Luxury as a concept is not unfamiliar to India. Our culture is unique, Indians have historically never seen a contrast between spirituality and materialism. The dominant Indian culture lays out the rules for the universe, in which preservation always goes hand in hand with wealth and prosperity; Lord Vishnu the preserver is intertwined with Goddess Lakshmi, the Goddess of wealth. The luxury market in India has been growing at a CAGR of 25 per cent over the last couple of years. As per a report published jointly by CII and IMRB based on a survey conducted in the luxury goods market in India the report titled “The Changing Face of Luxury in India” this segment is not as dormant as it was pictured earlier. Since the last 3 years it is estimated to have reached USD 7.58 billion. An ASSOCHAM report says the market is hoped to cross $18.3 billion by end of 2016.  It is the luxury categories like apparel & accessories, perfumes, fine dining and automotive that has contributed to this growth.

Another fact about Indian market is, luxury market accounts for almost a negligible 1 – 2% proportion of the global luxury market. Industry experts believe that multiple factors are contributing to the slow growth:  low priority status assigned to luxuries by the government, lack of adequate range of luxury goods and service levels that are below par. They also believe that our culture discourages us from flaunting our wealth. Yet luxury goods marketers are optimistic about the above factors changing in the coming years and predict that the luxury market will boom in India over the next few years. Frugality is there in deep psyche of Indians.

According to the Goldman Sachs research report  ‘The Asian Consumer,’ India’s urban mass will trade up into brands that offers the most incremental value, but may not readily jump to aspirational brands. However, the report further states that the growth of luxury and high-end, in general, will be limited. Culturally, India’s affluent consumers tend to shy away from ostentatious display of wealth.

Significant brands across various verticals that performed well in 2015 included GUCCI, Christian Dior, Louis Vuitton, Canali India, LVMH India, Judith Leiber, TheSPA Group, Starwood Asia Pacific Hotels & Resorts, and Reliance Brands. Increasing brand awareness and growing purchasing power of the upper class in tier II and III cities is fuelling further growth. Service areas such as fine dining, electronics, luxury travel, luxury personal care and jewellery saw increasing revenues and are expected to grow by 30-35% over the next three years. Spending on luxury cars continue to rise growing upwards at 18-20% over the next three years. As the purchasing power of women is rising in India, the luxury beauty products market is witnessing a fast paced growth.

The past 2 decades of economic growth have seen a substantial new class of wealthy consumers who have joined the ranks of the traditionally rich – from new generation entrepreneurs to senior corporate executives, from farmers who have sold their land off to developers to the BPO generation which lives at home with the parents and has money to splurge. Despite their newfound riches, however, findings indicate that there is an inherent mindset that is ‘middle class’ in India, even among those who can no longer be classified as middle class basis their income. The inner conflict between a middle class mindset and the globally rich income level, between conspicuous consumption and a level of luxury which is a reward for hard work shapes what we call the closet consumer. Closet consumers are cost conscious and seek ‘value’ even when buying luxury products. And their definitions, symbols of luxury are often in variance with conventional definitions and symbols of luxury.

Based on their current lifestyles, values and needs from luxury, a segmentation framework divides these consumers into four distinct segments – spanning across those who are Connoisseurs, Experientialists, Aesthetes and Flaunters; with specifics on aspects that drive each of these segments. The neo rich class of consumers – educated, well earning, classy consumers is also in a rush to buy and consumer luxury products.  Luxury is no longer restricted to the rich and famous. In India’s slow-moving luxury market, brands are trying to tap into the deep vaults of closet consumers, a variety of people with no exposure to global brands but who technically can’t call themselves middle class by income any longer.

I read a TOI article last year which says that a 24-year-old man from Haryana who walked into the Ferrari showroom in Janpath in the Capital with cash in a sack and a thick Haryanvi accent on his lips. He wanted a car immediately for his dad’s birthday. But, when he was told that he needs to wait for six months after placing an order, since that’s how long a Ferrari takes to be built, he lost interest.  A Ferrari executive told TOI on the condition of anonymity.

