I met an entrepreneur over breakfast the other day, who is trying to address the luxury needs of the Indian consumer. His company offers high-end metal (not gold or silver) based gifts. The luxury market in India is a very strange one. It’s always the bridesmaid, never the bride. Every year is the “year of luxury” and the beginning of the “inflection point” in luxury goods.
Although many luxury vendors are starting to show interest in the Indian local market, they realize most luxury bought by Indians is purchased abroad. It’s not uncommon to hear the intense preference for “value for money” in all products and services, even in the high-end of the market, and I could relate to his experiences. I have seen this consistently in our engagement with senior leaders at various organizations.
I was talking to a fairly large multi-national marketing executive whose bank recently inaugurated their new 50,000 sq. ft. campus. To commemorate the building they decided to make mini-replicas of the building and give it away to every one of their employees at the new facility. They had done a similar piece at their US office, and it was apparently well received by their employees. The cost per piece was about Rs. 2000. The piece would retain nearly 70% of its value if made from the metal that we proposed from our partner. So we recommended that option.
After weeks of deliberation and many discussions with their facilities team and employees, they decided to look at alternative options. The main reason was their Indian employees were not appreciative of the “free” gift they were going to receive.
I had the opportunity also to talk to their senior HR executive who was trying to put together the alternative giveaway for about 2500 employees. This is a typical offshore unit of any large company, with average salaries in the 4L – 6L per year range. Many of their executives consistently make over 20L per year, and there are about 200 of them. The main feedback she got from her employees, was that they felt preferred many inexpensive gifts rather than one expensive one.
After a few weeks they finally settled: Quantity versus quality was the way to go. They decided that they got enough feedback from employees to purchase a T-shirt for Rs. 500 (printed with the façade of the building on the front). They also hosted a catered lunch over a Friday evening (which would cost them about Rs. 500 per employee). Finally the employees were given a gift voucher to spend at a local mall for Rs. 1000.
I could understand, since most of their employees were young, their preference for a “memento” was lower than those that they perceived to be fun. But the HR executive mentioned in our discussion that most of the rank-and-file employees were not asked for feedback. This was the request from their senior leadership team. The leadership team even shot down the idea of putting together a commemorative trophy for the Rs. 1000 and instead opted for the gift voucher from the mall. She knew it would not necessarily bring long-term-loyalty for the company, but the leadership team felt that long term loyalty was overrated. None of the employees, they felt would feel any different or have more engagement with either the company or the building thanks to the trophy.
Mukund Mohan is the CEO of Jivity, a social commerce and brand merchandising company.