S T R A T E G Y – I 1 www.ibscdc.org turbulent times – Wars, recessions and US and excitement through Revlon’s core Financial Crisis (2008). The current products, nail colours and lipsticks. Despite financial crisis has had crippling effects on the intense competition posed by players luxury industry. The connotation of luxury like L’Oreal, Estee Lauder and Procter & Low-Cost Airlines in India: Took is used in a very generic sense in this case Gamble, Revlon emerged as a strong off with Pride, Landed in Troubles study, symbolising all the ultra-premium contender, becoming a multi-million dollar and super premium goods. It also enables company in a short span of 6 years. The primary objective of the case study is an interesting discussion on whether the However, trouble started brewing when the to analyse the sustainability of Low-Cost industry succumbed to the troubled times’ reigns of the company were passed on to Carrier (LCC) model in Indian aviation business pressures or did it use those troubled Michel Bergerac, Charles’ handpicked industry. This case would enable a discussion times to come out with business and market successor, in 1975. With the company’s on the factors that are critical for the innovations. This case study particularly focus shifting from its core beauty business successful functioning of LCCs; the factors looks at what happened to fashion brands towards diversified areas like healthcare, that have led the Indian LCCs into trouble; as a result of US Financial Crisis. This case Revlon started succumbing to its and the sustainability of LCCs in the long tries to resolve the following questions. competitors. Post acquisition in 1985, the run. Since 2003, when Air Deccan entered Firstly, is luxury industry a recession-proof company witnessed a series of efforts to with its LCC model, Indian aviation was urnaround Strategies urnaround Strategies urnaround Strategies urnaround Strategies urnaround Strategies or a recession-prone industry? What made restore its lost glory. But burdened under a revolutionised. While with the increase in the luxury brands to hold back their debt-load of $2.9billion, and with the demand, opportunities increased, so did the expansion plans, lay off employees and miserable failure of Vital Radiance, its latest threats with the increase in competition. set their minds on improvement of sales? product launch for women above 50, the In a span of 2 years, the industry witnessed How can luxury brands uphold their growth dilemmas surrounding Revlon have 25% annual growth and the entry of four during turbulent times? Who can be their increased greatly. new players. It was estimated that by 2010, target customer and how should be their air passengers would increase to 50 million. positioning strategy during crisis times? Pedagogical Objectives However, instead of doing well, by 2007 Indian LCCs were bleeding. In 2007, Air Pedagogical Objectives • To understand cosmetics industry’s estructuring T estructuring T Deccan merged with Kingfisher Airlines estructuring T estructuring T estructuring T dynamics – critical success factors, RR RR R while, GoAir moved out of the LCC model, • To analyse and understand the nature industry attractiveness, competitors’ adding business class in its aircraft. With and business dynamics of luxury industry analysis, etc. SpiceJet and IndiGo remaining as the only and to debate on whether luxury industry LCCs in India, the case delves into the is recession-proof or recession-prone • To analyse the reasons for Revlon losing reasons behind the failure of LCCs in India its market share inspite of being an old and enables an interesting discussion on • To examine the performance of luxury player with formidable brands what needs to be done to make the LCC sector in the light of US Financial Crisis (2008) • To discuss and debate the challenges model successful, given the potential facing the new CEO, David Kennedy and demand. • To analyse the ways in which luxury to explore all the possible ways and brands can sustain their growth when means for reviving Revlon. Pedagogical Objectives industry is engulfed by economic and financial crisis. Industry Cosmetics • To understand the critical success factors Reference No. RTS0187 for a LCC player globally and in India in Industry Luxury Goods Year of Pub. 2009 particular Reference No. RTS0188 Teaching Note Available Year of Pub. 2009 Struc.Assig. Available • To analyse the performance of LCCs in Teaching Note Available India and the reasons behind the failure Struc.Assig. Available Keywords of LCCs in the country Keywords Brands, Brandings, Positioning, Cosmetics, • To explore and evaluate various options Consumer behaviour, Revlon, P&G, to make Indian LCCs operations Luxury Industry, US Financial Crisis, L'Oreal , Advertising, Marketing economically viable. Luxury Brands, Premium Brands, Brand