Marketing Project On Indian Luggage Industry

[MARKETING MANAGEMENT] December 15, 2007
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Travel Equipment Market
IBS Page 1
Acknowledgement
Executive Summary 07
Indian Luggage Market 09
Critical View of the Luggage Industry 11
Per 1997 12
Post 1997 13
Environmental Scanning 14
1.1 Technological Environment
14
1.2 Social Environment
14
1.3 Economic Environment
14
1.4 Political Environment
15
Porters Model 16
Major Players in the Organized Sector 22
V.I.P 23
1.5 Product Portfolio 24
1.6 Objectives
28
1.7 Segmentation
29
1.8 Distribution Network

29
1.9 Product Differentiation 30
1.10 Positioning
30
1.11 Strategy
31
1.12 SWOT Analysis

36
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Competition from Samsonite & the Unorganized Sector 38

1.13 Critical Aspects
42
Samsonite 43
1.14 Brand Portfolio
44
1.15 Products Lines and Width

45
1.16 Distribution Network

48
1.17 Positioning
49
1.18 Segmentation
49
1.19 Product Differentiation

49
1.20 Business Strategy of Samsonite

50
1.21 Swot Analysis of Samsonite

50
SAFARI 52
Products & Pricing 52
1.22 Packs
52
1.23 Luggage
52
1.24 Business Gear

53
1.25 Shoulder Bags

54
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1.26 Tote Bags

54
1.27 Places and Promotions

55
1.28 Push strategy

55
1.29 Pull Strategy

55
References 56
Executive Summary
Brief Insight into Indian Luggage Industry
The luggage industry in India is currently undergoing a
consolidation phase. Competition in the sector is expected to
intensify with the entry of foreign players like Delsey of France.
Companies with good research and development facilities are
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expected to survive while others may end up as contract

manufacturers for the bigger players. The luggage market
comprises of three segments namely the premium segment with
15% of total market share, the popular segment and the standard
segment. Samsonite (International) and VIP are the dominant
players in the premium segment with a market share of 52% in
the popular segment. V.I.P. industries and Universal dominate the
low-end standard segment.
The luggage market is dominated by the unorganized sector with 50%

market share. Northern and western India are the biggest markets in the country.
V.I.P. and Samsonite are focusing on developing their distribution networks. Both
players are also into exports. V.I.P.’s export touched Rs.134 million in 1997-98
and is mainly targeted at Gulf and West European Markets. Samsonite posted an
export turnover of Rs.150 million for the year ended December ’98. Luggage
manufacturers, particularly V.I.P. have slashed prices following decline in prices
of raw materials.
The organized sector (8%) is growing at a lesser pace when compared to the
unorganized sector (25%). The organized sector will have to face the reality that
players in this sector may become organized and come out with branded products
emerging as competitors to the existing players in the organized sector. The
organized sector has to be cautious of the developing grey market.
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Indian Luggage Market
The Indian luggage market is worth nearly one thousand crores. A considerable
portion of the market is unorganized. The table below gives the distribution of the
market between the branded sector and the unbranded sector.
Market Size: Rs. 900 crores
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Organized Sector 60%

Unorganized Sector 40%
The market for luggage in India can be subdivided into three segments,
comprising of the premium, regular and economy segment. The current growth
rate of each of these segments shows that the premium segment is the fastest
growing one - five times as fast as the economy segment, and two and a half
times as fast as the regular segment.
Growth Rates (Organized Sector)
Premium 25%
Regular 10%
Economy 5%
The organized sector is dominated at present by the Piramal fleet of companies -

VIP Industries and Aristocrat. Between them, they account for 85% of the
organized sector market. Their chief competitor is the Rs.41 crore Safari
Industries, whose share in the branded market is nearly 14%. The rest of the
market is comprised of other brands like Encore, Unilite, Genius, Club and
Novex. But the entry of Samsonite India, the 60:40 joint venture between
Samsonite and the Bombay-based Rs.28 crore Tainwala Chemicals, would
change the whole scenario.
Organized Sector
Company Market
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share
VIP 70%
Aristocrat 15%
Safari 14%
Others 1%
MARKET DISTRIBUTION
UNORGANISED
SECTOR
SAFARI OTHERS
ARISTOCRAT
8% 1% VIP
9% UNORGANISE
D SECTOR
ARISTOCRAT
40%
SAFARI
VIP
42%
OTHERS
Critical View of the Luggage Industry
The luggage Industry can be traced into a triangle with the MNC giant Samsonite
International trying to steal the limelight, the $50 million Indian giant VIP
Industries at one of the vertices and the triangle completed with the $120 million
unorganized sector at the third end. The other small companies find place
somewhere in between. This then is the Indian moulded luggage industry in a
nutshell.
IBS Page 8
Going back in time, the history of Rs. 10 billion Indian moulded luggage industry
can be observed in two phase’s viz., the pre-1997 phase and the post-1997.
Pre-1997
During this period, the companies were more interested in volume sales rather than
satisfaction. The Indian market was dominated by both the small and big players.
It had still to witness the onslaught of the multinationals. American Tourister,
currently the world’s second largest luggage manufacturer was there on the scenes
but, had to retreat in 1985 due to poor sales.
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Quality of the Indian luggage at that time was suited mostly for the low end mass
market and not for the premium end quality conscious customer. Innovations were
very few. People had got used to the old type of luggage which had a top, a bottom
and a lock to keep it intact. The manufacturing process concentrated more on
volumes than on quality. And surprisingly, nobody was complaining. The reason:
lack of quality awareness among the customers.
Then came the discounts war in the 90’s. Customers were availing 50-60%
discount on the maximum retail prices. Even as the sales soared companies started
to bleed. At this juncture, the aggressive Piramal group took over Universal
luggage and its brand Aristocrat. This gave a body blow to all competition. The
battlefield now comprised VIP Industries, Universal as part of the Piramal group)
and Safari to name a few until the entry of world number one the $737 million
Samsonite International, in late 1996. Till then competition was restricted to sales.
Service and customer satisfaction didn’t assume importance. In short, it was more
of selling than marketing.
Post-1997
This was the period when the industry witnessed a paradigm shift in terms of
quality and service. Liberalized baggage rules, presence of multinational and freer
import of luggage helped the Indian consumer to access international quality
luggage. In fact it ushered in a phase where even the domestic companies showed
the keenness to compete with the foreigners instead of following them. Sanjeev
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Aga, former CEO, VIP Industries says. “A few years back we were not aware of
our own strengths. We assumed that the best was Samsonite or Delsey and we
tried to come close to their standards. But now, we feel that we must do better to
outsmart them in the market.’ The company already seems to have moved in that
direction. While between 1990 and 1996 VIP had registered only eight new
designs in the next two years (1997 and 1998) the company registered 16 design
patents. The Indian consumer today has more choice than before.
Environmental Scanning
Political Environment:
Government has placed the raw materials required for the industry under OGL
(Open general license). Raw materials can be freely imported. There is no
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restriction on the export of finished product and very little barriers were there for
foreign firms to enter into Indian market.
Excise duty, Import duty, Custom duty, Sales tax have a substantial bearing on the
cost structure of the final product. International prices of raw materials are highly
flexible. There is no policy to control the burgeoning grey market.
Social Environment:
Luggage sales show a peak during the marriage season. This season witnesses a
spate of purchases of luggage.
Brands are promoted as status for consumers & tourists.
Economic Environment:
The luggage industry’s growth rate is dependent on the level of business & leisure
activity in the country. The positive signal in the growth of the economy works
well for the luggage industry. The growth in the tourism industry affects the
performances of the luggage industry which shows peak sales during the months of
September-January. The potential market growth @ 8-10% is making India a base
for the Multinational Companies.
Technological Environment: -
The luggage industry has graduated from the tin trunks; plywood suitcases to the
newly developed technologically superior plastic moulded suitcases with a lot of
features added on to cater the requirements of the customers. The luggage now is
developed for aesthetics, comfort & convenience in use. Technology is also
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developed in the manufacturing of the luggage with specialized moulding

