Clique Pen

Case Summary “Clique Pens: The Writing Implements Division of US. Home “ The case was about the problem faced by Clique Pens, a writing implements division of US. Home. For nearly three years, its gross profit margin gradually fell by 3 percent from 2010 to 2012. Even, no growth was found in 2013. Eliza Ferguson as the president of the division formulated the strategy to dampen the gap between sales and cost. She proposed Marketing Development Fund( MDF) to resemble allowance in discounting price. Her action was supported by Logan Chen, the marketing vice president with his strong argument. However, Ross McMillan (the sales Vice President) opposed with valid and deep analysis. Clique Pens was the wiriting implement product of US. Home. Clique pens was found in 1922 by mennonite cousins in Kansas City, Missouri. Its utilarian design was the hallmark of Clique Pens. It represented the founder’s core value that was the availablity of ink supply without stroking pen before flowing ink. The core competency of Clique compared to its competitior was in ink formula. Under US Home, Clique had grown steadily an in 2013 its stable of brands sold worldwide. 1. Business/Industry Situation The advance of digitalization surprisingly did not affect the wiritng implement industry. Data showed that there were more than 50 major firms competed and more than 20 billion pens and pencil sold to world market. Thus, Clique Pens was not the only supplier of pens and pencil product to US market. There were a plethora popular brand names, such as BIC, Scripto, Pentel, Pilot, Papermate and Sharpie. It resulted in fierce competition among them. The consumer might come from high end consumer and retailer. High end consumer might have a brand awareness but less loyality. The retailers posessed a strong bargaining power to decide which brand to display in their shelf. They seeked for a product that offered price reduction such as allowance and promotion. This condition made the pens and pencil to be high turn over and profitable commodity for retailer but less margen for the manufacturers. 2. Marketing Mix  Product : Clique Pens was the wiriting implement product of US. Home. Clique pens was found in 1922 by mennonite cousins in Kansas City, Missouri. Its utilarian design was the hallmark of Clique Pens. It represented the founder’s core value that was the availablity of ink supply without stroking pen before flowing ink. The core competency of Clique compared to its competitior was in ink formula. Under US Home, Clique had grown steadily an in 2013 its stable of brands sold worldwide.  Price : Clique pens was sold primarily to retailer with price reduction.  Promotion : On average, 55 percent of Clique marketing budget was allocated for trade promotion. Clique advertising and communication programs were aimed at several market segments consistent with its product line. The most consumer



promotion used was coupons. They were distributed through a variety of media such as free –standing-inserts in Sunday newspapaer, special marketing event, instore display and cash register receipt. Coupon redemption rates for writing implements were about 1,3 % lower than for most other consumer products. Place : Clique pens could be found at many types of retail outlets, such as supermarket, mass retailers, drug store, warehouse club, department stores and specality stores.

3. Problem Definition : The problem of the case was the decsent of gross profit margin for 4 year as much as 3 percent. Elisa Ferguson proposed MDF program to push the margin, so the problem can be defined should Elisa Ferguson reduce the alowance for trader and increase the price of clique pens and pencil? 4. Alternatives Formulation : The problem will be approached by using advantage and disadvantage analysis for shifting from current marketing strategy to MDF.

5. Alternatives Analysis a. Advantage of Changing to MDF Program : The market development program was pointed for long term strategy to take control the trade promotion. The market development aimed to increase the end user for a brand demand which in turn would dampen the bargaining power of retailer. The two main program would launch were consumer’s advertising and instant coupon. The advertising was devoted to increase the brand awareness so that it would mold a brand equity in consumer’s mind. It, by the time, would reduce the future marketing effort in which consequently pushed the profit margin larger. b. Disadvantage of Changing to MDF Program : In short term, the reduction from trade promotion would enhance the price of Clique Pens in retailer level. With current competition condition, and similartiy in product, the retailer would easily change clique pens to other brand. It would occur because the competitior was assumed would still use the thin margin strategy. 6. Recommendation and Contigency Plan : From the explanation above, Eliza Ferguson should not change the trade promotion to Market Development Fund with several consideration : a. The bargaining power lied on buyer’s side. The company was not able to control price because end consumer was lack of brand awareness. b. Even the elasticity of product was inelastic, but the product was not too different from others. So that, it long term, They will substitute the clique pens to a lower price product.