This paper undertakes to study the international marketing strategy used by parker pen. Parker pen is a company that has gone global which sells products over 154 countries worldwide. The company went international in 1984 and they experienced huge profits but they failed to have proper marketing strategies that will make them compete in international markets with inexpensive products from other parts of the world. The company failed to retain the best human resources they had thus having a problem with a continuous success in the market.
Product policy:- the company has a variety of products which was divided into five hundred products which were marketed worldwide. These products were being sold in different countries without a specific product policy controlling each product. The product life cycle of the company had reached its peak and eventually started declining in their acceptance in the market and it was upon themselves that is the management led by James Peterson to reinvent the product. However, the CEO and his team failed to take advantage of the lapse in the market to reinvent themselves but they continued taking advantage of weak dollar and recognized the differences between foreign currency exchanges as profits.
The use of Parker pen brand name was important in marketing because it gave the consumers the image of the product. However in some markets new brands came into existence which affected the products. It was very unfortunate for the company to fail to take necessary steps to reinvent the brand name but they concentrated in differentiation in different markets. The product policy of a company embraces all decisions relating to product development manufacturing and distribution. Product policy always has influence on the selection of the manufacturing site. It affects the profit position as well as the cash flows into the company. In this case, “Parker pen has been affected because of poor product policy adapted by the company. A poor product policy as this of Parker pen affects the marketing policy of an institution in this case the company failed to have a uniform product policy thus they have a problem in selecting uniform distribution for all channels, physical distribution, poor pricing policy and promotional policy. These failures were the chief architecture or failure.
Target segment: – parker pen targeted almost all market segments but they forgot to introduce products which will cover the market segment wit middle and lower income levels. This gave competitors and opportunity to come up with products which are not expensive and they took over the market. For any product to succeed in the market the target segment plays an important role.
Market targeting policy should embrace three basic activities formulating the marketing objectives, setting market targets and developing market mixes and this activities should be reviewed periodically to exploit the existing opportunity for the business success,. The company failed in its objectives of succeeding in international markets by not reviewing the market targeting policy. In this case they did not differentiate the market i.e. they did not take care of the segment with less or low income which will go for in expensive pens. This income differential was taken care by the Japanese manufacturer who took over the market. Differentiated market product and market plans and programmes are supposed to be developed for each segment. However, the new team, failed to take into consideration this fact and they decided to force people to use a similar promotional strategy as coca cola and this proved to be a total failure.
Competitive forces:- the company, parker pen failed to take into consideration the five forces of competition and they though they will remain market leaders. The entry of Japanese manufacturers with in expensive pens took over various market segments. They did not foresee the entry of competitors into the market which could have enabled them to take necessary steps such as change of pricing strategies, changing production policy and cost differentiation. The company also forgot the existence of substitutes which were used by many in ensuring that the market was exaggerated with substitutes or product went down.
Competition within the industry reduced the market share of the company. They should have foreseen the existence of competitors such A. T Gross company and Montblanc of West Germany. The company should have established how the companies were distributed in various market segments before coming up with marketing strategies in those markets they should have also understood the product differentiation, diversity of competitors, cost condition of production of competitors and market growths for this competition before deciding on the proper marketing channels, production channel and positioning channels.
They failed to analyze the bargaining power or purchasing power in various segments. The company should have understood each market segment purchasing power so that they will be able to set a consumer sensitive price in different markets this will also assist institutions understand the concentration of customers. After understanding the purchasing power the company will decide the form of distribution channel that will be used because it will enable them understand the type of products, prices and costs that should be shared in that market.
The company didn’t also understand the power of suppliers. This could have enabled them to outsource some services which were becoming very expensive in the USA. The power of suppliers determines the prices that will be charged for the goods and services.
There are various globalization strategies that could have pursued by the company. However the company pursued a policy that was offered which became very expensive in the long run for the company. The globalization that could have been adapted will have been different because the product was not homogenous as it was more that 500 product line. They should have understood that different market segments have different income levels. Cultural and social differences as will as different technological advances. Unlike coca cola which has almost homogenous products parker pen approach should have been differential prices in different market. Globalization of a company usually requires the company to first structure themselves international to enable them adapt global nature. The company should have appraised each market to be able to understand political, economic system and regulation system in any country. They should also have though to entering into market where no stiff competition but introduces cheaper products which was their failure in totality.
