VIP seems confident of its market leadership in the luggage market, especially since it follows a tricky strategy of ensuring each brand in its portfolio is vastly different from each other. Sudip Ghose, Vice President, Marketing, VIP Industries Limited, shares the reason why the company has adopted this strategy, along with its current challenges
Q] Now that you have settled in at VIP Industries, what is the brand positioning and objective?
Luggage is an interesting category as a lot of new players have made their presence felt in various segments. The category has also evolved as people now realise that luggage is their ‘home out of home’, and therefore need to buy good-quality, branded luggage. We currently have five luggage brands: VIP, Alfa, Skybags, Aristocrat, Carlton and also a women’s handbag brand Caprese. Each brand is a different offering to the customer and with five strong brands in our portfolio we plan to operate in all segments. We just need to make them more chiselled and distinguished from one another, so that they do not cannibalise themselves and get us more market share.
Q] One of the first things that you did was to change your creative agency to McCann Erickson. Skybags was awarded to Law & Kenneth. Why the change?
If we have to make each brand chiselled from one another, then the teams that work on them have to be different. Earlier O&M was handling all the brands, and the management wanted both the marketing and sales teams to be separate from each other; so that due focus could be given to each brand. Therefore we brought in two different agencies, McCann for VIP and Law & Kenneth for Skybags.
Q] But in this case, how do you relate all your brands back to the mother brand?
We don’t want to relate the two and we don’t want people to know that the brand belongs to the same company. All brands are separate — they have to sell on their own and compete with each other in the market. Each brand has to stand on their own, for us to have additional market share, because consumers have different mindset and it should appeal to a certain kind of a mindset.
Q] What does your media mix look like?
For companies like ours with limited money, I believe 360-degree campaigns do not work. It is better to concentrate on one or two maximum channels or media. If you try a 360-degree campaign, you will not be seen anywhere. What I am saying is contrarian, but I would rather be hugely present in one medium than spread myself thin; it has always worked for us in various categories, which has given huge dividends for the brand.
If you have enough money, you have to make a threshold level of justice in terms of investment in any medium. If you don’t have that, then it’s best to to stay away from the medium, and put your money in another medium where at least you will be dominant as a player. So we primarily use television and digital, and to some extent print.
Q] You have a new campaign for Caprese, the new VIP handbag brand for women. Has the response met your expectations so far? What are your targets looking ahead?
We are delighted with this category as it has been a fabulous success story driven by product, and we are confident we have the best products too. Our new campaign lends an international look and feel. We have positioned ourselves as a bridge to luxury and are targeting the middle-class, people who will move to the luxury segment someday. The women’s handbag segment is a complicated category, as their demands are unique; so the product has to be strong and the brand good and trustworthy. We have managed to do both till now and going forward, we expect that this brand will become the number one women’s handbag brand in the next one-and-a-half year’s time in India.
Q] How have consumer tastes evolved over the years? How has VIP adapted to them?
There are two kinds of consumers in every city: one section is from India and the other is from Bharat. India consists of air travellers for whom weight is an important concern because of weight restrictions imposed by airlines. The second segment travels by road and train, so security is very important for them. We design our products keeping these two broad customer segments in mind so VIP, Skybags and Carlton are for India while Alfa and Aristocrat are for Bharat.
Q] What is the total market size of the luggage and women’s handbag segment? What is VIP’s share?
The unorganised segment plays a big role in the luggage market. The organized segment is around Rs 3,800-4,000 crore and with all our brands put together we have a 56% market share. Our portfolio and brands stretch across very large price points from Rs 700 to Rs 14,000.
The organised women’s handbag market is not more than Rs 200 crore. Though we are the newest entrant, we already have a healthy share of almost 15%. Since there are very few large players in this sector, we are confident that we should at least have a 40% market share by the end of this financial year.
Q] Which is your biggest brand and what are you betting on going ahead?
All our brands are distinct. We invest our monies to push all the brands. However, VIP remains the most important label, followed by Skybags and Alfa. The USP of each brand needs to be different, so that we get additional channels and larger reach.
Q] In terms of distribution and retail, where does most of your business come from — standalone or multi-brand stores?
Our exclusive brand stores are not only points-of-sale, but they also help build the brand. We choose our stores based on profitability and brand ability. As it is difficult to have stores across India, we get into multi-brand outlets, preferably those that do good business. Both have equal importance in our distribution — we get 50- 50 business from both and we would like to continue the same.
We launched Caprese in our exclusive VIP Lounges where we could sell the products, as the store already attracted footfalls. This has worked for us because today almost 30% of our business comes from VIP Lounges.
Q] What is the biggest challenge for the company today?
Because of the fluctuating Rupee, import costs have gone up. We can’t pass on everything to the consumer, neither can we absorb everything. So the balancing act between consumers and shareholders is the toughest challenge. The other prime challenge is making consumers realise that luggage cannot be bought like a commodity. Buying unbranded luggage is not worth it, as a brand comes with warranty, and with warranty comes peace of mind.
Q] What are your expectations from this wedding season?
Luggage is an important part of the wedding trousseau. Plus, there are 32 auspicious wedding dates till January; so we are very bullish and expect the market to pick up. November looked good and hopefully the trend will continue.
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