materials used to mould the plastic material. The features like the locks, wheels,
handle etc. have been developed over the years. The industry has about 300
models in various segments. Technology has made it possible for companies to go
for a large production (VIP is 12000 per/day (286 models) & Samsonite is 1500
per/day (85 models)).
The amount of Research & Development investment being done by the companies
is also on the rise. This is more prominent in the organized sector with VIP
spending @ 7% of its turnover & Samsonite spending @ 9% on Research &
Development Internationally. The unorganized sector spends very little amount on
Research & Development spending is towards product development, capacity
utilization, distribution network & communication.
PORTERS MODEL
Threat of Entry:
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The industry is Oligopolistic in nature moving towards Duopoly with two

companies enjoying the market share a bit over 80%.
1) Barriers To Entry:-
a) Economies of Scale:-
 Existing distribution channels.
 Brand awareness of existing players.
b) Product Differentiation:-
The existing players in the industry have managed to
differentiate their product from each other depending on the
segments they are in.
c) Capital Requirements:-
 Total project cost=25 cr.
 Payback period is 3-5 yr.
 Access to Distribution Channel:-
Existing competitors have tie ups with wholesalers & retailers
for marketing their products based on the long term
relationship, high quality services or exclusive relationship. A
new entrant will have to invest heavily to develop a distribution
channel.
d) Cost disadvantages independent of scale:-

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No demographic survey to demarcate buyer profile & helps to

focus marketing efforts. This translates into greater costs in
product development & selling & distribution.
e) Possibilities of a new entrant getting into a Joint Venture with

the players in the market are less. [Given an Oligopolistic
nature of the market, this is becoming duopoly in nature]. This
would mean that the new entrant would not be able to take
advantage of the existing player’s strengths (production or
distribution) & will have to start fresh.
f) Favorable access to Raw Material.
2) Expected Retaliation:-
 Expanding of the distribution network by the existing player.
 Accessibility of product.
 Price cuts & discount.
3) Entry determining price :-

Given the strong brand & market presence of the existing
players & their well established distribution network the new
entrant will have to plan for heavy initial investment in order to
make his presence felt. This will have to be done under the
prevailing price structure taking into account retaliation from
the existing players
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Thus the returns may not be as soon as expected which itself

may form a barrier to enter into the industry.
4) Bargaining Power Of Suppliers:-

 Dominance of few suppliers & lack of substitute products.
 Although there is an additional capacity of the raw materials
required for the moulded luggage, there is limited to the
quality of the available material. There is no substitute raw
material to the material used at present i.e. Polypropylene &
ABS. This shifts the bargaining power towards the suppliers of
the raw materials. Raw materials make up for 50% of the cost.
Although Reliance has the process to supply quality raw
material the volumes of the luggage industry do not justify
their production & supply.
5) Suppliers:-
Raw materials used for moulded luggage are mainly
Polypropylene & HDPE Acrylonitrile Butadine Styrene (ABS).
These are by products of petroleum.
There are plenty of suppliers. Moreover the materials can be

imported as PP is under the OGL because of which companies
like Samsonite & VIP imports their raw material.
There has been no shortage in the supply of the material. Due

to the excessive capacity & the South East Asian Crisis the
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prices of the raw material have dropped by about 46% in the

last two years.
Thus in the scenario of enhanced competition in the moulded

luggage industry the diversity of suppliers & over capacity
without the scope of forward integration has limited the
bargaining power of the suppliers. The unorganized sector
sources its raw materials (recycled plastic) from a number of
local sellers.
6) Bargaining Power Of Buyers:-

