Embracing versus Embarrassing
the potential Customer;
Changing the way the Luxury business is
done in India
- Author: Joseph Sam
Statistics don’t lie but what’s
underlying is always food for speculation and so it summarizes why even though
the luxury market in India shows positive indices is still less than 2% of the
global luxury market. The number
of High Net Worth Individual’s ( defined as those with more than $1
million in onshore liquid assets) in India grew 200 per cent from 2006 to 2013
and households with an annual disposable income of over $100,000 increased 60
per cent, from 700,000 in 2006 to 1.1 million in 2013. Expected to grow at over
20% to reach $14 billion by 2016 (ASSOCHAM-KPMG study )owing to rising number
of wealthy people, aspiring middle class and affluent young consumers the
intangible barriers to luxury consumption far exceed issues such as the
distribution of the target luxury consumer across various markets in India.
So why are Indian consumers reluctant to
let their guard down in embracing luxury in the manner consumers have done in
other emerging markets which have evolved? The key answer is in exploring the
background of ‘the target luxury consumers’. Most of the new wealth in India
has been added by virtue of entrepreneurs from the aspiring middle class, SME’s
and the trading community which has been expanding their footprint. Even high
net worth individuals with a professional background (investment bankers,
techno-preneurs, engineers etc) are those who have established their
credentials in developed markets and reverse migrated to ride the great India economic
wave. What is common to all these classes of the new luxury consumer is their
‘cultural backgrounds and upbringing’, where they were taught to ‘save and be
apologetic about spending’. Since the late
90’s to early 2008 a large number of mid level brands and products established
their presence in the Indian market while luxury struggled getting a foothold
primarily because of lack of partners, shortage of quality retail space and the
difference in pricing Internationally & India, courtesy high duties and
overheads. It’s only in the last 5 years, especially with the opening up of
FDI, that brands have understood the need to be present directly in the market
to access the dispersed pockets of wealth as well as transform this regressed
cultural ethos from apologetic purchases into an unabashed frenzy of being
ostentatious on opulence & personal indulgence.
So how do you get to provoke these new
maharajahs to indulge in luxury be it apparel or accessories or food services or
cars & bikes or even products like real estate when there is this constant
cultural impediment which is far more significant a reason than what most
luxury brand owners have been resonating saying that luxury isn't growing the
way it should be because Indian’s are price conscious. The key is
‘Price-Value-Equity’ (try getting it on an X Y Z graph to see it place marked
right at your face) and how as pre qualified reverse engineers we are able to
give value to the content without having the requisite lineage or culture to
quantify the legacy of a brand. Yes the Indian consumer is brand struck, but
not every brand has struck it out well in the market and with the influence of
social media on mindsets, opinions and perceptions, verdicts are out by the day,
making or killing brands overnight.
The first step to engaging the potential
luxury client in the background of the cultural paradox is to adhere to the ‘global
positioning of the brand’ as luxury brands are uniquely positioned and
respected for the ability to conform to a vocabulary that differentiates them,
so localization at the cost of distorting brand & product DNA should be
avoided at all costs. Second is to make the brand ‘relevant’ to the target
customer and how the acquisition of its offering adds perceptible and tangible
value to the customer in a way that the value of owning it far outweighs its
perceived cost. The third step of the way is far more kaleidoscopic than what
it implies, ‘accessibility’, which is a spirited combination of physical access (retail, eCommerce,
luggage sales, concierge....), price
& payment access and the access
to experience. The last factor, in our studies, is the most vital
considering that it is where cultural barriers are broken, comfort/ the excitement
of owning the product is created or enhanced AND luxury is matured as a concept
in the mind of the target or repeat customer. The final step is to disseminate
the various facets of the brand beyond its product and service offerings into
ensuring that it communicates to its patrons that their engagement &
relationship is symbiotic in a meaningful manner that is lasting. The ‘relationship
enhancement’ step is about going beyond the tokenism of espousing ‘causes’ and
zooming into the resolution of issues that would directly impact ‘the way we
live’.
Brands are akin to people with distinct
and powerful personalities and being a global brand is more about engagement
than the distortion of its DNA by compulsive localisation. With luxury brands
where mental roadblocks are normally higher than a potential client’s self
pride, the challenge of meeting the brand’s business objectives would be best served
by the localization of the method of engagement. In markets like India luxury
brands have to go the extra mile especially as they are saddled with a legacy
of regressive cultural disposition towards spending on indulgences. In
conclusion while tendencies are changing it has to go hand in hand with a sense
of respect for the brand as well as a methodical evolution of the patron
qualifying them for the more privileged products and services.
Author: I.Joseph Sam
Designation: Business Director, Tasteful Living
Email: jsam@tastefulliving.in
