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Social Media-Segment in Focus: Luxury Market (Part I)

megha Monday, October 26th, 2009

There are some things that immediately register…. Like I’m sure most of us grew up listening to Bryan Adams and there have been idle moments when we started humming “The only thing that looks good on me…”

And when we are at it, just what was the novelty of this song? The luxury brands didn’t fit as well as “you” as we all know (another question though…Who was this “you” anyway?). Coming back, the Armani suit, Gucci Shoes, Versace style et alia currently is the subject of our general interest.

Ever since ever, living kingsize has been equated to splurging on luxury brands, bags from Berkin, shoes from Jimmy Choo and perfume from Chanel (to exemplify)…*sigh*

At what position is India placed in the list of customers? Our concern exactly…

According to a recent study by Bain & Co., while India makes up just 0.4 percent of global luxury good sales, the market is growing at 25 percent a year. There are 1.5 million households in India who can afford luxury goods, compared with 1.6 million households in China, according to McKinsey.  (International Herald Tribune report). So effectively, if we view it in the light of a sigmoid curve, there is still an exponential to witness, even sooner than we expect.  Moreover, a report by FICCI and Yes Bank, published in July 2008 on luxury brands, estimated the luxury products market in India to be over USD 500 million that is expected to touch USD 1.2 billion by 2010.

Sorry to play the spoil sport, but here’s something for flipside sake. Armani, the company opened one boutique and one Emporio Armani shop in New Delhi only recently (its first ever store in India). This is pretty disturbing as the company was founded in 1975, and by 2001 had an annual turnover of USD 1.6 billion (wiki).

So why the discrepancy one may ask?

1. Explanation One: Purchasing power

Rebut: India has the world’s twelfth largest economy at market exchange rates and the fourth largest in purchasing power (wiki). Plus the post recession period has witnessed a steady change in how these powerhouses have started looking beyond the western hemisphere, with India being a major emerging market (Brand equity report).

1. Explanation Two: Marketing strategies and media presence (Bingo!!)

In the past, brands like Liz Claiborne and Pierre Cardin entered Indian markets but made a hasty retreat following poor customer response (Source: Financial report from THE HINDU group).  There have not been many celebrity endorsements from India either.

Only recently, MontBlanc signed up Indian actor Anil Kapoor with daughter Sonam for a TV commercial. Considering the fact that the company has already established itself as a brand to reckon with, long ago, its attempt to create brand awareness in India, is still in its infancy.

Since Social Media is the latest buzz around, we at Microreviews decided to take up a series on this segment and check out the social media presence (in India), of some of the major players in the luxury division.  Watch this space for more, as we zoom into the biggies in the business.  Until then…

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Tags: Armani, Chanel, Gucci, Luxury brands, Social Media, Social Media India, social media presence, Versace