VIPP AS

An SME uses global branding to break into the international waste bin business

Attila Németh

12 06 2013 1Original Vipp – Marie’s Hairdressing Salon, 1939

Index• Introduction

• History of Vipp • Vipp today

• Asian Pacific market• Screening of the market• Asian Pacific markets• Enter into Asian Pacific

market• Strategy for entering

• Marketing plan• SWOT• Action plan

• Conclusion• Bibliography

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IntroductionHistory of Vipp

• Vipp was established in 1939 by Holger Nielsen in Denmark (Randers)

• The family based company started to produce pedal-operated waste bin.

• The product initialy sold to the industrial market (petrol stations, ferries, hair-dressers and hospitals).

• The consumers were interested in the product.• In 1992 Nielsen’s dougther Jette Egelund took over the

company.• Starting to be international – Conran Shop – London, Paris.

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IntroductionHistory of Vipp

• Jette visited international design and interior fair in Frankfurt.• In 1996 Jette’s son – Kasper - and daughter – Sofie - became

Vipp employees • In 1999 the factory moving to Lolland (outsorce the

production, becouse there was no place to expansion) and Lyngby (the office is place here even today)

• „Less is more philosophy” - distinguish Vipp products from others

• DNA design and new concept of the product developement – the company offers different type of kitchens match with the bin.

• 2011 (December) opened the first store in Copenhagen.

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Introduction Vipp today

• It is still a family run business, creating very high quality products

• The company has it’s own designgroup

• Vipp has a smal team (3 people) in Public Relations, who promote awareness of their products in the press, with dealers, and with end customers.

• Wide product range : kichen, bathroom accessories ( e.g. toilet brushes, soapdispensers, plastic bags for bin, and towels)

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Introduction Vipp today

• Vipp products available in the leading design shops: Casa Shop, Illuns Bolighus, Waterworks in New York

• Worldwide presentness of the product in designer shops and lifestyle stores.

• Sales are continually grotwth (300 bins/day)

• The company has own sales force in Germany, Holland, Sweden, Belgium and Denmark

• Desing focused not volume driven company (use limited editions)

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• Vipp exports to 30 countries, mostly in Europe, also Canada, Japan, United States, New Zealand, and South Africa.

• The precentage of the export is increasing – 70% of the total sales is export

• In Denmark 10% of the total sales is from B2B market

• Two main competitor are Brabantia (Holland), and Wesco (Germany)

• Vipp participates Special marketing events and art exhibitions

Introduction Vipp today

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• The company is also good in advertising the firm through various charity events,, attracting more and more design-conscious consumers who are on the look-out for a stylish waste bin for their bathrooms and kitchens.

• Vipp got invited to exhibit at Carrousel du Louvre in Paris. Chilean designer Mauricio Clavero created some art experience by using Swarovski crystals and Sicis mosaics. This exhibition tours took place in major cities throughout Europe and it helped Vipp to advertise their products.

Introduction Vipp today

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Vipp is selling … what?

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• Vipp sells trash bins as a luxury product – good idea!!!• Vipp not only sells kitchen and bathroom apparels and other

household products, but sells fashion and trend and creates it too (Trashion).

• Vipp has own philosophy and design which influenced by art• Vipp bin is like a favourit furniture or picture of the owner• Who owns a Vipp bin is rich, and demanding• Vipp sells well working equipment with the feeling of

individuality• Vipp bin means the same like Rolls-Royce among the cars• The brand has a strory and a lifestyle together, connected to

the product

Screening of the market preliminary screening and market categories

Political stabilityEconomic growth Currency convertibilityLabour cost/ productivityShort-term creditLong-term loans/venture capitalAttitudesNationalizationMonetary inflationBalance of payments Enforceability of contractsBureaucratic delaysCommunicationsLocal managementProfessional services

For Vipp - Denmark

A markets: primary markets offering the best opportunities for long-term strategic for development: surrounding countries (Germany, Holland, Sweden, Belgium) B markets: secondary markets where opportunities are there but risk is high: UK, France, Italy, USC markets: tertiary markets with high risk: Australia, China

If Vipp is screening Asian Pacific markets from macro aspects must continue with a deep research, gathering primary data, wherewith this is a high-risk (C) market to the company, becouse of the high psychic, cultural and geographic distance.

