'L..............................................

4o

..

..r...

PARKER PEN CO. (A) 549

. ... ." , ..

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
INTRODUCTION

The meeting at sunny Palm Beach concluded with nary a

whimper of dissent from its partiCipants. After years of
being run as a completely decentralized company whose
managers in all corners of the world enjoyed a high
degree of flexibility, Parker Pen Co., of Janesville,
Wisconsin, was forced to reexamine itself. The company
had enjoyed decade after decade of success until the early
1980s. By this time, Parker faced strong competitive
threats and a deteriorating internal situation. A new
management team was brought in from outside the
company-an unprecedented step for what had been until
then an essentially family-run business. At the March 1984
Palm Beach meeting, this new group of decision makers would
outline a course of action that would hopefully set Parker

back on a path to success.

The men behind the new strategy were supremely confident
of its chances for success-and with good reason. Each was
recognized as a highly skilled practitioner of in ternational
business and their combined extensive experi
ence gave them an air of invincibility. They had been
recruited from larger companies, had left high-paying, rewarding jobs, and each had come to Janesville with a grand
sense of purpose. For decades, Parker had been a dominant
player in the pen industry. In the early 19808, however, the
company had seen its market share dwindle to a mere 6 percent
and, in 1982, net income plunged a whopping 60 percent.
To reverse this decline, Parker recruited James Peterson, an
executive vice president at R. 1. Reynolds, as the new president
and CEO. Peterson hired Manville Smith !is president of the
writing instruments group at Parker. Smith, who was born in
Ecuador and had a broad international background, came from
3M where he had been appointed
division president at the tender age of 30. Richard Swart was
vice president/marketing of the writing instruments

Cases (A), (B), and (C) were prepared by Charles J. Anderer, research
associate, under the supervision of Warren J. Keegan, Professor of
International Business and Marketing, as part of the International

Business Case Study Project, Center for International

Business Studies, Pace University. This project was funded in part
by a grant from the United States Department of Education. @
1986 by the Board of Trustees, Pace University.

group. He spent 11 years at. the advertising agency BBDO

and was an expert on marketing planning and theory. Jack
Marks was head of writing instruments advertising. Marks
came to Parker from Gillette, where, among other things,
he assisted in the worldwide marketing of Paper Mate
pens. Rounding out the team was Carlos Del Nero,
manager of global marketing planning, who brought with
him considerable international experience at Fisher-Price.
Each of these men was convinced that Parker would right
itself by following the plan they unveiled at Palm Beach.
A BRIEF HISTORY OF PARKER PEN The
"Rolls Royce" of the Pen Industry
The Parker name has been identified with pens since 1888
when George S. Parker delighted ink-splotched pen users
everywhere by introducing a leakproof fountain model
called the Parker Lucky Curve. Parker Pen would eventually blossom into America's, if not the world's, largest and
best-known pen maker. Parker's products, which would
eventually include ballpoint pens, felt-tip pens, desk sets,
mechanical pencils, inks, leads, erasers, and, of course, the
fountain pen, were also known for their high price tags. In
1921, for example, Parker introduced the Duofold pen.
The Duofold, even though it was comparable to other $3
pens on the market, was extravagantly priced at $7. Parker
was able to charge a premium price because of its
reputation for quality and style, and its skill in positioning
products in the top price segment.
Parker's position as America's leading pen maker was
solidified during the years when the pen was mainly
viewed as a gift item. High school and college graduates
in the 19408 and 19508, for example, were quite likely to
receive a Parker "51" fountain pen (priced at $12.50)
commemorating their achievement. Indeed, it was with a
"51" that General Douglas MacArthur signed the Japanese
Peace Treaty in 1945. Parker's stylish products and high
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,
knocked them out of first
place once and for all.
Of course, Parker would not have lost its hold on the
market had it not made some oversights along the way. In
addition to a more competitive environment, Parker failed
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
market. When Parker unveiled the $25 "75" pen in 1963,
it showed that it remained committed to supplying highpriced pens to the upper end of the market. As the 19605
wore on, a clear trend toward cheap ballpoint and soft-tip
pens developed. Meanwhile, Parker's only ultimately successful addition to its product range in the late sixties was
the "75" Classic line, yet another high-priced pen.
A Brief Flirtation with Low-Priced Pens
Parker did, however, make an effort to compete in the
lower price segment ofthe market in the late 19605 only to
see it fail. In an attempt to capitalize on the trend toward
inexpensive pens, Parker introduced the T-Ball Jotter,
priced at $1.98. The success of the Jotter led it to move
even further down the price ladder when it acquired
Eversharp. Whereas the Jotter had given Parker reason to
believe it could make the shift from pricy pens to cheap
pens with little or no difficulty, the Eversharp experience
proved to be different. George Parker, a grandnephew of
the company's founder and president of Parker at the time,
stated the reasons for the Eversharp failure, as well.as its
consequences:
All the market research surveys said go lower, go
lower, go lower, that's where the business is. So I said,
'Go lower? Fine. But we don't know how.' We bought
Eversharp and tried to run it ourselves, and we
couldn't do it. Our people just couldn't think in terms
of big units, and they didn't know how to sell peopl~
on the lower-priced end of the business-grocers,
supermarkets, rack jobbers. The result was, Bic and
Paper Mate were cleaning up in the lower-priced end,
Cross in the high, and Parker was getting squeezed in
the middle. Volume was going up, but our costs went
up faster, and
our profits were squeezed.l
The 19705: The Illusion of Success
Despite the difficulties Parker encountered when it left its
niche in the upper end of the pen market, the company experienced a healthy period of growth and profitability for
most of the 19705. Demand for its products remained
strong, and its worldwide markets expanded significantly
due to a rise in consumer income and increasing literacy
rates in much of the Third World. Parker also chose to diversify during this decade, and its most noteworthy acquisition, Manpower, Inc., proved to be a very strong asset.
In
1975, when it acquired Manpower, a temporary-help firm,
Parker was the slightly more profitable of the two. With
the
boom in temporary services in the late seventies and early
eighties, however, Manpower eclipsed Parker in sales and
earnings and eventually subsidized its parent company
during down periods.
Why did Parker fall from its position of leadership in
the writing instrument market? There were many reasons,
and one of the most important was the weakening of the

