Euro MBA Luxury Brand Management

Armani Case

Introduction

In France, luxury brands and consulting agencies are working seriously in the Indian market. Part of the BRIC (Brazil, Russia, India and China), everyone is according to say that India will become the 5th country in term of luxury consumers, and this before 2025. The demand of Indians people regarding luxury products and services increased during the last two year from 120 to 150%. According Altagamma, an association of Italian luxury companies, over 500 international brands listed, only 150 would be introduced into India -­‐ against 350 in China today. We can observe a strong dominance for products such as watch and jewelry, they represents actually 47%. In comparison with brands of ready-­‐to-­‐wear, they are representing only 14% of the luxury business.

The potential region

India conventional long name Republic of India is a state located in South Asia. It is the seventh-­‐largest country by geographical area, the second-­‐most populous country with over 1.2 billion people, and the most populous democracy in the world.

For the introduction of Armani in India, there are two main locations that we can keep: Mumbai and Delhi. Some people according to say that the city of Kolkata has a big potential, but for the first Armani store we will only keep the two main cities. If we talk about the competitor, we can see that brand as Hermès, Cartier or Gucci started their expansion in these cities. In India, there are 35 cities with

over one million inhabitants and twenty cities are identified for potential implementation of a luxury brand. Mumbai is India's largest city (by population) and is the financial and commercial capital of the country as it generates 6.16% of the total GDP. Regarding the other city, Delhi is the largest commercial center in northern India. Both of them are really attractive for the first “boutique” of Armani. These cities are the two mains place for luxury brands. They have to be there if they want to start their expansion.

Distribution

Concerning the distribution of Armani in India there are only few possibilities. We will talk about the 2 that we can follow. The first one would be to open the first boutique in a luxurious hotel. In India, this strategy is really effective and often adopted by luxury brands. The best opportunity can be to create a partnership between Armani and the Khanna family. This family owns the luxury hotel group called Oberoi and already distributes luxury brands. They have a really good expertise of the Indian market and a very good channel of distribution that can match with the spirit of Armani.

The other strategy for Armani would be to become proactive in India like Hermès and open a flagship in the street. For this, the best opportunity would be to move to Delhi and create a boutique in the downtown. It is not in Indian culture, but the neighborhood, close to the Taj Mahal, we can find lot of interior design boutiques, the concept store Bombay Electric and many major hotels. According to lot of people in the industry, this area can become “the Golden Triangle of the city".

We see that this two strategy would match with the ideas and brand values of Armani. For example we saw that the strategy of Armani Japan was similar to this one, same in Middle East with the creation of the hotel and boutique in latest and biggest building on earth.

The Indian luxury market will almost quadruple over the next decade, and brands will have a major opportunity to target the fast-­‐growing numbers of brand-­‐savvy, aspiring consumers. The luxury goods market in India is one of the world’s most diverse and exciting – and a challenging one for brands seeking to gain a presence there. Brands – and retailers – that want to capture a share of this fast-­‐paced business need to learn and adapt, or risk missing one of the great-­‐ untapped opportunities for the luxury business.

Source American Express

Source NCAER MISH

Customers profile

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Primarily resident in urban India;
Lives in a household earning more than about INR800, 000 (US$18,000) a year, where the chief wage;
Earner is male, average age 36–37;
Owns a premium/luxury car;
Among women consumers, 65% are housewives;
Most are educated to post-­‐graduate level
Incidence of foreign travel is 53%, 44% travelling abroad for holidays at least once a year (Europe, Middle East, Us); We can also categorise luxury households into segments according to their attitudes to luxury goods purchasing:

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The Arrived: This is the most affluent group, com-­‐prising 49% of the target audience of luxury goods companies.
The Actualised Ascetic: This group comprises largely self-­‐made men, professionals or businesspeople that are in their late 40s or early 50s.
This is the smallest group (15% of the target audience).
The Climbers: As the name suggests, this group wants to project a lifestyle image that will gain them acceptance into the higher echelons of society, yet many lack the discernment that comes with exposure to luxury brands and wealth over a long period. These are 19% of the target universe for luxury brands, says the study.
The Laggards: Although well heeled and targeted by luxury brands, this group remains nonchalant about luxury goods consumption. This group comprises a high proportion of college dropouts and graduates who are in business or work as office executives. This group is 17% of the target consumer base. In short, Armani has to target the new Indian luxury consumer who pursuing a lifestyle bases on ostentation, impressing other with wealth and power, owning exclusives items and owning them first.

Lines of products

As we see before, only 150 brands were imported into the territory -­‐ against 350 in China today -­‐ with a strong dominance in the watch and jewelry (47%) and brands of ready-­‐to-­‐wear and accessories, which are represented as 14%. The Indian market has this particularity that for the moment it’s only with dominance for some products. If we consider these numbers we can easily say that Armani have to focus in specific segment as Watch for example.

The important of the fusion of Local & Global goods is a priority for a brand, which wants to succeed in India. The Indian consumer, while attempting to ape the West, also sees a sign of luxury in the Indian culture / royalty. Taking this point forward, a consumer also attempts to build a connection with his roots while at the same time making efforts to achieve grandeur. Armani has to develop a specific image, which suits perfectly with the culture and environment of India. They have to connect the strategy of a product being (Ready to wear…) in line with the consumers’ values. As did Montblanc or Hermès, they build specifics products for India. They can create for example a collection of Sari (most common dress that use all the Indians woman) or a collection of scarf call Gandhi. They have to create like in Japan a real brand value that Indian customers can recognize and adopt. They also have to focus on Art of living and interior design. They take a real importance to this sector and really enjoy this new type of design products for home. With Armani Home, they can develop this opportunity.

Communication

Regarding the communication of Armani across India, I think that it would be good for the company to create some specifics partnership with specifics people in India. As we know, India really loves movies and cinemas. The Bollywood industry is the biggest in the world and they are the biggest production too. It would be interesting to get some famous actor or famous singer (most of movies are famous for the music soundtrack) like for example: Urmila Matondkar (one a favorite actress there) or with John Abraham. He is one the emerging stars in Bollywood Industry. He started his career as a model. He is still one the hottest and costliest model in India.

John Abraham Urmila Matondkar

One good strategy of communication would be a sponsorship with some Cricket players. As we know, this sport is the national sport, every people loves this game and love to play. Every child plays everyday and admire certain players, as for example French people can love Zidane and wants to identify themselves as him. It would be a good way of transmits values and ideas to a large public. The entire basic channels of communication have to be use (Internet: really important in India because big market, TV, Magazine). Good public relations have to be done as well (events, parties). A specific campaign in the theme of Luxury meet India but keep the traditions with lot of colours. We have to create a real atmosphere around the brand.

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