Parker Pen Co

'L..............................................4o PARKER PEN CO. (A) 549 .. ..r... ... ." , .. Parker Pen Co. (A) International Marketing Strategy Review It is circumstance and proper timing that give an action its character and make it either good or bad. -AGESILAUS group. He spent 11 years at. the advertising agency BBDO and was an expert on marketing planning and theory. Jack INTRODUCTION Marks was head of writing instruments advertising. Marks The meeting at sunny Palm Beach concluded with nary a came to Parker from Gillette, where, among other things, whimper of dissent from its partiCipants. After years of he assisted in the worldwide marketing of Paper Mate being run as a completely decentralized company whose pens. Rounding out the team was Carlos Del Nero, managers in all corners of the world enjoyed a high manager of global marketing planning, who brought with degree of flexibility, Parker Pen Co., of Janesville, him considerable international experience at Fisher-Price. Wisconsin, was forced to reexamine itself. The company Each of these men was convinced that Parker would right had enjoyed decade after decade of success until the early itself by following the plan they unveiled at Palm Beach. 1980s. By this time, Parker faced strong competitive threats and a deteriorating internal situation. A new A BRIEF HISTORY OF PARKER PEN The management team was brought in from outside the "Rolls Royce" of the Pen Industry company-an unprecedented step for what had been until The Parker name has been identified with pens since 1888 then an essentially family-run business. At the March 1984 when George S. Parker delighted ink-splotched pen users Palm Beach meeting, this new group of decision makers would everywhere by introducing a leakproof fountain model outline a course of action that would hopefully set Parker called the Parker Lucky Curve. Parker Pen would eventu- back on a path to success. ally blossom into America's, if not the world's, largest and The men behind the new strategy were supremely confident best-known pen maker. Parker's products, which would of its chances for success-and with good reason. Each was eventually include ballpoint pens, felt-tip pens, desk sets, recognized as a highly skilled practitioner of international mechanical pencils, inks, leads, erasers, and, of course, the business and their combined extensive experi fountain pen, were also known for their high price tags. In ence gave them an air of invincibility. They had been 1921, for example, Parker introduced the Duofold pen. recruited from larger companies, had left high-paying, re- The Duofold, even though it was comparable to other $3 warding jobs, and each had come to Janesville with a grand pens on the market, was extravagantly priced at $7. Parker sense of purpose. For decades, Parker had been a dominant was able to charge a premium price because of its player in the pen industry. In the early 19808, however, the reputation for quality and style, and its skill in positioning company had seen its market share dwindle to a mere 6 percent products in the top price segment. and, in 1982, net income plunged a whopping 60 percent. Parker's position as America's leading pen maker was To reverse this decline, Parker recruited James Peterson, an solidified during the years when the pen was mainly executive vice president at R. 1. Reynolds, as the new president viewed as a gift item. High school and college graduates and CEO. Peterson hired Manville Smith !is president of the in the 19408 and 19508, for example, were quite likely to writing instruments group at Parker. Smith, who was born in receive a Parker "51" fountain pen (priced at $12.50) Ecuador and had a broad international background, came from commemorating their achievement. Indeed, it was with a 3M where he had been appointed "51" that General Douglas MacArthur signed the Japanese division president at the tender age of 30. Richard Swart was Peace Treaty in 1945. Parker's stylish products and high vice president/marketing of the writing instruments profile name would keep it at the top of the pen market until the late sixties when American competitors A.T. Cross and Sheaffer, as well as a few foreign brands, Cases (A), (B), and (C) were prepared by Charles J. Anderer, research knocked them out of first associate, under the supervision of Warren J. Keegan, Professor of place once and for all. International Business and Marketing, as part of the International Of course, Parker would not have lost its hold on the Business Case Study Project, Center for International market had it not made some oversights along the way. In Business Studies, Pace University. This project was funded in part addition to a more competitive environment, Parker failed by a grant from the United States