1 Forbes, 1 October 1973.

U.S. dollars. At its peak, Parker accounted for half of all

U.S. exports of writing instruments and 80 percent of its total
sales came from 154 foreign countries. Parker was es. pecially
strong in Europe, most particularly in the United Kingdom.
When sales in the strong European currencies were translated
into dollars, Parker earned huge profits.
The downside of a weak dollar, however, was that it
gave Parker the illusion that it was a well-run company. In
fact, throughout the 19705, Parker was a model of ineffi.
ciency. Manufacturing facilities were dated and inefficient.
Production was so erratic that the marketing department
often had no idea what type of pens they would be selling from
year to year or even month to month. Under the lead. ership of
George Parker, nothing was done by company headquarters
to update these facilities or to develop new pro' ducts. As a
result, subsidiaries and distributors around the world saw fit to
develop their own products. By the end of George Parker's
reign, the company's product line in. cluded 500 writing
instruments.
That distant subsidiaries would have the leeway to make
such decisions was not at all unusual at Parker, for it had long
been known as one of the most globally de. centralized
companies in the world. Decentralizati<;>n, in
fact, was something that Parker took pride in and consid. ered
to be vital to its success as a multinational. Yet it was this very
concept that Peterson and his new management team would
hold to be responsible for much of what ailed Parker Peri.
PARKER'S GLOBAL OPERATIONS BEFO'RE
PETERSON
In addition to having a hand in manufacturing and product. line
decisions, Parker's subsidiaries developed their own marketing
strategies. More than 40 different advertising agencies
promoted Parker pens in all the comers of the globe. When
Peterson came to Parker, he was proudly in. formed that the
company was a "federation" of autonomous geographical units.
The downside to the "federation" con. cept, Peterson
thought, was that home country management oftep lacked
the information needed to make and coordi. nate basic business
decisions. Control was so completely decentralized that Parker
dido't even know how many pens it was selling by the time
Peterson and his group arrived.
On the other hand, decentralization obviously had its
positive aspects, most noticeably in the field of advertising.
Pens mean different things to different people. Whereas Europeans are more likely to choose a pen based on its style and
feel, a consumer .from a lesser-developed country in the
seventies viewed the pen as nothing less than a badge of lit.
eracy. In addition, tastes varied widely from country to country.
The French, for example, remained attached to the fountain
pen. Scandinavians, for their part, showed a marked preference
for the ballpoint. The logic behind having so many different
advertising agencies was that, even if it appeared to be
~omewhat inefficient, in th~ end the company was better off
from a sales standpoint.

