Luxor Writing Instruments Private Limited - Marketing Pens in India: IntroductionIn 2002, Luxor Writing Instruments Private Limited

(LWIPL) had emerged as the market leader in the

premium pens2 segment in India, with a market share

of 60%. The company held a 10% share in the writing

instruments industry, next only to the market leader,

Reynolds that held 12%. LWIPL had been in the pen

industry for nearly four decades. The company

adopted innovative marketing strategies that had

made it one of the most popular pen manufacturers in

India.

LWIPL offered a widest range of pens with leading

brands including Luxor, Pilot, Papermate and Parker.

In December 2002, LWIPL launched the world

renowned 'Waterman' brand of premium pens in India.

This was possible after LWIPL's acquisition of a 50%

stake in the Indian operations of Newell Rubbermaid3.

The company planned to sell imported 'Waterman'

pens for the next couple of years and then start

indigenous production for these pens. The price of

these pens ranged between Rs.3,500 to Rs.50,000 and

was made available in nine sub-brands. LWIPL planned

to sell these pens to corporate customers.

Commenting on the prospects of the 'Waterman' brand, DK Jain, Chairman of LWIPL said,

"Because of its price and brand name, Waterman will certainly have an edge over other

premium brands in India."4 The company planned to launch an international advertising

campaign for these pens. LWIPL was known for its heavy spending on advertising its

products. It had entered into several tie-ups with multinational pen companies that helped in

leveraging its current position in the industry.

The fact that LWIPL was a debt-free company was another significant achievement.

However, with the rising competition and negligible presence in the faster growing gel pens

segment, analysts felt that LWIPL had an uncertain future. Analysts also feared that LWIPL's

decision to diversify into the hospitality and packaged foods business in 2001-02, might lead

to a loss in market share in its core business.

Background NoteThe pens industry in India had passed through various phases with the changing tastes and

preferences of customers. Till the late 1970s, only two categories of pens existed in the

Indian market - fountain and ball point pens. During that time, people preferred writing

through a pencil rather than a pen. Moreover, people preferred fountain pens, as it was

perceived to write better compared to the ball point pens.

Apart from domestic manufacturers, who

manufactured fountain pens on a small scale and sold

them at cheaper rates, branded fountain pens

manufactured by leading international players such as

Monte Blanc, Cartier and Parker were available in India

through the grey market.

However, owing to their high prices, not many people

could afford to buy them. Camlin Limited was among

the noted fountain pen makers in India during that

time. By the late 1970s, fountain pens started loosing

their popularity as people found it cumbersome to

refill the ink regularly.

The 1980s witnessed an increased acceptance of ball

point pens and Wilson Jotter was considered to be the

market leader in this segment. The pens

manufactured by Jotter were popularly called Jotter

pens. The market for ball point pens was also

dominated by domestic players in the unorganized

market. With the increase in demand, existing players

started expanding their capacities while many new

players began entering the market.

In 1982, Deepak Jain, managing director of Luxor Pen Company (Luxor) entered into an

agreement with the Pilot Corporation of Japan to officially launch Pilot pens in India. In 1984,

Suraj Mal Jain5 started a manufacturing unit for ball point pens and refills in Kolkata and

named it as Linc Writing Aids Private Limited. The company launched new varieties such as

disposable pens into the market.

In 1986, the French pen company, Reynolds entered the Indian market through its

subsidiary, GM Pens International Limited by setting up a manufacturing plant at Chennai. It

used the latest technology to make pens and refills of better quality and offered them at an

affordable price. The Reynolds 045 pens became very popular among the regular pen users;

especially among the school and college students.

Until the late 1980s, not much importance was given to the promotion of pens and there

were very few recognized brands in the market. Companies did not consider it worthwhile to

invest large amounts of money on promotional activities. The focus was more on pricing and

distribution. Pens were manufactured in large volumes, and were priced competitively. By

1990, 90% of the market share in India was held by unorganized players.