The organized sector has few buyers compared to the suppliers
of raw material, which is available in plenty.
The raw material forms 50% of the total cost of the product.
There is no restrictive sale policy by the government as
regards to the raw materials. Hence buyers can have resource
to the international market. The raw materials are under the
open general license which can import freely.
In the unorganized sector the suppliers of the raw material

(recycled plastic) are many & this shifts the bargaining power
to the buyers.
There is no scope of backward integration by the buyer

because of the number of suppliers & the free import policy.
There is no product differentiation of the raw materials.
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7) Intensity of rivalry among existing competitors :-

The moulded luggage industry can be divided into 3
segments:-
 Standard
 Popular
 Premium
In each segment there are 2-3 competitors. VIP is the leader
overall but in each segment there is intense competition as
each company tries to maximize its market share.
8) Slow Industry Growth:-

The growth in the moulded luggage industry has been sluggish
& the competition is getting intense. Compared to the growth
rate of soft luggage market or 25% the growth rate of moulded
luggage is about 8-10%, which is relatively slow.
9) Differentiation & Switching Cost:-

There is a lack of switching costs in this industry leading to
intense competition levels. Product differentiation exists
amongst the players in the standard and popular segments.
10) Diverse Competitors:-

Diversity in terms of strategy origins triggers off intense rivalry.
In this industry the competitors are into the market with
different means of capturing the market. This leads to intense
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competition especially during the season of marriage &

travelling which are considered periods of peak sales.
11) Exit Barriers:-

Exit barriers may be economic strategic or emotional in nature.
The specialized machinery used in the manufacture of luggage
the investment companies make in terms of production human
resource, building up distribution network are enormous &
makes it difficult for the company to exit. This then intensifies
the rivalry among competitors with each player trying to
optimize utilization of assets.
12) Substitute Products:-

The presence of substitutes which perform functions essentially
similar to the existing one & offering price advantages put a
capacity on the profits of the industry.
The luggage industry can be divided into the hard moulded

luggage & the soft luggage. The soft luggage is a perfect
substitute for the moulded luggage. With a growth rate higher
than the moulded luggage there is a capacity to the extent the
hard luggage market growth. Also the flexibility of the soft
luggage in terms of size design price etc. makes it a potential
threat to the hard moulded luggage market.
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MAJOR PLAYERS IN THE ORGANIZED SECTOR
• V.I.P.
• Samsonite
• Aristocrat
• Safari
• Giordano
• Delsey
• American Tourister
• Rimowa
• Kipling
• Jansport
• Blue & Blues
• Jang
• Fiorelli
• Others
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V.I.P.
VIP Industries Ltd. is the flagship company of the DG Piramal
Group. Established in 1971, it is a leading luggage manufacturing
company, which manufactures strollys, suitcases, executive
cases, backpacks and other hard and soft-sided luggage. It owns
reputed brands such as VIP, Alfa, Footloose and Buddy. It has two
manufacturing units in India and various subcontract operations
in China and Indonesia. Currently, it has a workforce of nearly
2000 people.
VIP is a well-known and reputed brand name in India.VIP has been

increasing its presence in world markets in the luggage industry.
The company has operations across the globe in five continents.
It has offices in the USA, South Asia, Middle East, Africa and
Europe, Worldwide, VIP products are sold across 1300 retail
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outlets in 27 countries. Currently, it exports its product to West

Asia, Europe, the USA, and select African and South East Asian
countries.
Product Portfolio
The product portfolio of VIP Industries Ltd. today includes a

diverse range of hard-sided and soft-sided luggage. The range
includes strollys, suitcases, duffles and overnight travel solutions,
executive cases, backpacks, and even school bags. VIP Industries
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Ltd. has renowned brands like VIP, Alfa, Footloose, and Buddy
covering the entire spectrum of travel products. VIP Industries
Ltd. has a license and markets Delsey products in India and
SAARC countries.
These products reach over 8000 retail outlets across the country.
Outside India, we have a network of over 1300 retailers across 27
countries. Our range includes injection moulded PP cases;
vacuum formed ABS cases as well as soft-side luggage in nylon,
polyester and EVA material.
Luggage Hard suitcase, soft Polypropyle

suitcase, ne,
hard upright, soft polycarbon
upright, cabin ate, ABS
luggage. nylon.
Travel Totes, travel bag, Nylon,
Bags trekking leather
bag, trolley tote.
Backpac School bag, Nylon
ks trekking bag,
laptop backpack.
Executiv Briefcase, soft Nylon,
e bag / executive bag, synthetic
Portfolio laptop bag, Laptop (foam),
trolley, polyurethan
messenger bag e, leather.
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Belts Pure Leather Leather

Reversal belt with
reversible buckle &
regular buckle
Regular belt with
fancy buckle &
regular buckle
Casual belts
Wallets Pure Leather Leather
3 to 10 credit card
holder with pockets
for coins and
identity card
Card holder with
pockets for coins
Zip pockets, 2 fold
wallet with pockets
for coins and cards
3 fold wallets with
pockets for coins
and cards
Credit card holder
with 10 to 20
pockets
Travel Security leg wallet,
Accessor hip money belt,
ies neck safe pouch,
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secret wallet, shoe

bags, passport
control with 7
compartments,
hands free CD case,
MP3 player case,
iPod case, eye glass
holder, cell pouch,
foldable bag, key
lock, number lock,
luggage tag, travel
pillow, toilet kit,
luggage strap, key
pouch, travel
security with
number lock etc
Handba Office / Everyday Leather,
gs bag, mess bag, Nylon
shopping bag,
leather bag, leather
purses, leather
wallets, jewel bag,
fancy, vanity hard,
vanity soft
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The company entered the nineties with four sub-brands,

segmented on form and customer profile. Market Positioning
:
• Skybags - soft luggage range, for the business traveler.
• Alfa - economy range, for the first-time buyer or the up

grader to the branded segment.
• VIP range - priced twice as much as Alfa, for the

stereotypical Indian luggage customer.
• Odyssey - for the exclusive, lifestyle buyer.
VIP Industry is Asia’s largest luggage manufacturers & world’s

second largest luggage manufacturer. It has some of the finest
brands & has been ranked second in the recent brand awareness
survey. The growth rate and sales in each of these brands in 1992
indicate the skewed growth towards the upper end of the market.
BRAND Contribution Growth Rate