Some of the individual advertising agencies were able to

devise excellent, imaginative camp'aigns that struck a responsive
chord among their local audiences. One example was the Lowe
Howard-Spink agency in London. The Parker UK. division became
the company's most profitable during the tenure of the Lowe
agency. An example of its creativity is an ad entitled '~Rediscover
the lost art of the insult." Gracing the ad is a picture of a dead
plumber, on his back, with a giant Parker pen protruding from his
heart. Part of the text is as follows:
Do you know plumbers who never turn up? Hairdressers
who missed their vocations as butchers?
Drycleaners who make your stains disappear-and
your clothes with them?
Today, we at Parker give you the chance to get your
own back.
Not only are we offering a beautiful new pen called the
Laque which owes its deep lustre to a Chinese technique 2000
years old, but we are attempting to revive something that went
out when the telephone came in.

PARKER PEN CO. (8) 551

Although the Parker UK. division was a success, however, the
company's general inefficiencies, loss of market share, and lack of
strategic direction were finally revealed in the early 1980s with the
rise of the US. dollar. Parker's financial decline was even more
precipitous than' the dollar's increase. When the huge 1982 losses
were registered, Peterson was brought in from R. J. Reynolds to try
and turn things around for Parker. He decided that every aspect of
the company needed to be closely examined, not the least of which
was Parker's decentralization of global operations.
DISCUSSION QUESTIONS (A) L What would you do if you were in
James Peterson's
shoes in January 1982?
2. What changes, if any, would you make in Parker's
marketing strategy?
3. Which aspects of Parker's structure would you dis
card? Which would you keep?
4. Assume that you are James Peterson and you have just hired a
new management team composed of highly qualified
executives from outside companies. You and your new team
are convinced that you have the solution to Parker's problems
but there are many holdovers who disagree with you. How
would you implement your plan? To what. extent would you
incorporate the views of Parker management into your plan?

The well-armed, witty, malicious dart.2

2 Ad Age, 2 June 1986.

...........................................................................
Parker Pen Co. (B)
Parker Goes Global
We will be creating more news in the next two years than we have in the past ten.
-JAMES PETERSON
July 1982

James Peterson relished the chance to be the top man at Parker Pen.
He spent 24 years at Pillsbury and had a taste of what it was like to be at
the helm of a corporation when he rose to the rank of president, the
number two power spot in the company. At R. 1. Reynolds, he was an
executive vice president-an influential position, to be sure, but not one
that afforded him the freedom of movement that he would have liked.
When he was brought (0 Parker in January 1982, Peterson, then 54, had
finally had the chance to run a company. All the theories he held to be
true would be tested. All the lessons he had learned after some 30
years of practical business experience-much of it in international
operations-would now be applied.
His years at R. 1. Reynolds had convinced him of the superiority of
global marketing, which he understood to

I
.I
I

mean standardized product and promotion strategies the whole

world over. This view made him unalterably opposed to the loose
structure that had characterized Parker Pen before his arrival. In the
opinion of Peterson, there was absolutely no way that any company
operating in the modern world would be able to survive such
disarray. That a subsidiary thousands of miles away could decide
not only what products it would manufactur~ but also how they
would market them ran counter to everything Peterson believed.
Peterson quickly moved to remold Parker Pen in his own
image. In addition to too much decentralization, Peterson thought
Parker lacked "a good enunciation of business philosophy."
According to Peterson, "every good company has to have one." In
order to correct this problem, Peterson devised an eight-point
statement of his management

552

PART
VI
Managing the Global
Marketing Program

philosophy imd had it translated into more than 40 languages and sent
in letter form to Parker managers all over the world. The statement
contained such 'phrases as, "There is no substitute for quality," and,
"Like most managers, I don't like surprises." The letters. concluded by
saying: "As I get to meet each of you in the months ahead, I will be discussing this business philosophy with you and asking you how you have
used it."!
THE DISMANTLING OF DECENTRALIZATION: FROM 40
AGENCIES TO 1