Department of Education. @ 1986 by the Board of Trustees, Pace University. to come to terms with a fundamental change in the pen 550 PART VI Managing the Global Marketing Program market-the development of the disposable, ballpoint U.S. dollars. At its peak, Parker accounted for half of all market. When Parker unveiled the $25 "75" pen in 1963, U.S. exports of writing instruments and 80 percent of its total it showed that it remained committed to supplying high- sales came from 154 foreign countries. Parker was es. pecially priced pens to the upper end of the market. As the 19605 strong in Europe, most particularly in the United Kingdom. wore on, a clear trend toward cheap ballpoint and soft-tip When sales in the strong European currencies were translated pens developed. Meanwhile, Parker's only ultimately suc- into dollars, Parker earned huge profits. cessful addition to its product range in the late sixties was The downside of a weak dollar, however, was that it the "75" Classic line, yet another high-priced pen. gave Parker the illusion that it was a well-run company. In A Brief Flirtation with Low-Priced Pens fact, throughout the 19705, Parker was a model of ineffi. ciency. Manufacturing facilities were dated and inefficient. Parker did, however, make an effort to compete in the Production was so erratic that the marketing department lower price segment ofthe market in the late 19605 only to often had no idea what type of pens they would be selling from see it fail. In an attempt to capitalize on the trend toward year to year or even month to month. Under the lead. ership of inexpensive pens, Parker introduced the T-Ball Jotter, George Parker, nothing was done by company headquarters priced at $1.98. The success of the Jotter led it to move to update these facilities or to develop new pro' ducts. As a even further down the price ladder when it acquired result, subsidiaries and distributors around the world saw fit to Eversharp. Whereas the Jotter had given Parker reason to develop their own products. By the end of George Parker's believe it could make the shift from pricy pens to cheap reign, the company's product line in. cluded 500 writing pens with little or no difficulty, the Eversharp experience instruments. proved to be different. George Parker, a grandnephew of That distant subsidiaries would have the leeway to make the company's founder and president of Parker at the time, such decisions was not at all unusual at Parker, for it had long stated the reasons for the Eversharp failure, as well.as its been known as one of the most globally de. centralized consequences: companies in the world. Decentralizati<;>n, in All the market research surveys said go lower, go fact, was something that Parker took pride in and consid. ered lower, go lower, that's where the business is. So I said, to be vital to its success as a multinational. Yet it was this very 'Go lower? Fine. But we don't know how.' We bought concept that Peterson and his new management team would Eversharp and tried to run it ourselves, and we hold to be responsible for much of what ailed Parker Peri. couldn't do it. Our people just couldn't think in terms of big units, and they didn't know how to sell peopl~ PARKER'S GLOBAL OPERATIONS BEFO'RE on the lower-priced end of the business-grocers, PETERSON supermarkets, rack jobbers. The result was, Bic and In addition to having a hand in manufacturing and product. line Paper Mate were cleaning up in the lower-priced end, decisions, Parker's subsidiaries developed their own marketing Cross in the high, and Parker was getting squeezed in strategies. More than 40 different advertising agencies the middle. Volume was going up, but our costs went promoted Parker pens in all the comers of the globe. When up faster, and Peterson came to Parker, he was proudly in. formed that the our profits were squeezed.l company was a "federation" of autonomous geographical units. The downside to the "federation" con. cept, Peterson The 19705: The Illusion of Success thought, was that home country management oftep lacked Despite the difficulties Parker encountered when it left its the information needed to make and coordi. nate basic business niche in the upper end of the pen market, the company ex- decisions. Control was so completely decentralized that Parker perienced a healthy period of growth and profitability for dido't even know how many pens it was selling by the time most of the 19705. Demand for its products remained Peterson and his group arrived. strong, and its worldwide markets expanded significantly On the other hand, decentralization obviously had its due to a rise in consumer income and increasing literacy positive aspects, most noticeably in the field of advertising.

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