George Safford Parker was getting fed up of the unreliable ink pens that were available in the market, so he decides to make his own pens. He forms the Parker Pen company with another partner. During the next century, the Parker Pen company sees everything: from 2 world wars to the great depression. But they still show stellar growth year after year. New pens are invented constantly. The company sells its pens in all corners of the world. The pens are available everywhere. They are available on racks in all kinds of stores: from grocery stores to drug stores and even in discount stores. The good times couldn’t last though…
In 1986, a few executives get together and buy the entire company and make Parker Pens a privately held company. By the end of 1986, their bottom line is red! How would the revitalize the company?
They change the entire selling strategy.
Their new marketing plan increases demand by curtailing supply of the pens. The pen is no longer sold anywhere and everywhere. Its high quality pens are only sold in high end stores like jewelry shops and office supply stores. They are only sold under glass in nice packaging, not on any racks in the open. The price of the pens is increased too.
The plan worked. The year the executives bought Parker Pens, it was making a loss.
A year after that, it makes a stellar profit of over $20 million!
Action Summary:
° One way of increasing demand is by supplying your product in limited quantity. You can sell fewer quality products and yet make more profits by curtailing supply and increasing prices.
° Parker Pens is a luxurious pen and even used as jewelry because of its higher demand…and lower supply. But the company didn’t only curtail supply; they also improved the perception of the pens by selling them only in higher end stores in nice packaging.
° Improve your packaging and you can charge a higher price too.