Five years ago, the only place where you were most likely to spot a luxury car was a five-star hotel. Marketing these essentially meant giving the prospective buyer a test drive. And for the vast majority of Indians, or rather, metro city dwellers, not only was buying one out of the question but even casually checking out the car in the showroom required guts.
Cut to 2010. A motley group of industrialists, exporters, lawyers, real estate developers and other well-heeled citizens in Aurangabad come together to negotiate a hefty discount and book 115 swanky Mercedes-Benz cars of their choice. Their aim: to make a statement about the purchasing power of their town. That?s how far luxury cars have traveled in the last five years in India.
Today, the barriers have been dismantled, the consumer is spoilt for choice, and whether one has the money or not, he is well versed with these brands. For luxury car makers, the sure way to tap customers is to be present where they are. Whether she is teeing off at the golf course or attending a fashion show, the strategy is to associate with the symbols of opulence. So, from fan clubs to museums to racing tracks, these companies make sure that their brands make a personal statement about its owners.
?Affluent Indians desire that luxury should reflect every mundane detail. They demand the newest, latest, the most modern technologies and the most personalised service. The consumption is also driven by peer pressure. The challenge therefore lies in how we segment this target group,? explains Debashish Mitra, director – sales and marketing, Mercedes-Benz India.
The luxury car market in India stands at around 7,000-8,000 units per year and has been growing at 20% year-on-year. The German power houses take the lead in this segment?in the financial year ended March 2010, BMW led with 3941 cars sold in India, closely followed by Mercedes- Benz at 3760 cars. Audi sold 1532 cars while Jaguar Land Rover (JLR) which was bought by the Tatas in 2008, brought up the rear with 242 cars sold in India. However, Mercedes-Benz recovered its leadership position last month when it sold 341 cars compared to 307 cars by BMW and 189 cars by Audi.
According to a report by DSP Merrill Lynch and CapGemini Consulting, the high net worth population in India is expected to triple over the 2008-18 period. ?A luxury car is probably one of the first luxury goods purchased by those ascending the socio-economic ladder, as it is one of the most obvious manifestations of achieved status. We clearly see India as one of the biggest car markets of the future. Our estimation is that India will be the fifth-largest automobile market in the world by 2015,? says Clemens Ollmert, head of marketing, Audi India. Last month, BMW launched its sixth generation 5-series sedan in India priced at Rs 38.9-45.9 lakh.
Brand perception
What drives customers to choose a high-end luxury car is not just its features but also how they perceive the brand. The concept of luxury cars is not new to India. The royalty and the rich always had several top models idling in their garage.
For a long time the luxury market meant Mercedes Benz. ?The Mercedes image is totally enviable. For anyone it is the epitome or gold standard of luxury. Look at it this way. The president of this country drives in to the Republic Day ceremony in a black Mercedes limousine. That?s the car used by the head of the state. So it becomes a possible aspirational statement for a lot of people,? says brand strategy specialist Harish Bijnoor.
The equation started to change when BMW arrived in India, followed by the entry of Audi, JLR, Porsche, Rolls Royce among others. What also changed is the profile of the customers, so succinctly brought out by the Aurangabad buying blitzkrieg.
?While earlier there were only people in independent positions buying these cars, now you see a lot of people from the salaried class or the senior management of companies who buy these. The average age has thus come down?, says Paul Blokland, managing director, Segment Y Automotive Intelligence, an automotive consulting firm. Now, in addition to industrialists and film stars, there are also a number of executives, in their 30s or 40s who buy these expensive beauties. Blokland gives the example of the 3-series of BMW in the Rs 22-lakh range which is seen as affordable for senior management personnel.
That?s where Benz faces a challenge, and other car makers make their entry. ?In a way, Benz symbolizes the old world luxury car. The younger people prefer to self drive and that?s where other manufacturers step in,? points out Bijoor. ?BMW is the modern style statement. It?s all about the self driven car. Audi on the other hand is the new entrant, it?s an upstart on luxury. It?s about engineering excellence.?
The brands also position themselves accordingly in the minds of consumers. ?Mercedes is perceived as classy, solid quality and with timeless appeal. BMW is focused on the driving pleasure, Audi on style,? says Blokland. ?JLR used to have the positioning of grace, pace and space. It was caught up in the old image for sometime but now JLR is looking more modern.?
The taglines also say the same story. So, while for BMW it?s sheer driving pleasure, for Audi, it?s always been Vorsprung durch Technik (German for advancement through technology), which clearly spells out its unique positioning.
