China’s import/export indexes show a 2% economic slowdown for the second quarter now, suggesting recession may definitely be headed their way. What does the global recession mean for luxury brands that once fixated on BRIC countries with ambitious expansion plans [Brasil, Russia, India, China]?
As Reuters explains well, BRIC luxury marketing is more, and less challenging depending on the market. Luxury goods might be a tough sell in India, which lags behind its BRIC bretheren in luxury sales overall, though it’s catching up quickly. The article cites India’s protectionist environment – which impacts luxury and mass consumer brands alike – including “high import duties on luxury goods, a cap on ownership in local units, excessive red tape and piracy,” as well as a cultural tendency to patronize local stores whose owners have direct personal relationships with consumers developed over time.
With the noteworthy exceptions of Kira Plastinina (16-year old retail fashion designer, and daughter of a Russian billionaire), Shahnaz Husain (India’s cosmetics maven), and others, homegrown luxury brands within BRIC markets fare far better than their foreign counterparts – when analysed in proportion to their market presence (foreign luxury brands obviously more numerous). Whether disadvantaged against local loyalties or other factors, luxury brands had better pay respects to cultural sensitivities to fare well in BRIC markets, particularly as the recession threatens to eat up what gains the past 5 years have afforded affluent consumers those markets.
Who can forget Louis Vuitton’s strategic decision not to display its Mikhail Gorbachyev ads in its Russian campaign (despite the muted angst of expatriate Russians living in London, where the ads were shown). Stories of blunders are common, and certainly today’s luxury marketers must be savvy to foreign policy as much as product positioning. Perhaps Richemont had the best-executed BRIC luxury marketing strategy with its acquisition, Shanghai Teng, in a “twist” of a reverse migration strategy bringing a BRIC luxury brand to the West.
Marketing should be a prominent concern at the feasibility stage when expansion into BRIC territories is likely, however execution is what’s most crucial. Media buying may seem to be a tertiary concern, but advertising execution can be a make or break venture for brands on the brink of new market success. Pitfalls, such as favouring English or Western-language media, can mis-position brands and waste marketing budget at times when such pounds are particularly valuable: when the brand is either new to the market, or when the brand faces its first recession in a new market.
A media buying partner should be versed in foreign policy more than fashion: the latter the lifesblood of soft-touch design, the former more critical to gauging response and ROI, particularly in new markets. Knowledge of economic fluctuations, the geography of foreign markets, trends in the population, climate, vacation seasons, languages and cultural trends, and use of technology should come into play when planning one’s international marketing approach.
However “global” multinational media buyers claim to be, making use of many local offices can become a markedly dysfunctional execution process, because in the end, those least familiar with the global strategy (local offices) are given the greatest work in execution – inviting internal mismanagement and dysfunctional campaigns. This culture of decentralized media placement often works to the functional detriment of campaigns, and always involves increased costs as affiliate offices share in advertising commissions, meaning that costs are passed on to advertisers.
Criterion Global‘s international media buying strategies are devised by regional and industry-specific experts, rather than advertising executives. We recruit from the private and public sector, and weigh heavily on candidates regional expertise, language abilities, countries of citizenship, and past experience. We draw from the most current syndicated research, giving us further insight into specific markets. Media buying at Criterion Global is executed from a central office, which has tax and exchange-rate benefits for clients, and also ensures accountability in campaign management.
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