Global factors make the Indian market extraordinarily
Global Marketing – Louis Vuitton in India With a GDP growth rate of more than nine percent, India is one of the fastest growing economies in the world.
The population size exceeds one billion, including around 83,000 dollar millionaires (2005), recording the world’s second fastest growth in the number of high-net-worth consumers. Luxury brands like Louis Vuitton can take advantage of a steadily increasing upper class and a more and more affluent middle class. Moreover, 51 percent of the population is under 25, which gives brands the possibility to educate its future customers and shape their fashion tastes.Along with the fact that the luxury products market is growing 20 percent annually, all these factors make the Indian market extraordinarily attractive for Louis Vuitton. In contrast, 87 percent of the population has an income less than $2. 50 a day. The countries per capita income is well below the unit price of the products sold by Louis Vuitton and the enormous diversity of culture, people and languages, combined with high customs duties and high tariffs make it difficult for companies to gain ground in this promising economy.
Considering both positive and negative aspects, I believe, that the Indian market comprises manifold business opportunities, especially in the rapidly developing segment of luxury products. A similarity all luxury brands share is the ambition to showcase its brand personality through an elite store design and highlight its reputation by the exclusivity of the surrounding areas. When Louis Vuitton entered India by opening its first store in a leading Indian luxury hotel, it found the right ambience for its products, but had to handle the limitation of space and the increasing rental costs.Having a store in a luxury mall would offer the same exclusive environment at a cheaper price and the possibility of image spillovers from other luxury stores around. Moreover, as the luxury mall model is new in India, it would arouse public interest, initiate viral marketing and pique the people’s curiosity. On the other hand, India lacks high streets providing an adequate space for a luxury mall and the missing experience in creating appropriate luxury standards could be a major drawback.Furthermore, even luxury malls limit the opportunities for store design and layout and store owners have little control over the choice of its neighbors.
Nevertheless, luxury shopping malls are a necessity, still requiring a lot of effort. Regarding counterfeiting, I do not consider it a major problem. Usually counterfeits can be clearly distinguished from originals and this is where Vuitton needs to protect itself by including inimitable features.
To increase their success while making sure that the products are difficult to imitate, I suggest to adapt an aspect to the local culture.In addition, the actual buyers of counterfeits are outside of LV target customer segment, as they generally would not be able to afford originals. Therefore, the goal has to be to prevent dilution of the brand value For all luxury products the brand itself plays an integral role, especially in comparison to regular products. For consumers who purchase their luxury products due to its superior functionality and quality, the brand itself signalizes a certain, safe value and is therefore very important.
Nevertheless, consumers need to experience the brand and build up their own opinion about the relationship between brand name and perceived quality. In contrast, customers buying luxury goods as status symbols and by reason of their functioning as a reward, appraise the brand itself as the most important characteristic of the product. Going a step further, I would argue that this customer segment just obtains the product because of its brand name. The third market segment has a more intrinsic, emotional motivation.
The main purchase reason is self-indulgence together with the need to feel good about the product. Brand does not play a major role in their decision process, as they first have to build up a relationship with the product itself and test out how well it fits to them. In the case of Louis Vuitton in India, the company should mainly focus on those customers from the second market segment. The population is getting wealthier and there is a strong urge to show one’s own success. Exclusivity and uniqueness are important goals.
This is where the brand has to position itself and support its customers in their believe that owning a Louis Vuitton product is the reward for their hard work. Concluding, I would recommend Vuitton to enter India as fast as possible. The upper class is rapidly growing, there is a strong need of proving that someone has made it in life and luxury items gain more and more importance as status symbols. LV needs to use its first mover advantage trying to get as much market share as quickly as possible.The company would have the unique advantage of influencing the taste, buyer behavior and brand recognition of millions of promising customers, building up entry barriers for followers.
With the outlook of Indian demographics, combined with the potential of the middle class and the young aspiring population, it will lead to an explosion of the market. If Louis Vuitton is able to maintain its gained market share in the even larger market in future, it wins.