Luxury auto maker Audi, which is referred to as the “churi-waali gaadi” (bangle-type logo) in rural India, is also aware of the dormant opportunity. “Smaller markets contribute close to 20% of our overall sales in India,” says Audi India head Joe King. “We have opened dealerships in markets like Karnal, Vadodara and Bhubaneshwar, where the luxury marketers are seeing a growing appetite for luxury. The emergence of a more ambitious middle class with increased purchasing power that understands, values and aspires to own a luxury brand, is significantly contributing to the transformation of the luxury landscape in India.

Another fact is also that the Indian luxury industry that is pegged close to Rs 60,000 crores.  Market analysts see a sense of uncertainty due to the complex strategies and buyer behavior prevailing among all its stake holders – consumers, luxury brands and policy makers.

When it comes to marketing luxury products in India, consumers have always valued opinions expressed directly to them. Marketers may spend millions of dollars on elaborately conceived advertising campaigns, yet often what really makes up a consumer’s mind is not only simple but also free: a word-of-mouth recommendation from a trusted source. As consumers overwhelmed by product choices tune out the ever-growing barrage of traditional marketing, word of mouth cuts through the noise quickly and effectively. Indeed, the term word of mouth means consumer-to-consumer communication with no economic incentives. The sender may, however, reap social gratification or rewards.

It is the primary factor behind 20 to 50 percent of all purchasing decisions. Its influence is greatest when consumers are buying a product for the first time or when products are relatively expensive, factors that tend to make people conduct more research, seek more opinions, and deliberate longer than they otherwise would. And its influence will probably grow: the digital revolution has amplified and accelerated its reach to the point where word of mouth is no longer an act of intimate, one-on-one communication. Today, it also operates on a one-to-many basis: product reviews are posted online and opinions dispersed through social networks. Some customers even create Web sites or blogs to praise or punish brands.

While traditional advertising such as TV spots and newspaper ads, as well as digital marketing such as sponsored links on Google, can build brand awareness, they increasingly do not resonate with target audiences. This is especially true among the 18-29 demographic, a group that’s notoriously suspicious of advertising and well aware of the proliferation of fake positive (and negative) reviews. While there’s no single formula for word-of-mouth success, it often starts with creating a culture that encourages consumers to in buying decisions. Word-of-mouth referrals stem naturally from an unparalleled customer experience that fosters clients’ identification with a brand.

I think, marketers must understand that Indians are intuitively value-laden and would think twice behind splurging on a Louis Vuitton bag or an Armani suit. While the reality of the luxury market is there, the price points are not there. Indians are not into buying random luxury products and there is no repeat purchase behavior happening either.

In today’s complex marketing world, defining digital marketing is a bit difficult. On the contrary I will put it like this – in today’s complex digital marketing era defining marketing strategies is no longer a simple job.  Digital marketing is the promotion of products and services using one or more forms of electronic media. Thus, digital marketing is promotion of brands on electronic media. It is different than traditional marketing which involves the use of channels and methods that enable an organization to analyze marketing campaigns and understand what is working and what isn’t.

Digital marketers help in promoting and building awareness, providing research to prospects, and driving qualified prospects to conversions. Their job is not all that easy because there are too many newer platforms emerging and each one comes with its complexities. It involves huge volume of data and streaming process of the data which contains diversified buyers, diversified marketers and a range of marketing channels. Sending the right message to the right buyer at the right time is a big responsibility. And let’s not forget the customer has exposure to more than data he can chew.

Digital media is so invasive that consumers have access to information any time and any place they want it. It is therefore a tricky thing to use segmenting, targeting and positioning. The marketers cannot promote only what they want their customers to know. Digital media is an ever-growing resource of entertainment, news, shopping and social interaction, and consumers are now exposed not just to what the company wants to say about their brand, but what the media, rivals, friends, family, peers, etc., are saying as well. And they are more likely to believe them than the marketer. People want brands they can trust, companies that they know of, communications that are personalized and relevant and which is offered in tailored formats to their needs and preferences.

Using digital marketing without a strategic approach is still customary. Many of the companies use digital media in a good way by using email or social media marketing on their own. But larger organizations need better governance and strategies while using social media; smaller companies can manage on their own.

