Sunil Malhotra had dreamt of owning a Mercedes Benz all his life. That dream came true two months ago when he drove home in a C-class Merc.
A successful chartered accountant, the 47-year-old south Delhi resident says: “As a child, I had seen a school friend’s father drive a Merc. Since then, I had lusted after its famous three-pointed star (the Mercedes Benz logo). I couldn’t afford it earlier but that didn’t stop me from dreaming.”
His father was a government servant and his mother a teacher. Malhotra represents a growing breed of middle class Indians who have cashed in on the opportunities thrown up by economic liberalisation and climbed up the professional and financial ladder. Many of them, in their 40s, 50s and even 60s, now have the means to splurge on the “little luxuries of life”.
Sociologists call the phenomenon “upward mobility”. Economists call it the “demonstration effect”. Some call it “snob value”. Quite a few luxury brands are queuing up to set up shop in India. A BMW, Audi or Mercedes Benz, a Louis Vuitton or Prada bag, a Ferragamo or Ermenegildo Zegna shoe or a limited edition Mont Blanc pen are things that millions of Indians now aspire for and use.
But a majority of buyers are 40+, mirroring greater ability to spend on goods that are marketed as iconic marquee youth labels.
That’s a dichotomy that marketers have to address. How do they draw in older consumers by appealing to the youth?
“The desire to own luxury brands manifests at a much younger age. The purchase, however, may take place when the customer has reached the required income level," said Ashish Chordia, chairman, Shreyans Group, which has brought brands like Ferrari, Bang & Olufsen, Bombardier Recreational products, Ducati, and Maserati to India.
“While designing an ad-campaign, I research on youngsters who can potentially grow into corporate leaders, innovators and entrepreneurs,” said Navonil Chatterjee, vice-president of ad agency JWT, which handled luxury brands including scotch whisky, Black Dog and The Collective, a super-premium retail format that trades in major luxe brands.
“Yes, the target customer is an older, more mature person. But we almost subliminally presume that older people are outdated and boring. So, brands are wary of wooing them directly,” said Ramanujan Sridhar, CEO, Brand-Comm, a leading consultancy that advises several high end brands.
The mantra, then, is: get the youth hooked to a luxe brand through small relatively “affordable” items such as wallets, key chains and small purses. In a few years’ time, that person’s income may match the desire to own a more expensive product such as a trench coat.
“Brands are devising a segmentation strategy by introducing two different categories – one that the youth can buy 'instantly' and the other, which they aspire to buy in future when they have higher levels of income,” said Abhay Gupta, CEO of Luxury Connect, a luxury brand consultancy.
When premium German car maker Audi decided to launch its small SUV, Q3, it decided to flash a peppy and bright orange model in its publicity campaigns, instead of the usual sombre black or grey.
It roped in Bollywood star John Abraham to launch a music video on social networking sites, instead of the traditional 30-second commercial on television with a tagline “Start Young”.
“Today, one starts purchasing luxury to ‘show’ at the early stage but they actually start knowing luxury when they approach their 40s or so,” said JWT’s Chatterjee.
A study conducted by Yes Bank and industry body Assocham found that luxury brands are increasingly using digital advertising as a powerful tool to connect with younger age groups (18-25 years old) who also influence the purchase decisions of the older (classic luxury buying) buyer in their families. Child (or, at least, youth), is really the father of man, marketers will agree.
“Luxury brands are using young faces to portray a certain imagery – to connect with the freshness and passion of youth, though the target customer is older,” added Brand-Comm’s Ramanujan.
Marquee labels such as Chanel, Christian Dior and Burberry offered discounts at their outlets in Delhi, Mumbai and other cities last year to attract the first-time buyers, mostly youth, who bought luxury products at a 40% lower price. The aim: give them a brand experience they will enjoy – and revisit at an older age when they have the means to splurge.
“Ours is a historical lifestyle brand that has been there over 150 years and we lay stress on freshness of the brand by constantly innovating while maintaining our heritage... We have products that cater to the young consumer who is highly educated and successful and who, at a later stage, would become our loyal customer. So, we carefully balance the two," Shtrujit Singh Tikka, adviser to the chairman, Louis Vuitton, said.