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Large Companies Reevaluating Market Positioning of Acquisitions

10/04/2018

In a review of company strategy, Julie Jargon and Annie Gasparro considered the fate of small brands acquired by large corporations in a Wall Street Journal article on October 1.

 

The authors pointed to the fate of Kashi products after it was purchased by Kellogg Company in 2000.  Integration into the large company throttled product development and promotion. A similar situation occurred after General Mills acquired Annie’s Home Grown Inc.

 

It is apparent that the factors leading to popularity and sales growth for small brands differ from corporate brands.  Large companies acquiring brands to enhance sales volume and net revenue are frequently disappointed by the gap between projections and performance. 

 

Small brands use social media and benefit from shelf space in specialty stores appealing to high income and health-conscious demographics. Performance of these brands can be depressed by eliminating entrepreneurial spirit and constraints imposed by established corporate marketing policies.  It is evident that acquirers of small companies giving their “fledglings” the discretion to continue building brand loyalty will ultimately benefit from the latitude extended to management.

Joint product development Kashi and parent Kellogg's