In the late 1990s, the pen industry witnessed several developments. The varieties of pens

available in the market increased significantly. The new range of pens introduced included

Fibre Tip Pens6 , Gel Pens7 , Roller Pens8 and Marker Pens9 . A marked change was also noticed

in the attitude of people, and they became increasingly brand conscious.

Background Note Contd...

By early 2002, some of the most popular brands in the Indian pen market comprised of

domestic brands such as Reynolds, Luxor, Cello, Rotomac, Kores, Today's, Montex and Add

pens and foreign brands such as Mont Blanc, Flair (with Pierre Cardin), Uniball and more.

Consumers now had a wider choice, both in terms of different variety and the number of

brands available.

Gradually, the competition among different pen brands

intensified, which in turn, prompted these companies

to increase their spending on promotional activities.

According to the 2001-2002 figures, the writing

instruments industry in India was worth approximately

Rs.15 billion10. Studies11 on the industry had revealed

that there were around fifteen organized players,

which included both domestic and international

companies and more than 600 unorganized players.

Though, in the past, unorganized players accounted for

a sizable share of the industry, their share had

decreased significantly from around 90% in 1990 to

just 20% in 2002. The huge potential that the industry

offered prompted existing companies to expand their

manufacturing facilities and encouraged new

companies to enter the industry. This had led to

intense competition in the industry. The studies also

revealed that the companies in the organized sector

were putting efforts in offering good quality products

at competitive prices. At the same time, impetus was

given to increase the visibility of their products in the

minds of target customers.

Established in 1963, Luxor had emerged as one of the leading companies in the pen

industry. According to analysts, Luxor's marketing mix helped it to capture a sizeable share

of the industry. They also felt that Luxor's 50-50 joint venture with Gillette Company12 in

1996 helped it to strengthen its position in the industry. After entering into the joint venture,

Luxor was renamed as Luxor Writing Instruments Private Limited (LWIPL).

The Marketing MixProducts and PricingLWIPL had launched its first brand in 1963 - the 'Artist' fountain pen. However, owing to its

small scale of operations during that time, the pens were made available only in Delhi and

surrounding areas. During the late 1960's, the Artist brand was renamed as 'Luxor.' In 1982,

LWIPL launched Pilot 05 microtip pens with needle point13 technology.

Priced at Rs.10, this was the first model of Pilot pens to be officially launched in India. The

pens were manufactured at the Delhi plant of LWIPL. Though Pilot pens were available in

India prior to the launch, they were available only in the grey market. LWIPL invested heavily

to upgrade its technology to manufacture microtip pens.

These pens were launched with the intention of bridging the gap between ball point and

fountain pens. Microtip pen was similar to a ball point pen, with the ink filled within. This

turned out to be a unique selling proposition for Pilot pens and they were quite successful as

they were considered to be an ideal substitute for fountain pens.

Background Note Contd...

By early 2002, some of the most popular brands in the Indian pen market comprised of

domestic brands such as Reynolds, Luxor, Cello, Rotomac, Kores, Today's, Montex and Add

pens and foreign brands such as Mont Blanc, Flair (with Pierre Cardin), Uniball and more.

Consumers now had a wider choice, both in terms of different variety and the number of

brands available.

Gradually, the competition among different pen brands

intensified, which in turn, prompted these companies

to increase their spending on promotional activities.

According to the 2001-2002 figures, the writing

instruments industry in India was worth approximately

Rs.15 billion10. Studies11 on the industry had revealed

that there were around fifteen organized players,

which included both domestic and international

companies and more than 600 unorganized players.

Though, in the past, unorganized players accounted for

a sizable share of the industry, their share had

decreased significantly from around 90% in 1990 to

just 20% in 2002. The huge potential that the industry

offered prompted existing companies to expand their

manufacturing facilities and encouraged new

companies to enter the industry. This had led to

intense competition in the industry. The studies also

revealed that the companies in the organized sector

were putting efforts in offering good quality products

at competitive prices. At the same time, impetus was

given to increase the visibility of their products in the

minds of target customers.

