Strategic Movements: August 2020


Tim J. Smith, PhD
Founder and CEO, Wiglaf Pricing

Published August 20, 2020

Nikola Green Garbage Trucks Pricing

Republic Services is said to be buying 2,500 garbage trucks from Nikola, an electric and hydrogen fuel cell vehicle maker. The price? Slightly under $500,000 per truck and reportedly around the same of other electric garbage trucks. The normal price for gasoline-powered garbage trucks is $200,000 to $300,000. Why the big uptick in price for electric garbage trucks? Economic Value to Customer. The business case for electric garbage trucks considering fuel savings, electric charging, and maintenance issues alone would make this a clear choice for a garbage truck that spends its days driving the same urban roads and averaging 2 miles per hour while generating lots of power to lift garbage containers into its belly. Nice development.

UPS and FedEx Raise Prices in Parallel Again

Photo by Obi Onyeador on Unsplash

UPS and FedEx Raise Prices in Parallel Again

Online ordering is up and package delivery firms are enjoying high demand. What to do? Raise prices of course. United Parcel Service (UPS) raised prices on some large shipping customers by more than 10%.  FedEx followed suit. Buyer power has shifted from shippers to shipping companies, and they are making hay. Logistics matters during COVID times. Note: package delivery companies have been facing increased costs and increased supplier power due to COVID.

CPG Rising Demand Does Not Raise All Sectors, but Some Sectors Soar

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CPG Rising Demand Does Not Raise All Sectors, but Some Sectors Soar

Proctor & Gamble reported 6% growth in organic sales last year (year ending June 30th). Fabric and home-care companies (such as Tide, Mr. Clean, Dawn, Cascade, etc.) posted 14% gains. Even better, customers seem willing to pay higher prices with fewer promotional discounts. Kimberly-Clark and Clorox are also reported to be currently reducing promotional discounts. During COVID driven demand and channel shifting, lower prices are generally not the key driver of sales. Rather, delivering supplies that customers need and want to the right distribution outlets is. Logistics matters.

Demand for Eggs Soars During COVID

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People Want Eggs

Cal-Maine Foods said sales rose 62% in the last quarter as consumers purchased more eggs – and more expensive eggs at that. Net average selling price per dozen eggs was $1.575 last quarter, up from $1.062 the year prior. Demand for specialty eggs (organic and brown) accounted for 30% of sales. Conjectures:  Are people who are not used to cooking finding eggs an easy option? Are eggs the new comfort home-cooked food? Are people buying eggs as a low-cost protein during economic uncertainty? Are people considering expensive eggs as a substitute for dinning out for brunch? I don’t know. All of the above?

Demand for Tuna Soars During COVID

Photo by Taylor Grote on Unsplash

People Want Tuna

During COVID times, Bumble Bee Foods’ sales of canned and pouched tuna doubled. Average wholesale prices increased 41% for same period last year. Other seafood prices have dropped while tuna prices have increased. Why Tuna? Conjectures: Do people not know how to cook fish? Is canned tuna the new comfort food? Are people buying canned tuna as a low-cost protein during economic uncertainty? I don’t know. All of the above?

Zoom for Home-DTEN ME $599

Photo by Chris Montgomery on Unsplash

Zoom for Home-DTEN ME $599

Perhaps this will sell: $599 for a 27-inch touch screen developed for making Zoom calls and conducting video conferences from home offices. Seems like some will buy it, but it won’t be the dominant profit maker for Zoom. Investors shrugged on the offering. Speculative question: is Zoom trying to make itself into a lifestyle brand? Maybe Zoom should enter the TikTok acquisition game.

About The Author

Tim J. Smith, PhD, is the founder and CEO of Wiglaf Pricing, an Adjunct Professor of Marketing and Economics at DePaul University, and the author of Pricing Done Right (Wiley 2016) and Pricing Strategy (Cengage 2012). At Wiglaf Pricing, Tim leads client engagements. Smith’s popular business book, Pricing Done Right: The Pricing Framework Proven Successful by the World’s Most Profitable Companies, was noted by Dennis Stone, CEO of Overhead Door Corp, as "Essential reading… While many books cover the concepts of pricing, Pricing Done Right goes the additional step of applying the concepts in the real world." Tim’s textbook, Pricing Strategy: Setting Price Levels, Managing Price Discounts, & Establishing Price Structures, has been described by independent reviewers as “the most comprehensive pricing strategy book” on the market. As well as serving as the Academic Advisor to the Professional Pricing Society’s Certified Pricing Professional program, Tim is a member of the American Marketing Association and American Physical Society. He holds a BS in Physics and Chemistry from Southern Methodist University, a BA in Mathematics from Southern Methodist University, a PhD in Physical Chemistry from the University of Chicago, and an MBA with high honors in Strategy and Marketing from the University of Chicago GSB.