future of luxury brands in india

A PROJECT REPORT

ON

“FUTURE OF LUXURY BRANDS IN INDIA(WITH SPECIAL REFERENCE TO ETAHRA WORLD)”

By:-

Ashish Srivastava

P.G.D.M 2009-11

“GREATER NOIDA INSTITUTE OF

MANAGEMENT”

Under the supervision of:- ABHISHEK JAISWAL (A.G.M.MARKETING)

Executive Summary submitted in partial fulfillment of the requirements for the POST GRADUTE DIPLOMA IN MANAGEMENT of G.N.I.M,

INDIA

1

PREFACE

Currently, India is in a changing era. From a conservative country to an extravagant country,

from more than half of population under poverty line to highest percentage increase in High Net

worth Individuals, from mass brand purchasers to Luxury brand purchasers.

Keeping in view that how much market research can affect any market; this is my sincere

attempt to do a research study on Luxury Goods and their future in India. The research is done

on the topic “Future of Luxury Brands in India” which is performed with utmost care and

sincerity. Thus the research has been performed with two clear objectives in mind, viz.

1. Making the research in such a manner that it facilitates the future endeavor of the Luxury

Brands

2. To make myself aware of the fact that research is a very vast field and one should take due

care while performing it.

It is hoped that the humble effort made in form of the project will be helpful for other researchers

and will able to assist them in a constructive manner.

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DECLARATION

I,ASHISH SRIVASTAVA, declare that the Project Work entitled

“A Project Report on Future of luxury brand in India”

“With special reference to Etahra world” is my own work and has

been conducted under the supervision of “Mr. ABHISHEK JAISWAL

(ETAHRA WORLD A.G.M MEDIA)”. I have put 45 days attendance with

supervisor at the center.

I further declare that to the best of my knowledge, the

Project does not contain any part of any work which has been

submitted for the award of any degree/diploma either in this

College or anywhere else.

Signature of the candidate

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CERTIFICATE OF THE COMPANY SUPERVISOR

Mr. ABHISHEK JAISWAL

A.G.M MEDIA

ETAHRA WORLD

Sec-41 NOIDA

This is to certify that the work entitled “A PROJECT REPORT ON FUTURE

OF LUXURY BRANDS IN INDIA” is a piece of summer internship work done

by ASHISH SRIVASTAVA under my guidance and supervision, for the partial

fulfillment of4 award of PGDM of “GREATER NOIDA INSTITUTE OF

MANAGEMENT GREATER NOIDA” To the best of my knowledge and belief

the Project work --

(1) Embodies the work of candidate himself/ herself.

(2) Has duly being completed.

(3) Fulfills the requirement of the ordinance relating to the PGDM of

the College.

(4) Is up to the standard both in respect of contents and language

for being referred to the examiner.

Signature of Company Supervisor

5

CERTIFICATE OF THE FACULTY SUPERVISOR

Mr. GIRISH KR. GUPTA

LECTURER

GREATER NOIDA INSTITUTE OF MANAGEMENT G.NOIDA

This is to certify that the work entitled “A PROJECT REPORT ON FUTURE

OF LUXURY BRANDS IN INDIA” is a piece of summer internship work done

by ASHISH SRIVASTAVA under my guidance and supervision, for the partial

fulfillment of award of PGDM of “GREATER NOIDA INSTITUTE OF

MANAGEMENT GREATER NOIDA”. To the best of my knowledge and belief

the Project work --

(1) Embodies the work of candidate himself/herself.



the College.



Signature of Faculty Supervisor

6

CERTIFICATE FROM PLACEMENT CELL

RAHUL BHANDARI

PLACEMENT HEAD

.

This is to certify that the work entitled “(A PROJECT REPORT ON FUTURE

OF LUXURY BRANDS IN INDIA)” is a piece of summer internship work

done by ASHISH SRIVASTAVA under my guidance and supervision, for the

partial fulfillment of award of PGDM of ”GREATER NOIDA INSTITUTE OF

MANAGEMENT GREATER NOIDA” To the best of my knowledge and belief

the Project work --

(1) Embodies the work of candidate himself/herself.



the College.



Signature of Placement Head

7

ACKNOWLEDGEMENT

Some works are so typical that are impossible for a person to complete

it alone. Summer Internship Project is one of them. I would not be able

to complete my work without the help of my respected Company

Guide, Faculty Guide, my college and workplace colleagues and my

family members. So it is my obligation to thank all of them.

I have had the honour of having been associated & working

under the able & stimulating guidance of “Mr. ABHISHEK JAISWAL

(A.G.M MEDIA) ETAHRA WORLD” and Faculty Guide MR.GIRISH,

GREATER NOIDA INSTITUTE OF MANAGEMENT G.NOIDA The Project

work was undertaken under their keen supervision and the Project has

been prepared by me. I express sincere feeling of gratitude and

respect for their inspiring help throughout the work. Without their

esteemed and valuable help and guidance it would not have been

possible for me to accomplish my job. I am gratefully indebted to them.

Mr. AMIT GAUR also deserves my thanks for typing this

thesis.

And finally I would like to offer my heartiest prayer to the Goddess

Gayatree, who has given me mental and spiritual strength to

complete this project work.

ASHISH SRIVASTAVA

Signature

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Preface 2 Declaration 3 Certificate from Guide 4

Acknowledgement 7 Executive summary 9

Table of contents

Particulars Page

Chapter 1: Project Profile: 11Problem DefinitionObjectives of the StudyScope of the studyJustification Of the studyResearch Methodology

Phase 1: Identification and Definition of the problem Phase 2: Determination of Information needs and Sources Phase 3: Collection of Secondary dataPhase 4: Developing Research FramePhase 5: Data Collection / Tabulation and AnalysisPhase 6: Conclusion and Interpretation

Limitations of the Study

Chapter 2: Company Profile 19Chapter3:Introductory Perspective 22

Introduction to the Luxury Brands Introduction to the Griffes Introduction to the Principles of Luxury Brands Introduction to the Luxury Brands in India

Chapter 4: Research Findings:34

Sample Status Findings from survey Relational Analysis

Chapter 5: Analysis and Interpretation 64 Chapter 6: Conclusions and Suggestions 68

ConclusionsChapter7: Bibliography 74

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EXECUTIVE SUMMARY

The study is part of dissertation on Luxury brands. The small glimpse of the project is presented

in front of you to give an idea what the entire project includes in it. The project has main

emphasis on the scope of luxury and premium brands in India and there future in India. What is

the target audience present for luxury brands, what the customer psyche for a luxury brand is and

the strategies luxury labels are adopting are.