Established in 1963, Luxor had emerged as one of the leading companies in the pen

industry. According to analysts, Luxor's marketing mix helped it to capture a sizeable share

of the industry. They also felt that Luxor's 50-50 joint venture with Gillette Company12 in

1996 helped it to strengthen its position in the industry. After entering into the joint venture,

Luxor was renamed as Luxor Writing Instruments Private Limited (LWIPL).

The Marketing MixProducts and PricingLWIPL had launched its first brand in 1963 - the 'Artist' fountain pen. However, owing to its

small scale of operations during that time, the pens were made available only in Delhi and

surrounding areas. During the late 1960's, the Artist brand was renamed as 'Luxor.' In 1982,

LWIPL launched Pilot 05 microtip pens with needle point13 technology.

Priced at Rs.10, this was the first model of Pilot pens to be officially launched in India. The

pens were manufactured at the Delhi plant of LWIPL. Though Pilot pens were available in

India prior to the launch, they were available only in the grey market. LWIPL invested heavily

to upgrade its technology to manufacture microtip pens.

These pens were launched with the intention of bridging the gap between ball point and

fountain pens. Microtip pen was similar to a ball point pen, with the ink filled within. This

turned out to be a unique selling proposition for Pilot pens and they were quite successful as

they were considered to be an ideal substitute for fountain pens.

Products and Pricing Contd...

LWIPL was able to sell 1,00,000 Pilot pens in the very first year of their launch. However, the

Pilot pens launched initially were not refillable. Due to the price conscious nature of middle

class people in India, the concept of disposable pens was not cherished for long. This

prompted the company to launch a new, refillable variant of these pens.

The new product was well received by the middle class

consumers as well as school and college going

students, teachers, middle and senior level executives,

resulting in a huge surge in demand for these pens.

Within four years of launch, the annual sales of Pilot

pens had increased ten fold to one million pens.

Buoyed by the success of Pilot pens, in 1990, LWIPL

decided to launch another product under the 'Pilot'

brand name, Luxor 0.5 mm Pilot V5. Priced at Rs.45.

each, these pens were targeted at the middle and

senior level executives.

The attractive design of the pen and the superior

technology (it had a liquid ink feeder14 system) used,

contributed to the success of the brand. By 1995, the

annual sales of Pilot pens had crossed 10 million.

LWIPL decided to go for further brand extension in

1997, and launched the Pilot V7 which wrote bolder

compared to V5. LWIPL's pricing strategy was

determined by factors such as the demand for

products, their brand image and the nature of the

target audience. When Pilot 05 was launched in 1982,

it was priced at Rs.10, and it was considered to be

expensive at that time.

However, in 1990, eight years after its launch, when the demand for these pens reached its

peak, Luxor sold them at Rs. 25 each. The price continued to remain the same till early

2003, indicating the stagnant nature of its demand. On the other hand, Pilot V5 was priced

at Rs.45 at the time of its launch. These pens were priced high due to its superior

technology and the brand image that Pilot pens enjoyed. However, after 12 years of launch,

the price of these pens had to be reduced by Rs.5.

In 1996, LWIPL launched Parker pens in India. Though Parker pens were popular in India,

they were available only in the grey market. Parker pens were primarily targeted at the

upper middle class consumers, senior level executives and bureaucrats. The initial range of

Parker pens launched included Sonnet, Rialto, Frontier, Vector and Parker Classic. The most

crucial decision for LWIPL was pricing. At the time of the launch, the prices ranged between

Rs.90 to Rs.10,000.

Priced at Rs.90, the "Vector" brand of pens was the cheapest in the range. Within four years,

"Vector" became the largest selling Parker brand in India. During the corresponding period,

the price was increased to Rs. 140. In 1999, LWIPL launched the 'Papermate' brand of pens

in India. Papermate was the largest selling brand in the US during that time. The brand

strengthened the presence of LWIPL in the low priced pen segment.