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Screening of the market Dimensions of market attractiveness and competitive

strength• Market size• Market growth• Buying power of customers• Market seasons• Average industry margin• Competitive conditions• Market prohibitive conditions• Government regulations• Infrastructure• Economic and political stability• Psychic distance

• Market share• Marketing ability and capacity• Products to fit market demands• Price• Contribution margin• Image• Technology position• Product quality• Market support• Quality of distributors• Financial resources• Access to distribution channels

I highlighted the most important factors that Vipp would research, as a luxury, high quality products manufacturer and designer when the company wants to get a

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Asian - Pacific marketsHigh demand of luxury

"Play god and create your own epidemic" - Radha and Husband encouraged

The Cult of the Luxury Brand by Radha Chadha and Paul Husband Reviewed by Kelly Nuxoll

„Thirty years ago, Chinese businessmen were wearing Mao suits. Now their suits are Armani. Ferragamo shoes are de rigueur for South Korean women. Ninety-four percent of Tokyo women in their 20s own a Louis Vuitton. Of the US$80 billion luxury-brand industry, more than half of sales come from Asian consumers - despite the fact that purchases are often out of proportion to buyers' actual incomes.”

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Asian - Pacific markets„The perfect way to be successful entering this market is to have a strong brand image with a high-quality product and good service background.”

Kelly Nuxoll

B2C market: Even Asian customers want luxury products which are easily recognized by anyone and furthermore they feel individual due to the rarity of its! Vipp products are in the „houses”, so mighy also need to research the habits of the hospitality in this market too. (It is a possibility to think about „go out from the house” – like the new Vipp Mini Table -, and develope, and design exterior products - e.g. DNA design shopping basket or trolley - , but first to the domestic market!)

B2B market : a growing number of luxury hotel and restaurants are opening, and many of hospitals, high standard offices and public meeting point (aerports, museums, theathers or cinemas) can be the target to Vipp.

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Asian - Pacific markets

I’m, as an expert of this market, can firmy state that Asian Pacific market is very attractive to the companies who wants to extend their bisiness, but there are some features that Vipp has to take into concideration, before entering this market:

• Open business environment and fast demographics changing – flexibility needs to attract costumers

• Rising incomes and consumer spendings (GDP, PPP) – gaining demand of high-quality produts – it’ s a huge market! - Capability to serve the customers

• Global market leader companies relocate their platns to Asia and this is part of their long-term global growth strategies - prime costs and transportation and logistic disadvantage

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Asian - Pacific markets

• Not to many own brand in the market, but it’s growing - “under-branded and under-advertised market” – It’s a good opportunity to an existing brands like Vipp uses global branding to entring the market (promotion)

• The most of the international brands are in the big cities - saturated market – tough competition - huge cost to compete

• The significant growth and potential is in the 2nd or 3rd biggest cities, areas in respect of the population (These are the areas wheregovernments is prioritising growth)

• Fundamental to know the historycal and cultural aspects of the customers of Asian market. (It’s risky to enter the market with a brand new approache - do not sells only a brand of a bin, rather a brand of luxory products

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Enter into Asian Pacific market Strategy for entering

Internal factors determinete the decision of the entry mode:Product complexity

Vipp has a wide rane of product portfolio, so in this case when we would like to built the brand image we have to pick the most known product (I suppose it is the bin in every size) and entering first to the market and observe the sales figures and profits, and enter the others stepwise according to the demands and regarding to the profitability of the products.

Product Differentiation advantageThe fact, Vipp is not only a trash bin manufacturer (in simple term) but a designer of luxury items coud be the main advantage. The luxury means quality and it can be the added value of the Vipp brand, and the costumers are willing to pay extra for the superior products.

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Enter into Asian Pacific market Strategy for entering

Internal factors determinete the decision of the entry mode:International experience

The company has some experience on international fields (A and some of the B market), but it’s mostly based on a collaboration of talented designers and artists. Despite of Vipp’s products appear all over the world, I suppose Vipp business experience, mainly on the 3rd markets, is slight. The hinterland in Asia is a very important fact, to undestand the market, and the opportunities of the business.

Firm sizeAs we know Vipp is an SME with less than 100 employees. The degree of the company’s commitement is limited. When Vipp decides which entry mode to choose, should take into consideration that, the company size ( availability of the financial and management resources) confines the possibilities to choose the enter mode.

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Vipp should use direct export mode first via local distributors (which has perfect relationship with luxury hotel and restaurants, hospitals and high standard offices) help them with professional product and sales training and marketing on B2B market, and later on cooperative export mode with strategic alliances to enter B2C market with massive brand promotion and a local sales force via luxury, designer and demanding furnishing shops.

Enter into Asian Pacific market Strategy for entering

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As I mentioned before first Vipp should aim to enter into the market the 2 nd and 3rd biggest cities, and takes part some exhibitions located in becouse more likely to have a higher proportion of smaller companies here than enormous multinationals. Such events are an excellent way of making initial contact with customers, and can also be a good means of moving a potential sales relationship forward relatively quickly, and there is an opportunity for potential customers to ask questions, and have the advantage of establishing the face-to-face contact which buyers value so much. In addition these events help to persuade buyers that Vipp is committed to this market, by the fact that they have physically devoted the time and expense to be here.

