VIP remains a leader Kal Bhi, Aaj Bhi, Kal Bhi with Strategic Changes

Established in 1971, VIP Industries Limited is the flagship company of the 200 million dollar DG Piramal Group. Its longstanding familiar Indian brand VIP is the largest luggage brand in Asia and the second largest producer of moulded luggage in the world after Samsonite. The first VIP suitcase was rolled out in 1971, and since then over 60 million pieces of VIP luggage have been sold around the world. In the organized Indian luggage market, VIP leads with a 60% market share, followed by Samsonite at 40%. In the international market Samsonite leads with 20% market share where as VIP follows at 6% with operations spread across 5 continents and in 27 countries. VIPs product range includes a variety of hard and soft luggage strolleys, suitcases, duffle bags, overnight travel solutions, executive cases, backpacks, and even school bags. Apart from the mother VIP brand, the company also owns other reputed brands such as Alfa, Footloose, Elanza, Buddy, etc. It also markets under license Delsey products in India. Moreover, it has acquitted the UK-based Carlton brand in a bid to penetrate the European market. VIPs products reach over 8000 retail outlets across the country and over 1300 outlets across 27 countries globally. Ever since its launch, VIP has been an epic brand synonymous with luggage in India. Its products priced for masses, enjoyed a near monopoly till the mid90s, and its sentimental, powerful, and long-playing advertising campaign Kal bhi, aaj bhi, kal bhi. remained etched in public memory for years to come. However, the scenario started changing with the international leader Samsonites entry into the India market in 1997. After a few initial setbacks, Samsonite started cracking the Indian market and posing a challenge for VIP. Along with tha t, a gabble of unorganized players also started confronting VIP at the lower end. This propelled VIP to take stock of the situation and realign its strategies with the changing market situation. VIP discovered that while competition was heating up, the Indian luggage industry had also been growing owing to a number of favorable factors. Most importantly, steady economic growth had led to an increase in peoples disposable incomes, thereby propelling the travel sector, which in turn had boosted the luggage industry. Frequent travel for business was also on the rise with organizations going global. This was also redefining peoples need for luggage. Convenience and variety in luggage based on specific travel occasions had started assuming prime importance. People no longer looked at suitcases as just a means of safeguarding and securing their belongings, but also cared for aesthetics, which increased the importance of soft luggage. Design, style, and attractive colors also guided peoples purchase decisions. Hence, luggage had transformed from being merely a functional product to a fashion or lifestyle statement. And people were no longer using the same suitcase for all travel requirements, but purchase had become more need-based with consumers buying luggage according to a particular type of holiday, trek excursion or business travel. Further, luggage in the premium segment had been growing the most.

In the wake of these changes, the age-old leader in luggage segment, VIP realized that youngsters perceived VIP as a brand belonging to parents and grandparents era. In order to be in sync with the times, VIP decided to change this perception and reposition itself as a contemporary lifestyle brand, which catered to people who traveled widely and followed a particular lifestyle. On the product front, it rehashed its soft luggage portfolio since that was the category driving sales. Besides it also allowed the company to play around with styles, which were becoming a major criterion in luggage selection. In addition, VIP also started adding more variety, designs and colors to its traditional category of hard luggage. However, it reserved the hard luggage segment primarily for exports since VIP and Samsonite were the only two hard luggage brands in the world. In order to address varied traveler segments, VIP designed products for all travel needs, durations, and prices, be it a long haul journey, short weekend or daily travel, leisurely holiday or business travel. Its mother brand VIP was developed as a slick lifestyle brand that focused on comfort and convenience for long-duration travels. Alfa provided reliable, good quality luggage for price-conscious consumers who otherwise had to make do with low-quality local luggage. Footloose focused on the daily or longer duration travel needs of the youth, while Buddy was a school bag brand focusing on providing fun, innovative and quality products in a segment that was dominated by cheap, local products. In order to reinstate its lifestyle proposition, it also launched a collection for women called Aura and a business collection called Matrix in Nov05. At the premium designer end, it offered ranges like Elanza and also marketed high-priced products costing Rs. 12,000 under its Delsey range. Thus with its extensive product portfolio with over 250 products matching different prices, VIP covered the entire luggage segment and has been constantly innovating keeping in mind travelers requirements. Following on VIPs footsteps, Samsonite, which initially offered only high-end collections, also launched the American Tourister range for the mid-price segment in the range of Rs. 800 Rs. 2,000 in 2002. VIP also aggressively promoted its prominent ranges to establish its new image. For example, the Alfa campaign conveyed both the importance of a better quality luggage as well as the affordable price points of Alfa. However, maximum promotional attention was showered on to the power brand VIP to position it as an all-encompassing, contemporary lifestyle travel companion. In 2002, its advertising campaign Looking at me? introduced some new lifestyle products as travel companions. The campaign informed consumers of the contemporized brands styles and colors, features, prices, VIP lounges where the brand was available etc. Then in 2003, VIP felt it needed to recreate the magic of its yesteryears with a more encompassing campaign that would reposition itself as a fresh, young, smart, and exciting brand. Thus, VIP launched a television ad campaign entitled bye-bye emphasizing a major shift in its marketing communication strategy. The campaign, designed by Lowe, began by airing a montage film that showed people bidding bye-bye to their kith and kin at the start of their journeys an elderly lady waving to a car making its way out of the gate; a doorman at a hotel waving to departing guest; a mother bidding goodbye to her children;

