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Currently Clique pens is stuck in a situation where they are competing with other pen brands including BIC, Scripto, Pentel, Pilot, Papermate, and Sharpie. The fight for shelf space is among some of the biggest retailers worldwide such as Wal-Mart, Target, CVS, and Kroger. Because of the immense power retailers hold in this market, companies like Clique need to make sure they are allocating their funds in ways that deem appropriate to stay on the shelves. Pens are a high profit and high-turnover items which for retailers is great, but because retailers haven’t changed the price for almost over a decade, manufacturers are receiving less and less profit from their items.
Retailers hold the power over the manufacturers in this market due to the amount of brands available; if one brand wasn’t working for the retailer, they could simply choose another brand. In order to remain profitable Clique’s brand managers have worked with different marketing and ad agencies to develop an integrated package of advertising, trade and consumer promotions to maintain the market share.
Clique allocated 15% of its total promotional budget to advertising, 30% to consumer promotions, and 55% to trade promotions. Types of advertising Clique used consumer promotions and price off deals through the retailer, in such ways you would see in an ad in a magazine, “available at target”. Consumer promotions were mostly used as coupons distributed to the customer through newspapers, in-store displays, and cash register receipts. Coupon redemption rates deemed useless for the most part considering rates were about 1.
3% lower than most other consumer products. Elise Ferguson (president of the writing implements division of U.S. home) has a very important decision to make; whether or not the company should spend their time and money marketing towards retailers or towards consumers, in order to grow Clique’s profits.
One option that the company could choose to go with would be marketing towards the consumers rather than the retailers. Logan Chen, vice president of marketing feels that reducing trade discounts and establishing a consumer oriented MDF (Market Development Funds), coupled with additional consumer-targeted marketing programs is the way to ensure that consumers are receiving the full benefit of Clique’s promotional dollars. However, Ross McMillan, sales vice president disagrees on that course of action whole heartedly.
If Clique were to use a majority of their sales and marketing funds towards the consumer the company could lose considerable shelf space and sales to competitors, due to the reduced marketing controlled funds. Consumers in this market also do not hold much if any brand loyalty, which means they wouldn’t pay much mind to advertising. Another large factor to keep in mind would be the fact that coupon redemption rates are 1.4% lower than other consumer products, which means wasting money that was spent on this type of advertising. Going with this option would be extremely costly for Clique as well as a dangerous move in the already fragile market; one wrong move towards the retailers and Clique could kiss their shelf space goodbye.
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