Section 2.

Competitor Analysis
Competitor Identification
Most directly competitive: VIP, Samsonite
Less directly competitive: Aristocrat, Safari
A. Strategic Groups
Strategic Group

Major Competitors

1. Large, branded
consumer luggage bag
companies
2. Smaller players

3. All others

Share

VIP ( owns Skybags)

40%

Samsonite ( owns American Tourister)

30%

Aristocrat

7%

Safari

7%

Wildcraft

6%

All others

10%

B. Strategic Groups
Strategic Group
1. Large,
branded
consumer
luggage
companies

2. Smaller
players

Characteristics /
Strategies
Stress on quality
Brand building
exercises through
heavy advertising
Developing new
product innovations
since they are the
market leaders
Have presence in
all product
categories (A-Z)
Market challengers
trying to create a
brand identity in
the minds of the
consumers
Look to dominate
in some niche
categories/segments
rather than being
pervasive

Strengths

Weakness

Production scale
economies
Strong distribution
network consisting of
exclusive outlets and
others dealers
Strong brand name and
loyalty

Heavy advertising
spends are necessary
to maintain brand in
the face of aggressive
market challengers
Becoming
increasingly difficult
to differentiate from
competition purely
based on features

Cost-effective products
Take advantage of newage channels like ecommerce to increase
sales effort

Higher raw material

and production costs
Unable to invest
heavily in
promotions,
advertising etc.
Highly limited focus
on R&D

C. Major Competitors
Competitor
VIP

Samsonite
(owns
American
Tourister)

Characteristics / Strategies

Strengths

Weakness

Overall market leader,

presence for the last 38 years
Early product innovations to
establish a brand for itself
Competes in all segments
Higher focus on midsegment and now increasing
focus on premium segment
Massive advertising and
promotional spending to
protect share
Worlds number 1 luggage
maker
American Tourister for midsegment and Samsonite
brand for premium segment
High quality/ High-price
positioning

Economies of scale,
low costs
Supply-chain
efficiencies
Deep financial
resources
Brand name and
Loyalty

Weaker in
premium
segment
Lack of product
innovation in
recent years,
spends 2-3% on
R&D

Parent company is
world leader in
luggage bags
Spends 9% of
revenue on R&D
High quality
products

80% of raw
materials
imported
Low
profitability

D. Competitor Strength Grid

Luggage bags Competitors in Indian Market
Assets and
VIP
Samsonit Aristocra
competencies
e
t
Name recognition
##### #####
======

Safari

Wildcraft

=====
=
=====
=
=====
=
---------

+++++

+++++

+++++

Breadth of product line

#####

#####

======

Breadth of channel
coverage
Specialty prodcts

#####

#####

======

#####

#####

..

Financial resources

#####

#####

======

Cost structure

#####

#####

======

Geographic coverage
India
International

#####

#####

+++++

=====
=
=====
=
+++++

#####

#####

..

..

.. Weak

--------- Less than average

======
+++++
######

+++++
+++++

====== Average

+++++ above average

##### strong

Section 3. Market Analysis

A. Market Identification: Luggage Market in India
B. Actual and Potential Market Size and Growth
India

2010
$412million

2015
$866million

Projected Growth
+21%

Factors Affecting Sales Levels

Increasing number of local tourists
Increase in purchasing power
C. Market Profitability Analysis
1. Threat of new entrants
The industry is Oligopolistic in nature moving towards Duopoly with two companies
enjoying the market share a bit over 70%.
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. Anew
entrant will have to invest heavily to develop a distribution channel.
d) Cost disadvantages independent of scale:No demographic survey to demarcate buyer profile & helps to focus marketing efforts. This
translates into greater costs in product development & selling & distribution.

2) Expected Retaliation:

2.

Expanding of the distribution network by the existing player.

Accessibility of product.
Price cuts & discount.

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.

3. 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.
4. 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.

5. 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.
D. Distribution System

25% of sales volume comes from company owned and franchised stores while the
remaining comes from dealers and other retailers

Increase proliferation of product offerings on e-commerce platforms

E. Market Trends and Developments

Shift in demand from hard luggage to soft luggage
Expected growth of around 40- 45% in the premium sector

F. Key success Factors

Present
Brand recognition
Product Quality
Access to major channels
Gain market share in premium brands
Future

Product innovations to ensure increased safety and convenience

Increased focus on premium offerings

Section 4. Market Analysis

A. Trends and Potential Events

Source

Description

Strategic Implication

Importance

Technological

Technological features of the

bag is a differentiating factor.

Very high

The security technologies are

very important.

High implications as the

customers would be
concerned about the
technologies used in such a
product

Regulatory

No much regulatory issues

Very limited

Very Low

Economic

Medium or low relationship

Very limited

Low

People would compare the

features with other available
products to check the value.

Medium

Would have positive impact

on the new bag with security
features

High

High competition
from other brands like
Decathlon, VIP,
American Tourister
Unorganized sector
have higher market
share of luggage bags

Higher competition would

have a negative impact on
the sales

High

Growth of tourism in
India
Growth of market for
premium brands
Travelers need for
security features in
Bags

High demand for security

features gives high hope
from the market.

High

Cultural

Demographic

Travelers concerned
about the safety and
security
Customers sensitive
about the value for
money
Young people interested in
traveling. They are willing to
buy products if they find
value for money.

Threats

Opportunities

C. Scenario Analysis

Travelers would buy the bags paying the higher price as it offers high security features.
Travelers would compromise on the security concern and go for purchase of low price bags.

D. Key Strategic Uncertainties

Will the expected number of sales of bags be met?

Will the customers be willing to pay the higher price for the bag?

Section 5. Internal Analysis

A. Performance Analysis
Objective Area

Objective

1. Sales

After one year from the

launch the sales estimated
according to the market
conditions is 28,605 units

2. Break- Even

As the company is growing at

annual 70% CAGR, and is
expected to sustain the
growth in the next 5 years,
the breakeven is expected in
coming 2.5- 3 years.

3. Profits

Profits after deducting all the

relevant expenses and taxes
for the company is 720 INR

4. Quality / Service

Quality is premium and the

material and the quality of
components used are of
superior quality and some are
from the current product line
available.

5. Cost

Cost include Cost of goods

sold, R&D cost, Marketing
and promotional cost, and
other operating cost which is
about 6000 INR

6. Other

Company has diversified

distribution strategy that
include modern trade chains,
multi brand outlets, ecommerce portals, also their
own stores, so reach will be
there to the customers for the
target of 28605 units.

A. Financial Projections
Particulars

Projected
(Per unit INR)

Operating Statement
Market share

6%

Sales

6720

Cost of goods sold

3800

Gross margin

2920

R&D

400

Selling / advertising

921

Product G&A

519

Div. & Corp. G&A

360

Operating profit

720