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Clique Pens

The document discusses a pen company that is facing declining market share and gross profit margins due to increased competition and trade discounting. The company is considering shifting from trade discounts to a consumer-oriented marketing development fund (MDF) program to boost sales and profits. Two alternatives are analyzed: 1) shifting to the MDF program could increase sales 5% and gross margins 2 points but require more advertising spending, and 2) not changing could maintain sales in the short term but risk losing retailers and market share to competitors long term. The recommendation is to implement the MDF program while ensuring retailers that product quality remains high, and to focus on brand building, retailer relationships, product packaging, and market segmentation.

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NEERAJ
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212 views6 pages

Clique Pens

The document discusses a pen company that is facing declining market share and gross profit margins due to increased competition and trade discounting. The company is considering shifting from trade discounts to a consumer-oriented marketing development fund (MDF) program to boost sales and profits. Two alternatives are analyzed: 1) shifting to the MDF program could increase sales 5% and gross margins 2 points but require more advertising spending, and 2) not changing could maintain sales in the short term but risk losing retailers and market share to competitors long term. The recommendation is to implement the MDF program while ensuring retailers that product quality remains high, and to focus on brand building, retailer relationships, product packaging, and market segmentation.

Uploaded by

NEERAJ
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Background

Company • Founded in 1922 Customer


• Shifted from making fountain pen to • Catered to several market segments
inexpensive ball point pen • Consumer promotion was used
• Utilitarian design reflecting founder’s core
values • Consumers were not price-sensitive
• Acquired by Utley in 1980

Competition • Over 50 major firms competing in global Collaborator • Sold through retailers who purchased on
market deals
• Hyper-competitive battle for retail shelf- • Discounts and better margin were usually
space among mass brands deciding factor for retailers
• Prominent brands like BIC, Pilot, • Consumers were influenced by brand
Papermate, etc. • Consumers has coupon promotion etc. offers

Context • Technological : Innovation usually meant


superficial design changes
• Economical : Consumers were not price
sensitive
• Threat : Competition’s better profit margins for
retailers leading to declining market share of 1
Decision Problem

“To reduce trade discounting in return for a ‘marketing controlled,


consumer oriented MDF’ to lessen the decline in gross profit
margins”

2
Alternatives

Shifting to consumer-
oriented MDF

a.Not Changing to MDF


Program
Alternative Analysis
Alternative – 1 Alternative – 2

• Shifting to consumer-oriented MDF could generate an • In short term, the reduction from trade promotion
additional increase in retail sales of 5% and would would enhance the price of Clique Pens in retailer level.
result in gross profit margin of 2 points-from 36-38% • With current competition condition, and similartiy in
• To buy more co-op advertising and consumer-directed product, the retailer would easily change clique pens to
advertising such as “instant coupons”. other brand. It would occur because the competitior
• The advertising was devoted to increase the brand was assumed would still use the thin margin strategy.
awareness so that it would mold a brand equity in • If MDF is implemented it would result in decrease in
consumer’s mind. sales of over 9%, if discounts were reduced, but a
positive impact of gross profit of 2% could occur
Recommendations

• Use MDF programs and resize the contribution of Retailer’s discount to MDF Programs
(Consumer Promotion & Advertising Budget)
• Make the retailer sure that our product is good although the price increase.
• Clique needs to focus on growing their brand instead of focusing on only marketing and
sales and need to focus on awareness & positioning
• The relationship with the retailers can be improved
• The packaging of their product can be improved, it can be made more fashionable and
vibrant
• New focus on market segmentation so that needs/wants of students could be identified
and accordingly packaging could be tailored

5
THANK YOU

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