The Hindu Business Line : `There's a stationery freak in all of us'

A visit to G. M. Pens' office in the once far-flung Velachery, a suburb of Chennai, yields many interesting titbits about pens and their users. Vishwadeep Kuila, the Vice-President of Sales & Marketing at this Rs 200-crore company which markets Reynolds pens in India, says candidly that the writing instruments category, or rather, the stationery category in general, will stop doing well if people actually used them or stopped to think about why they need to buy so many pens and knick-knacks. "There's a bit of the stationery freak in all of us, and that's what keeps us going," he says. BrandLine met up with him for an insight into the category, on how Sachin's brand ambassadorship is working for the company and its retail plans.

Aren't pens a rather low-involvement category?

Yes. Categories become low-involvement when the differences between brands are few. Up to 1986 (when Reynolds was launched), the quality of writing various pens offered differed hugely, not so now.

Also, the stake is low for a category like pens. Not so in others like fairness cream - prices in this category too are low, they are competitive, but factors like safety and reliability matter. In the exam season, our sales are relatively higher than others'. Reliability plays a big role - what if your pen stops writing? For that period, it becomes high-involvement.

Has the widespread use of computers hurt the category?

No. Writing has come down dramatically, especially among those who work. Students still write, to some extent. But there's a bit of the stationery freak in all of us, so possession goes up and the usage comes down.

It's pure affordability - it's something you can buy on an impulse, or if you're bored of the same old things, with what you already have. The day people start thinking about them cluttering up the house, or about why they have to buy another despite having so many already, or why they can't get a refill for the old pen rather than buy a new one, the industry may not do so well (laughs).

Interestingly, people prefer pens with refills even though they would rather buy new pens when the refill runs out - they don't really buy new refills for the old ones. Even our costs would be lower if we made use-and-throw pens, but customers don't like that. It's only once in a while that someone goes into a stationery shop with a bunch of pens and asks the salesperson to fit new refills.

It's a good thing for kids too - with the pocket money they get - for Rs 50, they can get about 5-7 pens. Our retail outlets see a lot of kids coming in to buy stuff.

You were the first company of your kind to get into retail. How did that happen?

People wanted a change from the blue-and-white pen (like the 045 Fine Carbure that was generic with Reynolds); they wanted variety. And we gave it to them. Then, six years ago, we opened our first WriteSite in Prince Plaza (in Chennai's Pantheon Road). We were still planning our retail strategy then - we thought we would run it as long as it paid for its rent and that it could be considered marketing expenditure. For various reasons, footfalls were poor, and we shut it down after a year. But three years ago, we thought the time had come again, and opened one in Spencer Plaza. We broke even, I think, in about 3-4 months!

A WriteSite outlet

The touch-and-feel experience, the clean, relaxed environment, and responsive staff ensured it was a good idea.

We even hired a head of retail, not something companies like ours were doing often back then. Now we have 10 outlets across the country, we plan to have 35-40 operating by the end of 2007.

What are your retail plans, specifically?

We want to be present in most of the malls that are springing up all over the country. Now that we are expanding, we are franchising outlets as well. Retail will give us visibility but it has to be dealt with carefully. You can't jump on to that bandwagon just because everyone else is doing it.

We are clear that we are not a destination store (as opposed to one which provokes impulse shopping) so visibility of the store in the main atrium is critical. More importantly, the concept needs to have soul. We cannot make it just a stationery outlet. That will not work. If it's a pure stationery shop, consumers will only walk in need-based. But it should be a concept which leads to impulse walk-ins.

What is the stationery market like?

The market is estimated at Rs 1,800 crore. Of this, writing instruments account for Rs 1,300 crore. The rest will be items like markers, sketch and art material, gift sets and so on. We are the leaders in markers, and have a 20 per cent share of the ball pens and gel pens market, estimated at Rs 1,100 crore. Cello has higher market share at the lower end, at the Rs 5 range and lower. However, we have better share in the Rs 10-plus category, both in ball pens and gel pens. Overall, both segments put together, Cello will be larger.

Fountain pens still exist, yes! Four or five per cent of the pens sold are ink pens. Some schools in some States still insist on students using them to maintain the quality of their handwriting.

What about the competition?

We have different competitors in different categories. We compete with Luxor in markers, with Cello in gel and ball pens, with Natraj in pencils, Camlin in sketch pens, Flair and Parker in gift sets. We just launched pencils, erasers and sharpeners to build brand equity with children at an earlier age.

What about the unorganised sector? Do you face a threat from them?

Yes, but depending on which segment you want to be in, you will feel the threat. The unorganised segment troubles the large players who are in a similar space for some time. These players then launch similar products, kill these unorganised players and get back to business. The flip side is that once the organised sector enters the segment, the segment becomes permanent and the value growth of the industry starts suffering.

When you launched Reynolds in 1986, how did you set about making a mark?

We gave consumers superior quality. We brought in newer varieties, and priced them lower than the existing prices. When Reynolds was launched in 1986, it was more than 2.5 times costlier than the existing popular products at that time. But our quality was so superior that consumers paid a premium at the stores to get our product.

Also, we achieved scientific pricing by working on the technology, in the context of how much those products would cost if imported. Our margins to trade are actually the right amount. Most players give more margins than us, but the trade does not retain the margins - players promptly undercut each other, or even sell at discount to the consumer.

People are ready to flock to innovations. Take the Trimax pen, for instance. As a writing type, it was nothing new. But it was the little tweaking that we did and made it totally refillable, unlike its earlier variants, which changed the whole scene. Today it is catching the fancy of the students; the earlier variants were primarily for the office-goers.

What about institutional sales?

You know, India is the only country where we are forced to charge lower than the MRP despite value-addition such as printing the company's name on the pen! But chalta hai ... it's a necessary evil because we have to keep the competition at bay.

You signed on Sachin as brand ambassador last year.

Yes, we needed our media money to go a little further for better top-of-mind recall. It's not as costly a proposition as you would imagine - the economics works out when you consider the various ways to break the clutter - and he had the peripheral benefit of having people think of us as a big brand.

We have more long-term plans with him - we are thinking of co-creating value with him.

You mean he would design a product line?

Yes, probably something like that. We are looking at an association that goes beyond his cricketing years.

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