Bijoor further adds that brands are very oriented towards the individual needs, passion and bias of its potential customers, a fact that the car makers also agree with. ?A luxury car makes a personal statement about its owner. While performance, technology, design, price etc. play an important role, a luxury car purchase is also an emotional decision and is reflective of the buyer?s personality?, says Audi?s Ollmert. No wonder the brand image is sacrosanct for these companies. Mitra of Mercedes-Benz adds, ?These people are very sensitive to how the adjacent target group perceives them if they consume a certain brand. The new-age affluent customer no longer restricts himself to purchases for special occasions.?
Mercedes-Benz, that introduced Indian customers to the world of luxury and style on wheels, believes that keeping the market excited with new offers is what gets Indian hearts throbbing. The company has been wooing its customers with new models, even as it closes the gap between global launches and their arrival in India. The company has a 12×12 strategy for the Indian market, which means 12 products in 12 weeks. Says Wilfried Aulbur, managing director and chief executive officer, Mercedes-Benz India, ?This year, in January, we unleashed our widest product portfolio with 38 variants. We started with showcasing SLS AMG at the Auto Expo and moved on to S 500L ?the most expensive completely knocked down product in India to S 600 L Guard? protecting India?s elite to GL 350 CDI?the king of SUVs in India to E-class that won four awards for the Best Luxury Car of the Year 2009.?
However, although auto makers are increasingly trying to bring the latest models into the country, it is not easy. ?The homologation process, introducing car specifics to market requirements like a right-hand drive or, in some cases, a long wheel base model are processes that take their time and hence it is a challenge to introduce these products simultaneously across markets,? says Audi?s Ollmert.
Another important factor that is driving product development for India is that it is largely a chauffeur driven market. Therefore, the emphasis is on luxury equipment and features. While they might focus on the comfort because India is still a largely chauffeur driven market, the brand positioning can?t be tweaked to a large extent. ?While you can have flexibility but you can?t have one brand stand for a particular thing in one market and the other in other market?, says Blokland.
Reaching out
Since the luxury market has its own specific nuances, brands look at strong below the line marketing strategies to connect directly with customers. ?Two-third of our budget goes into below the line marketing. Our customers want to person- ally experience the car and hence we look at building dealerships taking into consideration their tastes and requirements,? says Peter Kronschnabl, outgoing president of BMW India. He added that the company may see some shift in its marketing strategy once it launches its pre-owned car programme?BMW Premium Selection?this year. The company is looking at around 30% of its total sales coming from the pre-owned car programme. The first pre-owned car programme will be launched in Chennai followed by Gurgaon.
?Fashion and luxury events such as these provide us with an ideal platform to connect with the right contacts who could become potential buyers. Besides, we also use avenues like participation and product displays at strategic high-profile events, product placements in films and associations with events like the World Economic Forum to take our brand message across to customers. Our focus is on mega ground events in the areas of fashion, lifestyle and sport,? says Ollmert.
Though initially, Audi spent heavily on traditional media to register the arrival of the brand in India, it changed its course a year later. Roughly 50% of Audi?s total marketing spends are on below-the-line activities, whether it is the Audi Quatro Golf Cup or its five-season association with Wills Fashion Week India.
Mercedes-Benz and BMW are also very active in promoting golf tournaments and have appointed golfers Gaganjeet Singh Bhullar and Shiv Kapur as their respective brand ambassadors. Further, these brands also see association with fashion designers and shows as a platform to reach out to their target customers. So while Mercedes-Benz?s idea of tying up with fashion designer Manish Arora to connect with the Indian audience fits into its global marketing strategy, for BMW tying up with fashion designers is a platform to showcase its history. Mercedes-Benz?s recently introduced ?StarDrive Experience? across four major cities combines driving experience with simulation of critical road situations while the multi-city ?Fascination Showcase? provide an exposure of the entire range of Mercedes-Benz cars for customers and prospects across tier II and III cities.
For JLR, the high-voltage takeover by the Tata group itself ensured enough eyeballs that the company did not have to put in a substantial amount of money initially to create brand awareness. The company recently opened a showroom in Delhi. It too believes in a targeted approach. ?We did not have to spend large money on traditional advertising when we launched. Going ahead, since our cars are ultra premium luxury we will focus on those contact points where our customers are more likely to access?, says Rohit Suri, head – premier car division (Jaguar and Land Rover), Tata Motors.