Merits Of Global Marketing And Parker Pen
Globalization has various advantages to the company that goes abroad. One of the advantages of going global is to avoid competition at home and take advantage of unexploited market abroad. The company also gets new injection of cash inflows from intentional market which will assist in the capital investing of a company. In this case parker pen received this advantage but failed to make huge capital investment that could have taken advantage of the inexpensive market. The company may also have an advantage of low product production costs and marketing costs if they outsource their services to various segments. Parker pen knew the advantage of this and exploited them however they forgot and reinvent themselves to make sure they were successful in the market. The company should also have though of other forms of going to global markets using various approaches rather than using construction or acquiring a subsidiary. When they realized that 80% of profits were from international markets they would have taken a grip of international market and analyze but they failed and eventually collapsed. In brief before going to this internal market a company should estimate their market potential, forecast future of target market, profits and costs associated with new market and estimate return on investment.
Parker Pen Strategies
- Target market:- The specific target market or customers for Parker pen involves all people who can write but must be affluent in the society who lead active lifestyles, both personally and professionally. These customers tend to work hard and a significant portion of them engage in writing activities but they don consider people with less fortunate in the market.
- Positioning: -The Parker pen brands are positioned as strong, effective and good writing pens for young and adult writers in the society. Consequently, the brands has failed to maintain its “make your mark with parker”, globally due wrong approach initially. Fundamentally, the message conveys the message of reliability, quality, and immense value for money is not accepted because the branches were not involved in designing the marketing slogan.
Product Strategies: – Given the industry analysis, Parker pen implemented product development initiative showing the following dynamics:
- The new product shall be a good writing instrument which gives has value for money. One reason for launching a variety of products is to penetrate different market segment closed to Parker pen’s existing brands
- The products are packaged attractively and maintaining the dominant combination associated with markings of parker pen.
Pricing Strategy:- The main pricing strategies are as follows:
- Pursue a “value for money” low cost strategy to gain rapid sales and market share;
- Provide discounts to volume purchases;
Distribution Strategy:- The best distribution strategy to be undertaken for Parker pen is via a channel strategy that covers three main components namely channel selection, distribution intensity, and channel integration. In terms of channel selection, Parker pen shall aggressively penetrate traditional and new off-premises retail sites. Traditional retail sites include convenience stores, supermarkets, bookshops, stationeries, and the like. As far as distribution intensity is concerned, Parker pen applied intensive distribution initiatives on the retail level. This means that sales and consumer educators aggressively penetrated and develop clusters of off-premises retail sites in various sites locally and internationally. In terms of channel integration, marketing team units will develop independent, exclusive distribution outlets that can serve as distributors to off-premises accounts.
Marketing Communications Strategy: – Parker pen’s existing products and new product are promoted using an aggressive push and pull strategy process but different strategies. The push strategy shall entail intensive off-premises retail development and promotions. Meanwhile, the pull strategy will entail developing independent distributors whose mandate is to develop their own retail channels. Furthermore, another pull strategy is to intensify direct selling activities buy hiring more product or consumer educations and instruct them to approach students, professionals and owners of businesses, etc. Consequently, to support the push and pull activities, Parker pen shall be aggressively promoted through tri-media and Internet advertising, sales promotions activities, pubic relations, sponsorships, direct marketing, personal selling, exhibitions, and product placements.
Lessons To Learn From Parker Pen
From this case of Parker pen there are a number lessons drawn. Before a company decides to go international they must understand the marketing environments both internal and external which will help them assess the opportunities and threats as well manage their weaknesses. This can be summarized as follows:
Product Program: before the company goes international they should implement the product strategy and a product development action program that will succeed. This program shall contain the following activities to be accomplished in the next six months by the company’s product development team:
- Implement product and customer surveys;
- Determine taste and usage attributes of the product;
- Develop and finalize the product formula;
- Secure necessary permits, licenses, and all certifications in all countries entering to;
- Develop and finalize packaging design that is uniform;
- Pricing Program:- Subsequently, the action program to develop the pricing of product lines would entail the following activities to be done by the marketing department in tandem with accounting:
- Establish and account for direct and fixed costs related to product development;
- Apply the necessary mark-ups for both independent distributors and retail channels (i.e. suggested retail prices);
- Set appropriate discount levels for volume purchasers and for sales promotions;
- Set prices that are competitive in the market.
- Distribution:-For the distribution program, the following activities shall be accomplished:
- Develop independent distributor guidelines and policies;
- Assemble and deploy market unit teams to strategic regions in the global;
- Avoid mimicking other companies marketing strategies.
- Marketing Communications:-Consequently, the marketing communications program shall entail the following activities:
- Tap advertising agencies to develop marketing campaign in tri-media;
- Enhance the corporate website by enabling it to engage in Internet marketing applications;
- Identify and secure the services of a PR firm to develop and implement PR activities;
- Prepare, plan, and implement sponsorship events to dealing with academic and competitions, fitness events.
- Deploy sales teams and consumer educators to assigned areas and regions;
- Conduct taste test demonstrations and product launch activities
PESTEL analyses provide tools to identify opportunities and threats.