Project title:

Future of luxury brands in India.

Objectives of the project:

1. To study the future of luxury brands in a developing country like India.

2. To understand the customer psychology towards luxury brands and the changing

consumer behavior for an expensive product.

Scope of the study:

My study includes understanding the consumer behavior and why a person will purchase a

lifestyle product. Which segment on basis of demographics and on basis of psychographics is

interested in buying a luxury brand? For this we framed schedules and also do qualitative study

like shadowing to understand the true behavior of the people. Through this we researchers were

able to analysis the consumer behavior towards luxury brands. At the end of the project we will

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also showcase certain strategies adopted by the luxury sellers and how it can increase its

consumer base in developing country like India.

Research methodology:

Project has information gathered from both from primary and secondary sources, the primary

sources will be survey done with schedules and through interviewing employees of the company

and luxury retail outlets. The secondary information was gathered through internet, brochures

and through old research papers etc. The sample size was 150 respondents of various luxury

retailers, their selection will be totally based on the non probability sampling.

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CHAPTER 1

12

Project ProfileProblem Definition

“Future of Luxury Brands in India”

Objectives of the project:

Before selling any brand its utmost important to judge and identify who is the target audience

and what is the perception they are holding about the brand. Researchers can fulfill all these

objectives through answering these four questions:

Why (what are the benefits or value people are getting through a lifestyle products, this

purpose should be very clear in the minds of all researchers that why we are doing such a

research)

For whom (who are the target audience for the luxury products)

Against whom (What is the basic difference between a Premium brand, a Luxury brand

and Griffe)

When (determining the opportunities for luxury brands in a developing country)

The objectives of the study are:

1. To study the future of luxury brands in a developing country like India

2. To understand the customer psychology towards luxury brands and the changing

consumer behavior for an expensive products.

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Scope of the Study

As the total strength of the universe is large and the time associated with obtaining information

from the viewers is less. The sample list contains retailers in NOIDA, Gurgoan, Delhi and Jaipur

which are accessible for me. With such a large sample list and no grouping of information, it was

essential to undertake NON RROBABILITY SAMPLING. I did not use PROBABILITY

SAMPLING because; in this population members have a known probability of being in the

sample. In my case because of there are huge number of readers that was not possible. I would

have had to develop a frame in probability sampling case and it might further complicate the

analysis. For non probability sampling I don’t need to design a frame. Moreover in my opinion it

would facilitate the research as the responses obtained through this sample would be more

accurate and honest.

Sample size: 150 Respondents

Sampling unit: The sample list contains luxury retailers in NOIDA, Gurgoan, Delhi and Jaipur

Method: Schedule was filled up through questioning the respondents. Shadowing of some

Buyers was done to gain an insight into the mind of purchasers of luxury.

Sources of information: both secondary and primary data used for the research purpose

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Justification of Study

Luxury came from the Latin word “LUX” which means light. That tells the logic behind the

luxury items, they glitter. The second most important is luxury must be seen by consumers

and others. That is why luxury brand externalize their logo or name outside. The brand

signature must be seen explicitly and should be recognized worldwide. Made to perfection,

luxury items stand out and embody certain ideals. Luxury defines beauty, it is art applied to

functional items.

The problem with the word luxury is that it is at once a concept, a subjective impression and

a potential term, often subjected to moral criticism. Thus, what is luxury for some is just

ordinary for others; while some brands are qualified as “luxury brand” by one half of public

opinion, others are simply considered as “major brands” by the other half. Peal luxury brands

remain attractive, but the word itself has lost its clout and sparkle because of the economic

downturn in industrialized countries. The word luxury has fallen out a little: a hindrance to

market researchers, who wish to measure their customers’ sensitivity to luxury. Luxury

brands are always in much more dilemma when they enter in a developing country about

there future as the target audience is very few and the consumer is slightly reluctant to shell

out that much of money in one go.

Hence, after a long discussion with seniors we came to do research on “Future of Luxury

Brands in India”

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Research methodology

Introduction

The research methodology establishes a framework of evaluation and revaluation of primary

and secondary research. The techniques and concepts used during primary research in order

to arrive at conclusion and findings; are also dealt with and lead to a logical deduction

towards the analysis.

Phase 1: Identification of the problem:

The problem with the word luxury is that it is at once a concept, a subjective impression and a

potential term, often subjected to moral criticism

Luxury brands are always in much more dilemma when they enter in a developing country

about there future as the target audience is very few and the consumer is slightly reluctant to

shell out that much of money in one go.

On the basis of problem identified we derive at the project title as


Phase 2: Determination of information needs and sources

Researchers conducted an intensive secondary research to understand the concept of market

research, brand perception the sellers and buyers are carrying for the luxury brands.

PRIMARY DATA RESEARCH

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New data gathered to facilitate the research. Primary data was collected through schedules

filled up by questioning the respondents and also through shadowing some prospect readers

to understand the real insight of the reader.

SECONDARY DATA RESEARCH

Secondary data is the information already exists somewhere, having been collected for

another purpose. Sources include websites, old journals, and old research papers. Data that

has already been collected and published for another research project (other than one in

hand) has been referred for the project.

Phase 3: Collection of secondary data:

Secondary data helps in understanding the nitty gritties of the project. Sources through which

data was collected were websites (economictimes.com, managementparadise.com,

wikipedia.com, etc), old journals, and old research papers.

