Clique: Marketing and Shelf Space

Topics: Marketing, Generally Accepted Accounting Principles, Sales Pages: 5 (1516 words) Published: April 21, 2015
Clique Pens: The Writing Implements Division of U.S. Home Harvard Business School Case
March 31, 2015

Define the Problem:
How can Clique come up with a plan that will grow revenues, increase gross profit margin, determine who controls market development funds (MDF’s) and have both the VP of Sales and the VP of Marketing agree and buy in?

Decision Factors:
1. Follow VP of Marketing
a. Reduce trade discounts and help pay for marketing controlled “consumer oriented” MDF b. Shift to consumer-oriented MDF would generate an additional increase in retail sales of 5% and an increase in gross profit margin to 38% c. Additional consumer-targeted marketing programs

d. Direct money towards more effective retail display and positioning and co-op advertising e. Price increase of 6% which would result in 1% reduction in sales f. Instant coupons
g. Assumes VP of Sales is wrong in asserting that a reduction in shelf space and increase of sales for competitors will be the result of following this price increase and discount reduction plan.

2. Follow VP of Sales
a. Reduce Consumer advertising and fund “retailer oriented” MDF b. Reduce advertising spending by 30%
c. Sales team would control MDF –
d. Create custom deals for specific accounts
e. Assumes the result will be increased shelf space and overall market share, leading to greater sales and overall profit though a lower gross profit margin f.

3. Incorporate recommendations of both the VP of Marketing and the VP of Sales a. Use MDF funds to take more shelf space from competitors
b. Increase price by 6%
c. Reduce advertising spending by 30%
d. Allow Sales and Marketing joint control over MDF
e. Focus heavy discounting during the back-to-school period
Relevant Information:
Industry Current
20 million pens were sold in 2012 in the United States
$5.5 Billion was spent in manufacturing costs
2% projected growth annually for the industry is tied to expected population growth Customers
85% of customers knew that they wanted upon entering the store, however point of sale displays and merchandising were still heavily influential 65% of U.S. consumers purchased 3 or more pens/pencils two times per year 100% of businesses bought 10 or more pens and pencils three times per year The Back-To-School period is from July 15 through September 1s 1.3% of U.S. customers use coupons when purchasing writing utensils Clique Brand

Known for its utilitarian design and its always ready ink supply Clique pens don’t require several strokes, this has been their “secret sauce” Marketing
15% advertisement
30% consumer promotions / price off deals / coupons
“available at Target”
Distributed through
Free standing inserts (Sunday papers)
Special marketing events
In store displays
Cash register receipts
55% trade promotions
Joint Promotions
Notebook and stationary suppliers (pen and pencil pack)
Increase cost 10%

Cliques main competitors are BIC, Scripto, Pentel, Pilot and Papermate, almost all of which have nearly 50 years of experience in the writing instrument industry Sales Outlets
Mass Retailers
Drug Stores
Warehouse Clubs
Department Stores
Specialty Stories

Identifying Best Alternative

For profits to increase and revenue to grow change is necessary which can be achieved through a implementing the recommendations of the VP’s of Marketing and Sales. The key points of execution would be a 6% increase in price, a shift to consumer-oriented MDF, purchasing more shelf space from retailers and reducing the amount spent on advertising by 30%. Based upon the qualitative data contained in the case, the 6% increase in price would result in a 1% decline in sales, however the shift in consumer oriented MDF could generate an additional increase in sales of 5% which would offset the decrease that would be a result of the price increase. In evaluating the recommendations made by both Logan Chen (VP of Marketing) and Ross McMillan (VP...
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