Are luxury brands clicking on the right buttons?11 min read . Updated: 12 Nov 2016, 11:42 PM IST
Marketing adages are amended unceasingly today. The consumerist society defines them. Are luxury brands in India listening?
Marketing adages are amended unceasingly today. The consumerist society defines them. Are luxury brands in India listening?
If you think luxury products are ahead on salesmanship, then consider this: Prada didn’t even have a website till 2007.
Today, the brand not only has a website that matches the latest design standards, but also sells online in the US and has a wide social media presence.
Many other international luxury brands not only sell online in the US and Europe, but also in China. Burberry, for instance, having taken up digital as a path to reinvention, employs myriad techniques and technologies to capture the fancy of its current and aspirational consumers.
While high-end flash sales site Gilt got snapped up by Hudson Bay, the popular online luxury retailer Net-a-Porter was acquired by Richemont Group in 2010 and also merged with the Italian e-commerce company Yoox in 2015.
Amid all this activity surrounding digital strategies and mergers, India, however, doesn’t feature much. Although the numbers say India is the next big market for international luxury brands, branding and marketing strategies in the country don’t seem to have diversified much to digital.
For a long time, luxury brands ignored the métier of the Internet, arguing that luxury marketing is not meant to take a mass approach. Luxury is about experience, exclusivity, lavish appeal—none of which can be replicated online. Today, everyone knows it’s ridiculous to think so.
The current questions are more about how to harness the power of the digital medium most successfully, how to work effectively with influencers to meet marketing goals and how to keep up with the ever-updating sophisticated technology.
American minaudière brand Judith Leiber found a unique way of interacting with potential consumers—Kim Kardashian: Hollywood, a role-playing digital game. Karl Lagerfeld, too, became a part of the game last November, but players could also experience Leiber through an in-game branded storefront and pieces from their latest collection. Players can shop and style their avatars with minaudières.
Similarly, giving eyewear a unique twist, Prada launched a special digital project to acquaint luxury aficionados with its Raw Eyewear collection. A special microsite (raw.prada.com) was created, where animated models, created by six international illustrators, wore Prada glasses and presented a virtual catwalk.
Users could see the new eyewear collection by flipping through the works of the illustrators, express their preferences and share their favourite animated interpretation. The “experience" is available across all platforms: smartphone, tablet and desktop.
Luxury beauty brand Guerlain selected seven bloggers, of varying ethnicities and skin tones, to showcase its cosmetic prowess. A smart idea—not only did the brand share the unique content created by and for each blogger, but the bloggers themselves shared it among their followers, thus creating a dialogue among an interested audience.
Many such examples abound of how luxury brands globally are slowly but surely adopting digital strategies, and at times innovating.
India in numbers
The Indian luxury market is expected to cross $18.3 billion in 2016 from the current level of $14.7 billion, according to a study by the Associated Chambers of Commerce of India (Assocham). Factors that have fuelled the luxury industry’s growth are increasing disposable incomes, brand awareness among the youth and purchasing power of the upper class in the so-called tier-II and tier-III cities.
The country understands luxury. Couture is a norm here. The Indian consumer today is a conscious one. She doesn’t want to spend without understanding tangible returns.
The number of millionaire Indian households worth Rs25 crore grew 17% from 2014 to 2015, according to a Wall Street Journal report from August 2015. That figure is expected to more than triple to 348,000 households over the next five years, with a combined net worth of Rs415 trillion, according to a Kotak Wealth Management report.
Alongside, India is expected to have 236 million mobile Internet users by 2016, says a joint report by the Internet and Mobile Association of India and consulting firm KPMG, which will further expand to 314 million by 2017. India is expected to have more than 500 million Internet users by 2017. More and more users are migrating from 2G to 3G since reductions in tariffs for 3G, with the user base projected to grow at a compound annual rate of 61.3% over 2013 to 2017.
