The document discusses luxury cosmetics brands in India and the evolving perceptions of Indian consumers. It analyzes several factors: the growing Indian economy and disposable incomes have increased spending on luxury goods. Personal experience and benefits are the most important factors for consumers choosing brands. There is a strong preference among consumers for international cosmetic brands over Indian brands. Switching between premium cosmetic brands is infrequent. Consumers generally prefer organic and natural cosmetic products over chemical-based products. Spending on cosmetic products appears to be independent of consumers' incomes.

1. Luxury Cosmetics & the INDIAN
Consumer
A study on the premium cosmetic brands and the evolving perception of Indian Consumer
Submitted To
Prof. Devashish Das Gupta
Associate Professor, IIM Lucknow
Submitted By
Sonal Rawat
WMP10038
Term IX, IIM Lucknow (Noida)
CIS: Consumer Behaviour

2. Abstract & Introduction

3. Parameters of Study
 Evolving Indian consumer and their buying behaviour w.r.t to international brands.
 Frugal  Spendthrift  Actively seeking luxury
 Growing brands
 Globalization (Increase in the luxury segment of India)
 Disposable income (Increased luxury spending), brand awareness and purchasing power
 Luxury branded cosmetics (makeup, body, hair, etc.).
 Price being a primary factor: keywords premium, luxury and international are used interchangeably
 Size of the High Income group (HIG) consumers growing (40% of monthly income spend on luxury
brands) (Management, Top of the Pyramid)
 Increasing brand awareness and the growing purchasing power
 Geography: Delhi-NCR

4. Defining Luxury
 Economic definition : A luxury good is a good for which demand increases more than proportionally as income rises, and is a
contrast to a "necessity good", for which demand increases proportionally less than income.
 High income elasticity of demand: as people become wealthier, they will buy more and more of the luxury good also a decline in income will
decrease the demand of these goods.
 A luxury good may become a normal good or even an inferior good at different income levels, e.g. a wealthy person stops buying
increasing numbers of luxury cars for his or her automobile collection to start collecting airplanes (at such an income level, the luxury car
would become an inferior good).
 Some luxury products have been claimed to be examples of Veblen goods, with a positive price elasticity of demand: for example, making a
perfume more expensive can increase its perceived value as a luxury good to such an extent that sales can go up, rather than down.
 Cambridge English Dictionary: Meaning of “luxury goods”: expensive things, such as jewellery and make-up, that are
pleasant to have but are not necessary.
 Luxury items are also known as "positional goods" because they signal that the owner has achieved a certain position or status within society
to be able to afford them.
 Luxury is a relative term that could change depending on the consumer. For a student owning any car (5 Lakhs +) is a luxury, for a mid-level
executive owning a Mercedes C Class can be a luxury. According to Brun & Castelli (2013), historically luxury goods were always linked with
wealth, exclusivity and power, as well as the satisfaction of non-basic necessities.
 It is impossible to develop a specific definition of luxury which can encompass all consumers. The industry surpassed €1 trillion in retail sales
value in 2015 and delivered healthy growth of 5% year over year

5. Why cosmetics as the PRODUCT?
SOURCE: TWITTER AND IPSOS, "ENGAGING THE AFFLUENTIALS," MARCH 17, 2016

6. Indian Luxury Segment 1-2
GDP Growth Number of millionaires in the country
REAL GDP GROWTH OF INDIA 2010-2020*
(SOURCE HTTP://WWW.STATISTA.COM/STATISTICS/263617/GROSS-DOMESTIC-
PRODUCT-GDP-GROWTH-RATE-IN-INDIA/)
Rising Wealth (Source Top of the pyramid 2016, Kotak Wealth
Management)

7. Indian Luxury Segment 2-2
Spending on Luxury Goods Increasing demand for luxury goods
Percentage increase in spending from 2013 to 2014 (Source Euromonitor)INDIANS SPENDING ON LUXURY GOODS (SOURCE EUOMONITOR)

8. Research Methodology

9. Phase I
 Conducted qualitative research
 In-depth interviews: to explore perspectives
and understand the dimensions that they
consider when buying international cosmetic
brands (specifically make-up segment).
Phase II
 Significance level: 0.5
 Tests used
 Cross Tabulations (cross-tabs) : Analyzing the
relationship between two or more variables
 Chi-square test for independence: Significant
association between the two categorical
variables
 Chi-square Goodness of fit test
 Lambda: Asymmetrical measure of association
(nominal variables)
 Gamma: Symmetrical measure of association
suitable (ordinal & dichotomous nominal
variables )

10. Respondent Profile

12. Products Bought by Consumers Gender & Product Types
3%
8%
8%
9%
10%
11%
11%
11%
12%
15%
0% 5% 10% 15% 20%
AntiAgeing
Shaving
Nail
Teeth
LIPS
Eye_FACE
Bath
Creams
Hair
Perfumes
8%
8%
6%
43%
39%
84%
65%
31%
33%
10%
69%
65%
54%
44%
67%
18%
75%
59%
63%
18%
0% 20% 40% 60% 80% 100%
Eye & Face
Lips
Nail
Teeth
Hair
Shaving
Perfumes
Bath
Creams
Anti Ageing
Male Female

