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. VIP’s 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. VIP’s 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 mid’90s, 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 Samsonite’s 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 ed to an increase in people’s 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 people’s 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 people’s 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 nd 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 p roposition, it also launched a collection for women called Aura and a business collection called Matrix in Nov’05. 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 VIP’s 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 brand’s 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 idding 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 bye-bye to men and coolies since new VIP bags were light, etc. Given VIP’s 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-the-line 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 Samsonite’s campaigns are carried out by its global agency and it doesn’t 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, â€Å"To me, business isn’t 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. VIP’s 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 haven’t really picked up in India. Also, VIP’s distribution in the European market is primarily done for its premium Delsey and Carlton brands. The brand’s 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 VIP’s 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? . 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 VIP’s new communication strategy? Did the product, price and distribution changes complement this strategy? How cohesive do you think VIP’s 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 VIP’s product-related decisions? . Comment on VIP’s distribution strategy. What message does it convey? Visit two-three outlets or exclusive stores selling VIP brands. Do you think they convey a message similar to the communication message delivered by the brand? Preethi Meets Venkat Through Shaadi. Com â€Å"I didn’t want to fall into the traps of a typical Indian arranged marriage; I believe it doesn’t give you the required time and opportunity to know and understand your would-be partner, especially with families breathing down your necks while calling for a decision,† said Preethi. And I always wanted to choose my partner myself,† concurred Venkat, adding, â€Å"That’s why Shaadi. Com worked for both of us. † Preethi and Venkat are among the 48% of Internet users who surf matrimonial sites for alliances. While traditionally the activity of matchmaking was left to the elderly aunts of the family, marriage bureaus, and newspaper matrimonials, with the advent of Internet and a change in youngsters’ preference s, online alliance search has taken off with a frenzy, especially with 60% of the online population in India being below the age of 25. With 12 million urban Indians undertaking online matchmaking, it is the 13th most popular online activity among Indian surfers. Although online dating is ahead of matrimonial searches as the 10th most popular online activity, it does not enjoy the high user loyalty and brand premium of matrimonial websites. This is because Indian culture has yet not fully accepted the concept of dating before marriage and people do not register on a dating site for finding a life partner. There is also a huge overlap between the two activities suggesting that people who date are also looking for a mate. Owing to a close-knit social structure of India, families and friends still have an important role to play in online matchmaking. Often parents are seen posting their children’s profiles, and while the final choice may be the children’s, parents extensively carry out activities like gathering information, filtering profiles, matching horoscopes, etc. Experiences of friends also guide in the decision-making. Online advertising as well as conventional television and print advertising are popular media choices for most portals. Advertising seems to be harping on factors like wide profile choices, relevant matches, and a joint selection process that satisfies the entire family (Figures 3. 23a-d). Smaller portals such as Simplymarry. com have also adopted viral tactics such as creating a website, rather a catchy microsite, for Mom-in-Law Day (Figure 3. 23e) on October 28 to promote its portal. The site has a collection of videos of interviews of people expressing their feelings and opinions about their mothers-in-law, text messages, tips, and a link to Simplymarry. com. One such communication triggered the dormant desire of finding a life partner for Venkat. While watching the film Metro, Venkat was exposed to Shaadi. com. The movie depicted Konkana Sen Sharma and Irrfan Khan getting older and feeling the need to find a life partner, and then turning to Shaadi. com for help. Sen Sharma was shown logging on to the website, and there were mentions of Shaadi. com in her conversations with Khan and even comical scenes in which the protagonists viewed some funny profiles on the site and enjoyed a good laugh. The movie propelled Venkat into online matchmaking. He believed that the biggest advantage of online matrimonial sites was their massive database, which offered people a wide choice of matches across both objective and subjective evaluation criteria such as education and career, religion, family background, location, personal preferences, personality, etc. He zeroed in on Shaadi. com after a little search, most importantly because the name had created a distinct impression in his mind through the movie. One of prospects he mailed was Preethi; the two of them hit it off and decided to marry. Preethi had chosen Shaadi. com as she was particularly impressed with its strict profile screening system, and the simplified search technology that increased the relevance of the matches. She also appreciated the portal’s attention to details through features like password-protected photographs that allowed members to maintain secrecy. Their choice was much like the rest of the consumers’; Shaadi. com and Bharatmatrimony. com were the two biggest websites in the online matrimonial space, each with 33% user preference. Another study by JuxtConsult pegged the websites’ shares at 28% and 29% respectively as on April 2007. A study by AdMomentux measuring ‘audience mindshare’ for television commercials, based on parameters like top-of-the-mind recall; appeal, likeability, relevance and comprehensibility of the ad; brand differentiation and preference created by the ad; etc. also showed similar results. Bharatmatrimony. com’s television commercial depicting how a modern boy and girl followed traditional rituals when it came to marriage, was the most effective, with 43. 8% mindshare. The television commercial of Shaadi. com showing the photographs of its various members received 36. 1% audience mindshare. Jeevansathi’s commercial came in third with 18. 4% audience mindshare. Yet another study marked Shaadi. com as the leader with 987,000 unique visitors in July’07. Convinced of Shaadi. com’s effectiveness after a month-long free registration, Preethi and Venkat had signed up a 6-month premium membership. When they found each other and finally decided to marry in a year, they posted their success story like many others (Figure 3. 4) who had also found the right partners through Shaadi. com. Questions: 1. Based on the case, identify the various cultural and social factors that influence the decision of match-making through online matrimonial portals. 2. What motivated Venkat to go for online matchmaking? Identify the cues that triggered him into action. Could there be any deep-rooted motives behind the apparent one? 3. What beliefs did Venkat a nd Preethi hold regarding online matrimonial portals? What was their attitude towards Shaadi. com? Why? 4. What communication factors seem to be reinforcing purchase decision? Do you think consumers should experience cognitive dissonance after subscribing to Shaadi. com? Visit Shaadi. com’s website and identify ways in which it may trying to alleviate any possibility of cognitive dissonance. 5. Why does most communication for online matrimonial portals harp on joint family decision-making? Do you see any attitude change strategies adopted by any of the websites in their communication? Explain. 6. Map the five-stage buying decision process for Preethi and Venkat identifying the internal and external influences that could have shaped their decision on choosing Shaadi. com.