Tag Archives: Acquisitions

Kellogg Buys RXBAR

Consumer taste trends are moving to healthy and natural foods.  Nutrition and energy bars are a still-growing industry segment that is particularly appealing to Millennials. Yet, many of the older, established CPG firms struggle to attract and retain sales from that market segment. What should a company do? While it can certainly develop new products, market adoption of the new products can take valuable time and development itself takes resources and money away from a company’s established products.

A fast way to enter a new market with a new product is through acquisition. Kellogg recently took just this approach and acquired the very trendy RXBAR nutrition bar brand for a cool $600 million. The four-year old company currently has built its sales up to about $120 million and has added a children’s bar line, also.

RXBAR is known for a “no B.S.” innovative spirit. The brand highlights its commitment to whole food, protein bars that contain simple ingredients. The bars are gluten-free, soy-free, and dairy-free, tapping into a growing food product segment. RXBAR has a distinctive package that clearly states ingredients on the front of each package. For example: “3 Egg Whites, 5 Almonds, 4 Cashews, 2 Dates, No B.S.”

Group Activities and Discussion Questions:

    1. Discuss the four primary marketing strategies: market penetration, market development, product development, and diversification.
    2. Show RXBAR Web site: https://www.rxbar.com/
    3. Video about the company story: https://youtu.be/aMFwfKThixA
    4. Which strategy did RXBAR use?
    5. Which strategy is Kellogg using?
    6. Divide students into teams. Have each team select one of the four different strategies and explain why that strategy could be used to market RXBAR.
    7. Have each team determine the marketing mix (4Ps) to support their strategy choice.
    8. Debrief the exercise.

Source: Buss, D. (2017, Oct. 9). Kellogg looks to “no B.S.” RXBAR for growth and inspiration. Brandchannel.com

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Amazon Buys Whole Foods’ Grocery Stores

By now you have likely heard about Amazon’s planned acquisition of Whole Foods for $13.4 billion. The combined companies will span the breadth of online shopping, and add 460 physical outposts in hundreds of communities across the United States.

The grocery business today accounts for approximately $800 billion in annual spending in the U.S. Yet, in its current form, Amazon has not been able to make a major inroad to selling groceries online. The Whole Foods purchase would give Amazon direct access to consumers, and their information, as they shop in stores for their foods. On average, groceries are purchased five times per month.

It seems somewhat incongruent that a 23-year old company funded on shopping over the Internet is now investing heavily in brick-and-mortar stores. Yet, Amazon has been opening some stores in select locations – bookstores and food-to-go. The combined companies would become the fifth largest grocery retailer, but only account for 3.5% of grocery spending in the U.S.

Where – and how – will you shop for groceries?

Group Activities and Discussion Questions:

  1. Discuss with class: Why did Amazon purchase Whole Foods?
  2. Which retailer(s) will be most pressed by this acquisition? Why?
  3. Discuss how grocery retailers will compete with the combined Amazon/Whole Foods.
  4. Is the Whole Foods acquisition a good move by Amazon?
  5. Discuss the four primary marketing strategies: market penetration, market development, product development, and diversification.
  6. Which strategy is Amazon using by purchasing Whole Foods? Why?

Source: New York Times, Wall Street Journal, other news sources

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Dollar Shave Club Becomes a Billion Dollar Shave Club.

shave

Nearly everyone has heard about Dollar Shave Club (DSC) these days. Started in 2011 and focused on selling inexpensive razors to Internet-savvy men, the company quickly disrupted the staid razor blade business and grew to nearly $200 million in revenue, and it owns a significant percentage of market share. The company got so big that it has attracted a number of competitors, and one very large suitor.

This summer, international consumer goods giant Unilever signed an agreement to purchase the five-year old company for about $1 billion.  Unilever makes and markets 1,000 different brands around the world. These products are consumed 2 billion times a day. Yeah, that’s big. Although Unilever has a number of personal care brands (such as Ax and Dove), it does not have a direct-to-consumer men’s shaving line.

Corporate acquisitions are a high-risk undertaking. Many fail to meet expectations when either cultures or organizations clash. It will be interesting to see how these two firms will work together.

Group Activities and Discussion Questions:

  1. It’s always fun to bring up the company’s Web site and show the viral video that launched it: dollarshaveclub.com
  2. Next, bring up Unilever’s brand portfolio and discuss it with students: https://www.unileverusa.com/brands/?page=2
  3. Another good visual is the graphic of the company’s brands at https://www.quora.com/What-is-it-like-to-be-a-Brand-Manager-at-Unilever
  4. Discuss how to build and use a SWOT analysis grid: strengths, weaknesses, opportunities, and threats (internal and external factors).
  5. Divide students into teams and have each team build a SWOT analysis grid for one of the Unilever brands:
    1. Strengths: what is company good at?
    2. Weaknesses: what needs work?
    3. Opportunities: what is going on in marketplace?
    4. Threats: what should company be wary of?
  6. Based on the analysis, what are the issues and risks that might occur?
  7. Debrief by building SWOT analysis grid on the white board.

Source:  New York Times, Bloomberg News, other news sources

 

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