Posts tagged ‘consumers’

Consumption and the Super Rich

In our last post, we established the context for our exploration into the lives of the super-rich. We saw just how wealthy the 1% at the top is in comparison to the rest of the world’s population. In this post, we shall try and decode their consumption habits and gain deeper insight into the mind of the luxury shopper.

A survey conducted by Prince and Associates in association with Elite Traveller Magazine, which is popular among private jet travellers uncovered these spending habits of the Jet setting elite:

  • 89% purchase fine jewelry per year, spending an average of $248,000 (INR 1.24 Cr.)
  • 32% purchase luxury watches per year, spending an average of $147,000 (INR 73.5 Lakh)
  • 90% purchase fashion/accessories per year, spending an average of $117,000 (INR 58.5 Lakh)
  • 65% stay in a hotel/resort for leisure per year, spending an average of $157,000 (INR 78.5 Lakh)
  • 73% use a hotel/resort for a meeting or event per year, spending an average of $224,000 (INR 1.12 Cr.)
  • 59% stay at a spa per year, spending an average of $107,000 (INR 53.5 Lakh)
  • 21% take a cruise per year, spending an average of $138,000 (INR 69 Lakh)
  • 17% take an experiential trip per year, spending an average of $98,000 (INR 49 Lakh)
  • 75% make home improvements per year, spending an average of $542,000 (INR 2.71 Cr.)
  • 85% purchase wine or spirits per year, spending an average of $29,000 (INR 14.5 Lakh)
  • 30% purchase fine art per year, spending an average of $1,746,000 (INR 8.73 Cr.)
  • They own/lease 4.4 luxury vehicles currently and 85% are planning to acquire a new vehicle in the next 24 months
  • They own 2.5 primary homes valued at $2 million + (> INR 10 Cr.)

Thus, these people spend considerable amounts of money on things others might consider luxurious. If you thought only the Americans and Europeans were crazy about luxury, the super-rich in Asia are also quickly getting up to speed with the west. Japan has long been one of the biggest markets for luxury goods in the world, and India and China are fast catching up thanks largely to growing economies and young populations with large expendable incomes.

However, it’s not just the amount of money they spend, but the manner in which they spend it that suggests the lengths this segment is willing to go to in order to satisfy their desire to consume.

Consider, for example these shopping behaviors exhibited by some of India’s super rich and reported by the Economic Times :

  • Shahnaz Husain, Cosmetics Diva, has a Louis Vuitton collection in her wardrobe—not crafted at any factory of the French fashion giant, but at her bungalow in South Delhi, designed by herself and stitched by an in-house tailor. She always buys LV Bags in pairs: One to be used as a bag and one to be cut up and shredded for use by her tailor.
  • Diljeet Titus, one of Delhi’s top lawyers, has bought 40 handsets of luxury phone brand Vertu in the last couple of years. Vertu phones in India cost between INR 3 lakh and INR 66 lakh. Titus also loves to splurge on luxury watches, suits, phones and vintage cars for himself.
  • A lady in Delhi sent 3 specially imported Hermes Birkins worth INR 60 Lakhs to a family friend whose daughter’s wedding she was unable to attend. She also sent an apology note.

This is not just a Delhi phenomenon, although Delhi is fast establishing itself as the nation’s luxury capital. The Delhi stores of most luxury brands with a presence in India are their best performing stores in the country today and cities like Bombay and Bangalore are only just catching up. As far as luxury malls are concerned, Delhi’s Emporio, Mumbai’s Palladium and Bangalore’s UB City are the most preferred destinations for luxury brands seeking to open in the country.

mall interiors

Data gathered from one of the world’s top apparel brands with operations across India suggests that approximately 55% of all revenues come from a small portion of the total customer base (~10%) and spending is concentrated even further amongst the top 1%.

Interesting anecdotes from those in the industry bear this out. One customer, for example, a rich businessman from the Mumbai area spends approximately 2 million INR annually at just 1 store of a brand selling premium casual wear, in addition to shopping at the brand’s stores in Thailand, London and at other locations across Europe. Another customer in a different city once deposited approximately 1 million INR at a certain luxury brand’s store in cash! He said it was too inconvenient for him to carry cash around every time he had to buy something. Even more surprising, he used up his store credit within 90 days.

A 2008 research amongst affluent households (Household Income >$100K) and Super-Rich Households (>$250 K) also provides keen insight on the media consumption habits of the Super Rich, as compared to the affluent. The richer one gets, the more time one tends to spend reading and surfing the web, versus time spent watching TV and listening to radio.

Thus, the super-rich individual today is:

  • A big spender on luxury products and experiences
  • An eccentric and a stickler for personalization, both in experience and in product
  • A global traveller, in tune with the latest luxury trends around the globe
  • An avid reader and a digital native

The Super Rich Customer’s wallet is the Holy Grail most luxury marketers are after and the quest isn’t an easy one. “What do you sell to someone who has it all?” is the question most are trying to answer. In the next post, we shall take a look at what Luxury and Premium Brands the world over are doing to serve this ‘Over served’ segment.

