Tag Archives: Acquisitions

by | Monday, April 20, 2020 · 7:27 am

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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by | Monday, June 3, 2019 · 7:43 am

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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by | Tuesday, October 16, 2018 · 7:35 am

SiriusXM Buys Pandora

SiriusXM satellite radio provider is buying music streaming service Pandora for a $3.5 billion stock deal. The deal will create the world’s largest audio entertainment company. Why should SiriusXM buy Pandora? Because SiriusXM wants to gain people who listen to music but don’t want to pay for the premium SiriusXM service.

SiriusXM offers streaming without advertisements for $10.99 to $20.99 per month per car with up to 140+ channels, or streaming on any device for the same amount of $10.99 to $20.99 per month, or combine both options for all-access streaming. SiriusXM has 36 million subscribers in North America.

On the other hand, Pandora, which has 70 million active listeners (5.6 million who are paying members) can be used at no-cost as long as listeners don’t mind listening to advertisements. Or, listeners can buy monthly subscriptions at $4.99 or $9.99 per month for services that eliminate advertisements and offer personalized stations and create playlists, plus other options.

SiriusXM isn’t new to Pandora; it provided $480 million of funding to Pandora last year. Pandora faces stiff competition from other music services such as Apple Music, Amazon, Tidal, and Spotify.

The war to gain new listeners is heating up!

Group Activities and Discussion Questions:

  1. Poll students:How much music do they listen to each day? Where is their music coming from? How much do they pay each month?
  2. View SiriusXM: https://www.siriusxm.com/
  3. View Pandora: https://www.pandora.com/
  4. Discuss the four primary marketing strategies: market penetration, market development, product development, and diversification.
  5. Which strategy is SiriusXM using? Why?
  6. Divide students into teams. Have each team research the different prices and packages offered by each music streaming company.
  7. Compare price structures. Which offers listeners the better deal?

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

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