Tag Archives: Acquisitions

Google Acquires Fitbit

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:

  1. Discuss the four key marketing strategies: product development, market development, market penetration, and diversification.
  2. Discuss diversifications/acquisitions as a marketing strategy. When is this effective? When is it not effective?
  3. Show Fitbit’s Web site and products: https://www.fitbit.com/global/us/home
  4. Show Google’s products’ Web site: https://about.google/intl/en_us/products/
  5. Do these two companies complement each other? If so, now?
  6. 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

 

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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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