Clique Pens: The Writing Implements Division of U.S. Home

The Clique Pens Writing Implements division of U.S. Home is a manufacturer of a full line of pens, pencils, markers, and art supplies. Despite solid sales, division president Elise Ferguson has seen gross margins drop from 42% in 2010 to just over 36% in 2012 as a result of various discounts, allowances, and other off-invoice deals. She is now considering a move away from these discounts in favor of Market Development Funds (MDF), which would be used explicitly to promote retail merchandising activity for Clique and in theory provide the company with more control of trade promotional dollars to influence consumer behavior. Along the way, Ferguson must consider the structure and problems of various trade promotions and the conflicting needs of her sales and marketing departments. This case introduces basic elements of promotion and pricing policy and the challenges of marketing through major mass retailers.