newell custom writing instruments

newell custom writing instruments

The Importance of Newell Custom Writing Instruments

1. Introduction

A custom writing instrument serves its purpose in promoting a company and selling an idea. With the vast market for promotional products, custom writing instruments are the third most selling promotional product and the most effective in creating future sales (Wallace, 1997). Though there are many types of writing instruments to choose for promotional products, it is important to note that quality is always better than quantity. Wallace also mentioned that if a writing instrument is thrown away because it did not work, the intended promotion will be a wasted effort and it is less likely for a consumer to purchase a product if they are reminded of poor quality (1997). Quality has an importance that is parallel to cost. Depending on the purpose of the promotion, cost can vary and it is perceived that a more expensive item will leave a better impression. This means the image a brand will attempt to portray with the promotion must be abundant in the minds of the customers. An illustration of this would be a medical company trying to improve its image after the introduction of a new product. A promotion to medical professionals can initially increase sales of this product. So the job is to create a means of promotion that these professionals will remember the company by, and the best possible method is a custom writing instrument.

Custom writing instruments are those that have been imprinted with an advertisement and then distributed as a means of brand identification. Pens are not just mere writing instruments; they do more than make a mark on paper. Lam (1991) revealed the benefits of using a pen as a promotional product and its correlation with increasing sales for the product being advertised. The promotional product creates a visual awareness of a brand, as the product will most likely be seen by the user of the pen and others. Lam disclosed that there was a 45% marginal increase in advertising effectiveness for those who were aware that a brand had promotional products. This shows that consumers are perceptive towards companies giving away free items and rate the company as being more friendly. The pens can also be an information tool as stated by Falch (1981). A consumer is better informed about a product if they can associate it with something and not having to exert effort to obtain information. This will in turn affect the productivity of the consumer. With the world today moving towards a paperless society, it is pertinent that companies make use of a tool that will enable its customers to remember them and obtain information. This is thereby helping the overall sales and image of the company who provided the pen.

Newell Company is a worldwide manufacturer and marketer of consumer and commercial products with a very significant presence in the United States, Canada, Europe, Australia, and Asia. The company is known for providing a wide range of products from children’s toys to professional products. In the writing instruments industry, Newell is the largest and most profitable firm. They have maintained a very high level of marker penetration in US households. With the acquisition of Sanford, Newell is primarily in the pen industry. Newell is looking to increase market share in the pen industry and needs to make key decisions about the custom writing pen market. This paper will address the importance of custom writing instruments and provide alternatives for Newell Company to increase market share in this industry.

2. Benefits of Using Newell Custom Writing Instruments

The implementation of the fourth and final benefit would be to make more money on the product. This would be accomplished by Manor House giving the excess profits from increased sales and promotions back to Newell at a rate of 25% compared to the expected 15%, which is under the current rate on the price of the Paper Mate products. This change would be most beneficial if Newell decides to enter a different product category in the future because the excess funds could be used for development, and it would prevent the closure of Newell’s relationship with Manor House due to a lack of funds and knowledge in a particular category.

The third benefit for Newell would be to get a better price for their products. Due to Newell creating the quality and value image for Paper Mate products, they want retailers to increase the price of their products. The price increase would still maintain good value for consumers who are quality conscious while causing less price-sensitive consumers to switch from a competitor’s product to a Paper Mate product.

A second benefit for Newell would be to enable growth in market share in the writing instruments category. This would be accomplished by preventing Manor House from having to share any promotional allowances or costs between Newell and their competitors. Due to the fact that it is generally the case that there is an equal sharing of promotional costs between retailers and manufacturers, Newell would be using the promotion money to increase the awareness of their product’s quality and value compared to that of the competition. With the lack of any trade allowances and a creation of a new product image, Manor House would increase the expected sales of the current Paper Mate product line and the level of shelf space for Paper Mate products. This would subsequently increase sales for Paper Mate products and take shelf space away from competing writing instruments, enabling Paper Mate to recapture its number 2 industry ranking by increasing its market share (20% market share, 25% industry rank).

