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:
- Discuss the four key marketing strategies: product development, market development, market penetration, and diversification.
- Discuss acquisitions as a marketing strategy. When is this effective? When is it not effective?
- Show Lulemon’s web site: https://shop.lululemon.com/
- Show Mirror’s web site: https://www.mirror.co/
- How do these two companies complement each other?
- 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