Tag Archives: Brand extension

by | Tuesday, February 22, 2022 · 7:08 am

Game Companies are a Hot Acquisition Target

Are you ready for the metaverse? It might not be quite a reality yet, but it has certainly caught the attention of technology companies that are positioning themselves for growth in the industry. While the metaverse might be difficult to define, there is no doubt that technology companies view video games as an important strategy for growth and customer acquisition for the metaverse.

So far this year three companies have been on a buying binge:

  • Microsoft will pay $69 billion for Activision Blizzard.
  • Sony will buy Bungie for $3.6 billion.
  • Take Two Interactive is paying $11 billion for Zynga.

Whew – that’s a lot of activity and investment at more than $84 billion!

Activision makes some of the most popular game titles such as Candy Crush and Call of Duty. However, Activision has been accused by employees of discrimination and sexual harassment, making the purchase by Microsoft rife with potential employee issues.

Microsoft was also the previous owner of Bungie, buying the company in 2000 for $20 million for the top multiplayer shooter games – Destiny and Halo. In 2007, Bungie split from Microsoft and became a privately-held company. Bungie’s most popular game currently is Destiny 2 (which is available on multiple platforms including Xbox and Playstation.

All of these acquisitions are predicated on the assumption that people will be spending more time in the digital metaverse, including augmented and virtual reality.

We have already seen an increase in gaming during the pandemic as people look for new entertainment options. According to MarketWatch, video games are a bigger industry than movies and sports combined. According to IDC Group, global video game revenue was roughly $180 billion in 2020, with mobile platforms showing the most growth.

What will you do in the metaverse?

Group Activities and Discussion Questions:

  1. Discuss the four primary marketing strategies: market penetration, market development, product development, and diversification.
  2. Which strategy are Microsoft and Sony using?
  3. Discuss with class: Why did Microsoft and Sony buy game makers?
  4. Show websites: Activision: https://www.activision.com/
  5. Bungie: https://www.bungie.net/
  6. Zynga: https://www.zynga.com/
  7. Check out Nielsen’s list of top video games: https://www.nielsen.com/us/en/top-ten/
  8. What are the risks and rewards that will be faced by the acquiring companies?
  9. Which competitors will be most pressed by these acquisitions? Why?

Source: Tilley, A., Lombardo, C., Gring, K. (January 18, 2022). Microsoft to buy Activision Blizzard, Wall Street Journal; Metz, C. (January 31, 2022). Sony to buy game maker Bungie in $.6 billion deal, New York Times; other news sources.

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by | Thursday, January 27, 2022 · 7:23 am

CarBravo – General Motors Introduces its Used-Car Website

Shopping for a used-car is challenging these days. Not only is there a reported shortage of used-cars, but prices have been steadily rising at an estimated rate of 35%, making it hard for consumers to shop for a good used-car at a good price. In addition, there has been an increase in the number of ways – and websites – to shop for a used-car.

To access this rising demand, and to help resell its hundreds of thousands of used-cars, General Motors recently announced a new digital platform named ‘CarBravo’ that will be focused on selling its own used-car inventory.

GM officials stated that there are roughly 400,000 used vehicles available on an ongoing basis and its dealers sell 2.5 million used cars each year. Plus, GM and GM Financial have another 500,000 used cars each year to add to the mix.

According to industry analyst research, the U.S. used car market is more than two times the size of the new car sales. McKinsey estimates that U.S. consumers buy more than 39.4 million used cars each year, at a value of $1.4 billion. And used car sales are growing at a faster rate than new car sales, leading to an expanded market opportunity.

The biggest used car dealers currently are Carvana, CarMax, and Cars.com – all of which use their websites and locations to attract buyers and make it easy to both sell and purchase a used car. Plus, Ford has already entered into the consolidated used car market with its Ford Blue Advantage site.

CarBravo will offer online only purchase, dealership only purchase, and a combination of the two methods. However, one of GM’s biggest strength may be its reach – it has a network of 4,200 dealers across the nation, and those dealers have 400,000 used vehicles in inventory each year.

Where would you shop for a used car?

Group Activities and Discussion Questions:  

  1. Poll students: Who has sold a car? Who has bought a used car? What was their experience?
  2. List the places that used cars can be purchased. Who are the direct competitors to GM? Indirect competitors?
  3. Show video discussing the used car market: https://youtu.be/OMHhOdQRXZM
  4. Discuss the purpose of GM’s new business – CarBravo.
  5. Ask students to develop a SWOT analysis for General Motors, focusing on opportunities and threats. What are the main risks and issues?
  6. Divide students into teams. Have each team compare CarBravo with a competitor.
  7. What are the points of difference?

Source: Brown, L. S. (January 12, 2022). Car and Driver. GM to launch CarBravo, its own used car sales website.; LaReau, J. (January 11, 2022). Detroit Free Press. GM launches massive used car website CarBravo, hopes to take on Carvana.

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by | Wednesday, December 15, 2021 · 7:41 am

Chocolate and Pretzels Make a Perfect Match for Hershey

It’s always snack time around our work place. And of course the best snack flavor profile favors chocolate and salt! Sweet and savory. All of which makes Hershey’s acquisition of snack companies Dot’s Pretzels and Pretzels, Inc. a great match. The two deals will amount to roughly $1.2 billion for the chocolate company and expand its product portfolio farther into the snack area.

North Dakota-based Dot’s Pretzels is a key prize for Hershey as Dot’s accounted for about 55% of the pretzel category growth last year. The snack category overall has done well under the pandemic as people everywhere reach for comfort foods and treats. And it’s easy to grab snacks when studying or working from home!

Pretzels aren’t the only product that Hershey is buying. In 2018 it bought SkinnyPop popcorn maker Amplify Snack Brands for $1.6 billion. Hershey also has entered into the nutrition bar category, diversifying from chocolate as consumers buy healthier snacks.  Hershey has also acquired Krave jerky and expanded Reese’s pretzel-nut-chocolate snacks. Other new treats from the company include:

  • KIT KAT Thins
  • Reese’s Snack Cakes for a mid-morning snack
  • Organic Hershey’s Bars
  • Organic Reese’s Peanut Butter Cups
  • Zero sugar chocolates

Shoppers seek more options than ever before. Hershey’s stated goal: Become a snacking behemoth. That’s a tall order when competing with companies the size of Nestle, PepsiCo, Mondelez, and Kraft.

Care for a snack?

Group Activities and Discussion Questions:

  1. NOTE: If available near you, buy a couple of bags of Dot’s Pretzels and bring them to class (along with Hershey bars). It’s always a nice idea to feed students.
  2. Discuss the four primary marketing strategies: market penetration, market development, product development, and diversification. When is each used?
  3. Which strategy is Hershey’s using with Dot’s Pretzels? Why is it in acquisition mode?
  4. Show the list of brands Hershey owns: https://www.hersheyland.com/brands
  5. Show Dot’s website: https://dotspretzels.com/
  6. Next, discuss setting SMART objectives (specific, measurable, achievable, realistic, and time-bound) for marketing strategies.
  7. Divide students into teams. Have each team develop five SMART objectives for the new acquisition’s products.

Source: Hershey to buy two pretzel makers for $1.2 billion, Reuters News Service; Newman, J. (Nov 10, 2021), Hershey plans to spend $1.2 billion in deals for pretzel producers, Wall Street Journal.

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