These pens were primarily targeted at the school and college students and were priced in

the range of Rs 4 to Rs 13. The specialty of this product was that they possessed the

Lubrigude ink technology15 , which ensured that the ink did not leak, thereby offering a

comfortable writing experience. In order to penetrate the Indian market, the company

offered these global brands at lower prices. For example, the Parker Vector roller pens were

launched at $3 compared to $9 in Europe.

Products and Pricing Contd...

The Parker refills were priced at a rate of Rs.35 compared to $3 in Europe. Similarly, LWIPL

launched the Papermate pens at nearly 1/3rd of the price in the US. In 2000, LWIPL launched

the Parker Beta range, with prices ranging between Rs.50 to Rs.75. Targeted at the youth,

the company sold around one million pens within a couple of months of its launch.

In 2002, Parker pens were available in three broad

price categories (Refer Table I). By that time, the

Parker range of pens had emerged as the largest

selling brand in the LWIPL pens portfolio, contributing

40% of its revenues. LWIPL also launched a series of

innovative products in order to mark certain occasions.

In January 2000, the company launched the

"Millennium series" of Parker Vector roller pens.

These pens had the world map inscribed on them and

their unique design enabled people to determine the

time difference between countries. Priced at Rs.250

each, these pens became very popular. In November

2001, LWIPL launched 'Special Moment', a gift pack

consisting of Parker Vector and Parker Beta pens,

which had the signature of the brand ambassador,

Amitabh Bacchan inscripted on it.

These pens were primarily targeted at pen collectors,

who were fond of Parker pens. In February 2002,

Parker launched the 'Black and White' range of Parker

Vector ball pens which were priced at Rs.145.each.

In mid 2002, the company launched the 'Football Legends World Cup edition' of Parker

Vector pens in order to cash in on the popularity that the event enjoyed. The pens had

photographs of famous football stars such as Maradona, and Pele inscribed on them. These

pens were primarily targeted at avid football fans, who would be interested in collecting

pens bearing photographs of their favorite players.

In December 2002, LWIPL launched the "Gajgamini" range of Parker Sonnet fountain pens.

The limited edition of pens (only 500 pens were released) was named after the paintings

created by noted artist MF Hussain16 and also had his signature inscripted on them. LWIPL

priced these pens at Rs.5000 each.

Distributing PensLWIPL adopted innovative, product - oriented distribution strategies to reach its target

customers. The company had a wide network of 1200 distributors who supplied pens to

67,000 stationary shops (Parker pens were available in 7000 leading shops), spread over

800 towns and cities in India. LWIPL also exported its products to 50 countries all over the

world.

As the Parker pens were initially targeted at the premium segment and carried a high price

tag, they were launched only in the four metros - Delhi, Mumbai, Kolkata and Chennai. The

pens were made available in large stationary stores and point of purchase displays were

attached a lot of significance.

Distributing Pens Contd...

These pens were put on display in special racks so that people could notice the complete

range of pens. As the demand of Parker pens grew, they were made available in other urban

areas of the country. In order to increase the reach of Parker pens, the low priced versions

were made available in small stationary shops. LWIPL later opened exclusive outlets of

Parker Pens in all major cities in India. When LWIPL launched Papermate pens in India, it

changed its distribution strategy vis-a-vis that of Parker pens. The pens were targeted at a

wider cross - section of people, which included students, executives and elderly.

Apart from relying on its existing sales force, the

company tied up with Indian Shaving Products Ltd

(ISPL)17 to distribute pens in the targeted one lakh

retail outlets in the first year of its launch. While the

sales people concentrated on traditional retail outlets

such as stationary and bookstores, the tie up with ISPL

ensured that the pens were available in FMCG outlets

such as shops and supermarkets. This multi-pronged

distribution strategy enhanced the reach of Papermate

pens.

Promotion and PositioningLWIPL promoted its products primarily through

advertising in the print and television media. The

company hired several advertising agencies in the past

two decades. The first advertising agency hired by

LWIPL in the 1980s was 'Creative Works18', to promote

its Pilot pens. In the early 1990s, the company shifted

to another agency, RK Swamy/BBDO. In 1996, the

advertising account of Parker was awarded to McCann-

Erickson19, while the Luxor and Pilot brands remained

with RK Swamy/BBDO.

