A Very INTrIGUING PACKAGe

INDUSTRIAL ANALYSIS
The Indian luggage market is worth nearly 3100 crores. Organized sector holds 55% and unorganized hold 45%. The market is subdivided into premium, regular and economy segment. Growth rate is given below:
Premium Regular Economy 25% 10% 5%
INDIAN LUGGAGE MARKET 3100 CRORES

ORGANISED 1705 CRORES

UNORGANISED 1395 CRORES

PREMIUM 632 CRORE

MID RANGE 647 CRORE

ECONOMY 427 CRORE

LUGGAGE BRANDS MARKET SHARE

10% 10% VIP 15% 10% 55% ARISTOCRAT SAMSONITE AMERICAN TOURISTER OTHERS

M A J O R
P L A Y E R S

V.I.P INDUSTRIES
The flagship company of the DG Piramal Group. Established in 1971 Asias Leading luggage manufacturing. It owns reputed brands such as VIP, Carlton, Alfa, Footloose and Buddy company has operations across the globe in five continents. VIP products are sold across 9000 retail outlets in 27 countries. It has strong distribution network and strong product portfolio that stretches across spectrum of price points.

 Company has 9 factories at one stage(manufacturing hard luggage) Due to Consumer shift- Restructured its operations by 1. Shutting factories 2. Cutting workforces Currently it has manufacturing unit in only 3 areas. (Nasik, Sinner, Haridwar) Work force from 5000 to 900 currently.
Lower end target Alfa, Aristocrat

Soft luggage for middle end

Middle to high end(soft/hard luggage) & Premium segment

Skybags

VIP Carlton

CASE ANALYSIS
VIP industry has sway for over two decades in the organized luggage market. Customers perceives value for money. Alfa is sold at much lower price. (VIP economically price brand) Alfa sells 1.5 lakhs pieces a month. Market Research shows that an average Indian family pulls out the suitcases merely for a outstation travel a few times a year. VIP has a wide range of market segment starting from Rs 295 to Rs 6000 a piece.

PROBLEM FACED BY COMPANY

Competition from the unorganized sector hurts the company most.

VIPs economically priced brand Alfa imitated and sold at much lower price
This enables the unorganized sector to typically sell 20 times more than VIP. The lower price threshold is 225 which is impossible for VIP.

In the range of Rs1500(premium) the main competitor is samsonite.

SWOT ANALYSIS OF V.I.P

STRENGTHS Brand Name Asias no 1 2nd largest luggage manufacturer (in world after samsonite) Market leader (60%mkt share) Diversified product range (suitcasepurse) WEAKNESS Over employed organization High inventory & Transportation cost No proper distribution channels Less Research & Development expenditure.(1.8% of total)

Gn
OPPORTUNITIES Tie-ups with foreign players so that they can tap the upper level segment Untapped consumers in non metro cities. Scope to increase exports Youth segment and executive class. THREATS Low demand Industry Competitions Price war The players in the unorganized sector getting them organized and coming out with branded products.

PORTERS FIVE FORCES MODEL

VIPS NEW STRATEGY

Strengthened the distribution by opening exclusive showrooms.

Manufactured light weight suitcases which catered upper segment

market. VIP gained access to European markets.

Tapping the remaining European markets.

They made VIP a fresh, young, vibrant brand. They launched Skybag branded soft luggage and also plan to increase the presence of mass brand alfa in hypermarkets.

 The footloose is competing with titans luggage brand fastrack . VIP targeted carlton as premium brand to compete with Samsonite and its subsidiary American tourister.

To gain market share, the company increased its advertising on brands

Alfa and Skybags. New brand ambassador is John Abraham for its Skybags. Restructured its operation by shutting factories and cutting work forces. VIP outsourced the production of its soft luggage to Chinese suppliers. Entry to ladies hand bags segment by this financial year

GROUPS SUGGESTION FOR COST CUTTING AND TACKLING COMPETITORS

It might acquire some wholesalers & retailers if they are highly profitable (forward integration). It can acquire one or more suppliers to gain more control over profit and also it will help them for cost cutting (backward integration). It can go for the acquisition of some local players in luggage industry or even some good doing industry in unorganized area (horizontal integration). Should go for an acquisition of some global brands. It should again have a talk with Delsey for effective alliance or even for buying out before its competitors approaches. It should spend more on R&D. Till now VIP is spending only 1.8 % of its total revenue while Samsonite is spending 9% in R&D.

GROUPS SUGGESTION FOR COST CUTTING AND TACKLING COMPETITORS

Company should conduct periodic focus group studies. Advertisement campaign should be full-fledged. Should increase its international patents by working constantly on R&D in areas. It should have an effective toll free customer service. Warranty cost are 0.07 % for the product with 7 years guarantee. Because of duopolistic nature of this industry, consumers dont have much choice in choosing brand. Company should identify new opportunities to add attractive business (conglomerate diversification strategy). Should diverse it online shopping opportunity. Should go for viral marketing for its new trending brands like skybags.

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