Talk of luxury, and the discussion can turn heated. This is, largely due to the positions that we take; not because we are like that but due to several paradigms, prejudices and biases we carry. After all, we are human; what if we hold a position of a head of business or its owner. We react almost instantaneously and with force when these are challenges by someone. Again, very human. It can be sometime become animalistic, simply because we are animals; social animals. And we love it, even during discussions.
One such discussion was witnessed when we started discussing about luxury being premium priced product or service. One of the participant at a recent programme in luxury management said, “All premium products are luxury products” and the discussion went on for about an hour. At the end of it we were all confused but happy that many age-old paradigms were shaken, if not shattered. The cause of the confusion was just one question: the participants were asked to write five sentences using luxury. They could access any source or persons. Here are some of them. I leave it to reader to fathom what luxury would mean.
A cursory look at these statements brings out a few indicators: scarcity, affordability, aspirations, not everyone can have it, it is not about products and services. It is about living and life. In short, it is what the customer values and there is a high intangibility factor in the total value that the customer wants.
Infact, the very origin of the word defines it as something ultra-affluent, something excess, something which is inessential but conducive to pleasure and comfort, the best of the best. What is considered to be luxury by one might be a lifestyle for the other. So, our first proposition: luxury always requires a context.
The definition of luxury in modern times depends on whom you ask. It is not just the product and the expensive nature of it but what emotion the person is attaching to it. One might attach luxury status to any product that is attainable but as soon as it is affordable for him the product or the brand would become ordinary and would no longer have anything luxurious about it. Thus our second proposition: luxury is in the eyes of the beholder.
|WHAT LUXURY WOULD MEAN
* Owing a Rolex
* Buying a yacht
* Living in Monaco
* Evening at a Chateau
* Vintage wine
* Walking to office in Mumbai
* Green pastures
* Free time with family, without BlackBerries
* Holiday on an island
* Big fat Indian wedding
* Dressed in Armani suits, Jimmy Choo shoes, designer wear
* A house with sprawling green lawns and a swimming pool
A significant number of customers consider luxury by brand as it is associated with status and there are few iconic brands like Mercedes Benz, Rolls Royce, Cartier, Tiffany, Rolex, Prada, Hunter Douglas and Gucci which benchmark the luxury products in their categories. Some customers define luxury as the intrinsic features which transform the ordinary into the extraordinary. As many of luxury consumers would state, “When you buy a luxury item, you expect it to be noticeably a cut above the average.” There is another set of luxury consumers who might consider any thing as a luxury as long as it is more than what one needs — “What’s luxury to me is somebody else’s everyday way of living, it is not about the wallet size or class. It is about personal indulgences and meaning. The paradox here is that luxury is both utterly universal and entirely individual. Thus our third proposition: luxury is about aspiration.
A product, brand or service which is exclusive in its positioning, is sophisticated and has a selective system of distribution and after-sales service can also be termed as a luxurious one. A luxurious brand may not be big in size — financially or in number of staffs, but is respected, has an impressive reputation and very strong brand awareness. Because of the intangible nature of the luxurious products, it is very difficult to compare two brands by their sales figures. A brand like Hermès may have annual sales of about ^2 billion while Cardin has worldwide annual sales of only ^10 million. Luxury business is characterised by high margin and high break-even. The idea here is not to make money but to stand out in the crowd. The packaging, the exclusivity of the product and the service, global but premium nature, sophistication, high aesthetic appeal to senses along with the expensive nature of the product or service, craftsmanship, limited distribution and low promotional activity are some of the characteristics common to most of the luxury brands and products. Thus, our fourth proposition: it is niche.
Luxury is about creating a total customer experience which is exclusive, differentiated and aspirational. From this perspective India has a huge potential of bringing luxury products into the world markets. The country offers immense opportunities of creating a luxury brand. It has heritage, legacy, stories and craftsmanship. In most cases, we tend to state that we do not have the capabilities of manufactures products like watches, cars, apparels that would become luxury worldwide. In my opinion we should look within and see what we can make it a world brand. For instance, we are already offering international luxury brand in hospitality. Some other categories which are becoming or have the definite potential are textile (not western wear only), home furnishing, spices, jewellery, ethnic food and tourism. Indian businesses that wish to make it big in luxury have to believe in themselves and show a long term attitude to brand building. Emerging local demand for luxury consumption is a very encouraging sign. Most international brands rule the world because they have a large domestic demand to establish them as a luxury brand and create a connection with the origin, legacy and heritage. Our dominant paradigm of mass marketing will not help us in getting us a luxury brand which requires its own ecosystem. We have already proven our competitiveness in the several products worldwide. Many companies have already made headways in luxury products. It is only a matter of time that India will have several luxury brands.
The author is professor of marketing and chairperson, Centre for Retailing, IIM Ahmedabad