Clique Pens: The Writing Division of U.S.

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Situation Analysis:
Case study present the complex marketing dilemma of Clique Pens - The writing
implements division which experienced 6% decrease in its gross profit during 2 years from
2010 to 2012. The major problem is to satisfy customer needs, retailers and increase both
revenues and gross profit margins by implementing new strategy. The president of Clique
Pens - Elise Ferguson believe that unnecessary giveaways and discount to retailers have
to be reduced in order to control this amount to drive sales more effectively.
Using customer-oriented MDF (Market Development Funds) as suggested by Logan Chen,
division VP of marketing, is one way to increase profit with higher sales. He also believes
that consumer-directed marketing and co-op advertising campaigns, such as instant
coupons, brand awareness advertisements may drive sales and increasing prices could
help to improve profits both for clique and its retail buyers. Consumers are not price-
sensitive and they also do not have strong brand loyalty. Therefore any price changes will
not result profit loss. As Logan Chen suggested 6% price increase would result only 1%
reduction in sales.
Despite the facts given above, McMillan believe that implementing retailer-oriented MDF
will increase market share by gaining more shelf space in retail centers. He stated that the
company spends 30% more on advertising activities than necessary amount. In
competitive environment only way to get more market share is to offer discounts and use
additional to take advantage of opportunities.
The main requirement from Ferguson in the last meeting is to decide what kind of change
must be implemented which requires keen cooperation between sales and marketing - the
strategy change that can solve competition challenge for retail space, increase sales and
stop the continuing erosion of Clique Pens' brand power in the market.
Possible Solution:
Although there was a successful implementation of marketing strategy in 1970s by BIC
Pen Company, which concentrated on selling ballpoint pens and with aggressive pricing
and promotion strategy became the leader of the marketing, and although "secret sauce"
formula can be used as a unique advertising slogan by Clique Pens to launch new brand
awareness advertisements in order to increase sales, it must be considered that the 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 retailer-oriented rather than
consumer-oriented.
If the strategy suggested by Logan Chen implemented the sales and profits may increase,
however this consumer-based strategy may result in losing of considerable shelf space and
sales to competitors as a result of ignoring additional allowances and discounts to retailers.
It have to be admitted that retailers have a strong power in the market and their dominance
make Clique Pens to compromise in some degree. Possible benefits to retailers can be
just-in-time deliveries to decrease their stock problems and seasonal discounts.
As indicated in Case Study in the period from 1980 to 2013 the major retailers' power in the
market forced manufacturers to spend more promotional dollars to trade and reduce
consumer advertising and promotion by reducing profit margins. It proves again that these
retailers have a great influence on the sales of famous brands. Although some packing and
handling issues occur and make a challenge for manufacturers, in a competitive
environment solving them are more effective than spending on social media channels to
attract consumers, the way that is not more interesting for them. As Ferguson know that
80% of Clique’s sales come from deals with retailers and suppliers are highly dependent on
retailers, in the case of broad variety of the same product types in the market funding for
shelf space is the only way to survive and maintain profits.
Since manufacturers and suppliers do not have enough bargaining power. If Clique Pens
decide to cut off some discounts and attempt to bargain with retailers, in this case, buyers
(retailers) can easily move to another suppliers. Retailers know that offering the same
products from different manufacturers is not a big difference for consumers, who do not
have strong brand loyalty and are not price-sensitive. In this case only loser will be Clique
Pens.
As a result it is recommended to implement the strategy McMillan, however there is
another point. While offering discounts for gaining shelf spaces, the possible in increase
expenses can be covered by price increase as suggested by Logan Chen. Since there are
less price-sensitive consumers in the market. However, any brand awareness advertising
campaigns can be an ineffective because of the existence of substitutes in retail shops.
In comparison to electronics it is not obligatory to sell Clique Pens products if the same
product types – substitutes offered by competitors. However, in electronics, it is highly
demanded to have Apple products because Apple has a sustainable brand loyalty on its
customers. As stated that only 1.3% of consumers use coupons to buy Clique Pens.
Continuing this strategy to gain consumers is extremely useless and costly for company
and this type of wrong decisions can push company out the market. Therefore it is not a
good strategy mainly to focus on consumer-oriented MDF by offering discounts and
coupons also showing ads to consumers.
After getting a strong place on shelf spaces and maintaining gross profit margin increase it
can be an option to engage with some consumer segments, such as students and launch
cost effective guerilla marketing campaigns, organize competitions for them and be a
sponsor for them. Since these campaigns are more cost-friendly to companies and
effective ways to increase brand loyalty by supporting teenagers and children in their study.
However, there is no enough data to calculate the risk and it can be given as a research
topic to Logan Chen by Elise Ferguson.