India Luxury Market Essay

Market Trend There was a slow-down in the growth in gross r nonethelessue of agiotage and luxuriousness trip upes in India in 2008-09. It prompted the market leader Titan industries to enter the economy market. Following the footsteps, lavishness chequer brands like Tag Heuer and Rolex introduced low- outlay models. But in recent years, mobile phones may as well engage dampened growth in the penetration of watches in India, as they provide a time read-out as well as alarm and other time-related functions.Watch fabrication experts believe that their results original function is increasingly losing importance, and that wristwatches ar now being bought as air accessories. Owning more than one watch is like owning different pieces of jewellery. Competitive landscape The economy watch demand is being met for the most part by the unorganised sector and by direct imports. The premium segment is increasingly being peppered by fashion brands much(prenominal) as Esprit, Swatch, Fossil and Tommy Hilfiger. There has alike been strong value growth for these brands, with growing demand from middle- and upper-income groups in urban India.Titan, HMT and Maxima argon the leading Indian players and Timex, Casio and Swatch are now the strong multinational players in the market. More multinationals are entering the retail market, only no new domestic companies make water done so, and the multinationals share of value sales has increased everywhere the review period. Premium Brand & Product Perception With the watches market in India now becoming fashion and style driven, especially at the premium end, companies now launch models and designs every six months. International brands much(prenominal) as Fossil launch spring/summer and winter governs.Titan, on the other hand, times its launches to proceed in with the Indian festive season Deepavali and weddings. Companies like Casio and Swatch and luxury brands like Rolex are exploring a ecological niche market f or chronographs, but this is currently negligible. Companies also need to respond to product innovations. The Citizen eco-friendly watch has been well acquire in India and is reportedly selling well in its price bracket, eliminating the trouble of replacing batteries and encouraging the intake of multiple watches.Apparel brands such as Esprit, Tommy Hilfiger, Benetton and Levis tolerate all gained familiarity among Indias urban youth, who may become more willing to try these brands premium watches. Affluent, urban Indians may aspect more flourishing about leveraging premium watches, age continuing to regard luxury watches as examples of overindulgent or unsusceptible spending. New Rich India The New fatty India is now indulging into the experience of owning Luxury Brands. Indias speedily growing high-end retail market is expected to increase from the around $3.5 billion in 2008 to $30 billion by 2015. Luxury clothing, fragrances, premium wine, high-end watches nonplus a chieved good penetration among male Indian consumers. Among women, jewellery and cosmetics bunghole already boast high levels of awareness, followed by categories such as handbags and mobile phones. These particular propositions, plot of ground non necessarily being better (in pure tone, performance, or appearance) than their less expensive substitutes, are purchased with the main purpose of displaying wealth or income or status symbol of their owners. There is a distinct shift from Old luxury to New luxury.Old luxury is defined by the attributes, qualities and features of the product, whilst New luxury is defined by the consumers point of focus on the experience that their purchase stimulates and not in ownership or possession of the product itself. The customers Redefined luxury as they believe it to be a sign of self deserving They are worth it it authenticates the buyers success and status it is a signal to others that the owner is a member of an exclusive group They req uire flawless performance in this application, the cost of product break is too high to buy anything but the best.Motivation of Study The reckon of wearing and enjoying fine timepieces is a passion that these days must be justified. We like nice expensive watches even though cut-rate watches exist to do the same thing. Hence like any other luxury good , nowadays modern shoppers buy luxury goods to reward themselves, to satisfy psychological needs or to make themselves feel good to pose off their somebodyality or to boost their self-esteem.Contribution of the research This study aims to rede the above said consumer buying behavior which will serve up the present marketing Managers to better displace their branding and advertising strategy to capture the correct target market for luxury products to boost the sales in times where economy are at a challenge. Literature Review Research accusing This study intends to find out if consumer buying behaviour of young purchasers are influenced by instruments such as premium price of luxury watches, perceived grapheme of luxury watches, societal status and brand truth associated with theconsumption of luxury brand. This study also intends to evaluate whether perceived qualities of the luxury brand watch have influence on the buying ratiocination of consumer. It is also