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Assessment of the industry trends and situations will be conducted through the following Porter’s five forces analysis:

Porter’s Five Forces – Bargaining Power of buyers

Clique Pens is facing two types of buyers who have absolute high bargaining power. One type represents the end customers who eventually purchase Clique Pens. Normally, consumers make their pen purchasing decisions base on the packaging, price and the way it is displayed. According to retail sales data from NPD.com, a reliable global information company, writing implements industry has experienced a 37% growth on E-commerce sales from 2014 to 2015, which indicates customers are changing their purchasing behaviors. Customers from high-end segment might have brand awareness. However, there are only very few customers who might have specific brand loyalty while purchasing writing implements. Without the assessment through E-Commerce, advertisement and marketing, Clique Pens will soon lose touch with the customers. Another type of customers will be retailer who holds immense power over manufacturers in the industry. Like other competitors, in order to gain a shelf place, Clique Pens needs to offer high trade discounts to retailors. Nowadays, the control power of online retailers is relatively lower than the bargaining power of retailers from Brick and Mortar. One thing needs to be kept in mind is that online retailers are growing rapidly, therefore, Clique Pens should not overlook the opportunity to collaborate with online retailers. Since the switching costs to another brand are very low, customers and retailors can easily access competitors’ pens.

Porter’s Five Forces – Competitive Rivalry

The rivalry competition is extremely high due to the low margin to differentiate the products from one another in the writing implement industry. The U.S. writing implement industry is well established with over 50 major brands competed in 2012. There is no doubt that Clique Pens is not the only writing implement supplier within the industry. Its prominent competitors include BIC, Scripto, Pentel, Pilot, Papermate, and Sharpie. NPD.com highlights that the U.S. office and school suppliers industry experienced a 3% growth in 2015 to $12 billion, with$ 2.4 billion share from writing instruments. The enormous market leads to even fiercer competition among them. All of these competitors are trying to seek opportunities to stay on shelf. The core competency that allows Clique Pens to remain competitive would be its unique ink formula, which allow the availability of ink supply without stroking pen.

Porter’s Five Forces – Bargaining Power of Suppliers

The bargaining power of suppliers is dramatically low since the raw materials (which including plastics, metals, and ink chemicals) that needed to produce pens are abundant. The switching cost to other suppliers won’t high for Clique Pens. Besides, Clique Pens’ global success paves the way for Clique Pens to collaborate with foreign supplier who will be able provide the most competitive prices.

Threats of substitutes are relatively high because that the rapid expansion of electronic communication lessens the need for handwritten. Even though unit volume pens and pencils have not yet been affected in 2012, the rising trend on paperless digital life potentially pose threats to the industry that Clique Pens is compositing in.

Porter’s Five Forces – Barriers to Entry

Barriers to entry are relatively high because it will be extremely tough for new entrants to gain competitive position among the fierce business competition even though the start up cost is low. New entrants will need to invest heavily in marketing and advertisement in order to attract and convince both retailers and customers to purchase an unknown brand.

Assumptions

· Clique’s competitors will always follow the similar allocation budget as Clique does currently

· The market will continue to grow in the next five to ten years

Alternatives

· Customer-Oriented MDF

Pros:

By building retail-oriented MDF, Clique Pens will be able to gain more shelf space, which may translate into growing profit margin. These additional opportunistic funds will help Cliques to invest in any type of opportunity. With the implementation, Clique could estimate potential growth on its market share by 0.4% and the overall gross profit by 3.5% in 2014.

Cons:

By cutting advertising and promotional budget directly toward end buyers, Clique Pens will lose touch with customers in short term. It will also affect Clique Pens sales in long term. Retailers’ bargaining power will continue to grow. This will also leave the Clique Pens Writing Division of US Home with certain unsolved issues retailers’ preference for discounts over MDF funds.

Action Plan