Jan Gusich, CEO of AKHIA, Ohio, brings attention to a Marketing Insights feature written by Don E. Schultz and Varsha Jain on the disparate roles that luxury brands fill in China and India (originally published Fall 2013)

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The Same but Different: Luxury Brands Fill Disparate Roles in China and India

Don E. Schultz is a professor (emeritus-in-service) of integrated marketing communications at Northwestern University in Evanston, Ill. Professor Varsha Jain, MICA (Mudra Institute of Communications), is a visiting professor at Medill IMC this spring/fall.

Schultz and Jain have been working together on various research projects involving luxury products, mobile marketing, and brands and branding, primarily from emerging markets and developing countries.


 Prada is Prada. Mercedes is Mercedes. Both are luxury brands with a global presence, so they must use the same concepts and the same creative across the board, right?

No, likely wrong!

In an age of globalization, where any and everything can, and often does, move effortlessly around the world, ignoring time zones and geography, luxury brands are quickly learning that while there are some similarities, increasingly, there are major differences in markets and consumers. That’s a lesson luxury marketers seem to be having difficulty accepting and adopting. Here, we discuss two examples, China and India, to make our point.

Almost the entire luxury category continues to grow globally. Although growth in the traditional markets of Western Europe, the U.S. and Japan is slowing, the markets in China and in India are still expanding. For example, Chinese market luxury sales are currently pegged around $20 billion and India is valued at about $8 billion, according to a 2013 Assocham-Yes Bank study. By 2025, however, the Chinese market will account for 20% and India will have roughly 10% of the global luxury market (i.e., China and India will account for approximately 1/3 of the total, global luxury market by that date).

If those growth figures are to be achieved, a better understanding of what is driving that growth and how luxury products are perceived by consumers in the two markets seems mandatory. Drawing on extensive research in both markets, let’s start by asking one basic question: Can a single marketing or marketing communications strategy be used in both markets? The answer is a resounding “NO!” Consumer perceptions, usage and aspirations are so different that separate and unique communications strategies will be required. While broad global positioning may still be possible, separate translations of that strategy will be required to generate marketplace success. The following basic customer insights generated from our research lead to that conclusion.

1. Chinese and Indian markets have very different perceptions of luxury products since the social dimensions of the two countries vary so greatly. In China, the inter-dependent self is more prevalent, based primarily on cultural views of hedonism. Chinese relate luxury to familial and social parameters. The focus is on interdependence, “face consumption”—making purchases to show off—and conspicuous consumption. However, in India, the market is more inclined toward an independent self and hedonism, as consumers there emphasize self-pampering and self-indulgence as a basis for buying luxury brands. Indian consumers also associate the attributes of luxury goods with an “I am worth it” attitude and a “self-gift giving” concept.

2. Economic parameters have changed the luxury market. The economic development and the growth of each of the two countries also have affected luxury consumption. Multinational companies entered the Chinese market in the 1980s and immediately impacted consumer’s disposable income. The Chinese luxury consumer market bifurcated into the (A) high net worth individuals (HNI) and (B) the affluent middle class. Interestingly, China has the world’s fourth largest number of HNIs, who spend lavishly on luxury products. Additionally, China has low tariffs and taxes on luxury products. China also has relaxed its rules on foreign direct investment (FDI) so that global and international brands are not required to have a joint venture to enter the Chinese market.

India has enjoyed a liberal economy since 1991, thus the flow of credit increased throughout the 21st century. This has resulted in the appearance of several HNIs in the country (wealth more than $1 million). Disposable income in the middle class is also increasing and is estimated to grow to $1.16 trillion by 2025. That figure would then represent 58% of the country’s income. In India, the tariffs and customs duties on imported luxury brands are high, being roughly +100% of the total value of the product. That makes India a less luxury-friendly country.

3. Luxury markets must be segmented. Luxury consumption is significantly related to the social upbringing, familial relationships, and internal and external motives of consumers in both countries. Consumers with high internal motives consume luxury for themselves, and people with strong external motives want to gain social recognition by using luxury brands.

In China consumers focus more on extravagance and social acknowledgement. In our research, we found four types of luxury consumers: traditional luxury shoppers, new luxury shoppers, empowered women and “little emperors.” Traditional shoppers are primarily males 35 years of age or older who enjoy the ambience of luxury brands. New luxury shoppers are the renowned and well-known personalities, who range in age from 20-40 years, and are eager to display their newly acquired wealth. Empowered women are well-educated and financially independent, often being employed in private companies. Little emperors are the teens and adults who are the only child of their family and they flaunt this status with luxury brands.

In India, we found only two categories of luxury consumers: global  Indians and young Indians. Global  Indians are the elite class of society. They reside in metro areas and have “old money” that enables them to consume and indulge in luxury brands. Young Indians are those individuals who work in the metro cities, often having emigrated from small towns. These new, affluent young consumers have “new money” to consume luxury brands, which enable them to meet their high aspirations and to gain acceptance into the desired social circle.

4. The influx of digital communication further separates the Chinese and Indian luxury markets. In both markets, consumers are well educated, tech savvy and are aware of all the luxury brands via social media and mobile phones. However, Chinese give more importance to materialism and social display, which is done by discussing the luxury brands on online platforms. Indians focus on individual likings and values although they also share their passions for luxury products with friends via social media.

To succeed in both of these emerging economies, luxury brand managers need to understand the taxes, customs and the consumers. In China it is easy to enter as FDI, regulations are less stringent and fewer taxes are imposed on luxury products compared with India. Finally, the Chinese and Indian markets both need to be segmented on the basis of consumer motives since there are sub-segments in each category. Thus, different communication strategies need to be developed.

The key lesson for marketers is that luxury is still luxury, but it clearly differs across geographies and cultures.


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