According to this report, India has the second largest Internet user base in the world. Though Internet penetration (approximately 19%) is poor, it promises great potential as rural India and cities outside the metros will drive the next phase of Internet growth in the country, with mobile Internet playing a pivotal role. Mobile phones now serve as the main access point for nearly 38% of active Internet users.
Additionally, social media has been capturing the consciousness of young Indians, with the number of users in the country reaching 153 million according to We Are Social, a social marketing agency, of which 130 million are on mobile. A rapid growth was discerned in rural India, where the user base grew by 100% between 2014 and 2015 to 25 million.
These numbers are whopping and many brands have leveraged these figures to taste success. The blended scotch brand by William Grant & Sons, Grant’s India, which is eyeing emerging markets in general and India in particular, launched #TheAwesomeJob campaign to find its India brand ambassador, where only friends could nominate and help you make it through various stages. Applications were invited on a specially created microsite in April 2015 as well as on the Grant’s India Facebook page. In the process, they received a slew of views, likes and eyeballs.
Jewellery brand Tanishq launched a unique product in July 2015, wherein a person could easily change the stone in a ring, with a number of coloured stones offered. The Palette, as the collection was called, required a special campaign, and the brand obliged.
Not only did it create pre- and post-launch hype around the ring, but it also invited an artist to create a masterpiece using the colours that got the most votes on Twitter. A microsite hosted a live stream of the artist at work, with Twitter users voting in real time.
There are more examples of how brands have leveraged the might of India’s population to create a buzz. Domestic bag brands Caprese and Baggit, among other things, used fashion bloggers to spread the word about them, while Mahindra Gusto, a scooter, invited prominent food bloggers to give a shout out.
There are no two questions about how India has become a digital force to reckon with. According to the 2011 census, half the country’s population is in the 20-59 age group and 41% of India is less than 20 years old. Since younger people tend to be more digital-friendly, the allure of social and digital media has only just begun for the country.
The golden core of luxury
Apart from a few, international luxury brands don’t have India-specific websites, Twitter handles or Facebook pages. Web traffic from India mostly gets sent to the home websites.
While Indian brands do create smaller campaigns that manage to woo the couture-hungry population, digital creativity has not yet fully seeped into the industry.
To comprehend what consumers think, want and demand, and how much are brands digitally interacting with India, I surveyed 650 Indian residents from metros including New Delhi and Mumbai and tier-II and tier-III cities such as Gandhinagar and Kanpur. Whether current or aspirational luxury consumers, the study was aimed at understanding how digitally active the Indian population is, and how it might evolve in the future.
More than 70% of the respondents agreed that they research on the Internet before shopping. A salubrious online presence is, therefore, important for luxury brands. Interestingly, of those who said “yes", 45.65% were from the income group earning more than Rs12 lakh annually.
Shopping for luxury brands online—with prices often running into six figures—has always been a debate for consumers and brand marketers. It may be no surprise for luxury brands then that 45% of the respondents said “no" to shopping for luxury online.
However, if you twist the method, the responses change. There was a resounding “yes" and “maybe", when asked if they would shop luxury items directly from a brand’s website, with more than 85% giving a positive response.
Of those who said yes and maybe, most belonged to the income group of more than Rs8 lakh per annum. Of those who said no, almost 70% were women. Brands, therefore, might be more successful if they sell men’s products online.
There has been a myth, however, that the rich are not social media savvy. But almost 78% of those surveyed said they were ardent followers of social media, with over 43% of these earning more than Rs12 lakh annually.
India circumvented the laptop phase to directly jump on to the smartphone bandwagon. When asked whether they used mobile apps, most of the respondents said yes and “sometimes". Luxury brands, however, have made no inroads in mobile marketing in the country.
Indian culture being, for the most part, communicative and family-oriented, “recommendation by a friend" is the most important factor in deciding a purchase. This is closely followed by “reading reviews/posts online", again highlighting the importance of the Web.