Phase 4: Developing research frame:

Research frame refers to a borderline into which researchers have to perform their work. In

our project the nature of the research is descriptive in nature as we our describing the

perception of the target audience for the luxury brands, the target audience is identified on

the basis of demographics and psychographics. Demographic profile includes age, gender,

status, education, occupation and income whereas psychographic segmentation depends upon

the personality types and lifestyle pattern of the respondents. Data sources are both primary

and secondary as discussed earlier. Contact method is through schedules, interviewing the

respondents, shadowing.

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Phase 5: Data collection, tabulation and analysis

Based on the type of data collected and the target segment with the appropriate statistical

methods, inferences should be made. The response set of one variable is compared with

another set of variables to ensure a detailed analysis of data.

Researchers kept a close watch on that what type of data is appropriate for each statistic and

able to recognize the level of measurement for the scales that you are analyzing.

Mean scores is important to know the degree to which respondents have shown an

inclination towards a pattern.

For judging who are the target audience on the basis of demographics and psychographics

Frequency distribution tables and graphs also are helpful for data analysis.

Phase 6: Conclusions and interpretations:

On the basis of different question asked in the schedules different hypothesis were

formulated and verified through the help of various tests. Pie charts, graphs were also made

on the basis of responses researchers get in through various respondents. Conclusion is

extracted on the basis of all collection, tabulation and analysis done.

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Limitations of the research:

1. Sample size of 150 to represent the entire Luxury buyer’s strength is not a very

significant sample of entire population.

2. Study was mainly conducted by means of convenient sampling so a representative

sample of the respondents could not be obtained.

3. Respondents were hesitant and reluctant to reveal the entire information as though

revealing truth may lower their self esteem.

4. Researcher’s own limited capabilities like personal biases, interpretation errors or

limited knowledge to understand the respondents view points also one of the major

limitations of the project

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CHAPTER-2

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COMPANY PROFILE

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A, name often speaks volumes, henceforth defining WOMENONTOP as an exclusive and articulated Hindi Lifestyle magazine, from middle to higher class females would not be an over-rated statement.

The objective being, to give a sense of bliss and contentment in the present days of Hustle and Bustle, which is our magazine promises to give full INFOTAINMENT to the potential reader. That being girls and women from the age of 15-60 and above. It is through our worth-wide Media organ an effort has been made to integrate the readers of Delhi, NCR and Northern India and soon, we shall cover the entire Indian Continent.

There are in-numerable magazines available in the market, dedicated individually to Fashion, Lifestyle, Finance, Movies, Education, Computers, Gadgets, etc. But WOMEN ON TOP is a combined effort with all the features, i.e. the content which has been accepted by the market. And, so is not consisting of a particular segment of readers, whereas all age group enjoys the same. The magazine has articles that provide the best tips on FASHION, TOURISM, FOOD RECIPES, MOVIES, YOGA, HEALTH CARE, PERSONAL PROBLEMS, GARDENING, PETS and more, i.e. all the infotainment that a woman wants to read and know more about. We use the newest platform but the most effective as it reaches all over and among all at the same time every month.

So we firmly believe, that this magazine, in future will surely add a name in the Indian Market counting it to have the maximum number of happy and satisfied readers, And we are sure that with your love and support we will and shall someday soon fulfill the dreams of our elders.

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CHAPTER 3

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Introductory Perspective

Introduction to the Luxury Brands

What is luxury?

The problem with the word luxury is that it is at once a concept, a subjective impression and a

potential term, often subjected to moral criticism. Thus, what is luxury for some is just ordinary

for others; while some brands are qualified as “luxury brand” by one half of public opinion,

others are simply considered as “major brands” by the other half. Peal luxury brands remain

attractive, but the word itself has lost its clout and sparkle because of the economic downturn in

industrialized countries. The word luxury has fallen out a little: a hindrance to market

researchers, who wish to measure their customers’ sensitivity to luxury.

In economic terms, luxury objects are those whose price/quality relationship is the highest on the

market. By quality, economists mean ‘what they know how to measure; in tangible functions.

Thus, a Mckinsey report defines luxury brands as those which have constantly been able to

justify a high price of products with comparable tangible functions. This strictly economic

definition of the luxury brand doesnot includes the notion of an absolute minimum threshold.

What counts, indeed is not absolute price, but the price differential between ‘luxury’ products

and products with comparable functions. This can vary from Rs1000 for cologne to Rs10000.

As we see, this strictly economic perspective does not help differentiate the upper range brand

from the luxury brand and a FORTIORI and GRIFFE. Even Jaguar has always been cheaper then

Porsche, still the Jaguar is more luxurious than Porsche, which is considered as a sporty car.

Finally the economic approach can’t clear the confusion because it is based on the following

dichotomy; a brand is or is not a luxury brand. Yet, as we shall see further on, it is time for us to

recognize that Dior is a griffe for one part of its activities, A luxury brand for the second part and

an upper-range brand for the third part. By wanting to classify the brand once and for all, we

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forgot to make appropriate distinctions according to its various functions and processes. It may

help to define upper range products as tangibles associated with a specific product category,

while luxury products are intangibles associated with values and ethics. Simultaneously

managing the 3 types of action of a given brand is precisely the challenge that luxury brand

managers face today.

The Luxury Industry According to Mckinsey:

What does the luxury concept actually encompass? What are the essential attributes

of the luxury items?

Luxury came from the Latin word “LUX” which means light. That tells the logic behind the

luxury items, they glitter. The second most important is luxury must be seen by consumers and

others. That is why luxury brand externalize their logo or name outside. The brand signature

must be seen explicitly and should be recognized worldwide. Made to perfection, luxury items

stand out and embody certain ideals. Luxury defines beauty, it is art applied to functional items.

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Tangible functions

Price

Luxury, derived from the Latin word luxus, means indulgence of the senses, regardless of

cost. Luxury brands are brands whose ratio of functional utility to price is low while that of

intangible utility to price is high. Such brands share characteristics like consistent premium

quality, a heritage of craftsmanship, a recognizable style or design, a limited production run of

any item to ensure exclusivity, an element of uniqueness and an ability to keep coming up with

new designs when the category is fashion-intensive.

