PARKER : Penning global strategy

Ankita Jain
Hrishikesh V
Nilotpal Sinha
Abhinav Sharma

Great Lakes Institute of Management

November 18, 2011

Caesar had perished from the world of men, had not his sword been rescued by a pen.
Abstract
In this study, we look at two strategies adopted by Parker Pen. The first is a
highly successful strategy of product differentiation through technological innovation. The second is an unsuccessful execution of globalization strategy.

A brief history of Parker Pen

The Parker Pen Company was born in 1888 when George Stafford Parker tried to repair
some fountain pens that were leaking and in the process began to manufacture his own
pens. Six years later in 1894, Parker Pen won the patent of the Lucky Curve feed,
which was claimed to draw excess ink back into the pen body when the pen was not in
use. This technology remained the differentiating factor for Parker pens until the arrival
of the Duofold in the 1930s. 1 2
The forty years period ranging from 1920s to the 1960s, in the pre ballpoint pen era,
was the golden period of Parker Pens reign when it consistently ranked either number
one or number two in worldwide writing instrument sales. In 1931 Parker Pen created
1
2

Key words and phrases. Parker Pen, fountain pen, ball-point pen.
This study was conducted for completion of the group project for Strategy Execution.

the Quink (quick drying ink) which eliminated the need for blotting and led to the development of the most widely used pen in history Parker 51 which generated over $400
million in sales. A Parker pen stood for quality, prestige, tradition, steadfastness and
strength highlighted by the fact that Parker pens were the pen of choice to sign important documents in history such as the World War II armistices.
Parker Pen expanded its business and by 1980s the company had extended up to
154 countries. The company adopted globalization strategy to establish market presence.
However the execution of this strategy was unsuccessful; the managers failed to create
proper marketing strategies that would have made them compete in international markets with inexpensive products from other parts of the world. In 1993 Parker Pen was
acquired by the Gillette Company, which already owned the PaperMate brand, one of the
best-selling disposable ballpoints. In 2000, Gillette sold the writing instruments division
to Newell Rubbermaid, whose own Stationery Division, Sanford, became the largest in
the world owning such brand names as Rotring, Sharpie, Reynolds as well as Parker,
PaperMate, Waterman and Liquid Paper.
In recent years, Parker Pen has abandoned both the entry level market as well as the
traditional retail outlets in North America and moved into up-scale luxury retailers.

Innovation as a differentiation strategy

Throughout its history, Parker Pen has used technological innovation as a strategy to
differentiate itself from the competition. The company has been a pioneer in research
on writing instruments and introduced several revolutionary products . In this section,
we look at some of the iconic products from Parker Pens which have driven both the
company as well as the pen market. (The current portfolio of Parker Pens products can
be found in Ref.[1])

2.1

Duofold - 1921

In 1921 the company introduced the Parker Duofold (Ref.[2]) fountain pen. It was a
state of the art pen for its time and Parker Pen positioned the Duofold in the premier
segment and priced it expensively $7.00, equivalent to about $85 in 2011. In 1926 the
Duofold became the first pen in the world to have a guaranteed life of forever. It was
an instant success. Sir Arthur Conan Doyle used one to write the exploits of Sherlock
Holmes. General Douglas MacArthur signed the document ending World War II in the

Pacific with his 20 year old Duofold (Ref.[3]).

By the early 1930s the Duofolds design had grown dated in the USA but it remained
popular in Europe until the 1960s. In 1988, Parker launched the Duofold Centennial
series of pens. The modern Duofold is a key part of Parker Pens product portfolio.

2.2

Quink - 1928

In 1928, after three years of research and an investment of $68,000, Parker Pen came up
with Quink (a portmanteau word from quick and ink; also known as Double Quink and
Parker 51 Ink) that would eliminate the need for blotting. The success of Quink lay in
the fact that it had a number of useful features: it resisted water, it did not clog, it had
the desired quality of ink flow, it resisted moulding, it was non-corrosive, it did not leave
deposits, it did not fade, and, most importantly, it was quick-drying. However, the new
ink was strongly alkaline and contained isopropyl alcohol, a solvent not previously used
in inks, which often damaged the pen barrels of that time which were manufactured using
pyralin. This problem eventually led to the development of the worlds most successful
pen, the Parker 51 in 1941.
In 1941, when the Parker 51 was launched, Double Quink was renamed and repackaged
as Parker 51 ink as a marketing initiative. Parker Pens ink sales became the key to
maintaining the companys profitability. This revenue generation model is used by the
modern day computer printer companies, whose main source of revenue comes from the
sale of printer cartridges. Further enhancements were made to Parker Pen inks with its
revolutionary Super Chrome ink. This ink was marketed in 1947 after a research period
that lasted 17 years and cost over $200,000. This was the first basic ink improvement in
the last three centuries. Today, more than seventy years later, Quink is still the worlds
biggest selling pen ink.

