Tanishq – The Turnaround Story
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SETTING THINGS RIGHT Contd...Tanishq set up an
ultra-modern and large-scale manufacturing unit in Hosur, Tamil Nadu at a
cost of Rs 600 million. The unit had facilities like refining, alloying and
stone casting and a dust-extraction system that kept gold losses down to 2%
of the raw material while local jewellers typically lost 8-10%. This
in-house manufacturing facility was the main reason, which enabled Tanishq
to charge the same price across the country.
One of the company's most important initiatives was customer service
enhancement. Tanishq launched a direct consumer contact programme and
conducted surveys to monitor store walk-ins and footfalls and percentage of
repeat customers. The company also kept the entry-level price as low as Rs
600 (for a pendant) and offered a range, which far exceeded that offered by
any other jeweller. All Tanishq outlets gave a 100% return guarantee on its
brand of jewellery and also exchanged other jewellery after deductions
depending on purity. A customer satisfaction measurement program was started
with the help of Customer Satisfaction Measurement Management (CSMM), an
associate of IMRB. CSMM tracked customer satisfaction parameters for Tanishq
on a quarterly basis.
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This gave the company the benefit of benchmarking
against local and international players and also aided in improving
repeat purchases. As a result, Tanishq was able to directly link the
remuneration of franchisees with customer satisfaction.
The company's corporate gold gift scheme (‘When you want to say thank
you, say it in gold'), launched in December 1998 proved to be a major
success. Tanishq delivered 50,000 customized gold coins to 0.25 million
Maruti car owners nationwide as part of the 15th anniversary
celebrations of Maruti Udyog. By 2001, the scheme accounted for almost
5% of the turnover and over 30 corporate clients like Coca-Cola, the UB
Group, Whirlpool, the TVS Group, Ceat and Liberty Shoes. |
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The communication and promotion budget was increased from Rs.
65 million in 1999-2000 to Rs 100 million in 2000-01. A majority of this was
spent towards advertising, while a portion was also earmarked for promotions
tailored to match regional preferences. For instance, in New Delhi, which was
Tanishq's single largest market, substantial promotions were carried out. The Rs
100 million was split into four parts, comprising national-level spends (both
electronic and print media), regional budgets, direct mail and research. For the
first time, Tanishq initiated a long-term media plan, aiming to give the brand a
round-the-year presence and enhance awareness. The communication focused on
design and quality instead of the price.
FUTURE PROSPECTS
The Indian branded jewellery market, though nascent, grew at the rate of 20-30%
during 1998-2000. Besides Tanishq, other major players included Intergold, Gili
and Carbon.
However, in the Rs 400 billion Indian jewellery market, Tanishq's share was not
even 1%. Not willing to accept this as a ‘poor show,'Tanishq saw it as a vast
opportunity instead. The company planned to attain a 2% market share in the next
few years. Kurian said, “The jewellery market is one of the largest consumer
segments in the country. It has an estimated 2,50,000 retailers with no national
or international brand and no corporate player. Titan believes that this market
is right for consolidation. A consumer-oriented, highly ethical corporate player
will have great opportunity. Our growth rates in the past three years have fully
substantiated this hypothesis.”
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QUESTIONS FOR DISCUSSION
ADDITIONAL READINGS & REFERENCES
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