Enter into Asian Pacific market Strategy for entering

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Marketing Plan

The challenge of gaining trust in Vipp brand can be turned into an advantage if the company leverages its brand to Asian market. When approaching a potential customer for the first time, Vipp should communicate experience and credentials. Even if the company is unknown in Asian market, the brand could be a real plus becouse it’s Europian. The most Asian people associate Europian brands with quality, and accuracy. Moreover the name VIPP is very simalar to the well known acronym: VIP, and I think, in respect to these are luxury products it could be an additional advantage.

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SWOT

StrengthsVipp can be a differentiator along the houshold industry („articles for personal use”) with it’s own designed products. Vipp has a genuine idea of desing and an original pedal operated waste bin from 1939. Only a few competitors (Brabantia – Holland, Wesco – Germany) in this brand-oriented segment. Vipp has a family tradition based management, and new, modern thinking about the products. The product range, and the sizes and the varies of the colors of the products are broaden. The strategy to build a global brand with only a little differentiation among the markets is used to work, if the company has a good product. Vipp has them, so I think this strategy is also a strenth of the company.

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SWOT

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WeaknessesVipp has a little experience on international market, and has a limitation its resources. To build a brand needs big amount of money and a lot of imformation from the customers. So, Vipp needs to be creative and cooperative, which is not neseccerely allows the company to do its own idea. The manufacturing is in Europe, which is in some respects not a weakness (trust, and quality), but if it’s based on the financial aspects, increases of the costs of the production.

Opportunities

Vipp still has been collaborating many of well known designers, who easily can publish their added value to the brand, showing the Vipp products what were created. This could be take place in an exhibition, a charity event or could be any type of issuance by the media. This is an effective way to Vipp brand to be published. The other important opportunity to the company is to take advantage of the increasing demand of the unique, designed, exclusive products. If the company finds the less risky expansion strategy for the sales, and uses the marketing as excelerate to build the brand image it will be possible too reach the globalization of the brand.B2G market is probably not the biggest opportunity for Vipp, and it needs very stong network of contacts, but in some wealthy countries, like Kuwait, Brunei, Singapur or Qatar, could be a reasonable revenue from this market too.

SWOT

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ThreatsIf the company spend too much (time, money, human resources) to developing new products and the product range would be too wide, it is a threat there would be lack of focus, or money of the sales. To desing luxury product it’s a capital and time intensive activity (research the demands, shaping, testing, market introduction..etc.). Similar would be occure if the company enter into too many markets at the same time or a too large market and can’t serve the demands of the buyers, or the quality of the service falls off.

SWOT

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Action Plan

• The first thing to Vipp should do is, prepares and presents comprehensive case studies about „what Vipp can offer” and „what could expect” to the market, and should assemble a client list for the potential B2B customers. These should be the earliest possible stage in the relationship with the market. The result of the study need to be communicated among the potential B2B customers. So, for the first step, time and effort are required to gain the trust of the target market.

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Action Plan

• Second - Vipp need to prove that they are „established” in the market, and need to demonstrate for the potential customers the acquired experience and the knowledge which is deeper about the market than similar companies have, and need to illustrate the brand has been gaining the trust of their target audience.

• Third - Vipp needs to collaborate with design, and luxury shops to promote (together under Vipp’s controll) the brand, and start to sell Vipp’s product.

When the customers realize Vipp has a strong appearence on the market, and look for their products , and after a while the sales figures are increasing,

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Conclusion

Vipp offers high-quality, fashionable products. I assume that the best branding strategy in the Asian market is to target the 10-20% of quality-focused buyers, and focus on service quality, collect international knowledge and people, while of course maintaining high quality standards of the products. Relationship-focused promotion is the other key element of the succes, such as trade shows and site visits…etc, since trust in brand be formed, and Vipp can determine the best sample of luxury and design oriented consumers.

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Bibliography

• http://www.linkedin.com/company/vipp• http://www.designmanagementeurope.com/site/webfiles/DMEA2008%20

Posters/Small_Vipp.pdf• http://www.vipp.com/• http://freshome.com/2012/02/07/modular-stainless-steel-kitchen-from-vi

pp/• http://www.frameweb.com/news/report--the-vipp-kitchen - Stand-alone

module, attention to detail and a clear DNA.• The Cult of the Luxury Brand by Radha Chadha and Paul Husband• Svend Hollensen, Global Marketing 4e – Pearson Education 2008• White Paper: Marketing and Selling to Chinese Businesses -Written by

Matthew Harrison and Mark Hedley • White Paper: What is Globalisation? - Written by Daniel Park

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