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Description
Clique Pens: The Writing Division of U.S. Home Home Situation Analysis
This case study’s analysis is based on the company named “Clique Pens” and their internal dilemma between Sales and Marketing departments in the most profitable period of the year (backto-school sales). This dilemma came up because of the decision of president of writing implements division of U.S Home Elise Ferguson to stop the decline in gross profit margin percentage and grow its overall gross profit by 4%. She hoped to accomplish this by growing revenues and increasing the gross profit margin. After the discussions with Marketing department, Mr. Chen and his team, and Sales department, Mr. McMillan and his team, she understood that the solutions which they suggested were totally opposite. Marketing department suggested to build the strategy of the company basing on the consumer interest and make it customer-oriented. He believed that the strong advertisement and discount coupons will increase the interest of the customers in their product. As well he suggested to increase the prices, as the customers are not price sensitive. He added that this decision will increase the sales and profit of the company and retailers and 6% of price increase will produce only 1% of sales deduction. Mr. McMillan from Sales department was not happy with this decision and presented his version of strategy which was based on the retailer-oriented retaile r-oriented actions. He dedicated that company is spending 30% more for advertisement that it is needed in real and it will be much profitable to provide discounts to the retailers. In competitive environment only way to get more market share is to offer discounts and use additional to take advantage of opportunities. The main challenge for Ferguson was to choose the option which will provide the keen cooperation between marketing and sales departments. As well as to increase the profit and solve the situation of the “war on the shelves”.
Possible Solution
Despite the fact that BIC B IC Pen Company used aggressive strategy in pricing and promotion to become the leader of the market in 1970’s and even if we will take as example the “secret formula” tactics of Clique Pens to increase the sales in the past, it should be mentioned that “war on the shelves” among such gigantic retailers re tailers as Wal-Mart, Walgreens, Target, CVS and Kroger requires the rational allocation of funds and shows that it is much important to be retailer-oriented that consumer-oriented. If the company will apply the strategy suggested by Chen it will result as the sales and profits increase, however this this consumer-based strategy may result as lose of important important shelf space and sales. It should be mentioned that retailers have a huge power in the market and their dominance. Possible benefits to retailers can be just-in-time deliveries to decrease their stock problems and seasonal discounts. As it has been mentioned before, in the period of 1980-2013 situation with retailers pushed the companies to decrease the marketing departments spending and reduce advertisement by reducing profit margin. It shows us that the power of retailers has great
big influence on the sales even of the biggest companies. In addition, special packing and marketing tricks will be complicated for the manufacturers manufacture rs and they may the interest to work with this company. As Ferguson know that 80% of Clique’s sales come from deals with retailers and suppliers are highly dependent on retailers, in the case of broad variety of the same product types in the market funding for shelf space is the only onl y way to survive and maintain profits. In the case if the company will decide to reduce the discounts and attempt to bargain with retailers, retailers may change their suppliers. As retail companies know that customers in this market are not brand loyal and price oriented, it will be easy decision to change the potential suppliers. So, in this case is recommended to implement the strategy of McMillan and his team. But, it also can be the combination of McMillan and Chen as discounts for retailers and price increase for customers. In this case they shouldn’t be worries about the loyalty of the customers. In comparison to electronics it is not obligatory to sell Clique Pens products if the same product types – substitutes substitutes offered by competitors. However, in electronics, it is highly demanded to have Apple products because Apple has a sustainable brand loyalty on its customers. Coupons strategy is useless as well because of the amount of customers which use it (1.3%). After getting a strong place on shelf spaces and maintaining gross profit margin increase it can be an option to engage with some consumer segments.
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