Like light luxury is enlightening (critics say they are blinding). Luxury brands are the tangible

references to the most sophisticated fashions of a given time. As such, these brands implicitly

convey their own culture and way of life; hence Saint Laurent is not Chanel. They offer more

than mere objects; they provide reference to good taste. That’s why luxury management should

not only depend on customers expectations; luxury brands are animated by their internal

programme. Their overall vision and the specific taste which they promote, as well by the pursuit

of their own standards.

On a symbolic level, light means life and fertility. Luxury is thus both creation and the vital

source of inspiration. In effect, most luxury institutions were founded by creative genius, whose

constantly renewed inspiration attracted the attention of the ruling classes and the elite. Relating

to luxury requires two things: the monetary capacity to pay the price of quality and a propensity

to appreciate the object’s artistic, creative and sensuous dimensions that is something beyond

mere practically. Luxury items provide extra pleasure and flatter all sense at once.

Luxury is the natural accomplishment of ruling classes. It is the natural accomplishment of the

ruling classes. It is indeed widely acknowledged that luxury plays a classifying role according to

which a restricted group bonds together and distances itself from the rest of society in terms of

price and preferences. In this respect, luxury brands are just perpetuating and exemplifying the

signs and the attitudes of the former aristocracy, yet has preserved the aristocrats’ social ideal?

Luxury ennobles both object and its owner. Coats of arms have disappeared, but blazons and

brand seals are today’s ostentatious adornments. Not many luxury symbols exist, but those that

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do represent the past privileges of the European aristocracy, living a life of leisure, free of all

workings, money and time.

Luxury constantly seeks to escape time constraints; by focusing on leisure or by concealing the

effects of time with wigs and face makeup. As for perfume, it also helped to distinguish

aristocrats from common folk. As we can see, it is significant that modern luxury brands have

fallen from the cosmetics and perfume industry, not to mention the other essential class

attributes; clothing and jewels.

Luxury brands and Griffes:-

A good deal of confusion surrounds the meaning and relationship of these two terms. Many

people use the term griffe if a prestigious brand is applied to many different products. Others

claim that brand can become a griffes.

In reality, brands and griffes must be distinguished in terms of ground that cover and they work.

Confusion has been caused by the fact that some famous names e.g. Dior are griffes for one art

of their production and brands for another. Hence, a griffe can become a brand, but the reverse is

not true.

The law scarcely clarifies the difference between brands and griffes: in its eyes, a griffe is the

fixed image of a signature, set down to be used as a trademark. Fortunately, we can understand

the griffe concept by examining the word itself. A griffe has something to do with instinct,

violence and lighting: it coveys something unpredictable, that leaps out and leave its mark. The

griffe is the mark of an inspired and instinctive creator. The griffe’s specific territory is clearly

that of pure creation. The griffe is a unique work of art that can never be reproduced.

That explains that mount Blanc, DuPont, Hugo boss are no longer the griffe they are luxury

brands. These are manufactured in factory not in workshop and they are produced in series not

one of its own kind.

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This distinction among the luxury and the griffes can be explained through

following pyramid.

Principles of luxury management:

Historians and sociologists have pointed out some of the basic principles of luxury brand

management: for instance, the necessity of protecting clients from non clients by creating a

distance, a no mix area, or as economists would put it, entrance barriers for those who are not

invited. Luxury brands must be desired by all but consumed by the only few lucky ones. This

outward and inward dialectic is reflected by a combination of relative visibility in the

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The brand

The upper range brand

The luxury brand

Griffe

Money

Aura

The luxury and the brand system

media with very restricted diffusion. That is why luxury awareness should be superior to its

penetration.

Loss of control occurs preciously when luxury brands no longer protect their clients from the non

clients. The infinite multiplication of Vuitton bags also hinders the distinctive features of luxury

and same goes with channel t-shirts.

The genuine luxury brands ensure that both frame and picture the exterior and interior are worth

the same. If the two get disconnected, the luxury brands enter the realm of sham and abdicate in

favor of counterfeit.

Luxury is always meant to be slightly excessive: excess in detail, excess in care, excess in

precaution, all reflecting a traditional way of working which scarcely exists in this age of

standardization and cost minimization. This does not means that the past is a shrine, as some

luxury brands unfortunately tend to think: in worshipping tradition so, they might end up

disappearing along with ageing clients. The challenge modern luxury now faces is to please and

preserve today’s consumers.

Having fully understood that, Cartier introduced steel in its watches, but still presented it as a

precious metal. Likewise, Hermes traditional crocodile or leather suitcase is now available in

carbon fiber yet its interior still contains numerous personalizing details and made of soft and

sensual leather.

Luxury brands perpetuate an exceptionally high level of quality. For them a wide variety of

sensations count as much as wide variety of functions. That is why they use the finest materials

for their products and extensively customize them in order to prove how customer focused they

are. Neither the rarity of the object nor the potency of the brand image can alone continue to

justify the price differential. As we see, luxury defines the ideal degree of personalization and

sublimation of a given object against which the more basic brands can measure themselves.

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Brand Awareness and Desire:

This outward and inward dialectic is reflected by a combination of relative visibility in the

media with very restricted diffusion. That is why luxury awareness should be superior to its

penetration. The need always to preserve a differential between brand awareness and brand

diffusion. This was confirmed by RSIC (1991) in their recent survey of 12,500 people aged 15

and above throughout Europe. Presented with a list of luxury brands the participants were asked

to say which ones they knew (awareness), which ones they dreamed of (attractiveness) and

which ones, if any, they had purchased in one form or other.

Those who know the brand are divided into two further groups of buyers and dreamers. By

analysiing each brand, it has thus been possible to identify 4 different situations that is, four

customer types:

1. The buyers who still dream of the brand are addicts. They are brand’s proselytes. They

must be encouraged and rewarded for their loyalty.

2. The buyers who no longer dream of the brand are called Blasé, they are saturated.

Their desire must be revived.

3. The non buyers who dream of the brand and don’t purchase because of whatever

reason, these should be encouraged by various means.

4. Finally, those no buyers who also don’t dream of brand are called the indifferent

ones.