The core of Peterson's revitalization efforts would be directed at

dismantling the geographical organization that Parker had
evolved into over the years. He slashed the product line from
500 to the 100 most profitable items. The manufacturing
function was consolidated, greatly reducing the number of units
produced overseas. As for what products would be
manufactured; that was to be strictly decided by the
management team at the Janesville headquarters. Of course, the
manufacturing facilities themselves would have to be updated,
for no longer could the production department be allowed to
dictate to marketing executives exactly what kind of products it
would be selling. None of these measures in and of themselves
was startling-each addressed problems that needed to be
corrected. However, when Peterson decided to get rid of
Parker's 4O-0dd advertising agencies in favor of one "worldclass agency," more than a few eyebrows were raised.
The logic behind the decision to go with one advertising
agency (Ogilvy & Mather) was consistent with Peterson's desire
to make Parker Pen a global marketing corporation. With one
agency instead of 40, not only could money be saved, but
strategies could be coordinated on a global scale. One problem,
however, was that formerly productive agencies such as Lowe
Howard-Spink in London were fired. This had a devastating
effect on morale at Parker u.K., the company's most profitable
subsidiary which had in effect been subsidizing the same
American division that was now telling it how to advertise.
"THE WORLD'S NO. 1 PEN COMPANY"
Even though Parker had experienced many problems before
Peterson arrived, the company was still very proud of its
tradition as a leading producer of "quality writing instruments."
Of course, this pride was sometimes translated into overblown
statements such as, "Parker is the world's No.1 pen
company."This indeed was the party line at Parker even though
it was paid little more than lip service. When Manville Smith
arrived in 1982, he commissioned a study to see just how
important Parker was. His findings shocked him: Parker had
only a 6 percent share of the global pen market and it didn't
even attempt to par
! Ad Age, 26 July 1982.

ticipate in a segment that was responsible for 65 percent of all

sales of pens in the world-that is, pens that sold for less than $3.
The new management team wanted to make Parkcrr more
than just a fictitious number-one company. In order to recapture
market share, Parker would have to participate in the lower end
of the market-the same area that George Parker himself had so
hastily abandoned in the late 1960s. A new $15 million state-ofthe-art plant would be built whose main function would be to
manufacture the Vector, a roller-ball pen selling for $2.98. The
Vector was Manville Smith's pet project. Using a new
automated line at Parker's new plant, Smith calculated that the
Vector could be produced for 27 cents per unit and therefore
generate huge profits for the company. After the Vector,Smith
planned to plunge even deeper into the low-price market with
the ltala, an even cheaper model that would be Parker's first
disposable pen.
THE FIRST RUMBLINGS OF DISSENT:
GEORGE PARKER
Although George Parker was still formally the chairman of
Parker Pen, he was expected to lead a quiet, charmed life in
Marco Island, Florida, and never to be heard from again. In
fact, George Parker was paying very close attention to the new
developments in the company that bore his name, and he was
none too happy. As his earlier remarks might suggest, he was
scornful of a strict market research approach to the pen
business. He also took pride in Parker Pen's autonomous
federation system that provided a high degree of flexibility to
the company's many subsidiaries. Even more disturbing to him
was the planned foray into the lower depths of the marketplace,
as he might put it. Cheap pens were beneath Parker Pen, in his
opinion, and nothing could be more disgraceful than a
disposable pen bearing his name. What were they
manufacturing anyway, garbage bags?
Compounding George Parker's displeasure, was his sincere
dislike for James Peterson, whom he dubbed "motormouth." To
him, Peterson was the embodiment of everything that was
wrong with the new Parker Pen. The grandnephew of the
company's founder still had many well-placed friends in the
company, and his constant criti. cism of the new management
team probably did little to
aid their cause.
PROBLEMS: FINANCIAL LOSSES, SMITH GETS FIRED,
ONE WORLD MARKETING FAILS
Despite all the complaints from George Parker, Peterson's major
problems lay elsewhere. The strong dollar that had exposed so many
of his company's weaknesses got even stronger. Recession was a
worldwide plague. The costs of new plant development were not
absorbed by profits and the company lost $13.6 million in fiscal 1983
(as shown in Exhibit 1). Still, Peterson had the luxury of time on his
side,

PARKER PEN CO. (8)

,55
'c:ss

..
Year Ended

Revenues

Net Income

(Per Share)

Range

1985

$843,7

$5.4

$0.32

$0.52

21-13

1984

708.8

11.8

0.70

0.52

21-12

1983

635.3

d13.6

dO.80

0.52

17-11

1982

679.1

15.7

0.92

0.50

24-14

1981

723.2

37.7

2.23

0.44

26-14

Feb. 28

(Millions)

Dividends
Earnings

d = Deficit.
Balance sheet as of June 30, 1985:
Current assets: $284.5 million
Current liabilities: $239.5 million
Current ratio: 1.1-to-l Long-term
debt: $27.1 million Common
shares: 17,635,000 Book value:
$7.65
Source: Annual reports.

