Strategic Movements March 2018

March 2018 Corporate

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.

About the author

Tim J. Smith, PhD is the Managing Principal of Wiglaf Pricing, and an Adjunct Professor at DePaul University of Marketing and Economics. His most recent book is Pricing Strategy: Setting Price Levels, Managing Price Discounts, & Establishing Price Structures.

Tim J. Smith, PhD
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