  •   Rahul Sharma

December 24, 2013 at 5:27 am 3 comments

“Khushiyon Ki Home Delivery”

Domino's PizzaDominos sure knows what they are talking about.

My husband and I are loyal and very regular customers of Dominos; so much so, that when my husband and I went on a diet and gave up pizzas for about 6 months, their customer care personnel called us to ask why we’d stopped ordering pizzas, if they had done anything wrong, if they could do anything to get us to order pizzas again. A single call – a simple gesture of caring for their customer – and they won us over.

My husband suggested that they include a whole wheat pizza option on their menu – as a healthier alternative. Promptly, the very next month, a pamphlet was delivered at home, talking about the launch of the new whole wheat thin-crust pizza! I’m not saying that the credit goes to my husband for this brilliant addition to their menu, I’m sure they heard this from enough of their customers before they decided to go with it – but this won them pots of brownie points from us. Not only did they introduce the pizza, they also knew who to inform about the same.

This sure got us ordering pizzas once again. We started asking for “less cheese” on the pizzas. The first couple of times we did this, we had to really explain to them what we meant by less cheese – because they weren’t used to hearing it at all. Now, after about 3 months of doing so, “less cheese” and “no cheese” have become standard options to choose from – there’s no hesitation or speck of surprise in the voice of the person taking the order.

That said, these options aren’t offered across all Dominos outlets. They have identified pockets of the city where there is demand for such healthier alternatives, like, the Dominos on Pedder Road in Mumbai has these options but the branch in Prabhadevi, although aware of the offering in other branches, does not have the option themselves. On the other hand, the Dominos in Nagpur hasn’t even heard of this option (I was met with a look of “pizza and whole wheat are oxymorons” when I tried ordering a whole wheat pizza in the Dominos in Nagpur). Smart move – acting locally and how! No added complexity and cost in the form of additional product options unless there is sufficient demand for them. But where sufficient demand exists – Bingo!

In addition, they track their regular customers very closely. And not only do they track them – they also create customized communication material and discount coupons for these customers and mail/ email/ sms regularly to them. In our case, since we always order two thin crust pizzas with a fixed combination of toppings – we receive mailers that have a set of coupons such that they are always applicable for our typical orders. Our friend, an even more regular Dominos customer (he orders from there at least twice a week) has a standard order combination of a thin crust pizza and a pasta dish – the coupons that he receives in the mail are always addressing his typical order pattern. Another friend, who always orders a dessert with his pizzas, gets a bunch of coupons via email with offers for their Tiramisu and Choco-lava cake.

 

It’s brilliant! A lot of companies do use customer information, but few actually succeed at making the customer feel so special!

They call this their Precision Marketing Program – I say, Well Done!

Need some results to show what this investment and effort into technology and analytics has gotten Dominos?  Sales generated solely basis precision marketing efforts  account for 30% of total sales.

This strategy is surely Precise!

 

By,

Roshni Jhaveri

January 6, 2012 at 4:37 am 6 comments

New buzzword in town – Frozen Yogurt !

Just as we were getting ready to run this post, our regular reader RJ also pointed this out in his comments on our previous post.

Notwithstanding our previous posts (read here and here) about habit change and how companies/ marketers need to adapt themselves to ensure the habits are in tune with the changing lifestyles of consumers – here’s an example of a category evolved over time, that both contributed and adapted to changing consumer lifestyles.   

First there were only Vadilal, Dinshaw, Kwality & Amul Ice-creams (limited flavors, standard packaging, uncomplicated parlors), then the homemade and the more high-end ice-creams like Naturals, Baskin Robbins hit the Indian markets. And then came Gelato. Consumers were exposed to different options in the category. With exposure to each new option, their palettes also evolved from the processed chocolate and vanilla essence to the delicate flavors of fresh vanilla bean extract, dark Belgian chocolate and fresh fruit flavors. More options also exposed them to the pros and cons of the new offerings. Consumers started realizing the ill-effects (fat, calorie content in regular ice-creams) and got more weight conscious and were fast adopting the Gelato, a low calorie alternative.

Similarly, earlier, yogurt was made at home. Then some households switched over to buying readymade yogurt with the option of regular and slim. The trend to follow was flavored yogurt. Neighborhood grocery stores now offer 3 brands of flavored yogurt – Nestle, Danone and the latest entrant in the arena is Go.

