BRANDED GOLD JEWELLERY MARKET IN INDIA

Case code- BSTR-041
Published-2002

GOLD JEWELLERY MARKET IN INDIA

GOLD JEWELLERY BECOMES FASHION ACCESSORY

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STRATEGIES FOR WOOING CUSTOMERS
 

TANISHQ

In the late 1990s, players in the branded gold jewellery market formulated strategies for wooing customers. According to Jacob Kurian (Kurian), Chief Operating Officer of Tanishq, the challenges were many. As the jewellery market was highly fragmented, lacked branding, and allowed many unethical practices to flourish, Tanishq worked hard on a two-pronged brand-building strategy: cultivate trust by educating customers about the unethical practices in the business and change the perception of jewellery as a high-priced purchase. Said Kurian, "We are changing the attitudes of customers from blind trust to informed trust."

The designers travelled the length and breadth of the country to get feedback on Tanishq's designs and learn about customer preferences. On the basis of this feedback, each showroom could select the designs it would carry. To stay ahead of competition from local jewellers, Tanishq decided to focus on quality control. In 1999, it introduced caratmeters which showed the purity of gold. In fact, Tanishq's USP was the purity of its gold. Accordingly, the company's ad campaigns emphasised the purity aspect of all Tanishq ornaments. (Refer Exhibit II for Tanishq's Ad Campaign)

In November 2002, Tanishq introduced a new collection of jewellery called 'Lightweights.' The collection featured neckwear, earrings, bangles, rings and chains in 22 karat gold with prices starting at Rs 1,100. It also launched Lightweight Diamonds, with prices starting at Rs 3,000.
Tanishq focused not only on urban markets, but small town markets as well. Real estate was less expensive in the small towns than in large urban centres. Besides, competition from stores in small towns was less stiff than competition from the large jewellery stores in the metropolitan cities. According to Kurian, the best returns on investment came from small towns.

CARBON

Carbon's focus had always been to move jewellery from the vault to the dressing table and bring the selling of jewellery out of heavily guarded jewellery stores. This was achieved by persuading a few lifestyle stores to add branded jewellery to their vast array of products. Besides selling from lifestyle stores, Carbon also sold its products as gift items over the internet.

Like Tanishq, Carbon laid emphasis on design. Most of its designs were contributed by students at the National Institute of Fashion Technology (NIFT) through the diploma programme which the company sponsored. In addition, Peakok's team of six designers, (headed by Rajeswari Iyer, an alumnus of a German design school who had worked in the U.K., Germany and India) turned out around 180 to 200 styles in a year, with 75 designs per style. At any point in time, there were around 600 designs of Carbon on sale, and on an average, 300 to 400 pieces per design were sold. In 2002, Carbon launched its 'Sun Sign' collection, which was based on the symbols of the Zodiac. This collection was a set of 12 pendants designed in a blend of 18 carat white and yellow gold (Refer Exhibit III).

While 18 carat gold was commonly used in Carbon products, some of the designs also used white gold, titanium and steel. Diamond was the preferred precious stone, but other colored stones were also used. Comprising items of everyday use, (rings, chains, bracelets, ear studs, tie-pins and cuff links) Carbon items were an impulse purchases. (Refer Exhibit IV) The brand had no offtake cycles in the year, like the marriage season, unlike traditional jewellery. The creation, manufacture and marketing of Carbon was different from the making and selling of traditional jewellery. Said Rao, "We are attempting here to eliminate the low productivity, quality inconsistencies and high precious metal loss associated with traditional jewellery making. We have instituted modern manufacturing practices such as self- contained small groups in the assembly area, self-inspection by the operators, the Japanese Kaizen approach to improvements in operational practices and the like. We have brought down our manufacturing loss of gold to 6.8 per cent. The average in the traditional Indian jewellery shop is as high as 22 per cent, while the world average is only 2 per cent."

As the profile of the average customer likely to purchase a Carbon item was a well-paid urban professional, 24 to 38 years old, having a credit card, it was decided that Carbon should not be placed in the usual jewellery shops but made available at `shop-in-shop' outlets in large lifestyle stores (such as Shoppers Stop, Ebony, Globus, The Bombay Store, Lifestyle and Taj Khazana) and some premium boutiques (such as the Helvetica in Chennai). Said Rao, "We are looking at cross-promoting Carbon jewellery with other branded lifestyle products such as perfumes, clothing and cosmetics." Carbon products were priced between Rs. 2,750 and Rs. 20,000 per piece. While the cost of traditional jewellery was negotiable, the cost of Carbon items was fixed and nationally uniform.

STRATEGIES FOR WOOING CUSTOMERS - Oyzterbay, Gili, and Trendsmith

ALL THAT GLITTERS IS NOT GOLD

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This case study is intended to be used as a basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. This case was compiled from published sources.