The larger companies need creation of digital plans in two stages. Initially a separate digital marketing plan needs to be created. This is useful to get conformity and buy-ins by showing the opportunities and problems and map out a path through setting goals and specific strategies for digital including how they would incorporate digital marketing into other business activities. At a later stage, digital becomes integrated into the firm’s marketing strategy which is a core activity – a usual business process that does not warrant separate planning, except for the strategy.

Some companies which use digital marketing very well are:

Nike: This Company used a major sporting event to surround their social media campaign. They skipped the high profile athletes of the 2012 Olympics and instead featured the average Olympic athletes. Nike gained 166,718 Facebook fans during the London Olympics. Nike has been able to evolve its global presence through the careful selection of international sponsorships such as its previous long-standing relationship with Manchester United.  Although sponsorship spending could be fairly unpredictable demand costs surged due to triggers like championships and tournaments. Nike has used such events to capture the attention of a global audience.

Similarly, Heinz primarily, uses Facebook to launch new products, like their 5-bean blend. They created a game where the person answered a series of questions, which was like a personality test. The results were given in types of beans. Personalized beans were sent to five winners every hour. If you shared the app with ten people, you received a goodiieeie bag. Coupons were also offered.

Digital marketers examine things like what is being viewed, how often and for how long, sales conversions, what content works and doesn’t work, etc. While the Internet is, perhaps, the channel most closely associated with digital marketing, others include wireless text messaging, mobile instant messaging, mobile apps, podcasts, electronic billboards, digital television and radio channels, etc.

The thumb rule in digital marketing is that it’s not enough to for a company to just know their customers; they must know them better than anybody else so that they can communicate with them where, when and how they are most amenable to their messages. To have the customer’s profile and what they like and dislike the marketers need a consolidated view of customer preferences and expectations across all channels. These channels are web, social media, mobile, direct mail, point of sale, online sellers etc. Marketers can use this information to create and anticipate constant, coordinated customer experiences that will move customers along in the buying cycle. The deeper the insight into customer behaviour and preferences, the more likely the marketers can engage them in lucrative interactions. It requires hand’s on experience of buyer behaviour.

While keeping its overarching branding consistent, McDonald’s practices ‘glocal’ marketing efforts. It used digital marketing to know the local taste.  McDonald’s brings a local flavour, literally, to different countries with region-specific menu items. In 2003, McDonald’s introduced the McArabia, a flatbread sandwich, to its restaurants in the Middle East. It uses digital marketing to the fullest of its worth. And, Domino’s is not far behind either. It used digital marketing to reach out to customers in China where dairy wasn’t a big part of their diet until lately. Domino’s changed just its toppings to suit the taste buds of Chinese.

Leave aside the business community; the Governments of many nations have started using the digital marketing. Their work isn’t just about delivering a public service. Increasingly, government leaders are determined on giving citizens a more personalized and customer-focused experience. In India, the present Government’s digital experience can meet, and even anticipate, the needs of citizens. The present NaMo government relies on digital tools and strategies that are flexible enough to adapt with rapidly evolving technology. By taking a customer service focus to the work, agencies are building customized services, emphasizing efficiency, engagement and security. A digital-customer facing experience is now built-in to many of the outward-facing services of government. The idea of putting the customer first can really help agencies stand out in the digital sphere.

Same is the case with hospitals, entertainment businesses, services such as electricity; income tax, water supply, municipal corporations, banking etc are slowly adopting digital marketing to woo their clientele. Good for the customers!

Though digital marketing and its associated channels are important exclusion of traditional channels does not work. Also, digital marketing comes with certain challenges:

• Explosion of digital channels: Consumers use multiple digital channels and a variety of devices that use different set of rules, specifications and interfaces and they interact with those devices in different ways and for different purposes. Hence marketers need to be alert and vigilant in keeping up with customer’s choices.
• Digital marketing intensifies competition: Digital channels are relatively cheap, compared with traditional media, making them within reach of practically every business of every size. As a result, it has intensified competition in all business spheres. It is difficult to capture consumers’ attention.
• Exploding data volumes: Consumers leave behind a huge trail of data in digital channels. Hence it’s extremely difficult to lay hands on all that data, as well as to find the right data within exploding data volumes that can help marketers make the right decisions.

Lastly, if your company is going to thrive in the digital marketplace, it will be as a data-driven organization.