Page 67 - Marketing Management

44 PART 1 UNDERSTANDING MARKETING MANAGEMENT

to sell over-the-counter pharmaceuticals; in 1991 with DuPont to expand basic research, and
in 2000 with Schering-Plough to develop and market new prescription medicines. In 1997,
Merck and Rhône-Poulenc S.A. (now Sanofi-Aventis S.A.) combined their animal health and
poultry genetics businesses to form Merial Limited, a fully integrated animal health company.
Finally, Merck purchased Medco, a mail-order pharmaceutical distributor, in 2003 and Sirna
Therapeutics in 2006.
Horizontal mergers and alliances don’t always work out. The merger between Sears and Kmart
23
didn’t solve either retailer’s problems. Media companies, however, have long reaped the benefits
of integrative growth. Here’s how one business writer explains the potential NBC could reap from
its merger with Vivendi Universal Entertainment to become NBC Universal. Although it’s a far-
fetched example, it gets across the possibilities inherent in this growth strategy: 24
[When] the hit movie Fast & Furious 4 (produced by Universal Pictures) comes to televi-
sion, it would air on Bravo (owned by NBC) or USA Network (owned by Universal),
followed by the inevitable bid to make the movie into a TV series (by Universal Television
Group), with the pilot being picked up by NBC. The show then
begins airing on Hulu.com (owned in part by NBC), and ulti-
mately leads to the creation of a popular amusement-park
attraction at Universal Studios.
How might Musicale achieve integrative growth? The company
might acquire one or more of its suppliers, such as plastic material
producers, to gain more control or generate more profit through
backward integration. It might acquire some wholesalers or retailers,
especially if they are highly profitable, in forward integration.
Finally, Musicale might acquire one or more competitors, provided
the government does not bar this horizontal integration. However,
these new sources may still not deliver the desired sales volume. In
that case, the company must consider diversification.
In today’s highly integrated media
world, NBC Universal may take a DIVERSIFICATION GROWTH Diversification growth makes sense when good opportuni-
successful movie franchise such as ties exist outside the present businesses—the industry is highly attractive and the company has the
Fast & Furious and leverage it right mix of business strengths to succeed. From its origins as an animated film producer, The Walt
across all its businesses, including Disney Company has moved into licensing characters for merchandised goods, publishing general
its Universal Studios theme park. interest fiction books under the Hyperion imprint, entering the broadcast industry with its own
Disney Channel as well as ABC and ESPN, developing theme parks and vacation and resort prop-
erties, and offering cruise and commercial theatre experiences.