Clique Pen: The Writing Implements Division of U.S. Home

Group 7
Nitin Paras
Chitrak Kumar
Saswata Mandal
Rana Pegu

Case study brings the complex dilemma of Clique pen – whether to satisfy its customers or its
retailers?

Due to excess discounts to retailers

retailers clique pen had experienced
experienced six percent decrease
decrease in its
gross profit in two years, Clique Pens president-Elise Ferguson believes that in order to control
this quantity, unnecessary gifts and discounts for distributors need to be lowered to drive
sales more efficiently.

Logan Chen, division VP of marketing suggested consumer oriented Market Development

Fund (MDF) and reducing the trade discount to increase sales and profit for the company.
Logan suggested that, if the price is increased by six percent than the sales will decrease by

one percent only.

In contrast McMillan gave emphasis on retail oriented MDF, which not only help in acquiring
more shelf space but also grab share of mind of customers. He also stated that in competitive
environment the only way to gain market share is giving trade discounts.

The main dilemma Ferguson is facing here is that to whom he will allocate the MDF as his
main requirement is to stop the deterioration of profit margin.

Since there is not enough bargaining power for producers and distributors. If Clique Pens
chooses to cut off some discounts and try to negotiate with distributors, buyers (retailers) can
relocate readily to other providers in this situation. Retailers understand that it is not a large
distinction for customers to offer the same products from other producers, as the customers
do not have powerful brand loyalty and are not price-sensitive. In this case, Clique Pens will
be the only loser.

As a consequence, implementation of the McMillan approach is suggested, it will not only

help in increasing gross profit by four percent but also increase the market share by 3.5
percent, but there is another point. While providing discounts to gain shelf spaces, as
proposed by Logan Chen, the possible incremental costs may be covered by price increases.

To make the plan more effective MDF allocation can be break down into two steps. First step
will be retailer oriented MDF to gain market share and shelf space. Second step will be
Customer oriented MDF to increase the gross profit margin as well as customer awareness.

It can be an alternative to engage with some customer sections, such as students and launch
cost-effective guerrilla marketing
marketing campaigns, organize contests for them and be a sponsor for
them, after gaining a powerful position on shelf spaces and retaining gross profit margin rise.