Louis Vuitton in India free essay sample

The company was now looking to increase its reach and teamed up with other global brands to develop luxury malls in five Indian metros. Does a high-end brand have a market in a low income country? According to the National Council of Applied Economic Research, in 2001-02 there were 20,000 families in India with annual incomes greater than INR100 million. This number is expected to grow to 140,000 by 2010. Although 87% of the Indian population lives on an income of less than $2. 50 per day the high net worth consumers, which are the primary target of high-end brands, is growing. Although the maharajahs had lost much in 1956 and 1971, they were still significantly influential and formed the new elite that would be the new generation of customers for Louis Vuitton (LV) along with Bollywood actors, politicians, and bureaucrats. Exclusivity is a main factor in maintaining the gap between the super-rich and other consumers. Since LV caters to this need, they have an edge that allows them to charge the premiums on their goods. We will write a custom essay sample on Louis Vuitton in India or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Every market in the world will have consumers that desire to stand out, be recognized as special, and feed their egos. Whether they are looking for superior functionality and quality, a status symbol that shows they have â€Å"arrived†, or self-indulgence, every free market seeks to satisfy these needs and, as such, there will always be a desire for luxury goods. Where should this high-end brand find its niche? For centuries the maharajas of India held vast amounts of disposable income and enjoyed spending their money on luxury items as a show of class distinction. These maharajahs and their families knew LV very well and continued to buy LV products up until they finally lost power in 1971 following the States Reorganisation Act of 1956. From that point forward LV tried to connect with the country’s new rich: owners of businesses, CEOs of companies, and Bollywood actors. In India, the super-rich sought to â€Å"make statements† about their status. One way to show it was by buying expensive products that were out of reach to the vast majority of the population. Today, India is one of the fastest growing economies in the world, second to only China, and has seen an exponential increase in the number of middle and upper class families with high net worth (HNW) or liquid assets in excess of $100 million. India’s economic boom continued to add families to this class. These newly-rich had extra disposable income and were starting to sample the good life by purchasing luxury items for the first time. The idea was that these consumers would get a taste of the finer things and would hopefully become customers for life. These consumers are exactly who LV was targeting with their expansion plans. Louis Vuitton decided to target these consumers directly by moving their stores out of the safety of luxury hotels and into luxury malls. Luxury malls were new to India and LV desired to be involved in their design so as to avoid any â€Å"cheapening† of the malls by adding tenants that didn’t fit the luxury brand status. LV traditionally enjoyed the retail ambiance of the luxury retail cluster. However, as noted earlier, if a luxury retail cluster wasn’t feasible, the luxury mall was the next best option. LV had the advantage of more than one luxury brand under the LVMH umbrella with different product offerings including Fendi, TAG Heuer, Christian Dior, Givenchy, etc. These offering allowed LVMH to place multiple products into the malls so they could enjoy the â€Å"spillover† from browsing shoppers. Luxury brands struggle to gain footing in India even today due to a poor retail infrastructure and high import duty taxes. i] The HNW Indian consumer likes to spend money and buy expensive items but also is price conscious. This means he won’t buy the same item in India if he can get it cheaper outside of the country. Also, the buying experience is apparently much better in foreign countries between the selection and customer service. There has been an effort by some luxury retailer s to clear those obstacles by adding more of a local flavor in their offerings and customer service and LV would be wise to do the same. Having a customized â€Å"India-specific† product may create the sense of â€Å"exclusivity† that wealthy Indian consumer’s desire and could help drive sales up locally. How should a luxury brand company deal with changing customer profile? In the past, luxury brand companies such as Louis Vuitton, Bentley, and Prada have never had an issue trying to market their products for their targeted HNW customers. In fact, a company like LV seemed to follow a basic strategy to attract customers ranging from the â€Å"nearly rich† to the â€Å"super-rich† with the slogan, â€Å"If you build it, they will come. Simply put, the name speaks for itself and creates demand. In India, however, the customer profile is entirely different the super-rich are also interested in looking for the best deal, not just the highest priced one and LV was now forced to make changes in order to better market their goods to the respective target population. It is apparent that L V’s target group was going to be wary of the cost, as their consumers also shop at discount stores like Target and Walmart, and this concept is illustrated by the tendency of the wealthy to not buy premium cell phones since, other than the name, there was no inherent superior value. Therefore, anything that LV puts out in an attempt to reflect itself as a luxury brand must