intended to de destinationine whether the high quality standards of luxury watches are the reasoning consumers opt for the luxury watches. Affiliations of social status of acquiring certain luxury branded goods will also be studied to transform whether consumer buying luxury branded goods just for the matter of being affiliate with certain quarters of hatful having the same luxury brand of goods.This study also will also evaluate whether brand loyalty of luxury brand will influence the buying decision of consumer. This study also aims to uncover whether a person who has been abroad is a reason for the consumer buy a luxury watch Research Q uestion The purpose of this study is to evaluate what pauperizational factors progress consumers into purchasing luxury brand watches . In evaluating this statement , this study aims to answer the following questions Is it the price or the type of users of the brand that drives the buying behaviour of the consumer for luxury branded goods?Is it the strong emotion of discriminating themselves with the demoralize class consumers that drives higher class consumers to turn to luxury brands? Is it the tag name of a mega brand that drives the grand term demand for that luxury brand? Is gender a deterministic factor in deciding the purchase of a luxury brand? If yes then what factors are important gender wise ? Is it the product utility program or the brand sensing that is refer for luxury watch brands? Will a persons visit abroad influence his decision to purchase a luxury watch? prior Research contribution Findings of overall previous research indicate that individuals pr eferences plays a key role in purchasing luxury goods. Individuals preferences may be base on desire and non-desires, which are based on experience in purchasing luxury items from their gladness, or nondesire such as bias towards brand products. Leibenstein (1950, p. 188) classified demand of goods and services consumption in relevant to motivation into two main aspects functional and non-functional. Functional demand is demand for a commodity which is imputable to the qualities internal in the commodity itself.On the contrary, demand of goods consumption that comes from other factors, which is not the product quality, is defined non-functional demand. The victoriouss from Leibensteins (1950) study especially stresses the role of social set up towards luxury brands consumption, and derived three main effects Veblen, snout, and Bandwagon INTERPERSONAL EFFECTS Perceived Conspicuous Value Perceived comical Value Perceived loving Value Ostentation Non-Conformity Conformity VEB LENIAN SNOB BANDWAGON Inter private effects (Vigenron & Johnson) (1999 p.7) Veblen establish The Veblen effect can be explained by dint of conspicuous consumption in which slew feel that it is necessary to purchase luxury products because they have a high price tag (Leibenstein, 1950). Conspicuous consumption is use by people to show wealth, world-beater and status (Veblen, 1899). Prices of product have a evidential aspect in consumers opinion of quality (Vigneron & Johnson, 1999). Studies by Erickson & Johansson (1995) have shown that price is used to judge quality of luxury products between a range of brands.Usually people would associate high prices with better quality. Additionally, those who do associate high prices with better quality would also suggest that high prices show a considerable amount of prestige (Lichtenstein et al. , 1993). Snob Effect The snob effect takes into account personal and emotional desires (personal effects), and the influence of other peoples beh aviour (interpersonal effects) towards the purchasing of luxury brand products (see Figure 1). The snob effect can be further explained through two circumstances. low gearly, the launch on new products which creates exclusivity in which the snob would purchase the product immediately because a minor amount of consumers at that particular time would have acquired it. Snob consumers only purchase bound items that have a high value, whereas those readily available are less desirable. Rare items demand appreciate and prestige (Solomon, 1994,p. 570). Products that are viewed as unique, popular, and expensive causes a higher demand for consumers (Verhallen & Robben, 1994), especially snob consumers.Snyder and Fromkin (1977) financing the statement by Verhallen and Robben (1994) suggesting that people have the desire to be unique. IndiaThe Affluent Masses Luxury volumes have been spurred by a significant growth in the rich in recent past. The new rich come in varied shapes, sizes and st yle quotients. Exporters, multinational bankers, college kids earning plum salaries at call centers or BPO operations, well-to-do corporate wives, and successful entrepreneurs.What they have in common is that they have very high purchasing power Bandwagon Effect The bandwagon effect represents consumers who purchase luxury products because they wish to fit in with a particular group. For example, people would consume products that are fashionable and stylish to associate themselves to similar people (Berry, 1994). Dubois & Duquesne (1993) explains that the snob and bandwagon effect are not alike. Although the similarity between the bandwagon and the snob effect is that people wish to