2.3

Vacumatic - 1933

The Parker Vacumatic (Ref.[4]) fountain pen was introduced in 1933, as a replacing the
Duofold as Parkers top-of-the-line product. The Vacumatic featured a new filling mechanism which boasted a much higher ink capacity than the Duofold. The pen remained
Parkers top-of-the-line product until the launch of the Parker 51 in 1941. The US production continued through 1948, and until 1953 in Canada.

2.4

Parker 51 - 1941

In 1941 Parker Pen introduced the Parker 51 (Ref.[5]) which arguably is the best pen of
all time both in terms of popularity and sales. General Eisenhower signed the victory in
Europe in 1944. The futuristic design of the Parker 51 heralded as Ten Years Ahead of
its time, a revolutionary pen, with its hooded, tubular nib and multi-finned collector, all
designed to work in conjunction with the pens proprietary ink, allowing the nib to stay
wet and lay down an even line with either the ultra-fast drying ink or more traditional
inks. It was advertised as the The Worlds Most Wanted Pen which created huge demand
which took Parker several years to fulfil. By 1970, the Parker 51 generated over $400
million in sales, higher than that generated by any single pen ever.

2.5

Jotter - 1954

In the 1940, the world had seen a fierce battle for market share fought between the traditional fountain pens and the new ballpoint pens. Despite some initial success, ballpoint
pens died a consumer death and by 1951, the fountain pen became the pen of choice of
the world. In 1954, Parker Pens introduced its first ballpoint pen, the Jotter which wrote
five times longer than the best ballpoint pens available in the market, the Eversharp and
the Reynolds ballpoint pens.
It was the introduction of Jotter that revived the ballpoint pen market. Parker sold
3.5 million Jotters at $2.95 to $8.75 in less than one year. In 1957, Parker Pen introduced
the T-ball Jotter with tungsten carbide textured ball bearing which to this date remains
an industry standard. The famed styling of the Parker Duofold was revived in 1972 as a
ball pen and within the next decade, ballpoint pens overtook fountain pen as the number
choice of pen in the world.

Rise of competition - 1980s

After about a century of dominating the fine writing instrument market, Parker Pen
entered into a period of crisis in the 1980s and the reason for this was that the company
was driven by the wrong strategy. Parker was facing competition from three fronts.
First, the Japanese were mass marketing cheaper and disposable pens and had captured
a large portion of the low end market in USA and Europe and were gradually eating into
Parker Pens market share. Second, like the Japanese, American brands such as Paper
Mate, Bic, Pilot, and Pentel had created significance presence in the low end segment
and gradually eroding and were pulling away parker Pens customer. Third, in the high
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end segment which had been Parker Pens main target segment, competition had become
fiercer with reputed German brands such as Montblanc and A.T. Cross making progress
in the European markets.

Globalization strategy - 1982

Parker Pen faced two contrasting challenges. On one side the weakened dollar generated
high foreign revenue since about 80% of the companys sales were abroad, the profits derived from those sales represented even big profits when translated to local currency. But
on the other side, this over dependency on foreign sales exposed the company to foreign
competitors, especially the inexpensive brands from Japan which used low pricing as a
strategy to compete in the international market. Parker Pen realized that a competitive
strategy based on product differentiation through technological innovation was not sufficient to thwart the challenge from competitors.
In 1982, James R. Peterson became the CEO of Parker Pen,having joined it from
Reynolds. He was given the responsibility of reinventing the brand. Peterson decided to
launch a global marketing campaign to target all market segments. A consequence of the
decision to adopt globalization was standardization. Everything including products as
well as marketing campaign was to be standardized for all the markets across the world.