be seen as the â€Å"creme de la creme† offering a unique value proposition. In this, LV’s customer base must be shifted to the â€Å"next lower level,† rather than focusing only on the â€Å"super-rich† in order to maximize profits and buy into anything with a luxury brand logo on it. Instead, as Singh, Booker, and Barasia put it, Louis Vuitton can â€Å"acquire a less expensive brand, price products more carefully, and launch new value-focused brand extensions. [ii] In the case of LV, since a less expensive brand is contradictory to that which they are trying to emphasize, and LV has stated that it is not a discount luxury brand (and therefore has never once been discounted in price), the best option would be to open up a new line of products focused solely on Indian consumers and their buying behaviors. In doing so, LV can sustain their brand image as a high-end luxury brand for the super-rich, while also redirecting focus geared towards their more appropriate customer profiles in India. How should a luxury brand company deal with changing concepts of luxury? Louis Vuitton not only faces a different customer profile than before, but their consumers’ concepts of luxury are also changing. Considering the fact that the luxury market in India is expected to grow and reach $30 billion by 2015, while the market for luxury products is expected to grow 20 percent annually, it is apparent that in order for Louis Vuitton to be successful in India, they must carefully define, target, and market to HNW consumers. Customers of luxury consumer goods fall into three basic categories. The first category consists of older, wealthier, buyers that want to buy products for their superiority and quality. The second category includes consumers that feel they deserve to pamper themselves by purchasing exclusive products. The third category consists of young consumers, predominantly male, who want to indulge themselves in luxury goods. According to Inside the Affluent Space, an American Express study that examined Indian consumers, most fell into the second category and were predominantly affluent women. The target market of Louis Vuitton’s product is Indian women who wanted to prove to themselves and their peers that they ad made it. They were successful and driven women who wanted to make intelligent, exclusive choices and feel good about their purchases. Using a different marketing strategy, Louis Vuitton should focus on the exclusiveness of their products. Limited editions, products that make statements, and items that say â€Å"I made it! † Since Louis Vuitton does not mark down their products, this helps to retain the product’s value. Special or customized orders add to LV’s exclusiveness, and can be encouraged even further by identifying the brand with Bollywood actors. And with the brand’s unique design, color, embossing, and packaging, Louis Vuitton can stand out amongst the rest and appeal luxury consumers. The Indian culture is based on social hierarchy and buying luxury goods like Louis Vuitton makes the consumer feel that they are in a higher class with their prestigious purchase. Measures of success in India are money, wealth, and consumerism. Therefore, the prestige of the LV brand must be upheld by limiting the areas and businesses that sell their products to those which reflect the high-end and luxurious image of Louis Vuitton, as a means to reduce the risk of being viewed as â€Å"common. Case Update The DLF Emporio opened in New Delhi and houses Louis Vuitton as well as 73 other international brands including Cartier, Versace, DKNY, Dior, and Gucci. [iii] In addition to the Emporio, only one other luxury mall in Banglore has opened to date. Hermes opened India’s first stand-alone luxury retail store in Mumbai in July. [iv] Louis Vuitton currently has five stores in India: three in hotels in Mumbai and New Delhi, and one in each of the nation’s two luxury malls. [v] Donna Karen, another member of the LVMH group, has also entered India. [vi] Despite growing wealth in Asia’s third-largest economy, conversion of potential demand into actual sales has been slow. [vii] Most of India’s rich prefer buying their luxury items abroad where goods are cheaper, service is better, there is greater variety and a superior shopping experience. [viii] However, the opportunity remains and luxury brands like LV continue to vie for the HNW Indian market. [i] Chakravorty, Jui. â€Å"Insight:   Luxury retail not part of India’s success story†. Reuters. Aug 24, 2011. Retrieved Aug 26, 2011 from http://www. euters. com/article/2011/08/24/us-india-luxury-idUSTRE77N11120110824. [ii] Singh, Ashish, Booker, Mike, and Barasia, Sandeep. â€Å"India: Strategies for Consumer Goods. † Bloomberg Businessweek. 12 June 2009. Retrieved 26 August 2011 from http://www. businessweek. com/globalbiz/content/jun2009/gb20090612_706157. htm. [iii] DLF Emporio Website. Retrieved 27 August, 2011 from http://www. dlfemporio. com/d lf/wcm/connect/emporio/Emporio+Site/Left+Link/Emporio/. [iv] Chakravorty. Ibid. [v] â€Å"Louis Vuitton Locations in India. † MyStore411. Retrieved 27 August, 2011 from http://www. mystore411. com/store/listing/187/India/Louis-Vuitton-LVstore-locations. [vi] Mukherjee, Rupali. â€Å"Donna Karan to enter India with DLF Brands. † The Times of India. 27 March 2009. Retrieved 27 August, 2011 from http://articles. timesofindia. indiatimes. com/2009-03-27/india-business/28043607_1_dlf-brands-donna-karan-new-york-dkny. [vii] Khandelwal, Payal. â€Å"A luxe life. † The Financial Express. 23 August 2011. Retrieved 27 August, 2011 from http://www. financialexpress. com/news/a-luxe-life/835780/1. [viii] Chakravorty. Ibid.