The Demise of the Pencil and Pen

How attuned are you to markets?

I won’t test your knowledge of what is taking place in technology or new media. Not even the experts truly know (though it’s something none of them will admit). Instead, I’ll invite you to weigh in on a set of products you are certain to have a great deal of experience using: pencils and pens.

How much are annual sales of pencils and pens expected to change over the next 5 years?

(a) grow at 7%
(b) grow at 3%
(c) stay flat
(d) shrink at 3%
(e) shrink at 7%

You’ll have to hold on a bit to see the answer.

I have never met anyone who does not know what a pencil or pen is, and what they’re used for. Even three year-olds know.

However, who really wants to use a pencil or buy an extravagant pen when you can get something that leaves them in the dust? How about a snazzy iPad 2, Samsung Galaxy or HP Touchpad? Or, for that matter, an Android smartphone or any of hundreds of brands of laptops and desktop PCs fill the bill also.

Add on one of the thousands of writing and note-taking programs (Word, Pages, Evernote). For good measure, an all-in-one printer scanner makes the chore of electronically capturing what’s on paper (or printing on the rare occasions that paper is needed) a snap.

There’s two things technology marketers know about product life spans, and the growth outlooks for technology offerings as a whole.

First, like people, all products have a life cycle. They are born and then they die. There’s even a graph that depicts it. It’s known to every marketing student. It’s called the Product Life Cycle (PLC). Every product starts out as an idea. If its potential is good, it attracts development capital, and is taken to market. From there sales grow along the familiar pattern of the PLC curve. Sales grow with exposure to the market, and level off as the market becomes saturated. Sales decline when buyers grow tired of the product, or when something better replaces it. There are two great unknowns upon which every business bets: how high will the curve go (sales)? how far will it stretch out (time)?

Second, sales of personal and business technology will only continue to grow during my lifetime (yours too, I’d wager). Brands may come go (remember the Atari and the Commodore PET?) but consumption of technology will only increase. There is no horizon in sight. Computing technology has moved from expensive mainframes housed on elevated floors in air-conditioned rooms to our homes, cars, pockets and purses. Applications have moved from floppy discs to CDs and now to the cloud. We don’t know how it all works, but who cares. When we do a search, check our bank balance or pay for an expresso using our phone, it just works. Reliance on older technologies – like paper and pen – diminishes in lockstep with the growth in consumption of new technologies.

This is the basis for the story marketers have been telling about new techologies for 50 years. As Seth Godin noted in his bestseller, All Marketers Are Liars, framing a compelling story about the future is an obligation marketers have to buyers.

Skilled marketers write stories of promise and a world made better. Skilled marketers make stories appealing, believable and – especially – wanted. They create an urgency that craves action. Buyers have choice, and they ultimately vote with their wallets. As long as the story continues to satisfy, there will be buyers to hear it.

Now, the curious thing about pencils and pens is what’s not happening. Sales are not spiraling down as was believed (honestly by the story-tellers). Quite the opposite.

If you answered (b) to the quiz you were right. Sales of pens and pencils worldwide are approaching $20B, growing about 3% annually. Growth is not coming from recent technology adopters, either. Sales in China are growing at 4%, with growth expected in the two largest markets for writing instruments – the U.S. and Europe.

The market for writing instruments is alive and well.

It certainly is for Newell Rubbermaid, maker of the Sharpie. It’s the marker pen made popular by professional athletes who use it to autograph everything from hockey sticks to basketball jerseys.

At 60% market share, the Sharpie holds first place in the permanent market industry. Now, it’s setting off on a bold mission to expand the size of its attainable market. The target: teenagers. The story: a catalyst for creative self-expression. The media: TV, print, social media.

Teenaged Sharpie users are do-it-yourselfers who have turned ordinary coffee cups into $900 works of art, designed customized skateboards, and even converted pencil cases into purses. As it turns out, a down-and-out commodity is a hot item among the demographic who propel the adoption of new technology.

Learnings:

Good marketers tell great stories, but make lousy predictions.
Old habits die hard. There is always a market for a good product.

Written by Michael

Michael Douglas has held senior positions in sales, marketing and general management since 1980, and spent 20 years at Sun Microsystems, most recently as VP, Global Marketing. His experience includes start-ups, mid-market and enterprises. He's currently VP Enterprise Go-to-Market for NVIDIA.