JAIPURIA INSTITUTE OF MANAGEMENT NOIDA

July 30th, 2020

MD MOIZ ALI (PGFC1915)

Case Analysis
CLIQUE PENS: The Writing Implements Division of U.S. Home

Summary
This case revolves around the decision makers of Clique Pens. The protagonist of the case is
Elise Ferguson, President of Clique Pens and other two parties involved in the decision making
are Logan Chen, Division VP of Marketing and Ross McMillan, Division VP of Sales for Clique
Pens.
Elise was in a dilemma that whose needs were more important for the company – the retailers
or the customers. This is because they had been facing a decline in the gross profit margins
within 2 years and now Elise wants to implement a new plan to increase its gross profits and in
the same time retain its retailers and its customers.
In order to work on the new plan, she held regular meetings with Chen and McMillan to have
their views on the problem. Chen and his marketing department were suggesting reducing the
trade discount and focus more on a consumer oriented MDF whereas McMillan and his team
had strong reasons to stick to the trade discounts, because shelf space is important to be in the
market. Such discussions led to a conflict between the sales and marketing department, but in
order to solve this problem they had to work on synergy for coming up with a suitable plan for
the firm.

Decision Scenario
Gross profit margin had gradually come down to 36% in 2012 as compared to 42% in 2010. The
main aim was to stop the decline in gross profit margin and increase its overall gross profit by
4% which was difficult to achieve in the current year.

Another dilemma for Elise was the debate between marketing and sales department which
focused on two different types of plans. The marketing team led by Chen was suggesting a
more consumer oriented MDF and on the contrary, sales team led by McMillan suggested a
more retailer centered plan for achieving more profit.
So, the main problem is to take a decision for the firm which can stop the deterioration of the
gross profit margin and increase their overall gross profit by 4%.

Two Scenarios
First scenario suggested by Chen and his marketing department was to cut down trade
discounts and use the money to pay for a marketing controlled MDF which was to be more
consumer oriented and to make sure that consumer receives the full benefit of the promotion
done by Clique Pens.

The second scenario was argued by McMillan and his sales department that if they implement
the above idea they will lose shelf space and sales to the competitors, instead he suggested
that they should decrease the funds for consumer advertising use the same funds for a retail
oriented MDP controlled by the sales team in which they can plan more deals for specific
accounts in order to win more shelf space for themselves, this will lead to increase in overall
market share and overall profit.

Analysis of the scenarios

Chen calculated that a shift to consumer oriented MDF would result in additional retail sales of
5% and would also result in the increase of gross profit margin from 36% to 38%. He insisted
that the funds could be used to provide instant discount coupons for the consumers. He also
stated that Clique as a brand was losing touch with the consumer and that could affect long
term sales if they continued to cut down the advertisement cost. He also gave examples of
some once-great brand died due to lack of focus on consumers.
McMillan totally disagreed to this and said that Chen’s idea would decrease the overall sales by
9%. He continued to argue that they have to focus on the retailers and trade discounts because
the market was very competitive and altering their terms with the retailers may result in losing
shelf space and sales to other brands. He was looking to expand market share by .4% and
increase overall profit by 3.5%.
Both the departments were adamant on there views about MDF because they wanted to have
more control over it, besides they both had different ideologies, i.e., marketing department
wanted to focus more on customers by giving them more attention and increasing gross profit
margin where as sales team wanted to focus on the retailers and increase the market share and
overall sales.

Elise Ferguson wanted a solution in which neither they lose customer’s interest in their brand
and continue to enjoy the current shelf space by having retailers intact.
Recommended Decision
If I was the President of Clique Pens, I would focus on a plan which could give me both
customers interest in my brand and the retailers shelf space.
A brand must address customer through advertisements and consumer related marketing
promotions because remaining present in customer’s mind is a must for a brand in order to
survive in the long run.
On the contrary, it is also necessary to maintain good relations with the channel partners,
basically retailers in this case, as already stated in the case that the Writing Implements sector
did not see brand loyalty and switching to another brand was relatively easier because there
was no additional cost involved in it.

If we run a quick Porters 5 Force analysis in the case, we could see three things affect the
decision making:

1. High bargaining power of the buyers – The retailers as shown in the case have an upper
hand on the manufacturers because of the high rivalry between the firms in the
industry. Consumers also can switch easily.
2. High Rivalry among competitors – There are many dominant brands in the market, that
makes the fight for sales very high.
3. High threat of substitutes – Availability of the substitute is high because there are
hardly any major differences in the product offerings.
Considering the above facts and the data provided by Chen that customers are less price
sensitive, I would suggest a 6% increase in price, that may lead to loss of 1% of customer base
but will increase my overall revenues.
I would allot 60% of MDF to the sales department, because expanding the market share and
winning on the competitor shelf space if there is an opportunity will lead to increase in the
overall sales.
Remaining 40% of the MDF would be available for marketing department, 30% shall be used for
advertisements and 10% would be used for consumer related promotions like the instant
discount coupons. I have decreased the consumer related promotions because according to me
advertisements would be a better way to make a perception in customers mind.