India and its impression of Luxury

After China, it is India on the target list of international luxury brands. But is India ready to accept these luxury brands and does it understand true luxury?

By: Suneet Pahwa (With inputs by Saguna Khajuria)

Posted on: January 10, 2011

After China, it is India on the target list of luxury brands. But is India ready to accept luxury brands and does it understand luxury?

As a middle class Indian, I was always price sensitive, but didn’t mind stretching my arms a bit when it comes to clothes. I always treated clothes to be reflection of one’s aspiration, thought-process, motivation and above all one’s overall personality. But, what actually brought the change within me was my education and work experience abroad. That’s when I came face-to-face with luxury for the first time. It was March 2009, when I visited headquarters of Louis Vuitton as part of an exchange programme during my MBA. From outside, the place looked like ‘just-another’ residential area on suburbs of Paris, but when I went inside, I actually witnessed the making of the legendary LV bag, with artisans working silently and diligently.

My story above is a reflection of typical Indian family – price sensitive India with global education as the priority.

To understand Indian luxury market well, I decided to conduct a small survey. The focus group was highly selective and only those were chosen, who either earn good salaries today or have masters level education and are target consumers for luxury brands. Here is the outcome of the survey.

Which brands do you consider luxury?
a. Louis Vuitton   b. Hermes   c. Zara   d. H&M   e. Hugo Boss   f. Benetton   g. Prada   h. Mark & Spencer

About 63% responses mentioned Benetton, Zara and Mark & Spencer’s as luxury brands as opposed to 15% responses that identify Hermes brand and consider it luxury.

People need to understand what factors make Hermes and Louis Vuitton a luxury. Factors such as history of the brand and craftsmanship should be highlighted. Such factors should be a part of promotion campaigns. Tag Heuer’s latest commercial on Indian television is a reflection of such promotions.

Rate the following brands from “most preferred” to “never heard of it” on the scale of 6 (1-Most preferred).
a. Marc Jacob   b. Hermes   c. Hugo Boss   d. Armani   e. Prada   f. Dolce & Gabanna

This question, like the previous one, aims to capture brand awareness as well as culture of Indians. The responses were quite interesting - 49% of people being surveyed had never heard of Hermes before, while 46% didn’t know about Marc Jacob. Armani, however, is a clear winner and is identified by most people surveyed.

As the Japanese society faces social pressure of using luxury brands, Indian society has social pressure too, though a different one all together! Indians have pressure of proving themselves in academics. So, an individual is left with very little choice of either studying for medical or engineering exams or learning about fashion! In continuation to this, when asked, “do you feel social pressure to indulge in luxury?”, about 90% gave negative answer to this question.

What quality do you see while buying Luxury brand (1-highest, 5-lowest)?
a. History of the brand   b. Comfort   c. Shopping experience   d. Quality   e. Attitude of sales people

People in mature markets would usually rank shopping experience, such as exclusive treatment at the store, higher along with attitude of sales people. India, however, is a young luxury market, hence, the results are bound to be different. The survey results suggest that ‘quality’ is what people look for, when purchasing luxury. It has been placed highest 107 times, against ‘comfort’ (placed highest 89 times), followed by ‘history of the brand’ (42 times), shopping experience and attitude of sales people (30 and 28 times respectively).

Given a choice between a diamond ring from Tiffany's or your reliable diamond dealer, your preference for your family member on special occasion will be?

63% people surveyed preferred to buy jewellery from their local dealers. As one of the luxury experts says, “The reason is reputation. If I have to gift someone an expensive piece of jewel, I would definitely prefer to buy from the same dealer who I have dealt with before because of the trust factor.” Hence, Tiffany’s (or Cartier’s) first and foremost step should be building its brand awareness and credibility. One of the ways could be by recruiting knowledgeable sales people, because employees are in direct contact with clients, and hence one of the assured ways of establishing trust among new clients.

Please specify what according to you is most preferred mode of promotion?
a. Magazine   b. Star endorsements   c. TV commercials   d. Official website of brand

Promotion is a crucial step to ensure that the target group of the society is aware of the brand presence. But, where these luxury companies need to take extra care is, ways of promoting their brands in different states. In terms of marketing campaign, caution must be taken in treating India as one unified nation. India is a sub-continent comprising 27 individual states - each state differs in its culture, language and customs. Hence, what luxury companies need is not one marketing campaign to generate brand awareness but to run 27 regional campaigns! The survey shows that TV commercials followed by magazine could be one of the leading modes of promotion.

Rate the following from major hurdle to least worrisome hurdle in sales of luxury brands in India
a. Infrastructure   b. Clear distinction between premium and luxury   c. Savings   d.
Lack of product availability knowledge   e. Counterfeits

When I read Deluxe – How luxury lost its luster, a book by Dana Thomas, I was surprised to read that counterfeits signals the overall brand success factor. More successful the brand is, higher will be the demand for the products. The only way to own such expensive logos for those who aspire to be part of luxury world is buying counterfeits that look like the originals. Hence, to some extent, none of the companies would want to hear the news that there are no counterfeits of their brand in the market.

30% people find counterfeits as biggest hurdle in development of luxury brands in India, while 36.8% find it quite a worrisome factor. 68% of surveyed people don’t really know where luxury brands can be bought and hence find this lack of knowledge as important factor for hindrance to the progress (26.4% people have marked lack of retail awareness as ‘biggest’ hurdle in luxury brand development, while 41% say that this factor is quite worrisome).

25% respondents rate savings as ‘biggest hurdle’ and about 18% rate this as ‘quite worrisome’.

What would you prefer, given you have money and each of the two choices are available to you:
a. Made in India   b. Made in France/Italy

This is another important aspect of our culture. We assume that ‘made in’ tag from outside India will somehow be more interesting than, let’s say, ‘Made in India’ tag and as suggested by the survey results, about 64% people prefer ‘made in France/Italy’ over Indian designers. Responses from remaining 36%, however, mention Ritu Kumar, Manish Malhotra and Tarun Tahiliani as their preference.

To conclude, India has vast potential to harness. But, one of the foremost goals of the brands should be to understand Indian mind and culture and then prioritize their strategy based on the surveyed challenges before they enter any partnership. It is easy to view India as one country, but really difficult to implement single strategy in this sub-continent. Due to some of the challenges that have been quoted above, many luxury brands are still hesitant to enter India and invest heavily.

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