From A Club(b) That Bagged Success: Corporate Front

corporate front interviews tarun mullick

Corporate Front

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There’s nothing soft or smooth about his marketing tactics. In fact, this former table-tennis player–he won the West Bengal junior state championship in 1975–believes in spinning his opponents out of a crowded marketplace. The result: in just seven years, Clubb International has become a major brand in the highly-competitive Rs 150-crore soft luggage market. And the credit for this goes to Tarun Mallick, the 37-year-old CEO of the Rs 2.50-crore Clubb International.

Don’t be fooled by his unassuming demeanour or the run-of-the-mill office marked by a table made from cheap wood with a pile of trade-fair guides in one corner. For the ambitious Mallick–who decided to give up table-tennis as “it couldn’t give me a livelihood”–established the Clubb International brand from a dingy room in Kidderpore, Calcutta’s congested port area.

Says Rita Mallick, his 33-year-old wife, who designs several Clubb International products: “Tarun’s key to success is his determination, ambition, and a matching doggedness to realise them.” Adds a confident Mallick: “I want to build a brand, and I want to prove that one can do that only by maintaining quality.” Not a tall claim for a person who embarked on his entrepreneurial career by making plastic diary covers in 1977 and, in 1980, bagged his first major order from the Rs 6,000-crore Peerless General Finance & Investment (Peerless).

The Peerless order for 55,000 diary covers helped Mallick financially. And, three years later, he spotted the real opportunity. “I realised that soft luggage would be the product of the future,” reminisces Mallick. So, in 1983, he invested Rs 20,000 to buy a Taiwanese machine to make bags, and was immediately asked by the Rs 670-crore Bata India to design and develop nylon bags for its Power range of accessories. In 1987, Mallick’s products were also distributed at the Reliance Cup–the world cricket championships.

But by 1990, Mallick was frustrated with being a mere supplier to major manufacturers like Bata India. Explains Mallick: “Although my products were praised for their designs and quality, I remained in the shadows.” So, in 1990, he launched the Clubb International brand, whose logo was finalised on the banks of river Bhagirathi when Mallick and his wife stood watching the silhouette of a boat with a sail. “That seemed to be a perfect logo,” says Mallick, “and a brandname like Clubb was enough to reinforce the idea of travel.”

But a perfect logo itself does not guarantee the success achieved by Clubb International, whose turnover has jumped tenfold from Rs 24 lakh in 1990-91 to Rs 2.50 crore in 1996-97. And Mallick now makes various products–travel bags, sports bags, trekking bags, duffle bags, suitcases, and rainwear, with prices ranging between Rs 50 for a pouch and Rs 2,000 for a suitcase–made from nylon, polyester, and jute. So, what is the secret of Clubb International’s success? The answer: its marketing and high quality standards.

Mallick’s biggest achievement is to build a brand in an industry where most small players are content with supplying their products to bigger companies. Behind the accomplishment is a well-planned marketing strategy. In 1990, the choice was between manufacturing soft or hard luggage. But Mallick chose the former for two reasons: the market leader, Rs 228.12-crore VIP Industries (VIP), had a near-monopoly in the hard luggage segment, and manufacturing hard luggage was both capital- and technology-intensive.

Next, Mallick realised that he could not afford huge advertising budgets like VIP’s–which spent nearly Rs 3 crore on advertising in 1996-97 and has a 18 per cent share of the market. So, he decided to concentrate on quality to satisfy his customers, keep his prices a notch–about 15 per cent–below VIP’s, and create a dealer-driven demand in the market. Agrees Mallick: “Dealers have a crucial role to play in my gameplan.”

But that meant giving enough incentives to the dealers and still be price-competitive. Clubb International offered a hefty 30 per cent commission–now reduced to 25 per cent–to dealers, compared to VIP’s margins of between 12 and 15 per cent for various products. However, a salesforce–which now has 12 people–was employed to contact the dealers directly, which helped eliminate distributors and, thus protect margins.

Clubb International also pays more attention to changing product designs regularly, and explore niche markets. For instance, it launched a range of jute ladies fashion bags last summer. “With Indian upmarket consumers choosing eco-friendly products, there is a big market for jute products in India and abroad,” remarks Mallick. In 1996-97, Clubb International’s exports stood at Rs 50 lakh, and buyers included those from the developed markets like the UK and Germany, as also the smaller, neighbouring markets like Nepal and Bhutan.

The strategy worked, and Clubb International sailed through the marketplace, as both dealers and customers were happy. While the dealers pushed the products to earn high commissions, customers were happy to buy a quality product at a lesser price. Wooing dealers was not easy, even with the high commissions. What really turned the tide in favour of Mallick’s boat was his obsession with quality.

Avers Mallick: “Product quality is my only capital and I have to score on that.” To do that, Mallick personally supervises every single step in the manufacturing chain, right from the procurement of raw materials to cutting, stitching, and finishing. “Even if the thread used in stitching is not of the desired quality, the luggage can be a complete failure,” says Mallick. Banking on these high quality standards, Mallick also became a supplier to established institutions, which further helped him convince the dealers that his products were excellent.

“We first purchased his products in 1996, and my colleagues thought that the bags had been imported from Holland,” certifies Avyudaya Chaudhuri, 40, manager (advertising) of the Rs 1,506-crore Philips India. Says Subhobroto Chakroborty, 27, a senior manager with the Rs 40-crore Black Diamond Beverages, a Coke bottler in eastern India: “We have been buying Clubb International bags for the past one year, and they can be compared with the best in the country. In fact, some of us have also become loyal individual customers.” Asish Datta, 31, product head (soft luggage), VIP, is more guarded: “I would say that their product quality is okay.”

Satisfied with his strategy of maintaining quality and wooing dealers, Mallick still refuses to spend money on advertising. After all, no advertising can be as effective as a satisfied customer, who spreads the message by word of mouth. But with the soft luggage market witnessing the entry of transnationals like Samsonite, Clubb International may find that the market is no longer in the bag.

Interviewer: Avijit Ghosal | Corporate Front