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Brand Awareness and Desire

Introduction to the Luxury Brands in India

Indian luxury market may boom to US$ 30 billion by 2015

No stranger to Bharat, luxury is all set for an unprecedented flourish here as the Indian

consumer has overcome the guilt pangs associated for ages with indulgence. The size of the

luxury market in India is estimated at around $3.5 billion, and what’s best, given the right

impetus, it could easily leapfrog to $30-billion by 2015.

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Seduction

Awareness UsageVuitton

Armani

Lacoste

Rolex

Cartier

Dunhill

Chivas

Cardin

Indians are lapping up luxury assets, services and goods with voracious appetite, according to a

comprehensive survey done by AT Kearney for The Economic Times. Indians splurge $2.9

billion on luxury assets (essentially private jets and luxury homes, cars or yachts and art), spend

another $953 million on luxury services and top it by buying luxury goods worth $377 million,

said the survey which was unveiled here on Thursday at ET’s first-ever luxury conference,

Dialogue on Luxury.

Be it private jets, art, yachts, luxury homes, top-of-the-line cars, spas, fine dining, travel,

holidays, jewellery, state-of-the-art electronics, wines & spirits, apparels or personal care

products like perfume, the confident Indian consumer is going for it all. “I have arrived and I

want it,” is what resurgent India’s creamy layer feels.

The typical luxury brand consumer is in the 25-34 age brackets, usually an industrialist. The

survey indicates that there is no guilt feeling associated with spending on luxury, according to

Neelesh Hundekari of AT Kearney. Briefing participants at the conference he said there was

strong growth in consumption of key luxury items and the potential was stronger. The Indian

consumer wants to get the best before others, demands value for money through tough

negotiations, and looks forward to recognition and respect.

The conference was kicked off by commerce & industry minister Kamal Nath and Lady Lynn

Forester de Rothschild, founder & CEO of EL Rothschild LLC, the audience included designers,

hoteliers, luxury brand marketers, decision-makers, aviation specialists, corporate honchos and

Delhi’s connoisseurs.

Apart from industrialists, the big spenders identified in the survey include professionals, self-

employed and top guns working for leading corporate. Consumers of luxury are located across

the nation, be it Kanyakumari or Kancheepuram in the south, Jalandhar and Lucknow in the

north, Surat and Pune in the west or Asansol in the east. Mumbai, Delhi and Bangalore are the

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top three cities in terms of rupee millionaires, said Mr Hundekari as the audience soaked in the

findings and thirsted for more.

A very interesting fact highlighted by the survey was the potential of India to be a source of

luxury goods for consumers across the world. Manufacturing of luxury items in India can grow

to $500 million and India’s strengths include traditional craftsmanship and low labor cost.

There are a number of challenges too, for the luxury business and this include paucity of trained

manpower, regulatory issues and high taxation, the survey pointed out. The import duty on

premium cars, for example, stood at 205% while wines & spirits invite 185% customs levy.

The survey also pointed out that that import duty was high in the case of personal care items,

fragrances, leather accessories and watches. Lack of quality retail space was another reason

hampering growth of the industry. While development of quality space will happen once real

estate picks up, the industry needs to spend on training to generate quality manpower. Poaching

may not help and such tendencies will only hurt the entire industry.

On the regulatory side, the survey also highlighted that restrictions on foreign direct investment

(FDI) in retail was hindering growth of the industry. Since the luxury market is not organised,

the organisations concerned are not working together on industry issues. As a result growth

remains below potential and regulatory issues are not being pursued vigorously.

As compared to markets like the US, Japan, Germany and even China, the size of the Indian

luxury market is small but the growth potential is tremendous. The number of high networth

individuals is increasing and the tendency to opt for global brands increases as more and more

Indians travel abroad, the survey said.

33

Few interesting facts about Indian Luxury brands:

1) In a recent study, Global Consulting firm McKinsey discovered the following trends:

Overall Indian consumption will triple by 2025, and 80 percent of the spending

will come through income growth.

Spending across all economic segments is up 40 to 50 percent.

The global class of consumers, who buy top-branded and luxury items is expected

to grow tenfold by 2025 to 23 million.

2) India Luxury Trends 2008 divides consumers for luxury goods into four categories:

Luxuriented: Source of affluence is largely traditional and inherited wealth.

Most importantly, they have high levels of exposure and awareness to world-class

living.

New Rich: Adequate spending power. Acquiring orientation to luxury.

Getting There: Acquiring spending power. Spend mainly on high-end white

goods, education of children, better housing, and larger automobiles.

Mid Affluents: Acquiring orientation to luxury, but unlikely to indulge beyond a

limit

34

CHAPTER 4

RESEARCH

FINDINGS

35

Sample Status

1. Gender wise classification of the responding sample:

GENDER NO. OF RESPONDENTS

MALES 67

FEMALES 83

TOTAL 150

36

Sample size which was taken for the research is 150, out of which 55% are female & 45%

are male respondents.

2. Age wise classification of the responding sample:

AGE No. Of Respondents

18-24 24

25-34 44

35-44 36

45-54 29

55 or more 17

Total 150

37

Maximum number of respondents are from age group of 25-34 & 35-44, which covers 54%

of the whole sample size.

3. Occupation wise classification of the responding sample:

Occupation No. of Respondents

Student 29

Service 65

Self Employed 56

38

4. Income wise classification of the responding sample:

Income No. of Respondents

Rs 10,000-19,999 14

Rs 19,999-29,999 37

Rs 30,000-39,999 45

Rs 40,000-49,999 28

Rs 50,000 or More 26

39

During the research process maximum respondents are covered from 19,999-29,999 & 30,000-

39,999 income group. This group is mainly considered as main target customers for luxury

items.

FINDINGS FROM THE SURVEY:

(Primary Research)

To understand the dynamics of age on the readership of lifestyle magazines this information

is obtained:

Which Age group is most interested in buying Luxury products?

AGE No. Of Respondents

18-24 24

25-34 52

35-44 43

45-54 25

55 or more 6

40

Total 150

Analysis

According to the respondents, Age group of 25-34 is most interested in buying Luxury goods

that is around 34% followed by Age Group of 35-44.

