Clique Pens, Case Study Example

As presented in the case, Clique is currently facing a marketing dilemma. Between the years 2010 and 2012, Clique Pens recorded a significant decline in its gross profit that plummeted by 6%, from 42% to 36%. The fall in the company’s gross profit had been driven by the need to entice retailers by way of providing them with trade discounts. Since its establishment in 1922, Clique Pens has reported steady growth with its brands’ growing popularity. Nonetheless, the writing implements industry has increasingly become competitive, a factor that has pushed down the prices at which these products are availed to retailers. Besides requiring low price concessions, retailers in this industry have also continuously demanded trade discounts and allowances.

A critical problem that Clique Pens has to contend with is how best the company can increase its gross profit while still meeting both the needs of the customers as well as that of the retailers. According to the company’s president’s views, Fergusson observes that the company has no choice but to significantly reduce the discounts and the giveaways that the company has been extending to the retailers. Besides, different views exist between the department of sales as well as the department of marketing. According to Chen, the marketing department’s vice president, Clique Pens, should focus more on its customers. In line with this view, Chen proposes that a consumer-oriented marketing development fund would be more suited, shifting its focus on its retailer oriented approach. Chen argues that by reducing the trade discounts and allowances offered to the retailers, these funds can be channeled towards consumer-focused marketing activities. Such marketing activities may encompass brand awareness adverts, coupons, and other advertising campaigns. Chen suggests that this approach would be beneficial in increasing the sales recorded by Clique Pens and its profits. Another alternative available to Clique Pens is to increase its products’ price, a factor that could further drive its overall revenues. Given that the customers’ price sensitivity in the writing improvement industry is low, it is projected that this would have an insignificant effect on the overall sales.

The vice president of sales, on the other hand, presents a conflicting view of how Clique Pens should address its current dilemma. According to McMillan’s view, shifting to a consumer-oriented MDF would increase the company’s margins, but this would decrease the sales. McMillan believes that a retailer-oriented market development fund is the most appropriate option.  By expanding the provision of this fund, McMillan suggests that this approach would drive the company’s market share. Instead of spending more on adverts, the VP of sales argues that Clique Pens will only remain competitive if it continues to give discounts.

With the various alternatives available to Clique Pens, there is a need for the company to adopt a solution that would lead to sustained change, i.e., increased profit margin. One of the factors that should be considered in choosing the most appropriate alternative is considering the current market conditions. As established, Clique is presently facing stiff competition from other rival brands, especially in securing shelf space among the reading retailers. If Clique Pens were to consider taking a consumer-oriented marketing approach, this would mean that the company might lose its shelf space to other rival brands. Cutting on the allowances and the discounts that the company gives to its customers would reduce the incentive the retailers have in providing Clique Pens with shelf space. The bargaining power of retailers in this industry is high, which must be considered in choosing to cut on the allowances and discounts offered to them. The importance of retailers is highly acknowledged by the company’s management, as retailers drive more than 80% of its revenues. Since brand loyalty is low among the customers, it is possible that the retailers would not hesitate to shift to other suppliers.

Taking these factors into consideration, it would be more prudent for Clique Pens to adopt the strategy recommended by the VP OF Sales. A retailer-based marketing approach would not only be critical in maintaining the current relationships the company has established with its retailers. Besides, while the profit margins realized from this approach are small, Clique Pens could benefit from high volume sales. Such an approach would still guarantee an increase in the company’s overall profit.  However, some of the suggestions made by Chen should also be considered. In particular, the suggestion on the need to increase the prices of Clique Pens’ products is a viable option.  Since the customers are not price-sensitive, a slight increment in the prices would help to cover the allowances and the discounts that the retailers receive. Besides, it is recommended that communications between the sales and the marketing department should be improved. The collaboration between these two departments would see the integration of different effective strategies. Besides, the company could in the future consider adopting marketing strategies aimed towards the customers.