(%)
to sales (%)
Skybags 10 35
Alfa 40 3
VIP range 35 10
Odyssey 15 30
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These all brands are found in the lower segment. It has

manufacturing facilities in Nasik, Nagpur, Jalgaon & Sinner. It
proposes to start manufacturing units in Sri Lanka & other SAARC
countries. VIP manufactures 280 models. The manufacturing long-
term objective capacity is 12000 units per day. VIP has a strong
4000 dealer network in place.
Long Term Objectives:
 To achieve 50% of the turn over from exports & become a

major player in the International market by the year 2005.
 To get a major chunk of the unorganized sector through their

product ‘MANTRA’.
Short Term Objectives:
 To have a volume & value growth of 15%.
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Segmentation
VIP is catering to income group of 5000-10000 for the standard &

popular segment product & their premium product is targeted to
an income group of 10000+. They are catering to all the four
zones.
Distribution Network
VIP has 21 branches & a strong dealer network of approximately

5000.
Market Distribution – in India

Sales Channel Share
(%)
Army canteens 30-40%
Luggage shops 60%
Market Distribution – World

over
Sales channel Share
(%)
Department Stores 41
Luggage shops 21
Catalogue stores 16
Variety stores 15
Mail order 2
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Others 5
Product Differentiation
VIP has made a dent into the unorganized sector as the only
branded product present in the standard segment.
 Premium Segment :-
There is hardly any differentiation in the product offered by VIP.

Product is almost same as to the product of their competitors
Samsonite in features. The differentiation is only in terms of
prices (VIP is @ 20% cheaper than Samsonite.)
 Popular Segment:-
It is the segment where VIP makes money. This segment provides

a better margin. The luggage is of the frameless type & the
company has a large market share. The product is promoted as
sturdy & enduring hard knocks of travel in India.
 Standard Segment:-
Product has the bare minimum features & is differentiated on low

prices. Product is promoted as value for money.
Positioning
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It positions itself as an A-Z luggage company without diffusion of

the mother brand.
V.I.P. is looking at tapping the lucrative European market where

people are buying more luggage
Strategy
VIP has established itself in the Indian market using product

innovations, stress on quality and brand building. VIP was the first
to introduce “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.
Then VIP faced the problem faced by most of the giants: the
brand becoming generic to the category and local brands eating
into the share of the company.
In 1997 came a formidable threat to VIP – Samsonite. With in
short time Samsonite established its presence in the luxury
segment of the market. While VIP was very dominant in the mid-
segment, it had no presence in the luxury segment. Samsonite
posed a major threat to VIP and garnered a market share of about
35% in the luggage market within a short period of time. This
forced VIP to seriously reconsider its marketing strategy. To
counter the threat of Samsonite, VIP launched Elanza range of
premium luggages. Samsonite meanwhile also wanted to enter
the popular segment (800- 2000 range). It launched the brand
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“American Tourister “to enter this segment posing a major threat

to the market leader. More over Samsonite had an international
contemporary look and appealed to the new generation than VIP
which was not perceived as a vibrant brand.
In order to attract the new generation and create a new brand

identity, VIP embarked on a rebranding exercise. The usual ads of
VIP was appealing to the middle class and focusing more on
emotion. The “Kal Bhi, Aaj Bhi” ads were very powerful and
appealed to the middleclass. But since the consumers changed, in
order to succeed, the brand had to have a contemporary look.
The new strategy of VIP is focusing on capturing or owning the

concept of “Travel”. The logo was changed to a more
contemporary logo and the ads were changed to communicate
the new positioning. The agency thought of the most appropriate
moments of travel and decided that the “time of departure “are
the most critical constituents of travel. The ads aimed to tie the
brand to Travel. Thus originated the “Bye- Bye “campaign with a
very youthful imagery that appealed more the new generation
travelers. The baseline was changed to “Happy journey” thus
attempting to own the concept of traveling.
The new campaigns were supported by new ranges of products.

The sub brands of VIP include Delsey (international brand from
France) to capture the premium segment, Footloose: the trendy
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bags for the youth, Buddy: school bags and Alfa: value for money
segment.
VIP is a market leader that is trying hard to retain its leadership
position. It had failed to create barriers for competition by
keeping many categories open for competition to enter. Now also
leather bag category is now seeing lot of action with big players
like Hidesign taking the lead. VIP does not have a presence in this
segment. But with its strong brand equity and ability to change
with the consumer trends will help VIP in its future battles.
Advertising Strategy
Their advertising strategy is to promote image of sturdiness,

value for money & toughness. Plan to spend RS 20 cr. for the
same. Its price ranges from RS 225 to Rs.8000. The company has
also been in fresh talks with French company Delsey, for
marketing the latter's premium luggage range.
Pricing Strategy
Market Segmentation
Segme Price Market
nt range share
(Rs) (%)
Premiu 1500+ 15
m
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Popula 700- 30
r 1500
Standa 300-700 55
rd
The premium segment is at the top of the rung in India. It is
followed by the popular segment which is slightly larger than the
premium segment but smaller than the premium segment, the
latter segment is the largest and contributes to maximum sales in
developing countries. In contrast, the standard segment in the
developed countries is very small.
Such constitution of the customer profile is aiding the

