By Lulu Raghavan
The Indian luxury story is being scripted amid a resurgence in the global luxury goods industry. Euromonitor data shows a value gain of 3% on 2012, and India is one among five countries with rapidly growing populations (the others are Indonesia, Malaysia, Brazil and Mexico) that provide the greatest opportunities for businesses and brands offering luxury goods and services.
Luxury brands that will experience the greatest success in India this coming year will be those that employ three strategies: consumer segmentation, experience-enhancing technology and exploiting social media to connect with consumers.
While the monied class in India always had access to luxury brands, economic growth has created a new generation of consumers as diverse as senior corporate executives, youngsters working in BPOs who live with their parents and splurge all their earnings, successful entrepreneurs, and farmers who have sold their land to developers.
The word luxury has different shades of meaning for each segment. Is luxury about the highest quality goods produced by excellent craftsmanship, affordable to only a few? Is it about spending the most you can to acquire a possession, or is it the ability to indulge in time, silence, and space? A badge to signal status, or the quest for something more personally meaningful? No single definition seems to encompass this broad field, with luxury meaning different things to different people.
A recent report by IMRB offers a psychographic segmentation – Experientialists, Connoisseurs, Aesthetes and Flaunters – which would help marketers to apply a segmented approach, sharpen their brand strategies and improve their odds of success.
Luxury brands were afraid to embrace technology simply because they feared not being able to create virtual experiences that matched the brick-and-mortar ones. Today, advances in technology and design make it possible to craft online brand experiences that in some cases may even be superior to the offline ones.
A report by Fidelity Investments suggests 85% of millionaires use text messaging, smart phone applications and social media. Imagine the level of consumer engagement possible for luxury brands through smartphone and table apps, QR codes and mobile marketing in general. This is particularly relevant for time-starved, on-the-move consumers who don’t have time to visit stores. This is even more true for those who live in tier-1, tier-2 and tier-3 cities where their favourite luxury brands may not have physical stores. We will see more luxury brands use digital screens, tablet devices and other relevant technology to enhance the retail experience itself.
Given the margin pressure that luxury brands face in India, social media marketing will become an increasingly important way to connect with consumers and increase relevance, especially with the burgeoning youth segment. Globally, Burberry has shown how effective social media campaigns have the power to turn the sagging fortunes of a brand.
Luxury brands in India, too, will be looking to revitalise digital strategies to connect with this new generation of tech-savvy consumers. Over 50% of India’s population is aged below 35.
Given the extreme social lives this segment leads, brands will be looking to refine their social media strategies. If luxury brands tap into these strategies, they might collectively give the market just the lift-off it so badly needs.
This blog was originally published by Economic Times (December 2013).
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