Premium Essay

Clique Pens

In: Business and Management

Submitted By luwenhan
Words 5477
Pages 22
For the exclusive use of K. Larsen, 2016.

9-914-525
DECEMBER 16, 2013

FRANK V. CESPEDES
JAMES KINDLEY

Clique Pens:
The Writing Implements Division of U.S. Home
A fierce thunderstorm had just brought brief relief to the sweltering mid-August temperatures in
Tampa, Florida, as Elise Ferguson, president of the writing implements division of U.S. Home, Clique
Pens, stared at the notepad in front of her. She had jotted some thoughts about just whose needs were more important for Clique to satisfy—its retailers or its consumers?
Fortunately, the 2013 back-to-school sales of her core writing implements product lines appeared to be on goal for a 3% increase over 2012. These sales were not without a cost, however, as various discounts, allowances, and other off-invoice deals had pushed gross profit margin down from 42% in
2010 to just over 36% in 2012. (See Exhibit 1.) Another one of Ferguson’s primary goals for Clique was to stop this 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. At this point, she felt it was unlikely that the latter would happen this year (2013).
Ferguson wondered, were all these “giveaways” to retailers necessary? If so, couldn’t the monies be shifted to a form referred to generally as Market Development Funds (MDF), which would in theory allow Clique to have more control over their use in driving sales of its products, rather than just increasing retailer margins? Clique had spent considerable effort on wringing costs out of its supply chain, and Ferguson was fairly certain that the deterioration in margins was being driven solely by these trade discounts.
Ferguson had held several recent meetings with Logan Chen, division VP of marketing, and his product managers, for their views on this issue. She…...

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