However, in 1999, when Papermate was launched, the account of all the brands in the LWIPL

portfolio was shifted to McCann-Erickson. In December 2000, the advertising account was

split again. Contact Advertising20 was given the charge of Luxor, Pilot and Papermate brands,

while Lowe21 was awarded the Parker brand.

However, in July 2002, the advertising account of Luxor, Pilot and Papermate brands was

also shifted to Lowe. As a result, Lowe was made responsible for advertising of all brands in

LWIPL portfolio. The theme of advertising differed according to the product brands. For

instance, the advertising campaigns for Pilot brand stressed on the unique features of these

pens.

During the 1980s, the advertising campaigns highlighted Pilot's dual features of a ball point

and fountain pen. In the 1990s, the campaigns stressed on the technology used in making

Pilot pens. The campaign created by Contact advertising in 2002, featured the famous

television actor Shekhar Suman22 , who highlighted Pilot's 'three dimple technology23 ,' which

helped in smooth writing. In July 2002, LWIPL felt that the students' memory had to be

refreshed with respect to the Pilot brand.

An advertising campaign, 'Pilot - Reads well, Writes well' was launched. The campaign was

very successful and within six months, the sales of Pilot pens increased by 30%. Explaining

the advantages of Pilot pens, Pooja Jain, General Manager, LWIPL said24 , "Today, the gel fad

is dying and the consumer is coming back to a more dependable and reliable proposition for

value for money, which Pilot offers.

Promotion and Positioning Contd...

Pilot is in fact perhaps the longest surviving and successful brand in the writing instruments

category as it writes four times more than any other needle point gel pen. Pilot contributes

15% to our total turnover." The Parker brand received maximum advertising support from

LWIPL. Commenting on the target audience, John Hadley, senior vice-president (sales and

marketing), LWIPL said25, "Parker's target group is the top 12 million families in India and

that gives us a big market any way you look at it.

Our aim is to provide a decent writing instrument to

Indians." In early 2001, LWIPL roped in the famous film

star and television icon Amitabh Bacchan to promote

the Beta and Vector brands of Parker pens.

The primary reason for choosing Amitabh as a brand

ambassador was his popularity among all groups i.e.

children as well as elders and masses as well as

classes.

According to media reports, he was paid Rs 50 million

for featuring in the advertisement. The ad campaign

was a huge success and had a high recall among

television watchers.

In 2001, LWIPL roped in Shekhar Suman to endorse the

Papermate brand. The advertising campaign

highlighted its unique selling propositions such as

trouble free writing, better quality and the rubber body

of the pen, which enhanced its grip. It also conveyed

the message of romance by highlighting the two heart

shaped symbols, which formed a part of Papermate

brand.

Though the campaign attracted reasonably good attention from the viewers, it was not able

to generate the kind of sales that the company expected and hence in July 2002, the

advertising contract for Papermate brand was given to Lowe.

In December 2002, an advertising campaign was aired, which featured Papermate as

'Americas Largest Selling brand." Through this campaign, LWIPL made an attempt to retain

the American identity of the Papermate brand.

LWIPL also made efforts to change the positioning of its brand, if necessary. For example,

when Parker pens were launched, they were positioned as a premium brand targeted at the

upper sections of the society, including senior executives, businessmen and so on. However,

realizing that young people could also be the potential buyers for premium pens, LWIPL

targeted its Vector brand at young executives and its Beta brand for the school and college

going students.

Explaining the necessity to change the positioning of the Parker brand, Sanjeev Goyle, Vice-

President, Marketing, LWIPL, said26 , "We want the Parker brand in the pocket of every youth.

To make this happen we've a two-fold approach: one, shift Parker's positioning from a

serious, daddy's pen to a youthful and vibrant brand; and second, give multiple price and

product options to address the entire section of the consumers."

Promotion and Positioning Contd...