unorganized sector in India which manufactures low cost goods.
The high quality manufacturers are finding it difficult to penetrate
the market due to high production costs. The target customers at
the high end (premium segment) form just 15% of the total
customers while the low end standard segment constitutes 55%.
The premium segment is controlled by the Apollo group (US)

company, Samsonite (I). The popular segment is dominated by
the domestic giant, VIP Industries. The standard segment, the
largest segment, is serviced by VIP Industries and Universal. The
unorganized players price their products at around Rs 300 per
piece.
Apart from competition and undercutting by the unorganized

sector, the moulded industry is facing a tough fight from the soft
luggage segment as well. This segment has caught customer
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fancy in the last few years. Even though the soft luggage
segment forms just 15-20% of the total industry. It is growing at
the rate of 25% which is much higher than the moulded luggage
segment growth.
The industry majors differ in opinion on the growth rate of hard

luggage or moulded luggage. VIP Industries optimistically puts
the growth rate at 10% while the multinational Samsonite says
the hard luggage market has shrunk by 4%. But, both the
companies are not ready to ignore the hard luggage market for
soft luggage. Abroad, most of the luggage manufacturers are into
both hard and soft luggages. In India too, VIP and Samsonite
manufacture both soft and hard luggage.
Universally, the luggage business is seasonal in nature. In India,

luggage sales depends on two factors—tourism development and
on the marriage season. The marriage season extends from
March – June and from October – December. These months see
good luggage sales. Also, the domestic tourists usually plan their
yearly trips during the holiday season between April – June.
During this period, there is fierce competition among the luggage
manufacturers to grab the market share.
However, socio-political turmoil in the last few years has affected

the Indian tourism industry. Market sources say all such problems
have retarded the cumulative annual growth rate of the moulded
luggage industry to 5%. However the Kargil issue at Kashmir has
worsened the chances of revival of the Indian tourism industry,
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thereby reducing the chances of improvement in the growth rate

of the luggage industry.
SWOT Analysis
1. Strengths:-
• Very high brand awareness (2nd in India).
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• 52% market share in organized sector (largest in Asia).
• 11% through Universal luggage.
• Form 31 years it has been in this market.
• It has 21 branches & a strong dealer network of about 5000

outlets.
• Low raw materials cost.
• Real Value for money.
• Money power & aggressive management.
• All plants are ISO Certified (government recognized R & D unit

in Nasik).
2. Weakness:-
• Less Research & Development expenditure.
3. Opportunities:-
• Scope to increase exports.
• Economy is reviving.
• Untapped lower segment area.
4. Threats:-
• Worsening situation in Kashmir for tourism.
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• Unorganized sectors are cheaper by 25% due to less amount of

excise duty.
• Excess capacity in the South East Asian countries.
• The players in the unorganized sector getting them organized

and coming out with branded products.
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Competition from Samsonite & the Unorganized

Sector
The Indian moulded luggage industry at the present juncture is

witnessing a bitter battle among the competitors. However, the
unorganized sector is having an upper hand grabbing a larger
share whenever the market grows. VIP has money power and an
aggressive management. Samsonite has a reliable parentage,
money power and R & D support. The unorganized sector relies
on low cost products for their good sales. The sufferers are those
lacking in money power which does not allow them to spend on
advertisements and R & D.
In the long run, companies with sound R & D are expected to

sustain competition. While VIP spends 2-3% of its turnover on R &
D, competitor Samsonite does not spend anything in India. The
parent company spends 9% of its turnover in R& D. This will help
Samsonite introduce new products periodically. In fact, Samsonite
proposes to reduce its price range from the present Rs.1500-1700
range to the Rs.1000 + category. On the other hand, VIP plans to
introduce products both in the premium and lower end segments.
But both the companies are keeping their cards close to their
chest.
The fight is expected to become fiercer when the world number

four Delsey (of France) also makes an appearance in India.
Internationally, the companies are trying to enter fast growing
areas because of very low growth in the developed markets. Take
IBS Page 38
the case of Samsonite International. It has witnessed a growth

rate less than 0.6% during 1998. Certainly, the international
majors cannot ignore the Indian market.
In the Budget ’99 however, the finance minister has allocated

Rs.1.33 billion for tourism development as against last year’s
figure of Rs.1.19 billion. This excess allocation is sure to benefit
the tourism industry in turn benefiting the tourism dependent
industries (moulded luggage and hospitality industries).
Another major area can be looked into by the luggage

manufacturers is making India a manufacturing base in the way
Samsonite has cashed on the cheap and skilled manpower
available in India. As stated earlier, due to poor product quality,
except for VIP and Samsonite none of the local manufacturers are
in a position in export. On the flip side there is excess soft
luggage capacity in countries like China and Taiwan. Market
sources say that these countries have 50% excess capacity which
will find their way in the international market.
Hence the local companies may have to encounter tough

competition. As such any rise in domestic sales and export sales
will definitely benefit the domestic industry.
Thus, the present status of the industry is highly competitive and

the final consumer will be benefiting. Today, he has more options,
more designs, and better quality products to choose from. The
consumer is the king.
IBS Page 39
The Moves:
Samsonite was considering launching Oyster (its highest volumes

earner worldwide) in the range of Rs.2000, so that it would be
priced above VIP, and its brand image would be strengthened.
But, early this year, VIP Industries launched Elanza, a slick brand
of premium moulded luggage targeted at the top end of the
premium market. Elanza boasts of two patents, for its bumper
and fabric lining. The 79-cm Elanza was priced at Rs. 3750, while
the 69-cm one sells for Rs. 3250 in India. Moreover, Elanza has
been made available through select dealers only, in order to
maintain its premium image. At present, VIP plans to export 90%
of its production of Elanzas.
This caught Samsonite totally unawares. The branded luggage

scores on perceived value pricing, and so at the moment
Samsonite is keenly tracking Elanza’s performance in the market.
VIP set the price so high to preempt Samsonite’s entry in the

