(For Ltd.

Circulation only)

Plastic Products Limited

Marketing of Throw-Away Plastic Ball-Point Pens

In January, 2007, Mr. Navneebhai Shah, the owner of Plastic Products Limited,
Ahmedabad, was considering manufacturing and marketing of throw-away plastic ball-
point pens.

The Company

The Plastic Products Limited had an annual sales volume of Rs.40 million. It produced a
variety of consumer durable plastic products as well as a number of items of packaging
material. It made a profit of Rs.4 million a year. Mr. Shah was an innovative technician.
He had in the past designed many new products. In the last year, Mr. Shah had made
several attempts to manufacture a throw-away ball-point pen.

The Product

Manufacturing of this pen required manufacturing of a hollow thin barrel, purchase and
fitting of brass parts, namely, the point and the ball. One end of the barrel was tapered
and shaped through machining, on which the ball and the point was fitted. Ink was filled
in the barrel through a single mechanical filling process. The other end of the barrel was
kept open for atmospheric pressure to force the ink to flow smoothly. It was also ensured
that ink won’t spill out from the open end.

Mr. Shah, instead of making the barrel cylindrical, made it angular showing six sides. It
was possible for him to give white colour to the six sides of angular surface. The barrel
could be made of different colours depending on the colour added in the base plastic raw
material.

Economics of Pen Business

Mr. Shah worked out the economics of manufacturing. His cost of the barrel, ink filling,
purchasing and fitting the ball and the point, all put together would come to about 50
paise per pen, if he produced about a lakh of pens. Considering his other costs and
reasonable margin for profits and risk, he should fix a factory price of 60 paise per unit.
Considering margins of the trade for stocking and selling such products he thought that
the consumer could be offered such a pen at about Re 1. The amount of ink put in the
pen and the consequent life of the pen was equivalent to that of other similar pens
available in the market at about Re 2. Mr. Shah, therefore, thought that it should be easy
for the traders to market a pen at the price he can offer.

This case was prepared by Professor M.N. Vora, IIM-A & updated by Dr. S. R. Singhvi
He had made enquiries in the market about the different kinds of ball-point pens
available. There was no ball-point pen available in the price range of INR1 or 1.25.
Reynolds, the most popular brand, was selling a different kind of ball-point pen at INR 4.
This was also a kind of throw-away pen; the refill in it could also be changed. There
were, however, several other ball-point pens available from INR1.50 to Rs.6. Most of the
cheaper pens would require substituting of refill every now and then. Each of these
refills costed between 50 paise and INR 2. As compared to Mr. Shah’s pen, the ordinary
ball-point pen would require at least 3 refills for the same life or amount of writing.
There were other ball-point pens also in the market which required refills which costed
INR3.50 per refill.

Mr. Shah thought that the pen market was a huge market. He knew from his personal
knowledge that there were millions of students in the primary and secondary schools.
Therefore, the potential users of ball-point pens could be a few hundred million of
students in colleges, schools, etc. He also thought that there was a large market for pens
in offices, institutions and companies. He thought that the throw-away pen would be
very suitable for banks, post-offices etc., where there was a larger public use and
sometimes people by mistake put the pen in their pockets and walked away.

He also thought that his throw-away pen really could compete even with pencils. He
thought that the unit price of pencil was fairly high and slowly the throwaway ball – point
pens might replace the use of pencils.

He was wondering as to whether he should make the necessary investment for producing
a few millions of pens per year or not. He knew very well that he did not have substantial
knowledge and skill of marketing pens. He did not know as to what would lead to larger
acceptance of his pens by the traders in readiness to stock and sell it. He also was not
very clear as to the need for giving brand name to his pen and how much advertising and
promotion effort he should put it.

Mr. Shah has approached you to help him.

As a consultant, what advice would you give him? Why?

 Supplement to Plastic Products Ltd.

1. An attempt is made to cull out apparently relevant information from various

secondary sources of information

A. School and College Education Statistics – 2004-05

Number of Enrolment
Institutions (In lakhs)
i) Primary Schools 767520 1308
ii) Upper Primary Schools 274731 512
iii) Higher Secondary 152049 370
iv) Colleges 13978 100

B. Literacy Rate in Various States in 2011 ( in %)

State % Lit. State % Lit
Andhra Pradesh 61.11 Madhya Pradesh 64.11
Assam 64.28 Maharashtra 77.27
Bihar 47.53 Orissa 63.61
Gujarat 69.97 Punjab 69.95
Haryana 68.59 Rajasthan 61.03
Himachal Pradesh 77.13 Tamil Nadu 73.47
J&K 54.46 Uttar Pradesh 57.36
Karnataka 67.04 West Bengal 69.22
Kerala 90.92 All India 65.38

C. All India Statistics of Joint Stock Companies, Other Establishments

i) Companies – 31.10.06 7,98,237
ii) Total number of factories in 2004-05 1,36,353
iii) Banking and similar type of financial institutions 10,620
iv) Provident fund & insurance establishments 4,08,831
vi) Legal service establishments 50,276
vii) Retail trade establishments 100 lakhs
viii) Wholesale trade establishments 4 lakhs
ix) Other trade/business establishments 16 lakhs
x) Number of post offices (03-04) 1,54,149
 D. State Statistics
Name of States No. of towns Total No. of No. of retail % share of
(2001) retail outlets outlets per urban market
(‘000) 10,000 pop. potential
Andhra Pradesh 210 498 114 7.5
Assam 125 158 108 1.2
Bihar 130 590 108 3.8
Gujarat 242 398 148 6.8
Haryana 106 134 132 1.6
Himachal 57 36 104 0.2
Pradesh
J&K 75 82 178 0.7
Karnataka 270 412 138 5.9
Kerala 159 404 190 3.3
Madhya 394 582 140 4.7
Pradesh
Maharashtra 378 358 72 17.5
Orissa 138 222 102 1.4
Punjab 157 236 174 3.2
Rajasthan 223 56 22 3.0
Tamil Nadu 832 504 122 11.1
Uttar Pradesh 703 1000 112 9.5
West Bengal 375 524 104 11.9
All India 5161 Not available 116 100.0

2. “Pens’ were sold by various kinds of retail outlets – cutlery shops, stationery
sellers, general stores, bookstores, grocery stores, provision stores and so on. These
retailers probably were supplied pens by wholesalers. There were large wholesalers
and small wholesalers. Sometimes large retailers acted as wholesalers supplying to
small retailers. Organizational purchases were probably supplied by manufacturers
directly or by large wholesalers.

3. There were a number of manufacturers of pens. However, none was a large public
limited company. Several private limited companies were operating in regional or
local markets. Then there were proprietary and partnership firms involved in
manufacturing of pens. These however catered to local or nearby market. Various
brand names noticeable in the market were – Camlin, Reynolds, Sharp, Wilson,
Luxor, Merchant, Navy Pen, G-Flo, Doctor, Senator, Cruiser. There were foreign
names too – Parker, Red Leaf, Zebra, BIC, Pilot, Steadler, etc.