since he had little mQre than Qne full year under his belt. One
mQre year like 1983, hQwever, and he was gQne.
In PetersQn's QpiniQn, Qnly a full-fledged glQbal marketing effQrt eQuid save Parker. At the March 1984 Palm Beach
meeting, it was decided that Parker WQuid participate "in every
viable segment Qf the writing instrument business." In additiQn,
it was declared that, "The cQncept Qf marketing by centralized
directiQn has been discussed and consensus was reached."The
management team,filled with a sense Qf purpQse, then set Qut
to' achieve its IQfty gQalS.
There remained Qne majQr problem: Parker's new plant
was proving to' be a failure. The plant was nQt functio.nal fQr
the 1983 Christmas seaSQn, cQsting the co.mpany millio.ns Qf
dQlIars in sales. Even as PetersQn arid his grQUP were
wQrking round-the-cIo.ck to' see its strategy thrQugh, the
cQmputer-autQmated plant which was suppo.sed to. spearhead
Parker's drive into. the Io.wer end Qf the market, broke dQwn
repeatedly. With autQmatiQn having failed, the co.mpany was
fo.rced to. hire labQr again and its CQsts sky
rocketed. Manville Smith, who. had placed his name next to.
the fully autQmated Vector pro.ject, was ftred by Peterson as a
result.
Smith's departure was impQrtant because he was the !>nly
member Qf the management team that held Qut fQr local
advertising flexibility. Smith had WQrked cIo.sely with Ogilvy
& Mather (0 & M) o.n Parker's first wo.rldwide advertising
campaign. At Smith's urging 0 & M devised a campaign that
allQwed fo.r SQme degree Qf Io.cal.flexibility. When Smith
left, ho.wever, Peterso.n to.Qk o.ver the advertising reins and
pushed very hard fQr "o.ne-IQo.k" advertising and the results
were disastrQus.
The fashio.n in which Peterso.n promQted his advertising
PQlicy was enQugh to. alienate o.nce and fQr all tho.se
remaining managers that sUPPQrted his effo.rts. A pro.cIa

matio.n issued fro.m the Janesville o.ffice and sent acro.ss the
glQbe headquarters stated that: "Advertising fQr Parker pens
[no. matter mQdel o.r mQde] will be based o.n a co.mmQn
creative strategy and positio.ning. . . . The WQrldwide
advertising theme, 'Make yo.ur mark with a Parker,' has been
ado.pted. . . . [It] will utilize similar graphic layo.ut and
pho.to.graphy. It will utilize an agreed-upo.n typeface. It will
utilize the appro.ved Parker IQgQ/graphic design. It will be
adapted fro.m centrally supplied materials."
The new advertising campaign was indeed rigidly CQntro.lIed. Subsidiaries were sent their materials and tQld to. get
o.n with it. Managers abro.ad were seen as simple im plementers
Qf the glQbal marketing strategy with little Qr no. input. The problem
was that many Qf them realized right away that the new
advertising campaign wQuldn't wQrk in their markets. In fact,
the campaign really didn't wo.rk anywhere.Jack Marks WQuld
later qualify it as "IQwest CQmmQn denQminatQr advertising"
that "tried to. say sQmething to. everybo.dy, and didn't say
anything to. anybo.dy."
The last to. admit failure was PetersQn himself, who. ignQred all evidence and tried to. mQve fo.rward with a seco.nd
wave Qf glo.bal advertising in January o.f 1985, this time fo.r
the Vecto.r, which had finally made it o.ff the productiQn line.
By this time, ho.wever, Peterso.n's po.sitio.n was terminally
weakened. PrQductiQn prQblems persisted, mQrale was Io.w,
resentment Qf the management team was high and reactio.n to.
yet ano.ther generic campaign was so. negative that Peterso.n
felt co.mpelled to. resign.

POSTSCRIPT: "GLOBAL MARKETING IS

DEAD"
The succeSSQr to. Peterso.n as CEO was Mitchell Fro.mstein,
president o.f what Q~ce was Parker's Manpo.wer subsidiary.

- --554 PART VI Managing the Global Marketing Program

Since it was purchased in 1975 by Parker, Manpower continued to
grow to the point where it was far more profitable than its parent
and, indeed, subsidized it for several years. Manpower would
wind up taking over Parker, finally selling it to a group of British
investors in 1986.
Fromstein was an implacable foe of Peterson's. Manpower
was as international as Parker Pen, and Fromstein had his own
views as to how an international business should be run. When he
assumed control of Parker in January 1985, he gathered the
company's country managers in

Janesville and told them: "Global marketing is dead. You're free

again.,,2

DISCUSSION QUESTIONS (8)

1. Why did Peterson's global strategy fail?
2. What lessons can be drawn from the decline and fall
of Parker Pen?
2 Ad Age, 2 June 1986.

r.........................................................