Saturday, April 22, 2006

"Catch" of a Lifetime

I recently added this 1954 Mirado Pencil magazine advertisement to my collection. I find some of these old pencil ads intriguing for both their design and copy content. Of particular interest to me is the contexts they provide as a historical reference and indicators of trends in promotional focus within our industry.

Given my own favorable predispositions towards both fly fishing and pencils (as covered in my prior post, WoodChuck on Fishing) I found this ad particularly interesting from both the graphic and copy standpoint. The use of the fishing scale to demonstrate that the strength of the Mirado lead “will take over five pounds of pressure… far more than you apply in daily use” is the first of several fishing references in pointing out features of the product. This theme continues with additional fishing analogies… “This yellow-bodied beauty with the bright red brand glides like greased lightening … smooth and fast. A Mirado reels off more than thirty-five miles of line, and you’ll agree that every inch is a joy and pleasure.”

So when you look at the Mirado performance features being promoted in this add it comes down to: the strength of the graphite core, smooth writing/gliding capability and it’s long lasting nature “35 miles of line”. It’s unclear if you’d have to sharpen down to an uncomfortably small nub to realize the claim of 35 miles of line. The ad also offers a free sample for writing into the Eagle Pencil Company.

Today there is much less print advertising done for particular pencil products like we saw in the first 50 to 60 years of the 20th century. Today newspaper circular insertions in support of given retailers mostly during the back to school sales period are the most common form of print advertising for pencils. These circulars generally cover pencils in addition to other writing instruments from a given manufacturer or brand range. The failure of these circulars in my view is that they communicate none of the performance features of product, just brand name and price point. Of course this is not the purpose of newspaper circular advertising which is designed around price promotion of known brand names to generate store traffic for the retailer, not to promote features and benefits of brands.

Where some manufacturers do seem to focus more marketing effort these days is on public relations activities focused on the wider corporate brand umbrella and not necessarily on specific pencil products themsleves. In the case of the Mirado pencil brand I am not aware of any advertising and promotional effort expended on this product by Sanford these days. Certainly their Sharpie marker range is quite heavily advertised and promoted along with their Waterman and Parker pens. I am sure there are also other less visible means of promotion of Prismacolor, Papermate, Uniball, etc. but the Mirado which is Sanford’s “flagship” high quality graphite writing pencil gets even less promotional support from what I’ve seen.

Also unclear at this point is whether today’s Mirado performance lives up to the billing of this Mirado ad from 50 years ago. Today’s cartons still make the claim of being “The World’s Smoothest Writing Pencil.” Some would say it does not offer the same performance as just 10 years ago following a series of cost reduction and brand repositioning steps. It has transitioned over the years from the Eagle corporate brand umbrella to the Berol Mirado, then in the past 12 years or so to the Sanford Mirado and is now currently the marketed as the Papermate Mirado pencil. I don’t know about you, but when I think of a high quality writing instrument that I would want to associate with my flagship graphite pencil brand, Papermate of all the brands under the Sanford umbrella is not the first one that springs to my mind. Over this time the Mirado has lost share in it’s primary market in the USA relative to Dixon’s Ticonderoga despite similar price points and market positioning for these two products. One thing that has changed is that the Mirado no longer fits the final claim from this 1954 advertisement that it is “The Largest Selling Pencil in the World”. Of course, I'm not certain that it did in 1954 either.

Sanford of course is not alone and I do not mean to pick on them in particular. The reduced advertising and promotional expenditures on branded wood-cased pencils in general these days is a partial consequence of trends that tend to “commoditize” all consumer goods. These trends include greater availability of lower priced foreign imports with improving quality, an increase in retailer concentration and control over access to distribution points along with their increasing use of Private Label. Another contributor is the reduced amount of product innovation in wood cased pencils, so there is less to talk about. When any product faces increased price pressure for products that are not well differentiated from other competitors this generally leads to reductions in marketing expenditure and excessive focus on cost and price reduction. This is to the detriment of other important aspects of a balanced marketing mix. Admittedly, this is a difficult challenge when every third sentence coming from buyers at Walmart, Staples and other large retailers is about the need to reduce prices.

Despite this I still believe that if the top pencil brands continue to advertise and promote their products and focus on keeping a quality advantage then their loyal consumers would continue to support the brand at reasonable pricing premiums and they would have “A Catch of a Lifetime”. More creativity is needed today in tying the fly and casting the rod to the right spot of the river than ever before. If the brands fail to do so then the fish will increasingly bite on other lures.

Thursday, April 13, 2006

Office Supply Trader

The very industrious Kyle MacDonald started with one red paperclip on July 12, 2005 in his quest to trade his way up to a new house. After just 10 trades and 9 months time he has bartered his way up to one year's free rent for a 700 square foot house in Phoenix, AZ and is now looking for the next trade to reach towards his ultimate goal.

Quite an adventure in value added activity despite the added costs and time he's expended in travel expenses and locating trades that move him along his path. I guess there's no real PayPal equivalent in the trading community to build some trust that would reduce such transaction costs. Certainly Craigslist and similar sites offer a means of reducing the search costs, but they mainly work within local markets where individuals are able to go and see for themselves what their getting in exchange for their item. Bartering of course is a very old system of trade, predating monetary exchange. In fact, it was the inconvenineces of the barter system in part that lead to the development of money.

So does a bartering system for pencils and office supplies make sense today? Some consumer products manufactureres do trade obsolete inventories for things like advertising trade credits. But these are intercorporate trades and the strings attached to sue the trade credits generally reduce their value. Would consumers willinging and actively trade office supplies in a barter relationship if an efficient and trustworthy transaction system existed? How easy might it be in such a system to trade up from a pencil to a PDA through a series of trades? Would it be worth the effort?

