Grasim Industries Ltd and VSF - Expanding a Commodity Market through Branding and CRM
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Case Details:
Case Code : BSTR214
Case Length : 26 Pages
Pages Period : 1999-2006
Organization : Grasim
Pub Date : 2006
Teaching Note : Available
Countries : India
Themes: Business Strategy | Product Development
Industry : Textile,
Apparel, and
Accessories
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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EXCERPTS
VSF: Fluctuating Fortunes
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Historically, the prices of substitute fibers had often had an impact on the demand for VSF.
The demand for VSF was at its peak in the 1960s, when it commanded a market share of 20% in the global fiber market.
Over the years, this had declined gradually. Over the decades, the production cost of VSF had risen steadily, owing to soaring raw material (especially wood pulp) costs and the highly power intensive nature of the production process. In the 1990s, the low price of cotton and falling polyester prices made VSF the costliest fiber, causing a decline in its market share. In the 1990s, VSF's
global market share had shrunk to 4%...
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Service Beyond VSF
In 2002, Grasim began implementation of its 'Service beyond VSF' strategy. The company had the following objectives:
- to provide complete solutions for its customers' fiber related needs,
- to ensure maximum customer satisfaction resulting in higher customer retention,
- to achieve higher sales by making customers increase the usage of VSF in their yarn,
- to fully utilize its production capacity, and
- to gain market share from cotton and polyester.
Offering Value Added Services to the Entire Value Chain
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Grasim believed that the market could be enlarged only if it worked with every segment of the VSF value chain. Therefore, the company implemented the 'Service beyond VSF' strategy to cover the entire VSF value chain. It encouraged the usage of VSF
by disseminating information regarding the key attributes of the fiber. It
provided several services to the various entities in the textile value chain
which included garment manufacturers, weavers, knitters, fabric
finishing/garmenting units, textile technical consultants, dealers/agents,
processors, and major buying houses/agents who sourced fabric/garment
supplies...
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Product Devoloment Initiatives
Grasim recognized that its efforts to enlarge the market for its VSF would be futile unless new applications and products were brought out regularly. Product development in VSF was virtually nonexistent as compared to other fibers which regularly came out in newer versions.
Therefore, along with its provision of value added services, Grasim made efforts to introduce newer variants of VSF...
Excerpts Contd... >>
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