Income usually affects the lifestyle and attitude of individuals which might shape choice of

the products you buy, to know more on this issue respondent gave the following reply:

Does purchase of Luxury is directly related to income level?

Answers No. of Respondents

Yes 138

No 12

41

Analysis

The result was totally skewed to one side and respondents agree that Purchase of Luxury

Products is totally related to the Income level of an Individual which is 92%.

Income usually affects the lifestyle and attitude of individuals which might shape choice of

the products you buy, to know more on this issue respondent gave the following reply:

Who are the potential target customers of luxury goods who generally have income bracket of?

Income No. of Respondents

Rs 10,000-19,999 12

Rs 19,999-29,999 19

Rs 30,000-39,999 34

Rs 40,000-49,999 41

Rs 50,000 or More 44

42

Analysis

Through the Above Pie Chart it is totally clear that there is a clear linear relation between the

income level and purchase of Luxury goods. As the income level of an individual increases so

there is increase in Purchase of Luxury Goods.

There are number of factors which affect the purchase preferences of the customers like

price, quality, availability, etc. to know the actual impact of the following parameters on the

purchase preferences of the customers this question was asked to the respondents.

Rank the following parameters on your purchase preference ?

Answers No. of respondents

Price 39

Quality 50

Availability 31

Involvement 19

Recommendation 11

43

Total 150

Analysis

Most of the respondents prefer quality followed by price and availability. This response shows

that customers are ready to pay of quality.

People purchase products because they find some sort of value in it. If the benefit is more

than the purchasing price the product is beneficial for them. To understand what sort of

benefits usually a customer derives from a luxury product, following question is being asked:

44

Why does one person purchase a Luxury Brand?

Value No. of Respondents

Quality 16

Flaunt Value 61

Interested in art 28

Exclusivity 45

Analysis

In opinion of Respondents, majority of People buy luxury product because they want to flaunt

their superiority over others. Followed by those people who really have taste of art and

exclusiveness of the luxury that is around 30%.

Always customers are looking for quality in products that’s why they go for shopping of

luxury products, to know more on this issue respondent gave the following reply:

45

Quality of Luxury brands are more superior then others?


Strongly Agree 42

Agree 64

Neutral 25

Disagree 12

Strongly Disagree 7

Total 150

Analysis

Our assumption is correct, about 73% of the respondents believe in the superior quality of luxury

products.

People purchase products because they find some sort of value in it. If the benefit is more

than the purchasing price the product is beneficial for them. To understand what sort of

benefits usually a customer derives from a luxury product, following question is being asked:

46

Value derive from luxury brands is more then others ?


Strongly agree 31

Agree 70

Neutral 32

Disagree 12

Strongly Disagree 5

Total 150

Analysis

About 70% of the respondents agreed that luxury brands provides value of the money. Luxury

products give more value to the customers, so then it becomes beneficial to them.

To have a good relationship with the customers their should be good services for them, to

know more about the services provided by the luxury brands following question was asked to

the respondents.

47

Services provided by luxury brands is better then others ?


Strongly Agree 35

Agree 73

Neutral 23

Disagree 13

Strongly disagree 6

Total 150

Analysis

About 72% of the respondents are of the view that service quality in luxury brands is more

superior then other brands.

Generaly people believe that luxury items are for high income group, to know more about

following question was asked to the respondents.

48

Luxury brands are prefer by high income groups ?


Strongly Agree 33

Agree 70

Neutral 25

Disagree 19

Strongly Disagree 3

Total 150

Analysis

Here we can see that most of the responses are in faviour of our assumption that maine target

customers for luxury brands are hing in come group. About 70% believe that luxury brand is for

high income group people.

There are various factors which affect the luxury market in both ways either positive or

negative. To understand which factor affect most, the following information was gathered.

49

Rank the following Socio Economic factors which affect the Luxury market?

Socio economic factors No. of Respondents

Change in lifestyle (like household patterns) 44

Retail boom 33

Working women 31

Rise in living standards 42

Analysis

Change in lifestyle is the factor which affects the luxury sales most, followed by the Rise in

living standards and Retail boom. These factors are very less skewed that shows all the factors

affect the sale of luxury goods almost at the same level.

I classified brands into three maine parts local, luxury & International brands, to know the

buying behaviour of the people and on this issue respondent gave the following reply

50

Which brands you prefer to shop ?


local brands 54

Luxury brands 66

International Brands 30

Total 150

Analysis

Here we can see that now a days most of the people prefer to shop luxury brands. A major part

purchase luxury brand followed by local brands. International brand has least share.

Following question is frame to find out the impact of real estate (commercial), retail i.e mall

concept on the sale of luxury product, like from where actualy customers prefer to shop?

51

Where do you prefer to shop ?


Local market 40

Malls 69

Brand outlets 33

Others 8

Total 150

Analysis

Most of the people like to purchase from Malls followed by local market and brand outlets. This

shows that real estate (commercial) mall concept have such a high impact on the sale of luxury

items.

India being a developing country is not an attractive hub for luxury brands till recent years

but now the scenario seems to be changing.

52

Do you still go abroad to shop for Luxury products?


Yes 65

No 85

Analysis

From the above pie chart we can see that now India is growing as a luxury market for the people

who are real luxury lovers and they don’t have to go to foreign lands to purchase one. People are

able to choose among the large variety of luxury brands which are now present in India also.

To understand the Demographic composition and the Awareness about the luxury brands the

following question has been asked:

53

Do sale of lifestyle products only restricted to Metros?


Yes 79

No 71

Analysis

There is a mix of opinion about the sale of luxury brand is more in metros or not. From the above

pie chart we can see that there is a very little skew between the respondents who said no and who

said yes.

Many respondents said that tier II cities are also emerging as a nice ground for luxury goods like

Pune, Jaipur, Chandigarh, Noida etc.

For some luxury is buying a premium product once in a life and for some buying in few

months. To understand the future of luxury sales it is imperative to know how often one

purchases a product.

54

How often they indulge in luxury in their lifestyles as opposed to buying the ordinary brand?