Loyalty, Recession, Purchasing Power, Industry Aviation/Airlines Disposable Income, Brand conscious Reference No. RTS0189 Starbucks in US: Too Much customers, Conspicuous Consumption Year of Pub. 2009 Coffee Spilling All Over? Teaching Note Available Struc.Assig. Available What helps retailers decide ‘how much of Revlon's Revolving Fortunes: a good thing is too much’? This is the Keywords Resolving the 'Core' Brand dilemma that Starbucks, the leading retailer, roaster and brand of specialty Industry analysis, Low Cost Carriers, Low Challenges coffee is facing. Starbucks, with over Cost Carriers in India, Air Deccan, 14,000 stores and $9.4 billion in sales Aviation, Business Model, Positioning, This case study, while providing a landscape worldwide, exemplifies how a commodity CSFs, GoAir, Indigo, SpiceJet, Jet Airways, of the cosmetics industry, offers scope to can be successfully converted into a Kingfisher Airlines discuss the factors that enabled Revlon in becoming a global brand and why in spite premium brand. In about two decades, the of being such a renowned and popular brand, company has grown from 17 to more than it lost out in the global cosmetics industry. 10,000 stores in the US – its largest Luxury Industry in Turbulent Times It also enables to discuss the measures that market. However, now it is feeling the the new CEO, David Kennedy, should take strains of rapid expansion with the same This case was primarily written to debate to rejuvenate Revlon. “In the factory we store sales in the US and the share price of on how to manage troubled times for one make cosmetics; in the drugstore we sell the company declining. The situation has of the highly recession-prone industries – hope”, said Charles Revson, founder of led to the reinstated CEO Howard Schultz Luxury Industry. It captures the Revlon. Guided by this principle, Charles ruing that in its efforts to grow; Starbucks performance of luxury industry during had strived to promote glamour, fantasy has commoditised its brand. In the first 2 www.ibscdc.org move at damage control, the company has For one it was leadership in denial. Not industry was searching for ways and means S T R A T E G Y – I S T R A T E G Y – I S T R A T E G Y – I S T R A T E G S T R A T E G Y – I announced that it would be closing 600 willing to break the set precedents was to deal with recession, Burger King had the S T R A T E G Y – I underperforming stores in the US. Will that another. The case also helps in debating additional burden of dealing with its internal be sufficient? What else should Schultz do how far was appointing Nardelli correct, problems. Meanwhile, the company to ensure that the Starbucks brand stands given his background and precarious witnessed a change in its leadership for the steady? conditions of the company and the 17th time in 52 years as John Chidsey took industry. Can he do a Lee Iacocca? over as the CEO of Burger King in April This case study talks about how Starbucks 2006. What strategies should John Chidsey converted the world’s second most traded Chrysler enjoyed iconic status at Detroit implement to help the company survive commodity into a much sought-after for a long time, but surrendered meekly to in these difficult times? What impact would luxury. The company’s expansion strategy the European and Japanese automobile US recession have on the fast food industry? is dealt with in detail emphasising, how manufacturers. Guided by a ‘prudent’ logic, Will Burger King be able to survive in the and why the company grew at the rate the company teamed up with Daimler- industry? that it did. The data in the case study enables Benz but the relation ended on a sour note. students to debate Starbucks’ position vis- The private-equity firm, Cerberus Capital à-vis its competitors. The changes that Management in a management buyout, Pedagogical Objectives Starbucks made along the growth track are took over Chrysler in 2007 for $7.4 billion. • To understand the dynamics of the fast also mentioned along with how each change The underlying confidence stunned food industry affected the company. Through the case markets, automobile industry experts and students identify the brand dilemmas that analysts. Cerberus appointed Bob Nardelli • To identify the factors that led to the Starbucks is facing and suggest alternatives to clear up the impending mess. Bob growth of the US fast food industry for improvement. Nardelli, with his GE-background and • To understand the impact of recession turnaround experience at Home Depot, has in the US economy on the performance This case is best suited to understand how chalked out a master plan to turnaround differentiation can increase consumer of the industry in general and Burger Chrysler. Lee Iacocca, for sure would be King in specific willingness to pay premium prices for a watching him over his shoulders.