super-premium segment of the market.
VIP plans to make this price permanent, subject to the successful

sales of Elanza. This means that Samsonite would go ahead and
launch Oyster at Rs. 2000. The market research study clearly
indicates that Samsonite would lose heavily on its brand equity if
its product is cheaper than the existing ones in the market.
IBS Page 40
The options available to Samsonite are
♦ Reduce price and target lower segments - This again is

not possible. The high brand image of Samsonite
demands a correspondingly high price. It is only the
premium segment that Samsonite can target, as it is
unknown in the other segments.
♦ Increase price and raise perceived quality - If Samsonite is

forced to enter at a higher price, it might take greater
amount of time to gain a footing in the Indian market. This
might give VIP Industries just enough time to strengthen
itself. But this option would ensure that Samsonite retains
its major strength - its brand equity.
VIP Industries is now concentrating on expanding its product

portfolio to plug in any existing holes. It has launched six new
products in 1995 in the higher end of the market (one of them
was Elanza). Also, VIP is planning to launch more products in the
super-premium category in order to counter Samsonite at all
price points.
IBS Page 41
The Critical Aspects to the success of the strategy

adopted by VIP Industries are:
• Elanza must be marketed successfully so as to

establish itself in the market. The earlier premium
product of VIP Industries, Amadeus, failed to take off in
European market channels like Italy. But VIP officials
state that Elanza, which is considered to be the most
sophisticated and extensively developed product of VIP
ever by insiders, is proving to be a success.
• VIP must introduce more products in the super-

premium category and gain a foothold at all the price
points. Unless this is accomplished soon, VIP will find
Samsonite’s product range too formidable totackle.
IBS Page 42
Through its premium pricing of Elanza, Blow Plast has forced

Samsonite to hike up its entry price. By coming in at a higher
price point, Oyster would find it difficult to garner desired
volumes. By using such a competitive pricing, Blow Plast is
hoping to gain time to plug every hole in the market, before
Samsonite starts breathing down its neck.
With Samsonite having invested heavily in the plant at Nasik (it is

the third largest manufacturing plant of Samsonite), it would not
give in a hurry. Whether VIP would be able to ward off
Samsonite’s challenge will not be clear for a couple of years.
SAMSONITE
The world's #1 luggage maker, Samsonite offers a broad range

of luggage and luggage-related products, including suitcases,
garment bags, casual bags, business cases and other travel
bags. Samsonite also license their trademarks for use on
products such as travel accessories, personal leather goods,
handbags and furniture . Samonsite also makes travel gear for
Timberland. Samsonite is the world leader in the luggage
market, with an emerging presence in Asia. It has set up a
manufacturing plant in Nasik, which has started operating.
Samsonite products are produced around the world at 14
Samsonite-operated manufacturing facilities or by third-party
suppliers. Samsonite benefit from their large size through
IBS Page 43
volume-driven purchasing and manufacturing economies. It sell

their products in more than 100 countries at approximately
27,000 retail locations, including department stores, specialty
stores, catalog showrooms, mass merchants and warehouse
clubs. In the United States, they sell their products through 195
Samsonite-operated stores. Samsonite is the top seller of
luggage in the United States, Europe, and Japan. In addition to
its world-renowned Samsonite label, the company also markets
the popular American Tourister and Lark brands. Under those
names, Samsonite offers a full line of luggage, including
softside and hardside suitcases, garment bags, casual bags,
business cases, and other travel bags and accessories.
Samsonite started its operation in Denver, Colorado, USA in
1910. It entered the Indian moulded luggage market only
towards late 1996 with plant in Nashik in collaboration with the
Tainwalas. Samsonite It has selected Denver, Belgium for
manufacturing hard luggage & Hungary, the Slovak Republic for
the manufacture of soft luggage.In Nasik, India both the hard
and soft luggage is manufactured.
BRAND PORTFOLIO
The brands of Samsonite collectively,serve every segment of the

market, reaching customers in all walks of life, all over the world.
It meets the discerning needs of the luxury market through their
Lambertson Truex and Samsonite Black Label brands, while the
innovative, high-quality offering within our time-honored
IBS Page 44
Samsonite brand serves both middle- and upper-market customer

segments. Its American Tourister brand provides affordable,
quality products to value-conscious consumers. Each of our
Samsonites brands has been carefully developed to meet the
precise quality, value and pricing needs of the consumers within
its market. Despite their diversity, all of the brands share a
common philosophy: to deliver durable, high-quality products that
reflect Samsonite’s commitment to excellent craftsmanship,
innovative design and exceptional functionality.
The brands of Samsonite are:
• SAMSONITE
• SAMSONITE BLACK LABEL
• AMERICAN TOURISTER
• LAMBERTSON TRUEX
• LARK
Samsonite complement their owned brands through their global

licensing program, through which they leverage Samsonite’s
luggage expertise to partner with market-leading lifestyle brands,
such as Lacoste, with whom they develop handbags and casual
bags, and Timberland, with whom they offer travel gear,
accessories, backpacks and outdoor items.
PRODUCTS LINES AND WIDTH

The products lines of Samsonite Includes:
IBS Page 45
• Suitcases
• Carry-ons
• Garment bags
• Backpacks/Duffels
• Kids Luggage
• Business/Computer Bags
BASED ON SMALL MEDIUM LARGE
SIZE
(TOTAL 6 (TOTAL 20 (TOTAL 21
PRODUCTS) PRODUCTS) PRODUCTS)
Samsonite® Samsonite® Samsonite® Ascella

