Changing Paradigms of Luxury Consumption in India: A Conceptual Model

By Gupta, Krishna Das | South Asian Journal of Management, October-December 2009 | Go to article overview
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Changing Paradigms of Luxury Consumption in India: A Conceptual Model


Gupta, Krishna Das, South Asian Journal of Management


This paper tries to explore the evolution of luxury consumption or prestige seeking consumption behavior. While it upholds the luxury consumption in the Indian context, citing the statistical growth of the 'the rich class' it rationalizes the origin of such indulgence. It also tries to project the significant change sweeping the Indian society that has turned conspicuously consumerist unlike the past when display of wealth was shunned at. The paper unearths the origin of luxury consumption through sociology and anthropology and tries to explain the cultural factors underlying luxury consumption.

INTRODUCTION

As a result of the spectacular growth of luxury markets over the past 10 years, the marketing literature has recently seen substantial interest in the study of prestige brands. Yet very little is known about how to best market prestige brands. Research conducted by Powderly and Mac Nulty (1990) anticipated important social changes as the year 2000 neared. Their research identified that people's needs for appearances and materialism were increasing. That is they recognized an increasing demand for conspicuous and status products. Evidences of launch of MBA programs specialized in luxury marketing (e.g., ESSEC, Paris) are a few. A review and attempt to reconcile the accounts from the literature of economics, marketing and psychology, show a general lack of consensus relating to the definition of luxury. The concept of 'luxury' in different discipline may have specific definition(s). Marketing textbooks suggest the concept of luxury when an organization is planning to position a product as high quality or exclusive; "prestige pricing is setting a rather high price to suggest high quality or high status" (Mc Carthy and Perreault, 1987, p. 506). Finally, social psychologists have long been using the concept of luxury to study the effect of group forces on the formation and change of opinions and attitudes (e.g., Lorge, 1936; and Asch, 1948). Early research on the topic of luxury started in the last century from the work of Rae (1834), Veblen (1899) and Keasbey (1903). Wong and Ahuvia (1998) conceptualized Asia's rising significance as the market for luxury and prestige brands compared to the West. Their articles examined the cultural factors that lie behind the 'luxury' phenomenon based on distinctions between Southeast Asian and Western cultures.

UNDERSTANDING THE INDIAN LUXURY MARKET

India's luxury market is still small, an estimation of $100 mn at best as on 2007 (Chadha and Husband, 2007). In a near virgin market, the rewards are almost instant - research conducted by the Foreign Investors' Chamber of Commerce and Industry (FICCI) found that Louis Vuitton was the most prestigious accessory brand, while Armani topped the charts in apparel category. As signs of the times, the World Luxury Council has opened an Indian operation. In terms of the spread of Luxury Model, India is at the threshold, the emerging middle class is aspiring for quality of life, while a small elite segment indulges in luxury brands. This segment has been acquiring luxury goods internationally, and hence, they are the first customers of luxury brands in India. While India may be the next China in terms of market size, the forces shaping its development are quite different. If China's starting point was a slate wiped clean by Mao, India's chalk board is covered by myriad of traditions, religious beliefs and colorful festivals.

India's multi-tiered consuming classes are mostly poor but income levels are improving. In time, the poor are becoming poorer. The rich are getting richer, as well as increasing in number, but they will continue to remain in minority. The myth of the Great India Middle Class - that large mass of homogenous consumers with growing incomes, who are supposed to form the mainstay of consumer India - has been exploded. The texture of India's population of approximately 1.17 billion people (as on July, 2009) , in many shades and grades of affluence and price-value orientation.

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