Clique Pen Debate, Marketing vs Sales View

(Case page 6-7)

Chen’s calculation of sales and profit increase if consumer-oriented MDF is employed:

5% increase in retail sales - assume 5% increase in Clique sales

Gross Profit Margin from 36% to 38%

Gross Profit

McMillan’s calculations of sales and profit decreases if consumer-oriented MDF is employed:

9% sales decrease

Gross Profit Margin from 36% to 38%

Gross Profit

McMillan’s calculation of sales and profit increases if retail-oriented MDF is employed:

Market share increase of .4%

Overall market (Page 3)

2013 Sales
2013 Market Share
Market share estimate with RO MDF  (3.4% + 0.4%) x 5.5 billion
Gross Profit change of +/- 3.5%
2013 Sales in 5% increase,
Millions 2014 estimation
187 196.35

36% 38%
67.32 74.61

2013 Sales in 5% increase,

Millions 2014 estimation
187 170.17

36% 38%
67.32 64.66

5.5 billions
187 millions
3.40%
209
32.5% 60.775 or 73.865
Clique Pen Debate, Staples Test
Consumer-Oriented MDF Test at Staples versus Present Pricing with Discount Structure
(Case page 7)

Staples regular retail price and present discount structure from Clique:

Retail selling price 1.97

Wholesale price from Clique 0.94
Discounts and allowances
Volume discount 0.055
Warehaouse discount 0.03
Stocking allowance 0.015
0.1
Net wholesale price 0.846

Staples normal gross profit 1.12

Staples normal gross profit margin 0.57

Test retail selling price 1.78

Wholesale price from Clique 10% off 0.846

Staples gross profit from test pricing 0.934

Staples gross profit margin from test 0.524719101

StapStaples test passing a 10% discount through to the consumer:

less loss of gross profit 10% 0.197
Staple gross profit loss to normal 0.176 17%

Clique’s variable cost 0.46

Clique gross profit after 10% discount 0.386
Clique’s sales increase 0.07 7%

If Staples has no unit increase, then Clique has to provide additional discount .12 to .19
Reducing Clique selling price to .85 to .66
Clique gross profit would then be .66 to .46, GPM around 21%