The convergence of the changes in ice-cream and yogurt categories has led to the latest trend to hit the market – hip frozen yogurt shops such as Cocoberry, Yogurtbay and Fro-Yo. Of these, YogurtBay seems to be the most popular hang-out for youngsters; any time of the day (or night) if you go by these shops, you literally need to squeeze your way in to get your hands on some very seasonal fruit-, gourmet-flavored yogurt with contemporary toppings like granola, muesli, praline and jelly. They are cool (in taste and attitude), contemporary, non-preachy about health and they are the new buzzword in town.

Health benefit is probably intrinsic to the cross-category of evolved ice-creams and yogurt. Yogurtbay mentions the health benefit (fat free) almost as an afterthought, in the small print at the bottom of the poster.

By,

Roshni Jhaveri

 

P.S – On my trip to the US this summer, I noticed the same trend there. Every street corner had a frozen yogurt store – not one of these was there when I last visited 5 years ago. Same concept, but executed differently. It’s a self-service concept – first you pick the size of cup, go over to the yogurt dispensing machines (remember the softy machines, these are the same type), take as small or large squirts of the flavors that appeal to you, mix how many ever flavors you like,  go over to the toppings counter and add all you  like and want, weigh the cup and pay accordingly. Fabulously executed, you get exactly what you want, in what proportion you want and how much you want.

Do you think this format would work in India? Or are we too dependent on asking people to serve us that this self-serve, self-decision on yogurt flavors and topping mix would just be too much to handle?!?!

July 14, 2011 at 5:31 am 24 comments

Habit Change example – Coffee Houses

Habits and habit change are a topic that occupy many in the marketing sphere. Given below are excerpts from an article by Prof. S. Ramesh Kumar of IIM Bangalore in the Hindu Businessline:

Brands that become a part of consumers’ habits in any sphere of their life are likely to enjoy a high degree of brand loyalty.

Another challenge that habits pose to marketers is the manner in which the latter need to adapt themselves to ensure the habits are in tune with the changing lifestyles of consumers.

Café Coffee Day has a strong base of loyal followers as the brand is a part of the socializing habit among urban youngsters and executives.

It is interesting to note that several decades ago Indian Coffee House (run by the Coffee Board in several cities) was a part of the socializing habit of youngsters of the bygone era.

Habits have not changed in this domain of socializing: Café Coffee Day has brought in several contemporary dimensions that matter to the lifestyle of today’s youngsters. Marketers need to explore the linkages between habits, product category and the brand becoming a part of the habit associated with the category.

July 11, 2011 at 4:50 am 2 comments

An example of successful habit change

An earlier post mentioned the difficulty that healthcare agencies in the development space faced in propagating the habit of washing hands often. Across the world, diarrhoea is responsible for 3 million deaths a year, equal to one child dying every ten seconds. As mentioned in this WHO document, diarrhoea is responsible for 13% of deaths of children under 5 in India. Hand-washing with soap and water can reduce up to 48% of diarrhoeal diseases. Yet, an estimated 70 million people in India never use soap.

One brand in the commercial space that has invested heavily in promoting the practise of hand-washing at the right times during the day is Lifebuoy – Unilever’s biggest brand in India and the country’s most popular soap. For inculcating such a huge habit change in people – from not washing hands with soap at all to washing hands with soap a few times a day – Lifebuoy tied up with government agencies and NGOs, and invested significant time and money. Its ‘Swasthya Chetana’ (‘Health Awakening’) campaign that began in 2002 had the objective of educating 200 million Indians – 20% of the population – to wash their hands with soap after defecating and to achieve this goal within five years. By the end of 2004 the campaign had reached 70 million people, including 20 million children. In 2003-4 sales of Lifebuoy grew by 20%, with particularly strong sales in the eight states where the program operates.

In order to ensure that this initiative has a sustainable impact, the Lifebuoy team worked with advisers to develop a multistage programme, designed to involve and educate whole rural communities. The whole process, from initial contact to self-managed health club, took two to three years. While this represented a significant time investment, it was felt this was essential to ensure the hand-washing habit becomes part of everyday life. (Read further details about the ‘Swasthya Chetana’ campaign here)

 While all the phases of the campaign are worth focusing on, in this post I will call attention to one aspect of it that is related to earlier discussions about tangible benefits which are one of the factors that help drive changes in habits. One of the key elements of Lifebuoy’s hygiene education approach was the ‘glowgerm’ demonstration. This countered the common misconception that ‘visibly clean’ is ‘hygienically clean’, and, in an easy-to-understand manner, drove home the message that even clean-looking hands are dirty until washed with soap. Children were invited to take part in a ‘glowgerm’ demonstration. This involved applying a white powder to the palms of hands, then washing with water only. Hands were then held under an ultra-violet light and the powder glowed where dirt remained, showing that hand-washing without soap was not enough. The children then repeated the process, this time using soap, only to discover the UV light showed no trace of the powder – a simple but highly effective demonstration that made the benefit of using soap tangible.

 

By,

Zenobia Driver

July 7, 2011 at 5:32 am 7 comments


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