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Name : Aziz Fauzi

Student ID : 29115688
MBA YP 54A
School of Business and
Management
Institute Technology Bandung
2016

Business Case Summary


Clique Pens: The Writing Implements Division of US. Home
1. Background of The Case
The case was about the problem faced by Clique Pens, a
writing implements division of US. Home. For nearly three years, its
gross profit margin gradually fell by 3 percent from 2010 to 2012.
Even, no growth was found in 2013. Eliza Ferguson as the president
of the division formulated the strategy to dampen the gap between
sales and cost. She proposed Marketing Development Fund( MDF) to
resemble allowance in discounting price. Her action was supported
by Logan Chen, the marketing vice president with his strong
argument. However, Ross McMillan (the sales Vice President)
opposed with valid and deep analysis.
2. Poduct Information
Clique Pens was the wiriting implement product of US. Home.
Clique pens was found in 1922 by mennonite cousins in Kansas City,
Missouri. Its utilarian design was the hallmark of Clique Pens. It
represented the founders core value that was the availablity of ink
supply without stroking pen before flowing ink.
The core
competency of Clique compared to its competitior was in ink
formula. Under US Home, Clique had grown steadily an in 2013 its
stable of brands sold worldwide.
3. Business/Industry Situation
The advance of digitalization surprisingly did not affect the
wiritng implement industry. Data showed that there were more than
50 major firms competed and more than 20 billion pens and pencil
sold to world market. Thus, Clique Pens was not the only supplier of
pens and pencil product to US market. There were a plethora
popular brand names, such as BIC, Scripto, Pentel, Pilot, Papermate
and Sharpie. It resulted in fierce competition among them.
The consumer might come from high end consumer and
retailer. High end consumer might have a brand awareness but less
loyality. The retailers posessed a strong bargaining power to decide

which brand to display in their shelf. They seeked for a product


offered price reduction such as allowance and promotion.
condition made the pens and pencil to be high turn over
profitable commodity for retailer but less margen for
manufacturers.

that
This
and
the

4. Marketing Mix
- Product
Clique Pens was the wiriting implement product of US. Home.
Clique pens was found in 1922 by mennonite cousins in Kansas
City, Missouri. Its utilarian design was the hallmark of Clique
Pens. It represented the founders core value that was the
availablity of ink supply without stroking pen before flowing ink.
The core competency of Clique compared to its competitior was
in ink formula. Under US Home, Clique had grown steadily an in
2013 its stable of brands sold worldwide.
- Price
Clique pens was sold primarily to retailer with price reduction.
- Promotion
On average, 55 percent of Clique marketing budget was
allocated for trade promotion. Clique advertising and
communication programs were aimed at several market
segments consistent with its product line. The most consumer
promotion used was coupons. They were distributed through a
variety of media such as free standing-inserts in Sunday
newspapaer, special marketing event, in-store display and cash
register receipt. Coupon redemption rates for writing implements
were about 1,3 % lower than for most other consumer products.
- Place
Clique pens could be found at many types of retail outlets,
such as supermarket, mass retailers, drug store, warehouse club,
department stores and specality stores.
5. Problem Definition
The problem of the case was the decsent of gross profit
margin for 4 year as much as 3 percent. Elisa Ferguson proposed
MDF program to push the margin, so the problem can be defined
should Elisa Ferguson reduce the alowance for trader and increase
the price of clique pens and pencil?
6. Alternatives Formulation
The problem will be approached by using advantage and
disadvantage analysis for shifting from current marketing strategy
to MDF.
7. Alternatives Analysis
a. Advantage of Changing to MDF Program
The market development program was pointed for long term
strategy to take control the trade promotion. The market
development aimed to increase the end user for a brand demand

which in turn would dampen the bargaining power of retailer.


The two main program would launch were consumers
advertising and instant coupon. The advertising was devoted to
increase the brand awareness so that it would mold a brand
equity in consumers mind. It, by the time, would reduce the
future marketing effort in which consequently pushed the profit
margin larger.
b. Disadvantage of Changing to MDF Program
In short term, the reduction from trade promotion would
enhance the price of Clique Pens in retailer level. With current
competition condition, and similartiy in product, the retailer
would easily change clique pens to other brand. It would occur
because the competitior was assumed would still use the thin
margin strategy.
8. Recommendation and Contigency Plan
From the explanation above, Eliza Ferguson should not change
the trade promotion to Market Development Fund with several
consideration :
1. The bargaining power lied on buyers side. The company was not
able to control price because end consumer was lack of brand
awareness.
2. Even the elasticity of product was inelastic, but the product was
not too different from others. So that, it long term, They will
substitute the clique pens to a lower price product.