Making the Right Choice on Acquisitions

The Business Issue

Our client wanted to get into the bottled water business and needed to determine which brand to acquire of the three they were targeting.

The Background

Research International was brought in to help our client make a decision based on which of the three brands offered the largest future revenue and profit potential. Complicating the decision was the fact that each of the brands had very different positioning and price points.

The Solution

In order to determine which brand best fit the client's distribution network and financial goals, the RI team developed a solution that focused on two elements:

• Potential dollar sales revenue, forecasted by using our MicroTest model for each of the three brands, under equal assumptions with regards to awareness and distribution through their multi-level sales network
• A consumer price, identified by using our brand price trade-off exercise (now called Price Solve^TM), that would maximize their total margin

The Business Value

These two pieces of information, combined with the potential investments and take-over sums required for each of the three brands, provided our client with all the building blocks needed to create a complete business case.

For each of the three brands, they could trade-off the required up-front investment against a volumetric sales forecast that was grounded in actual consumer interest to try and adopt the proposition.

By using this data, our client was able to select the most appropriate brand for acquisition.