Age does determine the mode of understanding—those in the age group of 45 plus still prefer “reading reviews/articles in print magazines/newspapers" over online reading.
Word of mouth is more appealing to women. Those earning more than Rs12 lakh preferred “recommendation by a friend", as compared to men in the same income group, who preferred “reading reviews/posts online".
Those who are 25-35 years old and earning more than Rs12 lakh annually gave more importance to “comments and complaints on social media" than to “reading reviews/articles in print magazines/newspapers". Social media is, therefore, gaining ground in the consciousness of Indian consumers.
While the research projects a diverse range of results, there was one resounding fact: Most of those in the 25-45 age group and earning Rs8 lakh or more a year are comfortable with researching and shopping online, using social media and exploring mobile apps.
Twenty-five luxury brands—ranging from watches and jewellery to hospitality and automobiles—participated in a separate survey I conducted in tandem with the above. Of these, 12 were international brands and the rest Indian.
Of the international brands, only six have India-specific websites, most of which are hotels and resorts, where it is common to have a microsite dedicated to each property around the world.
To begin with, the brands were given a list of methods used to increase visibility, which included print and online advertising, as well as PR for traditional media and mobile advertising. Brands were allowed to choose as many options as fitting their current marketing strategies.
Most of the brands swear by PR for traditional media (79%), PR for new media (74%) and social media (68%). The least preferred methods were television and radio advertising. Advertising through a third party or mobile app, however, received absolutely no votes.
Video marketing is the new catchphrase today, with brands producing short films, and the method is proving to be popular. For India, specifically, the results varied wildly. When asked to rate, on a scale of 1 to 5, how important was video marketing for the brand in India, ratings of 5, 4 and 2 were given by 26% of brands each, while 10% each rated it as 3 and 1—not the most definitive results.
Most brands ranked importance of online marketing as high in tier-I cities (79%), moderate in tier-II (44%) and between moderate and low in tier-III cities (37% each).
For traditional media marketing, most brands ranked it as high priority in tier-I cities (68%), and moderate in tier-II (50%) and tier-III cities (44%). Traditional media marketing, therefore, still remains the most popular method for luxury brands in India.
Mobile marketing received dismal responses though, with most brands relegating its importance as moderate to low in tier-I cities (39% each) and low in tier-II (53%) and tier-III cities (59%).
Beacon marketing is the new frontier for digital marketers globally. With luxury firms such as the UK’s Harrods trying to optimize it for their data and personalization benefits, it has already become the present in many developed markets.
Beacons are devices that transmit small amounts of data via Bluetooth. Imagine a customer is in a store which has beacon installed. The beacon in that store can communicate with the store’s app on the customer’s smartphone (assuming the customer has downloaded the brand’s app) to display special offers or additional information for specific products or services the company is currently offering. When brands were asked about the importance of beacon marketing for them in India, most of them responded moderate or low in all city tiers.
A word in the end
Will digital initiatives lead to confirmed sales? Maybe not: Digital media is not meant to be a direct sales agent. It is but one of the most important components today to create a holistic integrated marketing communications strategy for brands.
There is a conception that digital media is highly mass due to its nature of being free for all. While that is true, how you operate it can make it a personalized communication method as well. The perfect example is the beacon, where you are directly interacting with your consumer, who is already in your store and who has downloaded your app.
India is a unique market. Due to its affinity to certain cultural norms and mindsets, many traditionally successful marketing strategies might not work in the country. The same way that luxury brands have customized their product offerings for India, marketing strategies also need to be customized, experimented with and utilized.
Digital media is superlative for communication and creating awareness, especially in a country that is still discovering and experimenting with international brands. Far-flung areas can be reached effectively through digital media, at little cost. A medium that has been just 20 years in the making, it has made long inroads into the public consciousness, and should be effectively exploited for luxury business benefits.
Soumya Jain is the chief editor and CEO, LuxuryFacts.com and co-editor of The Luxury Market in India: Maharajas to Masses.
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