enhance their self-concepts, the differentiation is that they purchase luxury items for different reasons.Bandwagon consumers purchase items to be fit in with others, whereas snob consumers purchase items to be unique and stand out. Individuals who fit in with groups that purchase luxury brand product s and/ or wish to differentiate themselves from people who do not purchase luxury brands are influenced by the bandwagon effect (Vigneron & Johnson,1999) Luxury is reward First time/New Purchasers They use luxury goods as a status symbol to say Ive made it . They are motivated by their desire to be successful and demonstrate this to others. Luxury brands that have widespread recognition are popular however they dont wish to appear complete or hedonistic in their appearance.They want to purchase smart luxury that exhibit importance while not leaving them open to criticism. Personal Effects Consuming luxury products can also be from personal desires and taste. PERSONAL EFFECTS Perceived Emotional Value Perceived Quality Value Self-Actualization Reassurance pleasure seeker PERFECTIONIST Personal effects (Vigenron & Johnson) (1999 p. 8) Hedonic Effect The hedonic effect occurs when consumers purchase luxury products and value the item. race who purchase items for self-fulfillment (e. g.inner direct consumers, Riesman, et al. , 1950, or role relaxed consumers, Kahle, 1995), and those who are not affected by interpersonal influences (e. g. conforming to group norms,Bearden, et al. , 1989) represent the hedonic effect. Dichter (1960) explains that motivation of noncognitive and unconscious is able to persuade consumer preference of products. Products that are consumed are known to have an emotional value that is added to their character (Vigneron & Johnson, 1999). When consumers purchase luxury products they expect that the item will offer benefits such as exclusiveness.Dubois & Laurent, (1994) stated that if products create an emotional value for consumers, it represents that the product is in effect(p) and holds an important characteristic. Perfectionist Effect The perfectionist effect exists when consumers purchase luxury items and expects superior products and performance as well as quality (Vigneron & Johnson,1999). People who represent the perfectionist eff ect are those who are associated to personal values and judge a product according to their value of a luxury band product. An example of the perfectionist effect is when consumers are purchasing a luxury watch they expect it to be accurate.According to Groth and McDaniel, (1993, p. 10) stated that high prices may even make certain products or service more desirable, because people view products with high prices with outstanding quality (Rao & Monroe, 1989). Additionally, consumers may assess the level of how luxury a product is by its quality (Vigneron and Johnson, 1999). mannerological summary Research Method Quantitative data consists of closed end info that includes numerical figures. The study has smooth quantitative data by applying closed-end questions towards a questionnaire.Focus Group Discussion to understand attributes both corporal and emotional that influence the purchase of a luxury watch. The group comprised of 7 individuals , 3 feminine and 4 male participants who have been users of luxury watches. Data Collection Primary Data collection Gathering information from consumers of luxury watches through online questionnaire survey Secondary Data Collection Research insights and hypothesis design with the help of previously published research work on luxury goods buying behaviour. Sampling Non-probability sampling method is adopted.Since the target audience or respondents of interest are consumers of premium or luxury watches, the sampling method adopted here is convenience sampling and snow-ball sampling. Measurement & Scaling Measurement Techniques used ? Perception chromosome mapping ? Utility of features in the watch Chronograph, Double dial, Indicator light etc. ? Stylish Designs that make the watch a fashion statement Respondents were asked to rate the 10 different brands in order to obtain their perception of these brands on the above defined dimensions Based on two predefined dimensions i. e ? ? ? preliminary Factor compendium To understand the underlying factors influencing the purchase behaviour of luxury watch for men & women and overall fixation To understand which interpersonal & personal effect is critical when consumers make a luxury watch purchase decision Discriminant compendium To understand the group behaviours based on the following discriminating variable ? Gender ? mooring abroad ? Work ExperiencePurchasing power ? AMOS Confirmatory Factor analysis to ascertain the Exploratory Factor compend RESULT AND ANALYSIS 1.Discriminant Analysis Work-Ex & Fresher Inference Wilks lambda (0.627) is more than 0. 4 which is not significant Box M test is also insignificant However based on analysis top 5 attributes discriminating work ex & fresher are Attributes Q5_7_attribute_analog Q5_2_attribute_alarm Q5_12_attribute_torch Q5_9__attribute_calculator Q4_8_attribute_celebrity_endorsement Variable lading of discriminating function -. 366 . 361 . 331 . 271 . 262 2. Discriminant Analysis Gender Inference Wilks lambda (0. 578) is more than 0. 