a very intriguing package
DESCRIPTION
VIP's strategy !!TRANSCRIPT
“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 25%
Regular 10%
Economy 5%
INDIAN LUGGAGE MARKET – 3100 CRORES
ORGANISED – 1705 CRORES
PREMIUM – 632
CRORE
MID RANGE – 647
CRORE
ECONOMY – 427
CRORE
UNORGANISED 1395 CRORES
LUGGAGE BRANDS MARKET SHARE
55%
10%
15%
10% 10%
VIPARISTOCRATSAMSONITEAMERICAN TOURISTEROTHERS
MAJOR
PLAYERS
V.I.P INDUSTRIES
• The flagship company of the DG Piramal Group. Established in 1971
• Asia’s 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.
• Alfa, AristocratLower end target
• SkybagsSoft luggage for middle end
• VIP• Carlton
Middle to high end(soft/hard luggage)
&Premium segment
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.
• VIP’s 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 NameAsia’s no 12nd largest luggage manufacturer
(in world after samsonite)Market leader (60%mkt share)Diversified product range (suitcase-
purse)Gn
WEAKNESS
Over employed organizationHigh inventory & Transportation costNo proper distribution channelsLess Research & Development expenditure.(1.8% of total)
OPPORTUNITIES
Tie-ups with foreign players so that they can tap the upper level segmentUntapped consumers in non metro cities.Scope to increase exportsYouth segment and executive class.
THREATS
Low demand IndustryCompetitionsPrice warThe players in the unorganized sector getting them organized and coming out with branded products.
PORTER’S FIVE FORCES MODEL
VIP’S 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 titan’s 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
GROUP’S 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.
• 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 don’t 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.
GROUP’S SUGGESTION FOR COST CUTTING AND TACKLING COMPETITORS
THANK YOU