Time Duration No. of Respondents

Once in a month 9

Once in a 6 month 25

Once in a Year 41

Once in 5 years 38

Once in 10 years 25

Once in a lifetime 12

Analysis

The above diagram depicts that there are most number of people who buy luxury brands once in

a year followed by those who buy once in five year and by those who buy once in a 6 month.

The GDP is growing and the Number of HNI’s are also growing at a very high rate, still

there are some reasons because of which luxury sales are not able to take a flight in India. To

understand those reasons lets see the following result:

55

What are the problems because of which luxury brands are not able to take a flight in India?

Reasons No. of Respondents

Conservative Thinking 29

Lack of Organized Retailing 44

High Rentals 23

High Taxation 54

Analysis

According to the respondents high import duty is main reason why sales of luxury brands in not

taking flight. The import duty on premium cars, for example, stood at 205% while wines &

spirits invite 185% customs levy, followed by the lack of serious organized retailing.

Due to less sales luxury brands generally fall into trap of discounting and that goes very true

in case of a developing country like India. To understand this question following information

is gathered.

56

Luxury brands generally fall into the trap of Discounting due to fewer Sales?


Yes 57

No 93

Analysis

About 62% respondents said that luxury brands don’t fall into trap of discounting due to fewer

sales and around 38% people agreed that yes luxury brands fall into trap of discounting

The infinite multiplication of Vuitton bags also hinders the distinctive features of luxury and

same goes with channel t-shirts. Counterfeit products hamper the growth of luxury brands.

So we gathered the following information to understand the real insight.

57

Do Chinese Counterfeit products hamper the Luxury Brands in India?


Yes 44

No 106

Analysis

The result was astounding and 71% respondents said that no, counterfeit products don’t hamper

the sale of the luxury sales. Whereas, 29% agree that counterfeit products do hamper the sale of

luxury products.

Awareness is utmost necessary for any brand. So, to understand the ways through which

luxury brands can make the people aware most about their brand in order to enhance both

awareness and recall following information was gathered.

58

What should International Luxury Brands do to woo Indian consumers?

Techniques No. of Respondents

Sensory Gratification 33

Celebrity Endorsement 53

Word of Mouth 28

Public Relations 36

Analysis

Around 30% respondents said that the Celebrity endorsement is most affective technique to woo

Indian consumers followed by the Public Relation technique like done by the Body Shop.

59

Relational Analysis

1. Which brands you prefer to shop * Quality of Luxury brands are more superior

then others.

Analysis

It is come to notice that about 50 respondent who prefer Luxury brand feels that quality of

Luxury brand is superior to other brands. While there are 37 respondents who are users of local

brands believe the superiority of luxury brands over others. This shows that those who use local

brands are probably not satisfied with the brand and will shift if constraints like Income etc. are

removed.

60

2. Which brands you prefer to shop * Value derive from luxury brands is more then

others.

Analysis

We can extract from the above graph that, 39 respondents who are users of luxury brands are

satisfied with the value derived from it. While users of local brands are not deriving the value of

their money and feel that by using luxury brands, one can derive their value of money. In short,

we can say that more than 50% of the respondents believe that, value of money is more in luxury

brands.

61

3. Which brands you prefer to shop * Services provided by luxury brands is better

then others.

Analysis

When we talk about the services provided in each brand, we can see that not only users of luxury

brands but also users of local as well as international brands believe that services are good in

luxury brands. So, there is a probability of shifting from local and international to luxury brands

at least by those who prefer good services while selecting a brand.

62

4. Which brands you prefer to shop * Luxury brands are prefer by high income

groups.

Analysis

Clearly visible from the graph that about 70% of the respondents irrespective of users of brands

have stereotyping belief that “Luxury Brand – Must be for High Income Group”. This shows that

the main target segment of luxury brand is high income group customers.

63

5. Which brands you prefer to shop * Age group is most interested in buying Luxury

products.

Analysis

The above graph shows the changes in brand preferences depend on the age of the customers. As

we can see from the chart that, more luxury brands is used during 25-34 years of age while it

shows a continuous decline in usage of luxury brand with increasing in age.

64

6. Which brands you prefer to shop * monthly salary of respondent.

Analysis

We can see that about 69% of respondents who have their income between 40000 to 49999

prefer Luxury Brands, while only 45% respondents who have their income of 50000 to 59999

prefer to shop luxury brands.

65

Chapter 5:

66

Analysis and Interpretation ANALYSIS OF FINDINGS

Trend Analysis of Sale of Luxury Goods:

Considering that more than 200 top global luxury brands are currently at various stages of

setting up shop in India, which is considered to be among the markets offering biggest

growth potential.

The current figure of sale of Luxury goods in $5.1 billion and The Indian luxury market

is expected to double by 2012 and further double by 2016 that is around $20 billion in

2015.

Analysis on basis of Schedule:

The study finds that cities like Pune, Ahmedabad and Surat with high numbers of rupee

millionaire households, are potential targets of low ticket size luxury brands, while

Baroda, Hyderabad and Asansol are targets of large ticket size luxury items.

India has one of the highest duties/taxes on imported luxury goods, which drive the grey

market and duty free purchases, while the stringent regulatory environment impedes

investment by foreign brands. There are a number of challenges; too, for the luxury

business and this include paucity of trained manpower, regulatory issues and high

taxation, the survey pointed out. The import duty on premium cars, for example, stood at

205% while wines & spirits invite 185% customs levy.

luxury retail prices have zoomed to around Rs1,000 ($25) a sq. ft from around Rs400

($10) two years ago

67

One more interesting analysis which came out was that that more than 70% of the

respondents believe that Chinese counterfeit products don’t hamper the sale of luxury

brands as the person who is interested in luxury brands will not purchase the counterfeit

one. Whereas, some said yes it will hamper the luxury brand not only through sales but

also to the exclusive nature of the brand will also be hampered.

According to respondents, brand awareness should be through the medium of celebrity

endorsement that is around 30%. Many famous personalities are linked with luxury

brands like shahrukh khan, sushmita sen, ashwariya rai etc. second most attractive

technique is public relations which we can see is successfully done by Body Shop of

Anita Roddick.