4 which is not significant based on analysis top 5 attributes discriminating males & females Attributes Variable charge of discriminating function.Q4_3_attrifashion_statement Q5_3_attribute_dualclock Q5_13_attribute_barometer Q5_8_attribute_motiondetector Q9_2_buy_in_store .329 -. 285 -. 269 -. 259 -. 255 3. Discriminant Analysis Abroad Visit Inference Wilks lambda (0. 573) is more than 0. 4 which is not significant however based on analysis top 5 attributes discriminating foreign visited and not visited people Attributes Q5_9__attribute_calculator Q5_6_attribute_color Q5_16_attribute_warranty Q5_11_attribute_straptype Q4_9_attribute_brand_image Variable weight of discriminating function . 228 . 225 .221 -. 207 -. 205 3) Exploratory Factor Analysis-(Male & Female) Research Question- Is gender a deterministic factor in deciding the purchase of the luxury watch. If yes what factors are important gender wise? Hypothesis- Women while making luxury goods purchase give more importance to emotional factors whereas Men go for carnal Utility features Factor analysis for male respndents(58 males) Results? ? ? ? ? ? ? ? Fac1(Ostentation) o o o o o o o o ? ? ? ? ? ? Sth to remmeber, hand gesture, to be unique Fac2(value added feature) Calculator,digital,compass.Fac3(Generic requirements) Shape, water resistance Fac4( economic requirements) Discounts Fac 5(Tech savvy) Compass, Motion sensor Fac 6(basic) Analog,water resistance Fac 7(Wrist suitability) Strap type Fac 8(extra feautres)Date and day display, brand image Exploratory factor analysis female Respondents (23 females)Fac1(Economical) o o o o o o Warranty, after sales, analog, emotional satisfaction Fac2(Style) Social status, to be unique, fashion statement Fac3(Special requirements) Alarm,altimeter, digital,dual clock Fac4(value added feature) Calculator,compass,barometer, torch.Fac 5(Tech savvy) Hand gesture,discount Fac 6(Exclusivity) Motion sensor,alarm,brand image Result A nalysis? Meno Attach importance to Ostentaion, value added feaures and style(veblenian effect and perfectionist effect are dominating) ? Womeno Style, Economic attributes an generic requirements ( Hedonist and snob effects dominate 4. Checking the Interpersonal and personal effects shown by males and female while purchase of luxury watch in Store Research Questiono Is it the price or the type of users of the brand that drives the buying behaviour of the consumer for luxury branded goods?o Is it the strong emotion of discriminating themselves with the lower class consumers that drives higher class consumers to turn to luxury brands? o Is it the product utility or the brand perception that is key for luxury watch brands? Hypothesis-Luxury watch purchase is primarily to show off and as an indicator of status symbol veneblian effect. Users also buy luxury watches due to perceived emotional value or for hedonist reasons Veneblian Effect- Snob Effect Bandwagon Effect voluptuous effect Typ e of effect Veneblian snob Bandwagon Hedonistic Coefficient 0. 517 0. 499 0. 274 0. 305.Inference- As we can clearly let on from the above table that the veneblian effect is very prominent in all cases of interpersonal or personal effects. That means People tend to buy Luxury watches to show off of their Public and Social Status. Snob and Bandwagon effect follows Veneblian effect. 5. Regression Analysis to check whether long term demand for luxury watches is driven by brand image Research Question Is it the brand image that drives the long term demand for that luxury brand? Hypothesis Brand Image for lucury brands is responsible for the long term demand of these watches.Inference Regression is insignificant with respect to the variables that drive brand image. Even the Rsquare value is 0. 071. Hence we can infer that brand image is not a good factor to explain the long term demand for luxury watches. 6. AMOS The default model is created based on exploratory factor analysis and t aking research literature into account. manikin Fit Summary Check Cmin/DF 2-5 OK GFI 0. 9 Not OK PGFI0. 5 OK NFI,TLI,CFI0. 9 Not OK RMSEA max 0. 1 Not OK Model is comparatively fit as such But Goodness of fit index is not property well. Validity & Construct Reliability S No.1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Attributes Q4_1_attribute_social_status Q4_3_attribute_fashion_statement Q4_2_attribute_to_be_unique Q4_6_attribute_emotional_satisfaction Q4_9_attribute_brand_image Q5_9__attribute_calculator Q5_10_attribute_compass Q5_12_attribute_torch Q5_13_attribute_barometer Q5_3_attribute_dualclock Q5_4_attribute_altimeter Q5_2_attribute_alarm Q5_5_attribute_digital Q5_7_attribute_analog Q5_8_attribute_motionsensor Q5_16_attribute_warranty Q4_10_attribute_secon_time_brandpurchase Q4_4_attribute_premiumwatch_collection Q4_8_attribute_celebrity_endorsements.Constructs Error e1 e2 Delta 1. 028 1. 079 0. 608 0. 635 1. 282 1. 323 1. 687 1. 473 1. 793 1. 816 1. 032 2. 133 1. 407 1. 074 2. 078 0. 179 1. 402 1. 367 2. 019 Lambda 1 0. 67 0. 922 0. 884 0. 997 1 0. 912 0. 971 0. 774 1 1. one hundred thirty-five 1. 005 1. 258 1 0. 876 0. 84 0. 403 1. 231 1 AVE CR Exclusivity e3 e4 e5 e6 e7 0. 81 0. 81 Tech_Savvy e8 e9 e14 0. 84 0. 68 Value_Added _Feature e15 e16 e17 e21 1. 22 0. 75 Reliability e22 e23 e26 0. 82 0. 69 Brand_Perce ption.