Preserve the luxury or extend the brand.
Published on: Mar 4, 2016
Transcripts - Preserve the luxury or extend the brand.
Extend the Brand
In context with Indian
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
India is a booming emerging
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
Fast GDP growth,
Increasing per capita consumption,
Growing young working population.
Segment in India
The fast rising Indian Consumer Markets has attracted many
Luxury brands from the worldwide to set up their business in
India being the second-fastest growing economy is believed
to be one of the most sought after market by the luxury
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 Key Consumers
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
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
The “closet consumers” are represented in
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.
Let’s Find Out
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
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”.
Let’s take an example
of Multinational Luxury
A French fashion house founded in 1854 by
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
In 2003, LV launched its first
official store in New Delhi, India.
The target market:
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
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
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
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.
A note describing some of the
“Indian Consumers of Luxury Brands”
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.
Alienate the Core Consumers base
and ultimately erode and dilute the
Louis Vuitton brand equity.
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
“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.
Instead of extending the
brand, the company needs
to think about boosting
the sales of the brand…
1. Increasing the footfall to
2. Endorsing and Sponsorship
3. Opening outlets in Luxury Malls
4. Outlets in 5 star hotels.
5. High streets: high footfall
6. Delighting customers with gifts on
purchasing during the low season.
7. stores located in the country’s
most favourite Tourist Destinations.
Bad times pose difficult
challenges on the luxury
Those who have successfully extended their
brands from vertically across a range of price
points are usually the most immune to
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
In Tier 2: Young, modern, more affordable
Tier 3: More youthful and street-savy
translations of Armani Style
AJ | Armani Jeans
AX | Armani Exchange
Clear differentiation exists between these brands,
minimizing the potential for consumer confusion and
Each also lives up to the core promise of the parent
brand, reducing chances of hurting the parent’s
Market share of
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
The BMW’s lowest priced car in India is 1 series:
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
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.
Created By: Dipanshu Sehjal, IIIT Allahabad
During an Internship under guidance of
Prof. Sameer Mathur