LUXOR WRITING INSTRUMENTS PRIVATE LIMITED - MARKETING PENS IN INDIA
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THE FUTURE
According to analysts, the major reason for LWIPL's
success was its focus on offering superior products to its customers. However,
in spite of LWIPL's current leading position, analysts felt that the company
would face tough competition in future from other leading brands such as
Reynolds, Rotomac and Today's.
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According to analysts, LWIPL lagged behind in tapping
the full potential in certain categories. For example, in the ball point
pen category that contributed to around 50% of the total sales in the pen
industry, LWIPL had just 5% share. Moreover, in the fast growing gel pens
segment, the company had negligible presence. Analysts also felt that
excessive dependence on the Parker brand, which primarily catered to the
premium segment of the market, may not be fruitful for the company in the
long run.
But most importantly, analysts seemed concerned about LWIPL's
decision to diversify into the packaged food and hospitality industry. In
2001, LWIPL established Hazel Foods Pvt. Ltd. with an intention to enter
the packaged foods segment and launched dry fruits and spices under the
'Hazel' brand. In 2002, Luxor Hotels and Resorts Pvt. Ltd. along with the
Hyatt group[1] acquired utub Hotel in Delhi from the Indian Tourism Development
Corporation (ITDC)[2]. The company also had plans to launch packaged water and
enter into the convenience foods segment. For packaged water segment, LWIPL
planned to tie up with an international company. |
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Explaining the rationale
behind these moves, D.K.Jain, MD of LWIPL and Vice Chairman of Luxor Hotels and
Resorts Pvt. Ltd. said[3], "Investments in categories which show promising
potential for growth and family interests" prompted this move. Analysts felt
that these industries demanded a different set of expertise and a totally
different type of customers to be catered to. They felt that due to unrelated
diversification, it would be difficult for LWIPL to focus on the writing
instruments business, where its core strength lay.
QUESTIONS FOR DISCUSSION:
1. By 2002, LWIPL had emerged as one of the
leading companies in the pens industry in India. Briefly analyze the marketing
strategies adopted by LWIPL that led its growth from a small stationary shop to
a leading company in the writing instruments industry in India.
2. According to analysts, LWIPL owed its success to the marketing mix,
which it adopted. Critically examine the various elements of the marketing mix
and evaluate the competitive advantage they conferred on the company.
3. LWIPL is facing tough competition from other leading players in the
pen industry. Briefly comment on the competitive position of LWIPL vis-à-vis its
major competitors. Do you think the company's decision to diversify into
unrelated business is right? Justify.
ADDITIONAL
READINGS AND REFERENCES
[1] The group is owned by the Pritzker Family of Chicago, Illinois. It owns or controls, a number of interests in the hospitality industry, including Hyatt Hotels Corporation, Hyatt Equities LLC and Hyatt Vacation Ownership.
[2] It is an Indian public sector undertaking which had been established to coordinate tourism related activities in the country.
[3] In an article titled "Luxor scripts a new plan," by Ratna Bhushan dated December 19, 2002 posted on www.blonet.com.
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