Elevation Elevation 22" Expandable
(SHOWN
21" Upright 25" Upright Upright
ASIDE IS
THE MODEL
NO. OF TWO
PRODUCTS
WHICH HAVE 700 Series Samsonite® Pro-DLX
THE LOWEST Samsonite® 28" Upright
AND THE Outline® 8
22" Spinner Samsonite® Pro-
HIGHEST DLX
PRICE 24" Upright
RESPECTIVE
LY IN EACH
CATEGORY.)
• Golf Travel Bags
IBS Page 46
• Accessories
SUITCASES
IBS Page 47
BASED ON SOFTSIDE HARDSIDE HARD AND

EXTERIORS SOFT
(TOTAL 25 (TOTAL 13
PRODUCTS) PRODUCTS) (TOTAL 8
PRODUCTS)
(SHOWN American 325 Series 450 Series

ASIDE IS THE Tourister® Samsonite Samsonite®
MODEL NO. D'Lite ® F'Lite Sahora
OF TWO 25" Exp 28" Upright Spinners Hybrid
PRODUCTS Upright 24" Upright
WHICH HAVE
THE LOWEST
AND THE
HIGHEST
PRICE
RESPECTIVE 700 Series
LY IN EACH Samsonite® Samsonite 600 Series
CATEGORY.) ® Samsonite®
Pro-DLX
Outline® 8 Carbon EXP™
29" Spinner
29" Spinner 29" Hybrid
Upright Upright Suiter
IBS Page 48
DISTRIBUTION NETWORK
Samsonite is present in 150 items with 450 outlets. They are not
interested in mass appeal & would like to concentrate on the top
23 cities. Samsonite is distributed primarily through:
• Samsonite Outlet Stores

• Samsonite Black Label Stores (Boston, New York, Short
Hills, San Francisco, Chicago, Dallas)
• Samsonite Classic Stores (King of Prussia,PA ;
Detroit,MI ; Arlington,TX ; Tampa,FL ; Concord,CA ;
Nashua,NH
• Department Stores like Macys in the USA and John
Lewis Partnership in the UK
• Online retailers like Ebags.com and KJ Beckett
• Warehouse Clubs like Costco
• Military Stores like AAFES
PRODUCT PRINCIPAL MAIN DISTRIBUTION

CATEGORY PRODUCTS CHANNELS
Hardside and softside Direct retail stores, specialty
Luggage luggage, garment stores and high–end
bags, carry on bags department stores
Mid–level department stores,
specialty stores, national
chains, warehouse clubs,
direct retail stores
National chains, mass
merchants, specialty stores,
IBS Page 49
direct retail stores

Duffel bags, tote
Specialty stores, department
Casual and bags, backpacks,
stores, national
Outdoor shoulder and hip
chains,warehouse clubs, sport
Bags bags,school bags,
and outdoor retailers
handbags
National chains, mass
merchants, specialty stores
Business
Briefcases, business Direct retail stores, specialty
and
cases, computer stores and high–end
Computer
cases department stores
Cases
Department and specialty
stores, office superstores,
OEMs, warehouse clubs
Mass merchants
Positioning:
High Quality / High Price
Samsonite positioned itself as Internationally acclaimed quality

product with visible benefits.
Segmentation:
The top premium segment i.e. Rs. 1500-7500 is the main area
of attention of Samsonite where it already has 60% of the
market share.
IBS Page 50
Product Differentiation:
The main differentiation factors based on the target consumer
that wish to cherish exclusivity are:
• Reliability
• Perceived Value of the Product
• International Quality
Business Strategy Of Samsonite:

• Expand Channels of Distribution and Product Offering
• Strengthen Marketing and Product Innovation.
• Continue Worldwide Expansion.
• Improve Distribution Systems in the U.S.
SWOT ANALYSIS OF SAMSONITE:

Strengths:-
• Reliable parentage & money power.

• Research & Development support (9%
worldwide).
• High Quality.
• 25% market shares in world (50% in the
organized sector).
IBS Page 51
Weakness:-
• 80% of raw materials imported

• Low brand awareness
Opportunity:-
• Increase distribution network

opportunity.
• Use it as a base for exports.
• Economy is reviving
Threats:-
• Worsening situation in Kashmir

• Other MNC’s entering in the
market.
• 4% decline in the market in
1997-98.
IBS Page 52
SAFARI
Products & Pricing
Packs:-
1. Original Packs
• Deluxe: We took our traditional Pack and added soft

padded leather shoulder straps and a waist belt for
comfort on those long portages
Prices: Rs.1950-3150
• Utility: These less expensive packs allow occasional

campers to have their own rugged gear
Prices: Rs. 1350-2150
• Heavy Duty: A heavy duty durable version
Prices: Rs. 1100-1900
IBS Page 53
• Rambler: A versatile gear hauling pack with three

outside pockets
Prices: Rs. 990-1750
2. Heavy Packs
• Heavy Duty: A heavy duty durable version
Prices: Rs. 1450-2100
• Monarch: Made of more functionality features and with

waist belt and sternum strap
Prices: Rs. 1450-2150
3. Child packs
• A miniature Pack that makes a great kids pack. Lots of

bright colors
Prices: Rs. 990 onwards
Luggage
1. Utility Luggage Bags
• Premium Bags
• Standard bags
• Trolley Bags
Prices: Rs.1300
2. Sportsman Luggage
• Sportsman garment bags : Hang your suits or skirts in

this classy garment bag.
IBS Page 54
Rs. 2000-3500
• Sportman Duffel: Meticulously crafted and thoughtfully

designed, we know you'll love this duffel!
• Extended Sportsman Duffel: Zippered end pockets

make it simple to find those frequently retrieved items
• Boot Duffel: The large top compartment is sealed with a

full length zipper, and hidden beneath it is a lined
compartment.
Rs. 2100 onwards
3. Leather Luggage
• Leather Duffel: A real value, our leather duffel is an

honest investment in your personal travel comfort and
security
Rs. 3000 onwards
• Pebbled Leather Duffel: Our Leather Duffel available for

a limited time in a soft pebbled leather
• Leather Bookbag: A stylish messenger bag style bag

that will last for generations.
Rs. 1500 onwards
Business Gear
1. Briefcases
IBS Page 55
• Executive Briefcases: These bags are made out of our

new velvety soft, full-grain, waterproofed leather.
Rs. 3500 onwards
• Leather Briefcase: An elegant leather briefcase
• Pebbled Leather Bags: Our Leather bags available for a

limited time in a soft pebbled leather.
2. Laptop Cases
• Laptop Backpack: A very popular Large Standard

