A case analysis of clique pens.

1. Clique Pens
Divya Shekhar Prem PGP13078
Divyank Dixit PGP13079
Gargi Shara PGP13083
Gazala Sheikh PGP13085
Geetika PGP13086
Govindam Rastogi PGP13087
Gunjan Parmar PGP13089
Kasturi Kalita PGP13103

2. Introduction
• Clique Pens was formed in 1922 by two Mennonite cousins in Kansas City, Missouri. The
company originally made fountain pens similar to the classic Waterman pens and in the
1960squickly adopted the new, inexpensive ballpoint design. Clique Pens were known for
their utilitarian designs that reflected the founders’ core values and for their “always
ready” ink supply that did not require the writer to make several strokes with the pen
before ink flowed. The ink formula was Clique’s “secret sauce” and provided a key
competitive distinction. In 1980, when Utley acquired it, Clique had a full line of writing
implements and markers. Its sales at that time were around $17 million. Under U.S. Home,
Clique has grown steadily, and in 2013 its stable of brands sold worldwide.

3. Industry
• Over 50 major consumer products firms competed in the writing implements business
along with numerous small distributors who purchased generic items from global
suppliers. More than 20billion pens and pencils were sold worldwide in 2012.
• The industry had some of the more prominent brand names in consumer products, such as
BIC, Scripto, Pentel, Pilot, Papermate, and Sharpie. Many had sold consistently in the U.S.
for more than fifty years. Consumers tended to shun private-label and unknown brands of
pens and pencils to buy familiar brand names, but had little specific brand loyalty. Pens
and pencils were viewed as commodities, except at the high end. This resulted in a hyper-
competitive battle for retail shelf space among mass brands. The battle was manifested in a
proliferation of SKUs (stock keeping units), as major retailers requested custom designs
and tailored shelf packs that allowed them some form of exclusivity from their
competitors.

4. Marketing and Promotions
• Clique’s brand managers worked closely with various marketing and ad agencies to
develop an integrated package of advertising, trade, and consumer promotions to
maintain market share and profitability. On average, Clique allocated 15% of its total
promotional budget to advertising, 30% to consumer promotions, and 55% to trade
promotions.
• Clique’s advertising and communication programs were aimed at several market segments
consistent with its product line. Innovation was touted loudly by all the companies in the
industry, but it generally consisted of styling and other superficial changes as the basic pen
and pencil technology remained stable. Consequently, advertising tended to focus on
consumer promotions and price-off deals. These ads were often tagged with a retail
“partner” and carried a statement such as “available at Target.”

5. Retail Channel Management
• The writing implement industry had no firm with enough brand- and market-share power
to havea dominant role at retail. Competition for shelf space was fierce but retailers tended
to be reluctant to alter “shelf share” once they had chosen their assortments. Writing
implements took relatively little space to display, but even a small retailer had to offer a
plethora of styles and types of pens, pencils, and markers at a number of price points and
package configurations. This resulted in a merchandising and buying nightmare. Stock-
outs were common. It was not clear how discounts affected this issue, but forward-buying
(retailers stocking up on discounted items and special deals) resulted in frequent over- and
under-stocking. Many retailers responded by forcing distributors and manufacturers to
hold inventory and provide it just-in
• This situation was exacerbated by the variety of methods that retail chains used to
compensate their buyers. Some retailers based their buyers’ bonuses on the spread
between gross manufacturer’s prices and the net prices achieved. Others based bonuses on
obtaining “dating” or favorable paymentterms, such as 2% 60 net 61 days. Still others used
return on investment or on assets, and some used dollars sold per square foot. -time (JIT).

6. Retail Channel Management
• The writing implement industry had no firm with enough brand- and market-share power
to havea dominant role at retail. Competition for shelf space was fierce but retailers tended
to be reluctant to alter “shelf share” once they had chosen their assortments. Writing
implements took relatively little space to display, but even a small retailer had to offer a
plethora of styles and types of pens, pencils, and markers at a number of price points and
package configurations. This resulted in a merchandising and buying nightmare. Stock-
outs were common. It was not clear how discounts affected this issue, but forward-buying
(retailers stocking up on discounted items and special deals) resulted in frequent over- and
under-stocking. Many retailers responded by forcing distributors and manufacturers to
hold inventory and provide it just-in
• This situation was exacerbated by the variety of methods that retail chains used to
compensate their buyers. Some retailers based their buyers’ bonuses on the spread
between gross manufacturer’s prices and the net prices achieved. Others based bonuses on
obtaining “dating” or favorable paymentterms, such as 2% 60 net 61 days. Still others used
return on investment or on assets, and some used dollars sold per square foot. -time (JIT).

7. Problem
• Small margins
• No market power
• Commoditized Product
• Exploitative Retailers
• Reducing Market share
• Increasing selling costs as a result of providing multiple discounts to reseller

8. Recommendations
• By increase the prices by 6% which would lead sales volume would only decrease by
1%.This would not allow them control over their sales, grow market share, or sustain
margins even though the sales would rise and the gross profit margin would climb.
• Dropping all discounts given to retailers and giving 10% discounts to customers. This
would reduce sales 180 million. This would lead to retailers will not market their pens and
pencils to customers on their shelves effectively. However, it would improve their gross
profit margin as shown in the calculation where it reached to 45%.
• Establishing a marketing development fund targeted at retailers. Deals with merchants
would increase as a result, and more shelf space, POS displays, and cash register spaces
would be purchased. Coupons would make up the majority of the whole consumer
marketing budget, which would be replaced with a retailer-focused MDF and gross margin
offset fund. The MDF would be under combined sales and marketing control by retailers
and Clique pens.

9. Thank You