etc. A peppy bye-bye, goodbye track played in the background and the film ended with the tagline, Happy journeys began with VIP. Other ads in the campaign presented more bye-bye situations people bidding bye-bye to Monday mornings, women bidding byebye to men and coolies since new VIP bags were light, etc. Given VIPs heritage and iconic status, the underlying objective of the new campaign was to get VIP to own the travel space, rather than just the luggage space that it occupied earlier. The company hoped that this would increase consumers involvement with VIP during their travel planning process, rather than the brand featuring only at the far end of the process. The time of departure was chosen for portrayal in the ads since the agency felt that this was the time that caught a range of emotions people bidding farewell to their dear ones, looking forward to the journey and to returning home, and being most closely involved with luggage. By depicting the happiness associated with the start of the journey; and through more vibrant, smart and youthful imagery such as a contemporary metro train in place of a workmanlike diesel train used in the Kal bhiE campaign, or the bubbly bye-bye tune and situations; VIP tried to make itself relevant to a new generation of consumers, without alienating its traditional base of loyalists. VIP also has plans for a series of communications to the bye-bye campaign that will portray its contemporary product range and strengthen its new stance as a travel companion. The bye-bye television campaign was supported by an outdoor campaign as well, but the company refrained from any sales promotion activities in order to reinforce the new exclusive positioning. Below-the-line activities were only used to complement above-theline communication in supporting new launches, addressing niche audiences or audiences difficult to reach by mass media, motivating trade force etc. For example, VIP ran an exclusive Mystery Shopper program, which encouraged the shop salesmen to better demonstrate its product features. It also designed interactive games to convey the superior features of its Alfa brand. Media relation activities were also conducted, albeit in a limited manner, to break the news of product launches or new stores. On the other hand, competitor Samsonites campaigns are carried out by its global agency and it doesnt have any India-specific campaigns, since it mostly caters to business travelers whose needs are the same the world over. For instance, in one print ad, Richard Bronson of Virgin Airlines testifies, To me, business isnt about wearing suits or pleasing stockholders. It is about being true to yourself, your idea and focusing on the essentials. Further, in order to retain its premium image, Samsonite too does not indulge in any sales promotion activities. Its distribution strategy is also selective with the company retailing only out of high-profile stores such as Shoppers Stop, LifeStyle and Witco. VIPs distribution strategy also complements with its varied product range and new positioning strategy with the right products available at relevant outlets throughout the country. VIP suitcases are made available at convenient retail locations with a self-select approach and appropriate display showcasing the large range of VIP products in an in-store ambience set to attract. The company also has forayed into retailing by opening exclusive stores that showcase all its product ranges. It has opened stores called VIP Lounges, which compete with the franchised Samsonite Travel World. Its ranges with products below Rs. 1,500 are also distributed through hypermarkets and malls. It also has an on-line

store although online sales havent really picked up in India. Also, VIPs distribution in the European market is primarily done for its premium Delsey and Carlton brands. The brands repositioning efforts have paid off by helping it retain its leadership position. Even today, the VIP brand enjoys 97% unaided brand awareness, one of the highest in the world and has over 65 million customers.

Questions:
1. Can you identify VIPs prime source of competitive advantage from this case? If yes, what do you think it is? 2. What strategy of segmenting and targeting the market has VIP followed? What segment(s) is the mother brand targeting? In what alternative ways can luggage market be segmented? 3. Identify the points of differentiation of the VIP brand from its prime competitor Samsonite. How sustainable do you think the differentiation is? 4. How was VIP positioned earlier in the minds of consumers? Why did it decide to reposition its image? Briefly state what steps it took to reposition itself and whether the attempt was successful. 5. What was the objective of VIPs new communication strategy? Did the product, price and distribution changes complement this strategy? How cohesive do you think VIPs new marketing mix is? 6. What was the difference between the looking at me? and bye-bye campaigns? What objectives did they both serve? How did they complement VIPs productrelated decisions? 7. Comment on VIPs distribution strategy. What message does it convey? Visit twothree outlets or exclusive stores selling VIP brands. Do you think they convey a message similar to the communication message delivered by the brand?