Pilot is in fact perhaps the longest surviving and successful brand in the writing instruments

category as it writes four times more than any other needle point gel pen. Pilot contributes

15% to our total turnover." The Parker brand received maximum advertising support from

LWIPL. Commenting on the target audience, John Hadley, senior vice-president (sales and

marketing), LWIPL said25, "Parker's target group is the top 12 million families in India and

that gives us a big market any way you look at it.

Our aim is to provide a decent writing instrument to

Indians." In early 2001, LWIPL roped in the famous film

star and television icon Amitabh Bacchan to promote

the Beta and Vector brands of Parker pens.

The primary reason for choosing Amitabh as a brand

ambassador was his popularity among all groups i.e.

children as well as elders and masses as well as

classes.

According to media reports, he was paid Rs 50 million

for featuring in the advertisement. The ad campaign

was a huge success and had a high recall among

television watchers.

In 2001, LWIPL roped in Shekhar Suman to endorse the

Papermate brand. The advertising campaign

highlighted its unique selling propositions such as

trouble free writing, better quality and the rubber body

of the pen, which enhanced its grip. It also conveyed

the message of romance by highlighting the two heart

shaped symbols, which formed a part of Papermate

brand.

Though the campaign attracted reasonably good attention from the viewers, it was not able

to generate the kind of sales that the company expected and hence in July 2002, the

advertising contract for Papermate brand was given to Lowe.

In December 2002, an advertising campaign was aired, which featured Papermate as

'Americas Largest Selling brand." Through this campaign, LWIPL made an attempt to retain

the American identity of the Papermate brand.

LWIPL also made efforts to change the positioning of its brand, if necessary. For example,

when Parker pens were launched, they were positioned as a premium brand targeted at the

upper sections of the society, including senior executives, businessmen and so on. However,

realizing that young people could also be the potential buyers for premium pens, LWIPL

targeted its Vector brand at young executives and its Beta brand for the school and college

going students.

Explaining the necessity to change the positioning of the Parker brand, Sanjeev Goyle, Vice-

President, Marketing, LWIPL, said26 , "We want the Parker brand in the pocket of every youth.

To make this happen we've a two-fold approach: one, shift Parker's positioning from a

serious, daddy's pen to a youthful and vibrant brand; and second, give multiple price and

product options to address the entire section of the consumers."

The FutureAccording to analysts, the major reason for LWIPL's success was its focus on offering

superior products to its customers. However, in spite of LWIPL's current leading position,

analysts felt that the company would face tough competition in future from other leading

brands such as Reynolds, Rotomac and Today's (Refer Exhibit I).

According to analysts, LWIPL lagged behind in tapping

the full potential in certain categories. For example, in

the ball point pen category that contributed to around

50% of the total sales in the pen industry, LWIPL had

just 5% share. Moreover, in the fast growing gel pens

segment, the company had negligible presence.

Analysts also felt that excessive dependence on the

Parker brand, which primarily catered to the premium

segment of the market, may not be fruitful for the

company in the long run. But most importantly,

analysts seemed concerned about LWIPL's decision to

diversify into the packaged food and hospitality

industry.

In 2001, LWIPL established Hazel Foods Pvt. Ltd. with

an intention to enter the packaged foods segment and

launched dry fruits and spices under the 'Hazel' brand.

In 2002, Luxor Hotels and Resorts Pvt. Ltd. along with

the Hyatt group27 acquired Qutub Hotel in Delhi from

the Indian Tourism Development Corporation28 (ITDC).

The company also had plans to launch packaged water and enter into the convenience foods

segment. For packaged water segment, LWIPL planned to tie up with an international

company.

Explaining the rationale behind these moves, D.K.Jain, MD of LWIPL and Vice Chairman of

Luxor Hotels and Resorts Pvt. Ltd. said29, "Investments in categories which show promising

potential for growth and family interests" prompted this move.

Analysts felt that these industries demanded a different set of expertise and a totally

different type of customers to be catered to. They felt that due to unrelated diversification, it

would be difficult for LWIPL to focus on the writing instruments business, where its core

strength lay.