The main benefits of this change would be for Newell to show a higher growth in sales and return on sales. This would be accomplished by the increase in the level of shelf space, which is currently 10% higher than its market share (20% market share, 30% shelf space), and reducing the price of their product. With increased availability and sales promotion due to the increase in product shelf space, Newell would be able to reach a different market segment of consumers who are price conscious while maintaining their market share on the current segment of consumers who are quality conscious.

Newell has branded itself as a “multi-product corporation” due to its fast growth into different product categories and its ability to create value for the customer, consumer, and retailers. With its focus strictly on the creation of a writing instrument stationery, Newell is positive that they can optimize their success and knowledge in the writing instruments category to create value for Manor House.

3. Customization Options Available

Customization is reality through Newell. They are continuously introducing a new line of pens, as well as customizing the existing ones to increase the product life cycle in the maturity and decline stage. Personalized pens can be in the form of a company logo or family crest. Having a pen custom made might sound expensive, but it is cheaper in the long run. For instance, if a company were to order a batch of custom-made pens with a company logo with the intent to encourage better performance, they can distribute the pens when an employee has reached a certain target or achieved success in a certain task. The act of receiving the pen can be very gratifying, and the employee can keep it as a memento for their achievement. This is definitely more effective than just giving a pat on the back, and the cost can be considered minimal. Customization is also available to the individual. Newell is also offering a service called “build your own” for the customer to choose what they want in a pen, giving the customer a sense of ownership in designing a pen of their preference. Building a pen can be done through step by step of selecting the type of pen you want, the color, the material, the width, point size, and the refill type. At the end of the selection, the customer will be shown a picture of the pen that they have chosen. This process is possible through Newell’s vast resources and advanced technology in pen manufacturing and is free to be tried at parkerpen.com. For a more personalized pen, Newell is offering an engraving service for selected pens. The customer can engrave their name, message, or company name, and the pen can be a memorable gift to someone. These pens can be purchased at various online stores, and the price range is affordable. Customization will not stop here, and Newell will continue to innovate new ways to add value to the pen.

4. Superior Quality and Durability

The decision to build the factory in Costa Rica can be attributed to multiple factors. The first and foremost was the cost of labor, at the time the average wage for a worker in Costa Rica was about a fourth of that in the United States, this was in stark contrast to Japan, a country notorious for excessive labor costs. Other minor factors were a lack of labor unions, and government funding or related projects to build the factory. The factory was to move forward in cooperation with a local Costa Rican development agency. During construction phases of the factory, new technologies to be used in the production of pens were to be transferred from Newell Sanford facilities in the United States, to Costa Rica as means of improving competency in foreign production sites. This method of transferring technology from site to site can be considered a build-operate-transfer contract. The decision was also made to produce solely for the Penetration Team in order to maximize use of the new facility with our own products and maintain confidentiality of our production know-how.

The method of production for Newell custom writing instruments was a critical factor in the creation and business plan for the new product. The new product was to be produced in a new ink pen factory located in Costa Rica. The decision to do manufacturing of the product within Newell’s own company was arrived at after performing a comparative SLEPT analysis of doing business in Costa Rica versus Japan. Newell had been outsourcing production of various products for years and wanted to use this project as a means to extend learning/competency in doing production work in foreign facilities.

5. Conclusion

The importance of learning from history is a key factor in this Newell case study. The Parker Pen Company is now a division of Newell Corporation, and is a bedrock company in the writing instruments industry. Parker Pen has been around since 1888, and has not only been in business long enough to see war, depression, and prosperity, but the company has remained successful through it all. The reason that Parker Pen has been able to maintain success is because of their unique capabilities in designing and producing custom writing instruments. Newell, which has only entered the writing instruments industry as of 1992, needs to be concerned with how the purchase of Rubbermaid would affect acquiring Rubbermaid’s Sanford, and Parker Pen’s future contribution to Newell. After thoroughly analyzing Parker Pen’s strengths and capabilities in producing custom designed writing instruments, it is clear that it is a capability that Newell needs to be concerned with. This is a capability that is not easily duplicated, and is something that has provided great success and longevity for Parker Pen. Newell is focused on being a low-cost manufacturer and leader in producing a range of high volume, high quality, and low-cost goods. Although Parker Pen and the Sanford division have already been successful in reducing costs and improving efficiency, Parker Pen does not fit into Newell’s vision of being a low-cost producer in consumer goods.