Globally operated organization must have up to date knowledge regarding rules and regulations relating to taxation and competition regulation. Politics will affect the company because it will have to adjust and fit into the political situation of the foreign country. Some of the political barriers will be vastable governments which have bad officials who award businesses with corruption to highest bribers instead of lowest bidders. Other government will impose high tariffs to protect their home industries. Political environment is also inclusive of laws, government agencies and pressure groups that will form a barrier to entry into a particular country. There is however hope because some political factors can also create some opportunity to countries. The company must therefore know all the major laws protecting competition, consumers and the society of the country that it wants to enter, before they decide to expand into the country
Interest and Exchange have impact on consumer spending and could affect their profitability. How the people spend their money, their power to purchase products and the income distribution among the people I the foreign country. Some people also have different patterns of savings and borrowings. This should be taken to serious consideration also. Some countries also have huge foreign debts, high inflation and high unemployment of its people. This leads to foreign exchange problems that will lead to foreign economic instability and the decrease of the currency of the country in value, hence the country should focus on these factors in order to make decisions whether to go international or not. Some of these factors may lead to threats or opportunities.
In order to analyze a market to know whether it has that potential for profits in the short run or long run, the company should first look at the particular market and see whether it has that potential for attractiveness i.e. whether there are customers who need the company’s product in that market. When a country uses this to identify the potential of a market, it will attempt to make a product that serves the needs of all customers in that particular market. This type of strategy is actually god especially for large companies that want to enter foreign markets.
The cultures of people in different countries can affect the marketing strategies of a company will use as market their products. The industry players has to consider vary many factors of the marketing, market place, some of these are political factors, social factors, economic and technological factors. Looking at the social cultural factors ethnocentricity is a major factor especially if a country has diverse cultures. This is a major challenge because most of these people hold so much to these cultures that it is very difficult to make them adopt your product and your marketing strategies.
Stay up to date with technological factors such harvesting method.
Strengths, Weaknesses, Opportunities, Threats (SWOT) Analysis
The success of Parker pen has been documented extensively in the last decade. Fundamentally, the brand achieved leadership status because of several effective strategies by Peterson although he only relied on foreign exchange currency weakness. One is its unique, aggressive distribution strategy anchored on developing and selling directly to independent distributors, opening subsidiaries and branches abroad as well as the provided various merchandise and marketing support.
Furthermore, Parker pen engaged in aggressive selling and distribution strategy that entails each subsidiary having its marketing team units to tap and market the product in that segment. Aside from directly tapping and developing these markets Parker pen also promotes its self by engaging in television commercials, merchandise sales, and magazine ads but with different slogans in different countries. Consequently, Parker pen is also directly sold by young, aggressive sales persons or consumer educators who “roam the streets and dangle free sample, this become another undoing for the company. Ultimately, Parker pen aimed to generate intense word of mouth marketing by tapping the patronage of the young, hip market in the market. All these relentless promotions and marketing activities are being done in all its areas of operations and propelled Parker pen in 1970’s to the top of the market. Consequently, the company gained strong brand recall, attained rising sales and profitability, and market leadership.
On the negative side, the only significant weakness of Parker pen is its peculiar, not so good writing. However, the brand’s intense marketing and promotions has mitigated this weakness. In fact, Parker pen had already introduced new products by amalgamating existing brands to give its customers less options and to penetrate the mainstream industry controlled by Japanese manufacturers.
Looking at the writing market, opportunities and threats loom in the horizon. A clear opportunity is evident in the growing demand not only in the U.S., but also the international market, notably Asia, Africa, Eastern Europe, and Latin America. There is also the opportunity to introduce cheap products accommodate the growing consumer demand for writing products by some segments who do not have enough money to spend. On the negative side, threats are evident. For one, the industry is a highly competitive, cut-throat industry. Not only does Parker pen need to compete against the cheap products from Japan, but it also needs to address competition from new entrants. Another threat is the unstable economy which can dampen market demand for all types of products, including writing instrument.
Overall, the strengths, weaknesses, opportunities, and threats (SWOT) in the writing industry in relation to Parker pen can be seen in chart below;
|Strengths (Parker pen) ||Weaknesses (Parker pen) |
|Opportunities(the Industry) ||Threats (the Industry) |
Conclusion And Recommendation
Given the trends in the industry, there are only two strategic options for parker pen. One is to maintain its current marketing strategies given the company’s different marketing strategies. The other one is to develop new product to address customer concerns and expectations by consolidating some losing making brands. Since some parker pen product lines are unable to penetrate other major markets through its traditional marketing approach, the company should consider developing a product with local appeal. However, it is imperative that Parker pen sustain its relentless promotions and distribution development strategies to keep the brands foremost in the target market’s consciousness. The focus of the effort should be on the product’s efficacy and benefits in all market segments as well as do away with those subsidiaries that are loss marking through outsourcing in those countries.
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