Clearly Kyle benefits from the novelty of his quest, the increasing publicity and the fact that his trade partners are assigning value to the emotional benefit of participation in Kyle's adventure to be willing to trade something of higher value for the lesser value item Kyle is offering. Otherwise who could justify a trade of a red paper clip for a novelty fish pen of all things. In an office supply bartering system with efficient transaction costs as usage increases such a system would reduce the value added increase one might get from such trades since there would be more selection of like value available. Thus it seems the main benefit would be a better use and distribution of the excess inventories people may be holding. Certainly, eBay has provided a rather efficient outlet for alot of the old junk accumulating in peoples garages and drawers and has made strides in redistributing such excess inventories. However, eBay is designed around monetary exchange for these goods and is not a barter system.

So what will you trade me for a tube of Prospector Pencils?

Wednesday, April 12, 2006

The Perfect Match

Special Spring Offer!

New at our eBay Pencil World Creativity Store, get a Free KUM® "Ellipse Office" Orange or Blue Pencil Sharpener of your choice when you purchase a minimum of one 40 count tube of Golden Bear graphite pencils. Offer valid through May 12, 2006. This sharpener includes KUM's Magnesium one hole wedge sharpener and is designed to fit perfectly in a pocket or purse for easy portability.

Golden Bear Orange Graphite HB – 40 pencil tube
Golden Bear Blue Graphite HB – 40 pencil tube
Golden Bear Orange Graphite 2B – 40 pencil tube

The 2B is also a new item at the store in the past month and is perfect for those looking for a bit softer lead in our fine Golden Bear range.

Monday, April 03, 2006

Do Industry Associations Matter Anymore?

Later this week I’m attending the Annual Meeting of the U.S. Writing Instrument Manufacturers Association (WIMA). Participants include finished product manufacturers and marketers with operations in the US as well as component suppliers. I used to look forward to this event each year as an important chance to get together with key customers, other businesses and friends in the pencil and writing instrument industry. Coming from a family business background I can remember attending one of the former Pencil Makers Association meetings with my parents when I was still in High School and later after college before I had joined the family business.

It always seemed somewhat like a family reunion with a good combination of sports and social activities intermixed with our business sessions. Very friendly long term relationships. Everyone always seemed to have a good time in addition to active participation in what were regarded as valuable educational programs and committee sessions of the association focused on technical, product safety, trade or governmental regulatory issues.

Like many industry associations ours has suffered declining membership and industry participation resulting from trends of industry consolidation, movement of manufacturing off-shore, cost containment pressures, conflicting business interests of member companies, etc. This has already lead to the merger about 10 years ago of the Pencil Makers Association into the Writing Instrument Manufacturers Association and since then we’ve continued to lose membership.

An important by-product of these trends is the change in the group of meeting participants. First, there are fewer participants from each company due to cost containment reasons and people tend to schedule in and out quickly minimizing the time commitment. Fortunately, for me the meeting is being held in San Francisco this year so it’s close enough to home that it doesn’t require the normal time commitment of traveling to the East coast.

More importantly participation was historically heavily weighted to the business owners who were the top executives and decision makers in the industry. Now larger companies or even smaller companies who have been absorbed by some other diversified group send VP or sometimes lower level managers if they participate at all. For example, I think it’s been at least 10 years since the President of either Sanford or Dixon attended personally.
Committee activity, historically the hallmark of strength for our association, involved the active participation of numerous members for direction of the work of the Association. This function has declined and generally committees now only meet face to face as part of the Association Board meeting itself once per year with a phone conference here and there in between.

I currently Chair the Pencil Section that deals with issues specific to the pencil industry. I recently sent out an email to the committee members proposing we move forward with a program the Association staff has looked into to increase and improve promotion of the PMA Certification Seal. I’d like to see the Committee request the Association board to fund the program since in my view is the one program the association currently offers that has potential to have some positive impact for members if supported. (see my August 2005 Timberlines Post: What’s the Value of Pencil Certification?) In any event, my email asked for feedback and input on this proposal. I got one response and that came from the legal counsel to the association, not from a manufacturer.

In the meantime I remain interested in consumer feedback on this particular issue. Do you place any more value on such third party certification programs, industry sponsored or not? Do you view a PMA, EN71 (European standard) or ACMI certified product as safer than one without one of these certifications? Does it bear any relevance in your purchase decision at all?

Finally, in a further effort to address the challenges of relevance as an association, this year we decided to focus the upcoming business sessions on International trade issues faced by our industry. We have invited participants from other Writing Instrument Manufacturing groups from around the world to this year’s meeting. We will have differing levels of representation from the associations in Japan, Europe, and Japan. We’ve scheduled four different speakers on a range of topics as well as an association round table to discuss how each association works to support its membership.

Will this lead to increased cooperation and coordination on global issues of product specifications and safety standards, counterfeiting issues, category marketing and promotion, etc? Will it be a first step to some form of International Federation of Writing Instrument Manufacturers? I’m skeptical at this point given the historically insular nature of each of these associations to focus on issues specific to their own region or country. What is clear to me is that US based manufacturers associations probably in many industries will continue to struggle without embracing and leading a broader international focus and collaboration with peer associations throughout the world.

For now our company continues to participate in the association feeling it’s better to try to show some leadership to improve the member benefits and support to those of our customers who remain members. Still each year when that invoice shows up to renew our membership I question the relevance and think of 10 other ways I could likely spend these funds to have a more direct positive impact on our business. 2006 will be a year of decision for me however as it’s simply too much expense to justify without seeing a positive trend of improved benefits from membership.