Strategic Movements: March 2018


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

Published March 26, 2018

Will Blue Buffalo Serve General Mills Well?

Jeff Harmening repeats his Annie’s Homegrown strategy in buying Blue Buffalo – a premium, all-natural pet food. Strategy: move into wholesome and premium brands as these are growing, while more dated brands like Betty Crocker and Yoplait are lackluster. But at a 17% premium, how will General Mills profit from this transaction? Wouldn’t shareholders be better served buying into Blue Buffalo directly rather than giving General Mills money to buy Blue Buffalo?  The 17% premium has to be paid for. Usual means: cost cutting or revenue growth. For General Mills, they are looking for growth: expand distribution channels to big box and convenience stores.  This is something General Mills can do better than Blue Buffalo alone, so the strategy can be sound.  Make it work Jeff.

EJ Bouter Made the Case for the Chief Pricing Officer

In his book Pricing: The Third Business Skill, EJ Bouter made the case for pricing to become its own department, right next to finance, marketing, sales, and operations in chapters 14-16. He clarified why pricing was neither a finance, marketing, nor sales job in itself, why it deserves a board level role, and what it takes to make it work. Well done, Bouter.

Target Finds Play Book

Target experienced an upbeat Q4 2017 followed their downbeat Q4 2016.  What changed?  First, consumers spent more lifting most ships. Second, Brian Cornell has been driving supply chain efficiencies, exclusive brands, store renovations, and e-commerce efforts. Somewhat like Walmart’s strategy and directly addressing Amazon.  Good moves and execution.  Q4 2017 profits at $1.1 billion.  Keep it up.  Game is still in play.

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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.