There are various resons why sale of luxury goods is taking flight in a developing country

like India, the few main resons which can be counted are Change in lifestyle (like

household patterns), Retail boom, Working women, Rise in living standards

One of the surprising findings of the study aided by primary research with Indian Market

Research Bureau (IMRB) was the demographic profile of the Indian luxury consumer.

Based on their research and findings, 52 per cent of luxury expenditure is exercised by

consumers belonging to the 25 to 34 year age bracket

About 36% of the luxury consumers said they preferred buying abroad as they believed

the range was available ahead of India, while 34% said they shopped overseas because

the “show off” value was higher

Due to less sales Luxury brands also fall into trap of discounting, this is a main threat of any

luxury brand. The retailer may turn the exclusivity of the brand down if he didn’t get the proper

returns.

68

INTERPRETATIONS:

It was found that:

1) There are a number of challenges; too, for the luxury business and this include paucity of

trained manpower, regulatory issues and high taxation, the survey pointed out. The

import duty on premium cars, for example, stood at 205% while wines & spirits invite

185% customs levy.

2) India has an exponential growth in market size of luxury goods it is due to various factors

like Change in lifestyle (like household patterns), Retail boom, Working women, Rise in

living standards.

69

Chapter 6

70

Conclusions

5.1 Conclusions:

There are many multinational luxury brands which are entering in India with their full pace like

Jimmy Choo, Gucci, Christian Dior, Louis Vuitton, Cartier, Piaget, Tiffany, Moschino, Prada,

Fendi and others. More than 200 luxury brands are present or in line of opening their shop in

India. All this rush is registered due to highest growth in HNI’s which is around 25% per year

and growing GDP.

There are many other reasons because of which market size of luxury brands is also boosting

which are Change in lifestyle (like household patterns), Retail boom, Working women, Rise in

living standards. Luxury brands can also increase their brand awareness and sales through

celebrity endorsements. The things which are hampering the growth of luxury market is high

import duty, lack of organized retailing, Chinese counterfeit products.

By keeping the above points in mind we can conclude despite being few difficulties luxury

Brands have a great future ahead in India.

71

Questionnaire

For


1. How often do you go for shopping?

within a week__ within a month__

within 6 months__ within a year__

2. With whom generally you go for shopping?

Spouse___ Family members___

Friends___ Colleagues____

3. Where do you prefer to shop?

Local market___ Malls__

Brand outlets___ Others__

4. Which brands you prefer to shop?

local brands__

Luxury brands___

International Brands___

5. On what parameters you select brands?

Price____ Quality___

Availability___ Involvement___

Recommendation___

6. Rank the following parameters on your purchase preference? (1 – Highest & 5 – Lowest)

Price ___

Quality ___

Availability ___

Involvement ___

72

Recommendation ___

7. Please tell on a scale of 1 to 5, where 1 means “Strongly Disagree” and 5 means “Strongly

Agree” for the following statements on Luxury Brands –

StatementStrongly

agreeAgree Neutral Disagree

Strongly

disagree

Quality of Luxury brands are

more superior then others

Value derive from luxury brands

is more then others

Services provided by luxury

brands is better then others

Luxury brands are prefer by high

income groups

8. According to you which Age group is most interested in buying Luxury products?

18-24__ 25-34__

35-44__ 45-54__ 55 or over__

9. Does purchase of Luxury is directly related to income level?

Yes____

No____

10. Who are the potential target customers of luxury goods who generally have income bracket of?

Monthly Salary:

Rs.20, 000-Rs.29, 999__ Rs.30, 000-Rs.39, 999__

Rs.40, 000-Rs.49, 999__ Rs.50, 000-Rs.59, 999__

73

Rs.60, 000 or more__

11. Why does one person purchase a Luxury Brand?

Quality_____ Flaunt value_____

Interested in art_____ Exclusivity_____

12. Rank the following Socio Economic factors which affect the Luxury market?

Change in lifestyle (like household patterns) _____

Retail boom______

Working women______

Rise in living standards______

13. Do you still go abroad to shop for Luxury products?

Yes____

No____

14. Do sale of lifestyle products only restricted to Metros?

Yes____

No____

15. What are the problems because of which luxury brands are not able to take a flight in India?

Conservative Thinking ______ High Rentals______

Lack of Organized Retailing______ High Taxation______

16. Luxury brands generally fall into the trap of Discounting due to fewer Sales?

Yes____

No ____

17. Do Chinese Counterfeit products hamper the Luxury Brands in India?

Yes ____

No _____

If, Yes how ________________________________________________________

74

18. What should International Luxury Brands do to woo Indian consumers?

Sensory Gratification_____ Word of Mouth_____

Celebrity Endorsement_____ Public Relations_____

Name: ____________________

Gender: Male___ Female____

Status: Married__ Single_____

Age: 18-24__ 25-34__ 35-44__ 45-54__ 55 or over__

Occupation: Student__ Self Employed__ Service__

Monthly Salary:

Rs.20, 000-Rs.29, 999__ Rs.30, 000-Rs.39, 999__

Rs.40, 000-Rs.49, 999__ Rs.50, 000-Rs.59, 999__

Rs.60, 000 or more__

75

BIBLIOGRAPHY:

1. Research Methodology, Methods and techniques (Second Edition) By C. R. Kothari

(New Age International Publishers)

2. Articles related to Luxury brands, brand awareness and brand perception through “Brand

Management” by Kaphler

3. Gathered information regarding economic conditions of India through WWW.

Wikipedia.com

4. WWW. Indianbrandequityfoundation.com

5. Gathered secondary data of HNI’s from WWW.dspmerrilllynch.com and WWW.

Capgemini.com

6. WWW. Economictimes.com

7. Gathered information regarding luxury consumption patterns by HNI’s through

WWW.hindubusinessline.com

8. Read articles related to Luxury Retailing in India through WWW. Creditsussie.com.

9. Articles related to different factors affecting sale of luxury brands through WWW.

Managementparadise.com.

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future of luxury brands in india

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