar Energy drink Web site: https://rockstarenergy.com/
  3. Show Pepsi Web site: https://www.pepsi.com/
  4. Rockstar YouTube channel: https://www.youtube.com/user/RockstarEvents
  5. Pepsi YouTube channel: https://www.youtube.com/user/Pepsi
  6. Have students compare the two sites. What are similarities and differences?
  7. Discuss the risks and challenges that Pepsi might have with the acquisition.

Source: Associated Press; Wall Street Journal; other news sources

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Schick Buys Harry’s for $1.37 Billion

The shaving industry is cut-throat (no pun intended) with fierce rivalries between Schick, Gillette, Unilever, and P&G. A few years ago, Unilever bought Dollar Shave Club for more than $1 billion. The deal gave Unilever access to a new market of online consumers for men’s grooming products. Last year, Procter & Gamble bought Walker & Co. which markets Bevel, a shaving brand focused on black consumers.

Not to be left behind, Schick has now announced a similar type of deal, buying shaving company Harry’s for $1.37 billion. Harry’s has roughly 2.6% of the men’s shaving industry, with Schick at 10% and Dollar Shave Club at 8.5%.

Harry’s differs from Dollar Shave Club as it has retailers such as Target and Walmart stocking its products on their shelves in addition to online sales. Harry’s also launched Flamingo as a new women’s grooming brand.

Dollar Shave Club and Harry’s built a direct-to-consumer business model which has been enthusiastically embraced by shoppers. Prices are lower, and connections are more easily built between the brands and the shoppers.

Where do you buy shaving products?

Group Activities and Discussion Questions:

  1. Poll students: Where do they buy razors and grooming products? Approximately how much do they spend each month on these?
  2. Discuss competition: what are the direct competitors for this product? Indirect competitors?
  3. View Schick’s Web site: https://www.schick.com/
  4. View Harry’s Web site: https://www.harrys.com/en/us
  5. View Flamingo’s Web site: https://www.shopflamingo.com
  6. View Bevel’s Web site: https://getbevel.com/
  7. Divide students into teams. Have each team analyze the one of the shaving Web sites.
  8. What are the points of difference? Key messages? Target market?

Source: Associated Press. Schick owner buys Harry’s in new shaving war alliance. (9 May 2019).

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