The following discussion describes recent changes in the strategy of Parker Pen Co.
Although consumer interest in fine writing pens in the United States may seem equivalent to consumer response to Kodak film and cameras in the opening case of this chapter, Parker Pen Co., which is owned by Newell Rubbermaid Co., developed a strategy to build its presence in China where there is increased income and strong preferences for fine writing pens as part of China's gift-giving business culture. Executives in other parts of the world may have substituted smart phones and tablets for expensive pens, but Chinese professionals are often willing to pay thousands of dollars for them. In response, Parker Pen Co. has darkened its pens' ink to appeal to writers of Chinese characters and added a special Chinese character meaning prosperity and good luck to the pens' heads. These changes have increased sales from 30% to 50% in many of China's department stores.
The number of Chinese earning a household income of more than one million yuan (approximately $156,000) increased 20% from 2010 to 2011. Pens are an affordable luxury, but also serve as a means for people to display their new wealth. Parker's pens sales had been declining in North America and Europe, so the company turned to China and adopted a higher pricing policy to emphasize the status of the pens. Parker does have competition for its expensive pens from Montblanc, which has opened stores to sell its
pens and other products. However, Parker pens contribute "substantially" to overall sales growth for Newell Rubbermaid.
a. Discuss the role of consumer demand in influencing Parker Pen's strategies.
b. Do you think Parker will be able to maintain its market power in China? Explain.