Group7_sectionb_cliquepens

Clique Pens : The Writing Implement Division of U.S. Home Submitted by : Group 7 PGP10219 Pragya Verma PGP10223 Priya kumari PGP10225 Jinesh Rambhia PGP10228 Santosh Mishra PGP10230 Sejal Ved PGP10233 Siddharth Gautam

Background Company

Customers

Competitors

Collaborators

Context

- founded in 1922 by two cousins in Missouri - Earlier, they made fountain pen. Later in the 1960s started making ballpoint pen by adapting market - In 1980, Utley acquired it, its sales were $17mn

- Retailers - Companies - Households - less brand loyalty observed in the pen industry -Influenced by POS display

- Over 50 major competitors in the -Hyper competitive battle for retail space among brands - For Example: ● BIC ● Scripto ● Pentel ● Pilot ● Papermate ● Sharpie

- Ad-Speciality dealers - Distributors -Speciality retailers and outlets offered 4-6 brands

-The US economy was expected to grow at 2 % per year (in line with the population growth) -Styling, colour and fashion mostly were driving factors

Porter’s Five Forces Bargaining power of suppliers

Threat of new entrants • Low • Competitive • mature market

Porter's five forces

Threat of substitutes • Very small difference between different products of different brand. • All the pens can be viewed as substitutes

• Low • High competition • Availability of multiple brand products

Bargaining power of customers Competitive rivalry • High • Competiton on prices and trade discounts

• High • Maufacturer needs to offer high discount to retailer to acquire shelf space

3

Decision problem ●

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The gross profit margin was down from 42% in 2010 to 36% in 2012 The major problem is to identify ways to increase the gross profit margin and revenues The company is confused whether to satisfy needs of the retailers or the customer

Alternatives

Evaluation of Alternatives

Alternative 1: Since this market doesn’t show up much of brand loyalty, increasing efforts is advertising would go in vain. Moreover, retailers do not prefer the concept of instant coupons and price reduction would impact them negatively Alternative 2: Fight for shelf space among the biggest retail companies, such as Wal-Mart, Kroger, CVS etc. requires sophisticated allocation of funds in a way that is retaileroriented rather than consumer-oriented. The retailers have strong power in the market and their dominance would ask for some comprise. Alternative 3: Though major focus should be retailer oriented, along with offering them discounts to gain shelf space, increased expenses can be covered by price increase. Also, the customers are less price sensitive. However, any brand awareness advertising would not help due to lot of substitutes present.

Recommendation ● ●

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Trade promotions should be increased, reducing advertising and consumer promotions A combination of Consumer oriented as well as retail oriented strategy (while offering discount to retailer for gaining the shelf space, the increased expenses can be covered with the increase in price) Different rates of the same product at different stores makes consumer lose loyalty for a brand; retail price for a specific product should be kept constant Just-in-time delivery to retailers to decrease the problems of stock and seasonal demand Tailor distribution for retail outlets Majority of the promotional budget should be allocated to trade promotions followed by consumer promotion; least allocation should be given to advertising

THANK YOU