Exploring the role of Country of Origin for Luxury Personal Care Products in India

Abstract

Indian consumers are widely using luxury brands primarily in the perusal care segment. The number of high net worth individuals has increased, awareness is enhanced and individuals are concerned about their looks and presentation. This paper explores the factors that consumers consider while buying luxury personal care products; additionally, it also explores the effects of country of origin on consumers’ behaviour in the same segment. We carried out qualitative research in two phases; first, focus group discussions were conducted in two metro cities, Mumbai and Delhi. Second, in-depth interviews were conducted to gain deeper insights from the respondents. The study found that brand promise and value, packaging, customization and quality of the product are the factors that influence luxury consumers’ behaviour. They prefer online media for exploring the products. Country of origin as well as social media had a very low impact on their behaviour for luxury personal care products; social media being a mass medium, there is no exclusivity in these platforms. We have developed a conceptual model that can help marketers of such products develop better strategies.

Introduction

The luxury market has a double-digit annual growth rate globally. It is predicted that worldwide revenues of luxury products would grow faster than the global Gross Domestic Product, GDP. The growth is primarily observed in emerging countries such as Brazil, Russia, India and China as they account for 11% of the global sales; this is expected to grow by 16% over the next five years (Luxury Goods in India, 2013). The present volume of sales of luxury personal care products in India is INR 6 billion (Euromonitor International, 2014). Moreover, India is specifically becoming the increasingly preferred destination for luxury brands, besides China. The Indian luxury market is projected to reach $14.7 billion by 2015 (Jha, 2013). India has several luxury brands such as Burberry, Hermes, Gucci, Dior, Louis Vuitton, etc. with a high market share. Additionally, the number of high net worth individuals has increased in India and they prefer luxury brands. Indian consumers who buy luxury products are knowledgeable, ambitious and are willing to spend on these brands (Jain et al., 2012). It provides a good platform for luxury brands as consumers are excited about this concept. Luxury brands are primarily in all the product categories such as apparel, accessories, automobiles and personal care category. India is a promising market for luxury brands (Euromonitor, 2013) and therefore, brands are keen to explore it.

Beauty and personal care products consistently perform very well in the Indian markets. The value percentage growth in the premium personal care products form 2007-2012 was 207.3% and in 2013, it grew by 25.8%. Moreover, this segment is expected to grow by 30-35% (KPMG, 2014) this year. The primary consumers of these products are from the urban markets; these consumers are concerned about personal grooming. Urban males are also focused on their looks and appearance and consciously select luxury products for their grooming. It is expected that this category will continuously grow as consumers are increasing their focus on personal grooming. Consumers are willing to buy these products as they feel that this category provides a good value proposition. Globalization has also served as a catalyst as it has helped in increasing the level of awareness of international brands among consumers (“Beauty and Personal Care in India”, 2013). However, in India, there is a high potential and several opportunities to explore this untapped segment as there are just a few brands. There are no Indian luxury brands in the personal care segment. There are primarily international brands with few outlets in India.

Luxury branding is widely studied in literature the focus is primarily on different cultures (Eng & Bogaert, 2010), experience of consumers and their motives (Venkatesh et al., 2010), intentions towards purchase (Amatulli & Guido, 2011) and the Indian consumer’s behaviour (Jain et al., 2012). However, there were a few studies on Indian luxury consumers and in our literature view, we could identify only one study (Godey et al., 2012) on country of origin that was related to India. This study was conducted in seven countries and India was part of the entire research project and focused on the effect of country of origin on luxury purchase decisions. It is an unusual phenomenon that luxury brands have foreign origin and do not have an Indian heritage. There is a dearth of knowledge in comprehending motives and drivers of consumers in India. This paper captures Indian luxury consumers and understands the role of country of origin in their purchase decisions primarily for the personal care category. This study focuses on understanding and analysing the consumer perceptions on luxury brands and the drivers that motivate the Indian consumers to purchase luxury personal care products.

In the subsequent section, we will review the literature on luxury, luxury brands and purchase behaviour, cue utilization as a theoretical framework, country of origin, country image and consumer ethnocentrism. After reviewing the literature in the following sections, we propose objectives, research methodology which includes study 1 and 2, empirical results, proposition and conceptual model developed from the data, discussion, implication and scope for future research.

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