Commodization of Luxuries...

Picture these News Items :-

a) Volkswagen Beetle set to roll out in India
b) India Among L'oreal Top 5 Markets
c) DLF setting up India's first LUXURY MALL DLF LUXURIO
d) LG launches their 43K worth TVs Scarlett TV

Modern India has show-cased that it has an appetite not only for low-cost deccans , discount offering Big Bazaars or forward thinking Tata Nanos but also for upmarket luxury products. Just as a note the luxury retail market, which is currently in a nascent stage, is estimated at Rs 2,000 crore and expected to grow at 20-30 per cent in the next five years in India.

Under the deluge of such luxury items hitting the Indian Market, one must ponder “HOW WOULD THE MARKET RESEARCH for these products be done to inspire all of these companies to enter via the silk-route to India?”

As an MBA graduate I would be prompted to jargonize that the Market research would drive to provide a detailed report analyzing trends on the market, major and niche distribution channels description, detailed profiles of major marketers including their financial data, product analysis as well as an outlook of market development in the next 5 years.
But as of the moment let us just hold the reins…..

The existential question we must address first "Is Market research truly the HOLY GRAIL, which shall guarantee the success/failure of products??"
I guess there is a lot to learn from the COKE CLASSIC Example about the caveats of taking Market research analysis on the FACE VALUE.

In order to present some fresh perspective on this issue, let me first bring to your notice a glaring change in the Marketing promotions of these luxury products:
These products are currently marketed out in the traditional open market (T.V Commercials, Radio & newspaper Adverts) rather than be restricted to couple of Life-style Magazines or jazzy club-house shows as in the yesteryear days.

This change not only means that the Armanis are viewing the wider audience apart from the rajas and maharanis of India, and for that effect these same luxury products are currently being marketed similar to Tooth-pastes and shampoos. Hence the reasoning of “COMMODIZATION OF LUXURY PRODUCTS”

So what are the exact reasoning behind this trend, apart from successful market research reports which would have suggested the Armanis & Hillfigers to follow the toothpaste way ?

Here are the top 2 points that would make a sizable dent :-

1) Widening Wallet size (or reducing economic disparity): Companies have realized that a massive population, or a higher GDP alone would not suffice for the success of any product but what really would matter would be the PCI (Per capita income factor) and similar to the demographic advantage that India has (i.e 60% of our population consists of people in the age group of 20-30) the average Indian has risen from a middle class to the social nomenclature of a upper-middle class.
The 2007 Asia Pacific Wealth Report, released by Merrill Lynch and CapGemini, says India has recorded the world’s second fastest growth in the number of high net-worth individuals (HNIs) at 20.5 per cent, making it a lucrative luxury market. The likes of Armani, Versace, Cartier, Marks & Spencer, Salvatore Ferragamo, Canali, Mont Blanc, Lladro and Tommy Hilfiger have made inroads into India.

2) Consumerism as a core value: Someone rightly said, “Luxury is not a product but an emotion”Rising from the austere money-saving thrifts, Indians have indeed graduated to develop the consumerism-savvy profligate attitude. One of the chief motivator was that these objects have been presented not only as status symbols but rather as also as an investment option (This ideology can be seen as a fore-front during the massive realty boom in India).
This rise in consumerism can be reflected in the Aspiration level index being very high and 48% Indians aspire (ref: Nielsen survey)

With these two prevalent factors, the Armanis and the Hillfigers of the world indeed view this multi-casting of their products across the entire Indian diaspora as a win-win situation so that even if they are not able to sell their products right now, at least they can create the notion of a status symbol across the Indian mindset and exhort them to during their frivolous moments.

*********An update for this post***********
After a few comments from my friends, i must mention that i am not playing down the role of Market Research, in fact one of my earlier posts indeed do glorify their impact.
My sole purpose of this post was to provide top two reasons "WHY would the Market research for Luxury products showcase India as an enticing market" and also to bring to light the new Marketing approach for Luxury products(Commodization) and the benefits of the same.