Daypack, and added a padded protective sleeve for
your laptop
Prices: Rs.1400 onwards
• Canvas Leather Laptop Pouch: A non-bulky padded

pouch for your laptop
• Leather Laptop Pouch: A non-bulky padded pouch for

your laptop
Prices: Rs. 900-2000
Visit hrmba.blogspot.com for

Shoulder Bags
IBS Page 56
1. Leather Bags
• Serengeti Book Bag: These book bags are made out of

our new velvety soft, full-grain, waterproofed leather
Rs. 1500 onwards
• Pebbled Leather Mini-Haversack: Our Leather Mini-

Haversack available for a limited time in a soft pebbled
leather
Rs. 1450 onwards
• Lady Slipper Bag: A handcrafted all leather backpack

handbag
Rs. 900 onwards
2. Shell Bags
• Deluxe Bags
• Standard Bags
• Classic Bags
Tote Bags
1. Sportsman Tote Bags
2. Zip Top Tote Bags
3. Mini Tote Bags
Other Products include
• Key Fob
• Leather Document Brief
• Leather Fold up Hat
IBS Page 57
• Wallet- Trifold wallet
• Notepad holder
• PDA case
Places and Promotions

The company should adopt two strategies for allocating its
products.
PUSH Strategy:
Manufacturers Wholesalers Retailers

Customers
Push strategy under which the products can be sold at different

wholesalers, retailers, franchisee shops, etc
Pull Strategy under which manufacturers promote their

products using advertising and promotions. In this strategy the
consumers are persuaded to buy the products directly through
the intermediaries.
The consumers may also buy their products online.
They should have their wholesaler at a particular place and the

retailers or franchisee shops should be located at public places,
malls, etc. Also, retail shop should be near airports, railway-
stations, bus stations, public places, etc. This would contribute in
impulse buying too.
The promotional activities may include electronic hoardings in

airports, railway stations, etc. Conventional methods of
advertising can also be used such as print media, television, etc.
References
IBS Page 58
• http://www.la411.com/company-V.I.P.%20Travel
%20Values&lid-3600517.htm
• www.vipbags.com
• www.vipmoderna.com
• www.bags-luggage.com
• www.google.co.in
• www.yahoosearch.com
• www.wikipedia.com
• www.travelequipments.com
• Philip Kotler, Principles Of Marketing (2nd European

Edition), Prentice Hall, 1999
• Prof. Karpagam, ICFAI Business School
• Prof. Harshita Shrimali, Pacific Institute of Commerce

and Management
• Visit hrmba.blogspot.com for

•
IBS Page 59

Marketing Project On Indian Luggage Industry

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Marketing Project On Indian Luggage Industry

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[MARKETING MANAGEMENT] December 15, 2007

Visit hrmba.blogspot.com for

Travel Equipment Market

1.8 Distribution Network

1.9 Product Differentiation 30

1.12 SWOT Analysis

Competition from Samsonite & the Unorganized Sector 38

1.15 Products Lines and Width

1.16 Distribution Network

1.19 Product Differentiation

1.20 Business Strategy of Samsonite

1.21 Swot Analysis of Samsonite

1.24 Business Gear

1.25 Shoulder Bags

1.26 Tote Bags

1.27 Places and Promotions

1.28 Push strategy

1.29 Pull Strategy

expected to survive while others may end up as contract

The luggage market is dominated by the unorganized sector with 50%

Indian Luggage Market

Market Size: Rs. 900 crores

Organized Sector 60%

Growth Rates (Organized Sector)

The organized sector is dominated at present by the Piramal fleet of companies -

Critical View of the Luggage Industry

developed in the manufacturing of the luggage with specialized moulding

The industry is Oligopolistic in nature moving towards Duopoly with two

d) Cost disadvantages independent of scale:-

No demographic survey to demarcate buyer profile & helps to

e) Possibilities of a new entrant getting into a Joint Venture with

3) Entry determining price :-

Thus the returns may not be as soon as expected which itself

4) Bargaining Power Of Suppliers:-

There are plenty of suppliers. Moreover the materials can be

There has been no shortage in the supply of the material. Due

prices of the raw material have dropped by about 46% in the

Thus in the scenario of enhanced competition in the moulded

6) Bargaining Power Of Buyers:-

In the unorganized sector the suppliers of the raw material

There is no scope of backward integration by the buyer

7) Intensity of rivalry among existing competitors :-

8) Slow Industry Growth:-

9) Differentiation & Switching Cost:-

10) Diverse Competitors:-

competition especially during the season of marriage &

11) Exit Barriers:-

12) Substitute Products:-

The luggage industry can be divided into the hard moulded

MAJOR PLAYERS IN THE ORGANIZED SECTOR

• Blue & Blues

VIP is a well-known and reputed brand name in India.VIP has been

outlets in 27 countries. Currently, it exports its product to West

The product portfolio of VIP Industries Ltd. today includes a

Luggage Hard suitcase, soft Polypropyle

Belts Pure Leather Leather

secret wallet, shoe

The company entered the nineties with four sub-brands,

• Skybags - soft luggage range, for the business traveler.

• Alfa - economy range, for the first-time buyer or the up

• VIP range - priced twice as much as Alfa, for the

• Odyssey - for the exclusive, lifestyle buyer.