Aishwarya RameshPublished: 2 Apr 2019, 6:31 PM
Points of View

Points of view: What does 'affordable luxury' mean and who's buying into the 'mass premium' segment?

For consumers, it's no longer about the price of the product, but the post purchase experience that the brand offers.

There was a time when a luxury vehicle or even adding extra "luxury" features to a vehicle would cost consumers quite a bit of money. However, as the market evolves and consumer preferences started to change, a new segment - 'affordable luxury' - was born. Companies like Tata, Hyundai and others have begun to introduce luxury features in their vehicles at affordable prices. But this is not just restricted to luxury cars, across categories, brands like Vistara offer affordable fares with a luxury experience and Mondelez's Cadbury Dairy Milk Silk offer consumers the experience of luxury chocolate without burning a hole in their pockets.

Earlier this month, we reported that the overall luxury automobile market in India is around 42,000 units annually. Luxury SUVs contribute over 50 per cent, growing at 15-20 per cent YoY, faster than the growth of the overall luxury automobile market. Jaguar Land Rover's Ankur Kansal told us, "Luxury consumers are knowledgeable, well-travelled and discerning. The challenge for us is how best to meet their rapidly evolving tastes and preferences, both in terms of content and media."

But what does it mean to market affordable luxury products in the auto sector? We spoke to industry veterans to find out.

Sumeet Narang - Vice President - Probiking, Bajaj Auto Ltd

Points of view: What does 'affordable luxury' mean and who's buying into the 'mass premium' segment?

Sumeet Narang

The relevance of luxury, as a brand or service attribute, in today's marketing environment is debatable. From cars and fashion to hotels and airlines, the focus is shifting from 'luxury' to youthful, sporty, connected, and smart. Consumers are seeking premium and unique experiences without pretensions of being pampered. I believe 'affordable premium/luxury', as an expression, is created more by observers and analysts of marketing rather than the marketers themselves. In the Indian context, being positioned as premium, at the cost of remaining a small niche, rarely works for most categories if the objective is to build a brand with some scale.

Today, consumers are aspiring for premium brands and experiences at a much younger age than ever before - they don't want to wait until they are 40 to be able to afford them. The desirability of premium brands is moving beyond metros to smaller towns where the spending propensity is very different. With such demographics and usage shifts taking place, a brand can stay in its premium ivory tower and not be considered. The alternative is to re-purpose the premium for these new emerging consumer segments. If handled well, this doesn't mean the desirability of the brand is going to diminish in any way.

KTM is a premium, sports performance motorcycle brand that we market. As a European brand, it's considered premium and high performance in Europe and America. If we were to launch it in India with the same forms and sizes, it might have made it as posters in many rooms, but into very few garages. We retained the same values of KTM - technology, performance and design and offered consumers 200cc to 390cc options. To meet the demands of our younger customers, we have recently launched a 125cc variant. Does this diminish the credibility of the premium brand in any way? I don't think so - neither do our discerning customers.

Pallavi Singh - Head of Marketing, MG Motor

Points of view: What does 'affordable luxury' mean and who's buying into the 'mass premium' segment?

Pallavi Singh

The upper middle class in our country has become more intelligent, more aware and most importantly, they know what they want. As a marketer, it's not just about what you're offering the consumer as a product; what you offer should be an extension of the product that they experience. If the experience of the product is not going to be great, then it's truly not luxury. They're not just paying the price for a product; they're paying for the experience.

Take Sephora, for example, it has multiple brands within the store. If I'm able to align the experience for my customer in the store, then they have more to choose from. It doesn't matter who's walking into the store because that's what Sephora specialises in. They have brands like Chanel and Davidoff but also ones more affordable. It has relatability because of that; a customer is not intimidated by the idea of walking into a luxury store. Luxury brands are trying to break the intimidation that people have towards luxury. Five years back, the situation would be that people would think twice before walking into a luxury store. Changing this would mean changing the cultural context in which people would see these brands. The aim is to create a mindset shift that comes in such a way that even your grandmother knows what you're talking about.

MG Motors is a premium brand. If you take a Ray-Ban or a Levi's, they're still aspirational, but in consumers' minds, they're not unaffordable. Our brand is competitive, it's comfortable to use, but it still falls in the premium category. We're a premium brand and we want people to come and experience our brand and who we are. That overall experience of the brand is very critical. The purpose of our brand is to create an exciting experience every time. It's not about selling an expensive product; it's about selling the right experience. India is growing at a pace that no other country is growing at. Luxury means different things to different people and the question we need to ask is - how can we create an experience that is relevant and non-intimidating for consumers so that they say they don't mind buying an expensive product.

Puneet Anand, Sr. General Manager & Group Head (Marketing), Hyundai Motor India

Points of view: What does 'affordable luxury' mean and who's buying into the 'mass premium' segment?

Puneet Anand

Consider the Creta; in India, it's the largest selling car in the 10 lakh segment today. If someone wants to buy a BMW X1, then he also has the choice of going for a Creta which offers him the same features. Today, a person who wants to spend around 15 lakhs on a car will ask himself why he would buy a sedan when he could buy an SUV. When you buy an SUV, your road presence is different and people look at you when you arrive.

Ultimately when a customer sees a communication for a product, he has to be made to feel as if he can relate to the product. Some people want to upgrade themselves and some want to be value-conscious, but they don't want to be looked down on. A high price doesn't always mean high luxury. At the end of the day, the consumer also looks at the value of the product. Luxury will have a different definition in everyone's mind. For some, the Creta might be a luxury car, but for others, a BMW might be a luxury car; it all depends on the price point they're looking at.

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