Strategic Movements July 2019

July 2019 Pricing

Household Insecticide Pricing

Raid, a household insecticide by S.C. Johnson & Son Inc. with roughly 50% U.S. market share, sells for $4.27 per 20 oz can canister ($0.21 per oz).  Procter & Gamble Co. has recently launched Zevo, a competing household insecticide, for $6.97 per 10 oz can canister ($0.70 per oz). Does Zevo warrant 3x the price per ounce over Raid?

Higher pricing justified for eco-friendly pesticides versus harmful chemicals

Differential Benefit:  Safety 

Zevo kills insects with chemicals that are benign to mammals while Raid kills using chemicals that can cause irreversible neurological damage and death. While Raid is safe if used according to label directions, people don’t want to hear that their home cleaning and maintenance habits may kill their children and pets. On a messaging level, S.C. Johnson must play defense on an issue it would rather not discuss while Procter & Gamble can talk and show how safe their product is. Considering the power of fear in shifting buying habits, the launch price on Zevo could have been set even higher.

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.

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