Indian Luggage Industry free essay sample

As frequency of travel is low, the luggage manufacturers are facing a unique problem of keeping their brand at the top of the mind of customers. The product is a high involvement product at the time of purchase but after the purchase the interaction with the product is limited. The Company: VIP has been the undisputed market leader in Indian luggage industry. Having launched in 1971, VIP successfully captured the luggage market dominated mainly by unorganized sector and established itself in the Indian market using product innovations, stress on quality and brand building. It was the first company in India to introduce â€Å"non reversible multi safe lock†, soft grip handle, dual action lock and central locking system. These innovations together with brand building made VIP a market leader. However in late 1990’s VIP faced a formidable threat from Samsonite. VIP was very dominant in the mid-segment but did not have presence in the luxury segment. Samsonite established its presence in the luxury segment of the market. Soon Samsonite was able to capture a market share of about 35% in the luggage market within a short period of time. Additionally, VIP faced the problem faced by most of the known brands as the brand offered more generic value preposition in the mindset of consumers. Consequently, local markets took advantage of these factors, becoming more popular and affordable. These forced VIP to carryout a re-branding exercise and formulate a new marketing strategy in 2003. The new strategy of VIP is focusing on capturing or owning the concept of â€Å"Travel†. The Company thought of the most appropriate moments of travel and decided that the â€Å"time of departure â€Å"are the most critical constituents of travel. The logo was changed to a more contemporary logo and the advertisements were changed to communicate the new positioning. The new VIP Logo launched in 2003: However despite all these efforts the Company failed to capture the premium luggage segment. Due to economic boom in India and with lot of MNC’s having presence in India, there has been a significant growth in income levels and top executives having high disposable income. These executives are always on the move, however VIP is not able to tap this market segment because of lack of premium products to cater to this segment. Now, VIP wants to enter this premium luggage segment with the following objective: â€Å"To target the high-end customers who look for well–designed stylish products â€Å" With this in mind the following marketing plan is being formulated to ensure that VIP is successful in this market segment. The Marketing Plan 1) Formulate Strategy In order to formulate effective strategy, it becomes very important for the company to know where it stands today and where and what has it to target in the future. The most effective tool of SWOT Analysis was used to carry this out. The results were as tabulated below. SWOT Analysis: Strengths: Undisputed market leader in Indian luggage industry †¢Product Innovations, stress on quality and brand building †¢Strong distribution networkWeaknesses: †¢It has failed to create barriers by keeping many categories open for competitors to enter. †¢Still not able to capture premium segment. Opportunities: †¢Huge demand for premi um luggage from high end consumers †¢Very few players in this segment †¢Premium fashion houses lack luxury luggage accessories. Threat: †¢Presence of Samsonite in premium segment †¢Traditionally, VIP has offered generic value preposition †¢Competition from unorganized sector and Chinese market Based on SWOT analysis the Company was able to identify as follows: a)There exists a significant demand for premium segment luggage b)The Company should launch a new brand for this segment as existing VIP brand had a generic value preposition. c)Existing strengths will help capitalize on successful launch for the new brand. d)Tie with an international fashion brand was essential to give it a fashion statement and fulfill the current vacuum. e)A Brand ambassador, who is a successful and very polished icon, should be approached to promote this brand. ) Business Environment Analysis Due to the lack of presence in the premium segment (specific to competitors) and the failure to create barriers for competition, by keeping many categories open, VIP should review (and prioritize) its business tactics. The key business issues, with suitable marketing strategies, are as identified below. Business Issue Summary Matrix: Business IssuePossible Marketing strategyResource requirements when the mar keting programs are assembled Position in premium consumer segmentContemporary look redefined thru logo and ads to communicate new positioning Advertisements and campaigns to reflect the new positioning Brand IdentityJoint venture with an international fashion brand. Tie-up with International brands-Delsey Footloose Product PromotionPromote thru a brand ambassadorPre-launch promotional events, e. g. fashion shows, events 3) Market Profiling Economy: †¢Indian economy on the rise because of MNC’s †¢Air travel has increased substantially because of globalisation †¢High Disposable Income available. Luggage Industry †¢Buoyant air travel industry because of cheap fares Usage of luggage has increased †¢Innovations on rise Competitor’s Profile: †¢Within the external business environment, Samsonite was the major competitor. The first reason was that Samsonite was a major player in the premium segment and secondly, VIP offered generic value proposition with traditional identity. †¢The advent of Chinese goods flooding the Indian markets is also a growing phenomenon and is being looked upon as a potential competition in this segment too. . Name:Samsonite Product:â€Å"Black Label† Luggage Range Market Share:Total 35%, out of which 10% is for the premium segment. Strategy:Launched the â€Å"American Tourister† brand to reach popular market segment and the product was perceived as international and contemporary that appealed to the new generation. Weakness:Comparatively a new entrant in the market, it was regarded as high-end as the premium segment was slowly emerging. Market segment: †¢Upper socio-economic groups –for stylish traveler †¢Young premium singles married with high disposable income †¢Jet set travelers Market Share: Capture 10% of the market share of the premium segment, valued at INR 750crores †¢Product will be priced at a premium †¢Rate of usage is predicted to increase as they are directly proportionate to current fashion and trends 4) Marketing Mix – The 4 P’s Positioning: Not for all, only for the elite Value Proposition: Where travel meets style Product: DescriptionLeather Range, Attributes High end and L uxurious, Young and Stylish, Personalized Positioning Limited Edition Price: Methodology Perceived value pricing as the product delivers value proposition.