QUITE WRITE, INC.
A Product Portfolio Case
Appreciation is extended to Newell Wright and RoseAnn Felt for their help in the preparation of this case.

Quite Write, Inc., was established as a manufacturer of mechanical pencils in Kingsport, Tennessee, in 1923. Since then, the company had grown and diversified into many fields, including pens and refillable cigarette lighters, as well as camera lenses. In the mid 1970s, international operations were set up in Europe, Brazil, and Canada, and Quite Write began to be very profitable.

However, competition began to be increasingly fierce, and several major companies, especially Bic, Pentel, and Gillette, challenged Quite Write's position in its key markets, writing instruments and cigarette lighters. By early 1999, Quite Write was no longer a major competitor, and the company lacked a standout product. Quite Write had a full line of pens, pencils, and lighters, but no one product was an exceptional money maker, and the international markets were losing money.

Last April, a new president, Helen Timms, was appointed. She took over operations after the company had recorded losses for three years in a row, and the board of directors wanted her to define a new strategy. Timms had worked for an eastern consulting firm for the past five years, and came from a marketing background. Part of his job would be to consolidate existing operations and eliminate unprofitable items from Quite Write's product lines.

After some preliminary research, Timms determined that the market for a disposable pipe/cigar lighter had not yet been tapped, and she thought this would be a good product to develop. But Quite Write would have to enter the market quickly, since both Bic and Gillette were developing these heavy duty disposable lighters. Timms remembered how Bic had virtually created the market for disposable stick pens and was now the market leader. In fact, Bic was largely responsible for Quite Write's poor performance in the writing instruments market.

If Quite Write wanted to get a jump on Bic and Gillette, it would have to develop a lighter and enter the market in the near future. However, Quite Write was in financial trouble, and didn't have the funds to finance a new product line. If Quite Write could enter the market quickly, Timms figured they could easily capture a 30-40% share of a market she estimated to be $50,000,000 a year and growing. If the disposable lighter was a success, she believed the market would grow 20% a year for the first few years.

With approval of the board of directors, Quite Write's European operations and camera lens production facilities were sold to pay off existing debts and to provide some funds for entry into the disposable cigarette lighter market. However, Timms still needed to eliminate the unprofitable items from Quite Write's product lines, and determine Quite Write's relative product strengths.

Quite Write's main products in the writing instruments market included retractable and nonretractable ball-point pens, and mechanical pencils. The ball point pen market had been very successfully exploited by Bic in the early sixties with the introduction of the $.49 nonretractable stick pen. The stick pen successfully competed with pencils and captured a large portion of the market belonging to pencils. Pentel had also introduced a line of retractable and nonretractable roller-ball pens that competed with Quite Write. Growth in this market had slowed to 6-8 percent a year, and total annual sales were estimated to be $120,000,000 in 1999. Table 6-4 shows the comparative market shares for Bic, Quite Write, and Pentel.

Quite Write's mechanical pencil was doing slightly better than its line of pens. In 1999, Quite Write held a 14% share of the mechanical pencil market, compared with 22% share for Bic and an 11% share for Pentel. Total 1999 estimated sales of mechanical pencils was $70,000,000, and the market was growing at a 10% annual rate.

Quite Write had established itself in the refillable lighter market in the late seventies, and competed on the higher priced models. Ronson, Scripto, and Zippo were its main competitors. Fuel and accessory sales also counted for a portion of Quite Write's sales. Table 6-5 shows the 1999 refillable lighter retail sales. Lighter and accessory sales had been good money makers for Quite Write in the past. However with the litigation troubles in the tobacco industry, and the expected decrease in cigar and pipe sales, Timms wasn't sure, that this market would continue to grow at as it had in earlier years.

If the company were to survive, Timms had to decide what to do with the product lines. What were Quite Write's competitive advantages? Since only limited financial resources were available, Timms had to decide which products to emphasize and which products to drop. Since Quite Write couldn't support all the existing products and introduce a disposable lighter, Timms needed to weed out the "dogs" from the product portfolio. She also had to adapt a long run strategic policy that would allow Quite Write not only to survive, but emphasize a select few products that would make money.