CLINIQUE PENS

The Writing Implements Division of U.S.

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Submitted To:
Prof. Manoj Nair

Submitted By: Section A, Group 4:

Aastha Tulsyan (190201002)
Akshay Sharma (190201011)
Ritvik Jaiminy (190201081)
Sakshi Shah (190201089)
Samyak Jain (190201092)
Question 1: Should Clique be more concerned with retailer needs (requirements) or
consumer needs? What factors drive this decision?
Answer 1: Clique should be more concerned with retailer requirements as compared to
consumer needs. Factors that drive this decision are:
 High bargaining power for Retailers
Retailers enjoy high bargaining power due to the lack of differentiation in products and low
involvement shown by consumers. Low involvement on consumers’ part translates to little
specific brand loyalty. There are a lot of brands competing in the space. This leads to a highly
competitive battle for retail shelf space.
 Low impact of consumer promotions
Research showed that consumer promotions like coupons had low redemption rate of about
1.3% as compared to most consumer goods showing that consumers are relatively unaffected
by promotional activities. Relative infrequency of purchases also resulted in little impact for
consumer promotions.
 Consumer Purchasing Behavior
Competitors fought for POS displays, end caps and cash register space because customers
often chose brand, package size on impulse. Thus, heavy dependence on point-of-sales
display and merchandising. Consumers almost never shopped around, even if the brand of
choice was not available when buying pens or pencils which makes high visibility on shelfs
vital.

Question 2: Should Clique institute MDF as a marketing initiative or another means for sales
to compete for retail shelf space? If marketing how will it be funded? If sales how will it be
funded?
Answer 2: Clique needs to institute MDF as a sales initiative because as mentioned in the
answer above, impulsive consumer behavior and extreme competitiveness among brands
means keeping retailers happy is of utmost priority.
Allocating some of the budget from consumer promotions to sales promotions. We have
already established that high visibility on retail POS and shelf space is vital. Consumer
promotions are not bearing a significant result due to impulsive buying behavior and low
usage of coupons and related promotional tools and retailers didn’t like instant coupons as
well.
As mentioned in Chen’s research, consumers were not very price sensitive. So, a price
increase to provide higher margin to retailers or to counter the effects of an increase in
retailer allowances and discounts can be considered. A higher margin for Retailers on selling
Clique’s products would act as an incentive for retailers to provide more shelf space and
would help drive out some of the competition.
Advertising budget should be left untouched as historical examples like Schiltz beer suggest
that stopping to promote the brand leads to shrinking of the brand and possible end.
To sum up, Allocation of a portion of sales promotion budget and increase in price by a
maximum of 6% to provide higher incentive to retailers, buy shelf life to combat competitors
while keeping the gross margin intact. This strategy can be a winning one given the market
scenario.

Question 3: If clique were to fully implement MDF oriented to consumers, how should
Ferguson go about obtaining retailer support? What kind of competitive response should be
expected?
Answer 3: If Clique pens implements consumer oriented MDF, the company would cut on
the discounts and allowances given to retailers to reduce costs. Thus, the company stands a
chance to lose retailer support and thereby valuable shelf space in the market.
Thus, in order to gain retailer support, the following steps can be taken:
 Convincing the retailers that increased sales due to the consumer oriented MDF
would help in off-setting lost margins for the retailers.
 Off-invoice promotions should be given to retailers to encourage their continuing
partnership and support.
The competitive response would be for other pen companies to continue to offer retailer
discounts, in order to entice retailers to give minimal shelf space to Clique. This would draw
the retailers’ attention towards the competitors because they would get better margins from
them than from Clique. This will adversely affect the sales of Clinique pens and it will not be
enough to cover the loss of retailer discounts.

Question 4: How should Ferguson manage the pull/push conflict between the marketing
department (Chen) and the sales department (McMillan)?
Answer 4: The sales and marketing departments have had heated discussions regarding the
procedure to implement Market Development Funds (retailer oriented or customer oriented)
and they are on the verge of a conflict.
In order to manage this push/pull conflict between the two departments, Ferguson should
consider an alternative which allocates resources to both consumer oriented MDF and retailer
oriented MDF.
The sales department (McMillan) should be responsible for the management of retailer
oriented MDF. The department has to manage relationship with retailers, work on margins
and strive to get more shelf space. The MDF funds can be utilized to run price-off promotions
to encourage the retailers to stock their products and maintain a lower retail price.
The marketing department (Chen) should be responsible for the management of consumer
oriented MDF. The funds should be utilized on consumer advertising and increasing the
involvement of consumers with the brand. They should work on differentiating the brand
from the competitors by making it more fashionable, vibrant and eye-catching. This will help
in increasing sales and thereby the gross profit margins for the company.