13. Consumers Introduction to Brand
110
103
77
49
46
32
0 20 40 60 80 100 120
1
Celebrity Endorsements International Travel Print Media Mall Family, Friends, etc. Digital Media

14. RO1: To understand
variables that influence
consumer choosing a
specific brand?
Personal Experience and Benefits are the most important
variables for consumer during decision making, followed closely by
Value for Money, Review & Recommendation and Variety.
• Brand/Social Value
• Review & Recommendation
• Personal Experience
• Variety (Colour, Skin Types, Scent,
Texture, etc.)
• Benefits (long lasting, better
performance, waterproof)
• Value for Money (similar products
across brands)
• Sales Staff (Demo application)
• Saver packs
• International Awards
0
20
40
60
80
100
120
140
1 = Not Important 2 = Slightly Important 3 = Moderately Important
4 = Important 5 = Very Important

15. RO2: Is there significant
preference of cosmetic
International brands over
Indian brands?
 The result shows that customer do show preference
while choosing products. They prefer International
brands over Indian brands.
 Avery strong relationship between preference and the
eventual buying of cosmetic products. There are 7%
responses that show a contrary opinion w.r.t. to
preference and buying
 A very strong relationship between gender and buying
of cosmetic products: Females prefer international
brands with 74% responding positively whereas only
30% males prefer to buy international brands.
H0: There is no preference seen when
choosing products
Ha: Customer prefer International over
Indian brands

16. RO3: Is there frequent
switching between cosmetic
brands in premium
segment?
Infrequent switching in cosmetic brands in premium
segment.H0: Consumers who buy international
brands and the number of brands they
are actively using are independent.
Ha: Consumers who buy international
brands and the number of brands they
are actively using are not independent.

17. RO4: Do consumers prefer
organic/natural cosmetic
products over chemical
based in premium
segment?
 Consumers prefer organic products/natural products
 Association of preferring natural products in premium and Indian
category, there is no dependence of type of product
(International/Indian) to type of product (natural or chemical).
H0: Consumer do not prefer organic
product over chemical based cosmetic
product.
Ha: Consumer prefer organic product
over chemical based cosmetic product
122
137
87
68
37
151
47
0
20
40
60
80
100
120
140
160
1
EcoFriendly NoSideEffects BetterResults Compatible
NoAnimalTesting SafeToUse NoToxicSmells

18. Gender & Natural Products Benefits
71%
73%
20%
29%
20%
87%
27%
70%
82%
64%
44%
22%
87%
27%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Eco-friendly
No Side Effects
Better Results in the long run
Compatible
No Animal Testing
Safe To Use
No Toxic Smells
Male Female

19. RO5: Is spending on
cosmetic products
dependent on income or
not?
Spend on cosmetics is independent of income of
consumers. The gamma and lambda values also show no
relationship between these variables concurring with the
result of chi-square.H0: Consumer spending on cosmetic
products is independent of the
consumer’s income.
Ha: Consumer spending on cosmetic
products is not independent of the
consumer’s income.

20. Conclusion
 Personal Experience and Benefits are the most variables for an Indian consumer, implying that they are not blinding buying brands
rather they are making informed choices. These factors are very important from the company’s standpoint as future marketing campaigns,
message content, etc. should be built on these variables as these are a consumer’s focal point.
 There is a growing market in India for top international brands, as Indian consumers show a strong preference to International
brands over Indian brands.
 Taking into account gender preference, For a company venturing into the Indian subcontinent, it would make more sense to keep their product portfolio
heavier on the female consumers by having a distribution of 70-30 for female-male products.
 If a company was planning to decide which product portfolio to launch, and they have a choice between men & women, they should launch the women’s
collection and with time follow with men’s category.
 Through this research we have seen that there is infrequent switching by consumers in cosmetic brands (premium segment. There could
be implications for cost to acquire a customer (CTA) and lifetime value (LTV) of a customer.
 There is a growing market for natural (herbal/organic) cosmetic products (Niche segments). The most significant factors for shoppers
in natural segment are:
 Safe to use
 No Side effects
 Eco-friendly
 The spending that consumers are doing on luxury cosmetics has no relation at all to their income, there are any number of
consumers who spend more on cosmetics than another consumer earning more monthly. This basically increases the customer base for
luxury cosmetics. Affordability or budget of individual shoppers cannot be determined by income earnings.
 Buying of luxury cosmetic products has very less to do with price and more to do with other factors like aspirations, perceptions, attitudes,
etc. Further research needs to be conducted to understand what is driving Indian consumers to International cosmetic brands and their
individual spending patterns.

21. Thank You