Luxury is usually all about the zeros, and in the case of McKinsey director Laxman Narasimhan's presentation at the Mint Luxury Conference on March 25, 2011 in Mumbai, the zeros spoke of the market for the luxury makers in India.
For instance, by 2015, the projections predict that India will comprise 8-10% of the world's luxury goods market and 9 million households would be in the opportunity set for marketers (a press note added that the Indian luxury market will be worth 30 billion USD by 2015).
The wealthy households would be concentrated in the top cities, with Mumbai and Delhi poised to be substantial markets of the future.
Coming down to the Indian consumer, like his or her counterparts in Asia, value is more of a consideration than price. Narasimhan emphasised that the youth will drive growth in luxury consumption. Also, local preferences will continue to exist. 30 percent of the present luxury market comprises the purchase of jewellery. Within this 30 percent, 50 percent is driven by wedding sales, and 15 percent by festivals, the importance of which can be amplified as in the case of Akshaya Tritaya.
Narasimhan highlighted the challenges that need to be overcome to harness this opportunity: unavailability of retail space, taxation and duties, lack of infrastructure, and ethnic tastes.
He ended his presentation with priority ideas that would help luxury marketers to win in India:
- As the economy goes through ups and downs, top leadership commitment to the market is required.
- "Flex to fit" - Brands should tailor offerings to meet Indian needs
- Target the young affluent
- Leverage Indian resources, such as sourcing craft skills, for global products and brands
- Harness word of mouth - for Indians, the shopping experience is as important as recommendations from friends and family.
In another discussion on "The Power of Experiential Marketing in Luxury", Fabio Degli Esposti, international business unit director, San Pellegrino, talked about how San Pellegrino mineral water was promoted like a wine. "The experience of a San Pellegrino bottle is part of the global experience of fine dining," he said. He elaborated on the strategy used by the brand, which went beyond classical advertising:
- There cannot be luxury without product superiority. When talking to ad agencies, this was always the story to be told.
- The entire strategy is based on being recognised by experts (chefs and sommeliers) as the best mineral water
- Most of the marketing investment is in garnering word of mouth support among the HORECA (hotels, restaurants and cafes)
- Consumers are engaged with by creating an emotional experience around the brand, that emphasises that San Pellegrino is not a product, but a lifestyle, with all the positive values of Italy.
- The venues for the brand are also carefully chosen. "Only the best hotels and restaurants with a high profile experience are chosen," said Esposti.
- Sanpellegrino is also associated with the best of brands in fashion and design like Bvlgari and Missoni
The fourth edition of the two-day Mint Luxury Conference sought to address the interventions that would help India realise its luxury potential. Other speakers included Giovanna Vitelli, member of the board, Azimut Bennetti Group, Raffaello Napoleone, chief executive officer of Pitti Imagine, Fulvia Ferragamo, member of the Board, Salvatore Ferragamo, Michael Perschke, head, Audi India, and Armando Branchini, executive director of Fondazione Altagamma.