5 key factors to win in the Indian Luxury Market in 2021 & beyond
By Dr. Sheetal Jain
India is one of the fastest developing economies across the globe. As per the latest report by IMF, India is the only major economy of the world predicted to have a double-digit growth in 2021. Further, CEBR forecasts India to become the world’s third largest economy by 2030. Backed by economic development, internet penetration, policy reforms, growing middle-class population and increasing aspirational consumers, Indian luxury market is all set to see favorable growth over the next decade. The size of Indian luxury market is projected to surpass $200 billion in 2030. According to recent McKinsey report, 300 international fashion brands are eyeing to enter India in next two years. Although, the country provides lucrative growth opportunities to global luxury brands, a lot of challenges pertain for the brands to successfully penetrate and expand in the complex Indian market. India is a diverse market with differences in culture, traditions, languages, region and religion across the country. Therefore, the strategies that have been successful in western markets may not work in Indian context. Marketers must ‘think Indian to win Indians’.
Here are the 5 key success factors to win Indian luxury market:
Brand awareness and visibility
Indian luxury market is still at a nascent stage. Majority of Indian consumers are not aware about the rich culture, heritage and pedigree of these brands which make them distinct from the mass brands. They mainly buy popular luxury brands rather than their lesser-known counterparts as ‘brand name’ plays a critical role in their purchase decision. For instance, few brands that entered Indian market in early 2000s have been able to build strong brand recognition. Therefore, it is important for luxury brands to generate brand awareness and brand visibility amongst the consumers. Marketers can leverage social media platforms to inform consumers about the brand’s unique identity and DNA and create positive perception in consumers’ mind-set. Further, brands need to educate the consumers about the core values the brand stand for.
In order to create effective marketing strategies, it is imperative for the marketers to segment Indian market. ‘One size fit all’ strategy may not work in India. Based upon the maturity level of the luxury consumers, they can be classified into 2 distinct groups, namely, traditional and novice consumers. Traditional luxury consumers have complete knowledge about the high-end brands. These brands are the part of their lifestyle and they buy them for intrinsic attributes like craftmanship, legacy, savoir faire and timelessness. Their key motivation to purchase luxury products is to ‘stand out’. To attract this segment, brands should come up with exclusive product range and highlight on quality, experiential and uniqueness value. On the other hand, novice luxury consumers buy luxury items to ‘fit in’. They look for extrinsic factors such as brand name, brand provenance and brand logo. For such buyers, luxury brands serve as a trophy for their achievement. Therefore, to lure this rapidly growing segment in India, brands should come up with affordable products and highlight on symbolic value in their promotional campaigns. For instance, luxury automakers like Mercedes Benz and BMW continue to introduce entry-level models to woo new-age luxury consumers.
Today, as growing number of Indian consumers are well travelled, aware and educated, they want to buy the unmodified version of a global brand. However, to satisfy the ego-gratification needs of ever- demanding consumers, making few alterations like putting their initials, monogramming, etc. can be a good strategy. Further, special collection can be curated by brands during festive or wedding season based on the unique Indian consumers’ tastes and preferences. For example, Italian luxury brand, Canali, came up with ‘Nawab collection’ to suit the time-honored Indian traditions.
Brands may follow standardized product strategy but at the same time, they may work upon adapted communication strategy to be able to create emotional connect with Indian consumers. For example, Shahrukh Khan and Ranbir Kapoor were signed as Tag Heuer’s brand ambassador in India to alleviate the brand appeal among Indians.
Luxury is a business of creating and selling dreams rather than answering needs. Therefore, brands should not just aim to satisfy consumers, instead they should make all efforts to provide them ‘wow’ moments. Marketers should use data analytics and technologies like AI and VR to provide seamless bespoke omni-channel experience to their consumers. To build long-term association with the consumers, brands must exceed consumers’ expectations every time. Invite-only parties, workshops and events can be organized for patrons to make them feel special. Brands should innovate, inspire and involve the consumers. For instance, Burberry’s ‘The Art of Trench’ campaign allowed the consumers from across the world to share their photos wearing Burberry trench coat. This created feeling of ownership over brand story among aspirational consumers.
Proper sales staff training is very important to alter transaction-based relationship to emotion-based relationship. Indian consumers believe in the philosophy of ‘Atithi Devo Bhava’ which means guest are equivalent to God. Therefore, luxury companies should make each client feel distinguished and special. Multisensory experience should be provided to mesmerize and captivate the shoppers.
Product and pricing parity
Since, Indian consumers are well-versed with the latest collection and releases across the globe, they may not be willing to make purchases in India, especially if the companies do not live up to their expectations. Lack of product variety, outdated assortment and high prices in India may compel consumers to buy from international locations like Dubai and Singapore. Due to high import duties, lot of luxury products are sold at 20-30% higher prices in India as compared to the prices in other global markets, thus making it less attractive for consumers to shop in India. If brands do not want to miss the great growth opportunity present in Indian market, they should match the products and prices on par with their offers in other international markets.
(This article has been previously published in indiaretailing.com)