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Indian consumers are becoming increasingly demanding and knowledgeable. Urban as well as rural consumers know what they want, and are looking for products and avenues to fulfil their needs without compromising on quality.
Today's Indian consumer has more expectations regarding - variety, availability of the latest products and location close to response.
The opportunities -- and the challenges -- posed by the Indian market are enormous. The world's second most populous nation, India has already become its twelfth largest economy.
India is a booming emerging market.
Today, the demand for luxury brands is ever increasing and brand offering is continuously on the rise.
The luxury market is expanding rapidly in India on the back of Economic deregulation,
Fast GDP growth,
Wealth (re)generation,
Increasing per capita consumption,
Growing young working population.
The fast rising Indian Consumer Markets has attracted many Luxury brands from the worldwide to set up their business in India.
India being the second-fastest growing economy is believed to be one of the most sought after market by the luxury brands.
India's growing luxury market is set to exceed $14 billion-mark by 2015 boosted by a new class of wealthy termed as the 'closet customers' who have joined the traditionally rich contributing to higher luxe sales.
From about $3.66 billion in 2007, the luxury market has more than doubled to $7.58 billion in 2013.
According to industry experts, India could emerge as
an important luxury market in the next decade but
pricing will continue to play a key role in expanding
the market.
The CII-IMRB report said luxury is no longer restricted to the
rich & famous alone, the new age or 'closet consumers'
who do not typically fit into the boardroom definition of luxury
consumers are staking claims to luxury products, brands and
services as well, but on their own terms.
The past 10 years of economic growth has given rise to a new
wealthy class in India —‘closet consumers’— who are a
major force behind the country’s luxury market growth.
Closet consumers are cost-conscious and seek “value”
even when buying luxury products. And their definitions, symbols of luxury are often in variance with
conventional ones.
These are new generation entrepreneurs,
senior corporate executives,
farmers who have sold their land to developers ,
the BPO generation that lives with parents and has
money to splurge.
Typically these are people who have not been born wealthy
and luxury is not a way of life yet – they are just
experimenting with luxury.
Despite their newfound riches, there is an inherent middle
class mind set among this class, even as they can no longer
be classified as middle class based on their income.
“The inner conflict between a middle class mind set and the globally rich income level,
between conspicuous consumption and a
level of luxury is what called as the ‘closet consumer”
The “closet consumers” are represented in Green
The Red and Green
sections are the target
markets of the Luxury
Brands in India.
Projected Income distribution of the Indian Consumers in
the upcoming years.
The question here is, whether the Luxury
brands need to bring down the prices or extend the brand set at lower price in order to attract more customers to make it more affordable
and become capable of catering the larger segment of the target market.
Luxury products are perhaps one of the purest form of branding because the brand and its image are often key competitive advantages that create enormous value and wealth for organizations.
Luxury for many have become more about personal pleasure and self-expression.
The common denominators of luxury brands are quality and uniqueness.
Enduring Style and authenticity are often critical to justifying a sometimes highly extravagant price.
According to BMW Group India President: Phillip von Sahr
Challenges luxury players face in India is making the brand known amongst its target customers. "For luxury companies, making brand familiar is the most important challenge. The next is to ensure that customer remains loyal to the brand”.
A French fashion house founded in 1854 by
Louis Vuitton.
Ranging from luxury trunks and leather goods to ready-to-wear, shoes, watches, jewellery, accessories, sunglasses and books.
LV is one of the world's leading international fashion
houses.
In 2003, LV launched its first official store in New Delhi, India. The target market:
Rich Businessman
The Royals
CEO’s Celebrities
NRI’s Closet Spenders
NEWS REPORT TELLS ABOUT THE KEY
GROWTH MARKETS IN INDIA
Key growth drivers are the 150,000-plus HNIs (high net worth individuals) with a net worth of $600 billion-3.1 million households earning more than Rs.10 lakh in the top 10 cities (Mumbai,
Delhi/NCR, Bangalore, Kolkata, Pune,
Chandigarh, Hyderabad, Ludhiana, Chennai
and Ahmedabad)
Closet Consumers "won't pick up a Louis Vuitton [bag] because it's Louis Vuitton. They examine it and give a glance to its worth. "The new Indian luxury buyer is more aware of brands.
While he values and buys international luxury brand offerings, he also appreciates his Indian roots and culture.
Clever buyers, prefer the best quality with a reasonable price.
About two-thirds of India's population is below 30 years in age, which is a challenge for most brands as these are aspirational consumers, but may not have the money to buy.
So does this mean that Louis Vuitton should drop down the
prices or extend the brand set at lowered price in order to reach this
segment ??
Louis Vuitton‘s continued success can be attributed to consistently upholding its core values and remaining loyal to its travel-centric heritage.
Core Consumers buy LV because it is more about personal pleasure and self-expression.
Quality and Exclusivity.
Symbol of social status for them.
High reputed Brand symbolizing the wealthy and elegant lifestyle.
While extending the brand has positive effects for the firm
as it can serve more people and simultaneously increase
its market share which in turn may help the firm to survive
the economic downturn.
But it also have negative effects
Brand dilution: Consumers no longer associate the brand with a specific or highly similar set of products and start thinking less of the brand.
People may start thinking that the company has shifted
its focus towards the other segment and have lost the
interest in the original segment of products.
Lower priced brand segment might cannibalize the sales
of the original Louis Vuitton product segment (its core
segment).
“India could become an important luxury market in the next decade. However, right pricing is very important. A luxury brand cannot bring down prices just to attract more customers, to make it more affordable. Premium pricing is essential to ensure the brand exclusivity" .
Canali, Generale Manager, Stefano Canali said in the CII-ET Dialogue on Luxury.
`
Those who have successfully extended their brands from vertically across a range of price points are usually the most immune to economic downturns.
LIKE…
Italian fashion house founded by Giorgio Armani which designs, manufactures, distributes and retails haute couture, ready-to-wear, leather goods, shoes, watches, jewellery, accessories, eyewear, cosmetics and home interiors.
Armani is the fastest growing fashion brand.
In India, Genesis Luxury Fashion Pvt Ltd. Markets brands ARMANI along with many other luxury brands.
The Armani brand extended from the most expensive to most accessible
In Tier 1 : Custom made couture products
Giorgio Armani Prive
and
Giorgio Armani
Tier 3: More youthful and street-savy translations of Armani Style
AJ | Armani Jeans
and
AX | Armani Exchange
Clear differentiation exists between these brands, minimizing the potential for consumer confusion and brand cannibalization.
Each also lives up to the core promise of the parent brand, reducing chances of hurting the parent’s image.
SIMILARLY
BMW cannot launch a car in the compact segment below 20 lakhs INR because the company is associated with high performance and luxury segment in spite of a tremendous market opportunities in the lower priced segment.
The BMW’s lowest priced car in India is 1 series: 22 lakhs. It maintains the luxury of the Parent brand and does not dilute the Brand’s image.
A brand is a name, term, sign, symbol, design or some
combination of these elements, intended to identify the
goods of one seller and to differentiate them from those
of competitors.
Brands are valuable intangible assets that offer a
number of benefits to customers.
If we want to keep younger and closet consumers buying and consuming good-quality luxury products at affordable prices—and attract future high-quality-luxury consumers as well—then companies like LV, with superior reputations, must make good-quality branded products available at competitive prices.
They can be made under the umbrella of the original group, but the production and distribution chains must be clearly separated. One option is to create two discrete business units within the group.
Companies with superior reputations must offer good-quality branded luxury products
at competitive prices.
Any attempt to change the traditional way of doing things could alter the Brand’s
perceived value in the eyes of both the industry and the consumers.