Issues in executing globalization strategy

When Peterson took over Parker, he was met by a highly proud, mismanaged company
that prided itself on its extensive decentralization. The atmosphere reflected the founders
pride in the fact that they had a unique pen for every place in the world. They were a
federation of autonomous geographical units.
It became immediately clear to Peterson that huge changes were on the anvil. The
immediate problems were twofold. The first was the products positioning. Having positioned itself at the higher end of the market for a significant part of the previous century,
it had now began to face problems with regard to its image. It was clear that a complete
clarity of its brand positioning and image was essential.
The second issue that confronted Peterson was its complete inefficiency in managing
its product portfolio. When Peterson entered Parker, it didnt even have a proper idea
of the range of products that it was manufacturing. It was a situation of complete chaos
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with more than 500 products in simultaneous existence. Its decentralized structure had
completely turned against its profitability, resulting in every distant subsidiary and distributor involved developing a customized product for that particular market. While the
company was proud of its decentralized multinational structure, it was ailing on account
of an obvious lack of economies of scale and a unified command and strategy. The company clearly lacked a common driving force across markets.
However, this decentralization had its positive aspects as well, most notably in the
area of advertising. Pens meant and mean different things to different people. While the
Europeans tended to choose a pen based on its style and feel, people in less-developed
countries tended to see a pen as nothing more than a badge of literacy.
Within Europe itself for instance, tastes tended to vary from one country to another.
While the French showed a definite attachment to the fountain pen, the Scandinavians
favoured the ballpoint pen. The company justified the existence of numerous advertising
agencies in its employ feeling that while it bred a certain amount of inefficiency, it paid off
from a sales standpoint. Many individual advertising firms were able to develop excellent
customized messages for their audience that successfully struck a responsive chord within
them. For instance, the Lowe Howard-Spink agency in London was able to make the UK
division of Parker the most profitable division during its tenure. Its creative genius is
clearly visible in the advertisement that it created showing a dead plumber with a giant
Parker pen protruding from his heart.
The situation seemed bleak to Peterson. He immediately implemented a strategy by
which Parker would position itself in the entry-level segment. He felt that in the face
of the trends at that time, this would be the ideal positioning that would succeed in
turning around the company. He also dissociated Parker from the numerous advertising
firms that it was associated with, retaining only one, Ogilvy and Mather, to oversee a
worldwide common strategy in terms of communication and advertising. However, this
strategy failed miserably on two counts. It failed to provide a customized communication
strategy to each market and thus failed to account for the cultLural differences across
geographies. It also failed to leverage the premium positioning of the brand and reduced
it to an entry-level brand.

5.1

Two specific cases of execution failures

The following examples show two specific cases of execution failure by Parker Pen.

(a) At a corporate level, Parker Pen targeted almost all market segments. However
at the business level, management failed to introduce products which would cover the
market segments with middle and lower income levels. This allowed competitors with
inexpensive products to take up the market.
(b) Some of the marketing campaign failed to adjust to the local environment. For
example, when Parker Pen first expanded their market to Latin America, they wanted
their advertisement to say, It wont leak in your pocket and embarrass you. The company did not realize that the Spanish word embarazar has two meanings; it means to
embarrass, and it also means to impregnate. So, to some unsuspecting people, the ad
read: It wont leak in your pocket and make you pregnant. (Ref.[6])

Acquisition of Parker by Gillette and beyond

In May 1993, Gillette announced its acquisition of Parker Pen Holdings Ltd (Ref.[7]).
(See Exhibit X). This made Gillette the world leader in the pen market. Gillette took an
after-tax charge of $164 million for a reorganization of its overseas operations, including
the integration of the Parker Pen facilities into the Gillette structure. Nearly 2000 jobs
were lost as a result of this restructuring process. Gillette sold the writing instruments division to Newell Rubbermaid, whose own stationery division, Sanford became the largest
in the world with brand names such as Rotring, Sharpie, Reynolds as well as Parker,
PaperMate, Waterman and Liquid Paper under its umbrella. The next few years were
one of a complete downsizing of Parker, marked by job losses across the board. In July
2009, the 180 workers at the Parker headquarters of Newhaven, UK were given notice
that the factory was going to be shut down on account of the production moving to France.
On August 18, 2009, Newell Rubbermaid announced that Janesville Wisconsin would
close the remaining operations of Parker. This resulted in the loss of 153 jobs. According
to the company, This decision is a response to structural issues accelerated by market
trends and is in no way a reflection on the highly valued work performed by our Janesville
employees over the years.
Newell Rubbermaid stated an offer of transitional employment services and severance
benefits. What remained of the Parker brand was moved to the upscale segment of the
writing instrument market and was sold via luxury retailers. Traditional retail outlets
were abandoned. This completely removed the brand from the entry level segment of the
market.
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In 2011, Parker Pen announced the finest innovation in the history of writing, Parker
5TH Technology which offers a genuine fifth way of writing. Until then the world knew
only four forms of fine writing - fountain pen, ball point, roller ball and the mechanical
pencil. ground-breaking innovation has reaffirmed placed Parker as leaders in terms of
both innovation and market share.

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7.1

Exhibits
Financial statement

7.2

Product display

Duofold - Lucky 8 Limited Edition

Ingenuity

Parker 51

7.3

Current product portfolio

TABLE I

7.4

T ype

M odel

Ink

Quink

Fountain Pen

Duofold, Premier, Sonnet, Vector, IM

Ballpoint pen

Facet, Executive, Esprit, Frontier, Urban, I.M., Vector Jotter

Acquisition of Parker by Gillette

References
[1] http://parkerpens.net/catalogue/parker catalogue 2009.pdf
[2] http://www.parkerpen.com/en/discovery/range/iconic/duofold
[3] http://www.patricktaylor.com/parker-duofold
[4] http://www.vintagepens.com/Parker Vacumatics.shtml
[5] http://www.pentrace.net/penbase/Data Returns/full article.asp?id=468
[6] http://parkerpens.blogspot.com/2007/09/advertizing-campaings-that-wentwrong.html
[7] http://www.nytimes.com/1993/05/08/business/company-news-gillette-completesacquisition-of-parker-pen.html
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