India and China may be similar in many ways but they differ significantly in their approach to luxury goods. This is forcing luxury brands to devise separate strategies to meet different expectations in the two countries, says a joint study by Dr Varsha Jain of Mudra Institute of Communications, Ahmedabad (Mica) andProfessor Don Schultz of Northwestern University, US. The study elaborates on the fact that consumer perceptions, usage and aspirations regarding luxury goods are so different that different communication strategies are required for the two Asian giants.
According to a 2013 Assocham-Yes Bank study, sales of luxury goods in the Chinese market are currently pegged at around $20 billion and that of India is valued at about $8 billion. By 2025, the Chinese market will account for 20% and India for roughly 10% of the global luxury market. "If these growth figures are to be achieved, a better understanding of what is driving that growth and how luxury products are perceived by consumers in the two markets seem mandatory," saidthe Assocham-Yes Bank study (as quoted in the study by Jain and Schulz).
The paper by Jain and Schulz titled, 'The same, but different: Luxury brands fill disparate roles in China and India', says that Chinese and Indian markets have very different perceptions of luxury products. While China relates luxury to familial and social parameters, Indians approach luxury goods with an 'I am worth it' attitude and a 'self-gift giving' concept.
Economically, China fares better as it has the world's fourth largest number of high net-worth individuals (HNIs), or those who spend lavishly on luxury products. Additionally, China has low tariffs and taxes on luxury products. India enjoys a liberal economy with disposable income in the middle class set to grow to $1.16 trillion by 2025. But tariffs and customs duties on imported luxury brands are high in India and that makes it a less luxury-friendly country.
Segment-wise, the study found four types of luxury consumers in China: traditional luxury shoppers, new luxury shoppers, empowered women and 'little emperors' (those who are the only child of their family and love to flaunt their wealth). In contrast, Indian consumers of luxury goods are divided into only two kinds: global Indians who form the elite and have 'old money' that allows them to use luxury goods; and young Indians who work in the metros, have 'new money', and buy luxury brands to meet high aspirations.
"In the digital context, Chinese give more importance to materialism and social display which is done by discussing the luxury brands on online platforms. Indians focus on individual likings and values although they also share their passions for luxury products with friends via social media," the study says.
The paper — it was featured in the 'Magazines of American Marketing Association' — suggests that marketers should build strategies based on geographies and cultures.
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