Growth Strategies Case Study

Samsonite In 2006

OR

Abstract:

Samsonite Corporation (Samsonite), one of the world’s largest and most recognised designers, manufacturers and distributors of travel goods, posted net sales of $966.9 million in 2006.

Samsonite depended heavily on luggage sales and the luggage sales depended on the growth of travel industry. The impact of the dot.com burst in 2000-01, SARS in 2002-03 and 9/11 (terrorist attack on Twin Towers in the US) had hit the travel industry and in turn the luggage sales. In 2001-02, the global travel turnover had dropped by 4-5%. Realising the need for diversification and to minimise its dependence on the luggage segment Samsonite began to emphasize on other products like apparel, eyewear and footwear.

In 2004, Marcello Bottoli (Bottoli), a former president and Chief Executive Officer (CEO) of Moet Hennessy Louis Vuitton (LVMH) joined as the CEO of Samsonite. He wanted to revamp the company as he believed that the strain of multiple changes in ownership, ever since Shwayder family sold Samsonite in 1973, had begun to take its toll. Bottoli’s plans included foraying into the “affordable luxury” category, adding markets, diversifying the Samsonite product portfolio as well as targeting more sales in global markets for the company’s value label, American Tuorister.

Though Samsonite was a well known global brand, it made losses for almost 4 years since 2000-01, turned profitable in 2003-04 and again posted a loss in 2004-05. By 2006, it was positioning itself as the “travel solutions company”, but it still posted a loss of US$ 1.5 million in 2005-06. Although the strategic initiatives to turn the brand over and extend the portfolio had paid off in terms of revamping Samsonite’s image, experts were still skeptical of Bottoli’s initiatives to keep the company profitable.

The case describes the growth and development of Samsonite as a global brand and organisation. The competitive advantage for Samsonite was innovation and it had tried to capture various ranges of the market by servicing through all segment brands. Its manufacturing and out-sourcing strategy has also been a key manifestation of its corporate strategy. The case details the image makeover strategy of Samsonite and ends with the discussion whether this will provide Samsonite the success it aims at.

Pedagogical Objectives:

• To understand the nature and structure of global luggage industry
• To discuss the growth strategies followed by the market leader Samsonite
• To discuss how Samsonite has been established as a global brand
• To analyse the diversification strategy followed by Samsonite
• To discuss the market positioning , product and brand management by Samsonite
• To discuss the image makeover of Samsonite from a luggage manufacturer to a ‘Travel Solutions Provider’
• To debate whether Samsonite’s strategies will keep it at the top of the industry.

Keywords : Global luggage industry; US luggage industry; Soft side and hard side luggage; Product categories of Samsonite; Product line extension; Growth through diversification; Positioning of Samsonite products; Growth Strategies Case Study; Promotion through advertisement; One stop shop for luggage; Multi branding strategy; Life is a Journey; Samsonite spinners; American Tourister; Samsonite Silhouette; Samsonite Black Label

Contents : 
Introduction
Luggage Industry
Samsonite in the Making
Product Portfolio
Sales and Logistics Management
Manufacturing and Sourcing Products
Trademarks, Patents and Product Development