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COVER STORY Marketing to the Superrich Continued...
Address The Buyer's Specific Motives Marketers must decide early on just which psychographic segment of the Superich they want to cater to, and then ensure that the segment is, in fact, large enough to constitute a sustainable niche. Falling victim to the assumption that their buying power unites them even in terms of brand-experimentation and brand-loyalty can be fallacious. For instance, yesterday's Superich, having come up the hard way, and unlikely to have been highly educated, is a careful spender, tending to invest in long-lasting products and in his children's future. Today's Superich is an Epicurean in comparison. Says Kartik Raina, 45, the CEO of Excelsia Foods: "His spending is reflected in new and snazzy cars, increased expenditure in five-star hotels, and usage of new-age products." And in being the first on the block to sample a new product. In other words, while one section of the Superich is in the vanguard of conspicuous consumption, deriving value from ostensibly leading-edge, expensive, and flashy products, the other constitutes a more conventional genre of spender, putting his money only into products whose tangible benefits are worth the price he pays. That makes marketing to this segment a question of strategic choice: the same product or service cannot be used for both. The distinction is crucial because marketers who project their sales on the assumption of homogeneity among the Superich will never make those numbers. For a realistic assumption, it is essential to understand which section will perceive value from the product, and how long its members are likely to patronise it. CASE STUDY. Launched in 1994, the super-premium ice-cream brand Baskin Robbins, which debuted through four retail outlets in four of Mumbai's most upmarket localities, found sales shooting through the roof initially. Convinced that its high price--at least twice as expensive as competing products--had conveyed a suitable value equation to the Superich, with sales being twice as large as projected, the brand promptly expanded to the other cities that house the Superich. But sales and customers melted as quickly as they had thronged the parlours. The problem: the Superich had only been patronising the product for its novelty value. Once that wore off, they moved on to the next flavour of the month--forcing the brand to cut prices by 20 per cent to widen its appeal to consumers below the level of the Superich. Admits Rajiv Verma, 42, assistant country manager, Baskin-Robbins India: "We had to drop prices. Fortunately, we were able to cut costs by as much as 25 to 30 per cent, without compromising on the product or service." THE LESSON. Understanding just why the Superich is patronising a particular product is essential. Or else, meeting his needs on an ongoing basis with that product will be impossible. Leverage The Intangible Value of Exclusivity Among the Superich income is an indicator of purchasing power. But it does not, automatically, direct spending towards the most expensive product in the market. For, perched as they are at the top of the pyramid, with a sizeable gap between them and the next rung of consumers, the Superich use their consumption patterns to maintain that distance rather than risking its being closed. Thus, a complex combination of gratification, social assertion, and the propensity to make statements is what drives the purchase decisions of this segment. For marketers, it is essential to tap these motives aright, instead of assuming that the normal value propositions of their brands will continue to serve them in good stead when targeting the Superich. Says Excelsia's Raina: "Every super-premium marketer has to marry income data with socio-economic classes to figure out the consumer profiles of his target audience, and work out the positioning appeal accordingly." The common factor driving the Superich, however, is a desire to reinforce their status as the highest earners--and, by extension, as that section of consumers which has access to products and services that other segments do not. CASE STUDY. If Scotch whisky has always been one of the most prized possessions of the Superich in India, just why has the post-liberalisation version of this consumer segment refused to push its sales up beyond 1 million cases--a mere 2 per cent of the whisky market? When IDI launched Spey Royale in 1994 in a bid to be the first company in the country with a Scotch brand officially on the shelves, it was counting on the pent up demand to be translated into consumer offtake. What IDI did not realise was that serving J&B, for instance, to guests was a statement for the Superich, conveying the power and influence of people who had access to the brands despite the restrictions on its availability. The intrinsic taste of Scotch whisky had nothing to do with it. Misreading this, the company failed to galvanise sales of the obscure Spey Royale--although fake and smuggled Black Label continues to enjoy a market. Says Deepak Roy, 47, CEO, IDI: "With big brands like Chivas Regal or Johnny Walker Black Label not yet available in India, the aspirational needs of the potential Scotch consumer are not being met. After all, Scotch is drunk for ego gratification. That's why Spey Royale is not doing well. It is an unknown brand." THE LESSON. The Superich derive value from products in a very different way from other consuming classes. Understanding their unique drivers is essential for their patronage. Ensure That Your Brand Is Globally Contemporary That even the Superich conform to the Value-For-(More)-Money equation is well-known. As Pradeep Pant, 37, director (sales and marketing) of Modi-Revlon, points out: "The top-end consumer is willing to pay a premium price, but it has to be a value-added offering." The critical issue, however, is just what the Superich construe as value within the classic product-plus-service-plus-purchase-experience framework. The answer: top-of-the-line global quality coupled with exclusivity. Only if the brand pitches the purchaser into the same league as the Superich around the world will this segment of consumers respond to the offering. Alternatively, its members will look for the best deal, thus opting for a product or brand actually aimed at a less affluent segment. For instance, cellphone services--which involves both a subscription and purchasing a handset--have seen even the Superich picking up the cheaper phones and subscription options simply because the service, being ubiquitous, confers no exclusive status. By contrast, Modi-Revlon has succeeded with its Outrageous lipsticks, priced at Rs 250 per stick versus the nearest competitor's Rs 125, primarily because its sunblock-and-moisturiser product-pluses, combined with the international fashion and glamour angle invoked by supermodel Cindy Crawford, conjured up an exclusive aura that appeals to the Super-Rich. Confirms Ravi Kant, 52, marketing director of the Rs 1,551.88-crore Philips India: "Households or individuals may have the financial ability to purchase super-premium brands, but they won't seal their purchase unless they're sure its availability is not extended to all and sundry." CASE STUDY. In 1995, Mercedes-Benz India, the joint venture between the dm 124-billion Daimler-Benz and the Rs 6,409.43-crore TELCO, launched the world-famous E-Class Mercedes Benz with a bumper-tag of Rs 22 lakh--a huge Rs 13 lakh more than the most expensive car till then, Mahindra-Ford's Ford Escort. Despite having the money to afford it, the Superich turned up their noses, rejecting the offering. Why? Simple: the company had launched a E-Class Merc at a time it was rolling out the state-of-the-art W-Class for its global customers. To the miffed buyer, "perceived value was not as high as it should have been for that price," as Samsika's Kapoor puts it. Why, after all, would the Superich dip into his admittedly deep pockets for a product that had, clearly, become outdated by international standards? It wasn't until the company realised its gaffe and introduced the contemporary W-210 in India that sales finally picked up. THE LESSON. The Superich can, certainly, afford super-premium products. But they won't part with the premium unless the brand equates the buyer with the creme-de-la-creme.
Redefining
the Rich / The Nearich / The Clearich |
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