Tanishq A Case Study Group-III Section C Happy Saini 0137/48 Uday Mehta 4035/18 Ganesa Kumar KV 0128/48 Harshit Krishna 0143/48 Vinay Kumar Juluri 4040/18 Himanshu Kumar 0147/48 Rohan Gala 0127/48 Introduction: ‘Tanishq’ meaning love for the body, was a brand introduced by Titan, a TATA company, to capture the gold jewellery market of India. The basic idea behind the concept was to redefine the gold jewellery market. India is the biggest market for gold jewellery estimated at INR 60,000 crores annually but there was no branded player in the market.
Tanishq launched studded 18 karat gold jewellery collection which was largely rejected by the Indian customers. The reasons can be summarised as: 1. The gold used in studded jewellery was 18 Karat. Indian customers were not willing to accept anything below 22 Karat which was too soft to hold gems and diamonds. 2. Tanishq showrooms were too modern and too different from the conventional jewellers which led to a ‘nice but not for me’ syndrome in the customers. 3. The designs were quite western and considered unsuitable for Indian weddings which constituted more than 50% of this market. . The traditional customers were not able to connect themselves with the brand name ‘Tanishq’ and other names like Zoya, Aria, Diva etc. 5. People used to buy gold jewellery not only as ornaments but also as investments. Hence, paying a premium for Tanishq’s studded designer jewellery did not seem profitable to the masses. 6. Tanishq costs were higher than the conventional jewellers because of purity, while customers thought that Tanishq was overcharging them. But the reality was that local jewellers were providing under karatage ewellery. Tanishq’s response 1. Tanishq started a Karat meter campaign to prove its purity and justification of higher costs. 2. Tanishq tried to reposition its product in the market to attract both high end and low end customers. To do this Tanishq brought 22 Karat gold jewellery in the market to attract traditional customers. With this Tanishq wanted to increase footfalls in their showrooms. Tanishq tried to shift customers from low profit traditional products to high profit studded jewellery. 3.
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Tanishq started a advertising campaign customized to target regional & traditional customers which constitutes 85% of the market. Entry of GoldPlus into the market: 1. Set up in 2004 to go after the segment Tanishq could not penetrate fully. 2. Set up in two locations initially- Ratlam and Erode. 3. Mode of operation similar to traditional jewellery shops, while using the Tata name for promotions and communications SWOT analysis for Tanishq Strength| Weakness| * Differentiated products * Purity * Economical Supply Chain | * “Not for me” perception * Higher prices| Opportunity| Threat| High-disposable income families * No branded competitor * Higher relocation of younger generation | * High loyalty to local competitors * Lower prices of local competitors * Perception of gold as commodity, not ornament * Possibility of union by local jewellers | SWOT analysis for GoldPlus Strengths| Weaknesses| * Resemblance to local competitors. * Brand name * Tata brand name to invoke sense of trust. * Competitive pricing * Purity| * Ability to replicate efforts and results on a large scale? No personalized relation with the local people. | Opportunities| Threats| * Bigger market share than high end market. * Mostly unorganized market. | * Taxes on expansion. * Local jeweler conglomerates. * Liberalized markets have reduced gold investments. | Market segmentation: Different versions or different models of a product are launched by companies to satisfy diverse wants of customers. Hence the market is broadly divided into various segments. A market segment is a group of customers who has similar needs and expectations.
Similarly, on the basis of age, life style, gender, income, generation, social class, values, psychological factors and other factors Tanishq segmented gold jewellery market into following major segments: A pie chart showing market segmentation of gold jewellery market in India 1) Confident Matriarch * Age group: 30-40 yrs. * Typically in a nuclear family and quite influential. * Confident to adapt to change and experiment. * Considerable experience in buying jewellery. * Represented 37% of the market. This can be a big segment for Tanishq to target.
This market segment has poor loyalty to local jewellers. They are ready to experiment. This segment can spread good word of mouth and can bring those customers into Tanishq stores who have a ‘not for me’ stigma in their minds. 2) Sanction Seeker * Age group: All ages * Majority live in small towns * Not confident, derives satisfaction from others’ appreciation. * Gives opinion on designs but finally it’s the decision of elders. * Represent 30% of the market- * 10% approval driven * 20% investment driven sanction seeker This segment is quite fragmented.
They are traditional buyers who buy jewellery for weddings and other functions. The user and buyer are not the same person. This segment can be a good market for GoldPlus. 3) Balancer- Marriage * Young women * Unmarried probably working * Distancing herself from traditional values but still sensitive to tradition * When comes to marriage will buy traditional jewellery. May prefer modern styles for other purposes. * Brand sensitive but also want good value. * Represent 20% of the market This segment can be a good market for GoldPlus when it comes to weddings but otherwise it’s a potential market for Tanishq.
This is the segment which Tanishq can try to capture completely. 4) Display driven * Fairly young, Upper class, working women, living in cities * Liberal parents, independent, modern * Want trendy and modern jewellery. Do not want to accumulate wealth in the name of jewellery. * Highly brand conscious * Represent 5% of the market. This is a sure market for Tanishq. This segment will buy high end products both for weddings and daily wears. Tanishq must focus on these customers from going away to other competitors. Perception improvement for Tanishq :
Price :Tanishq has considerably bettered its image in pricing between 2001 and 2004. Ratings for charging and pricing of gold have increased by over 33% and overall ratings for pricing have increased by around 30%. However the overall ratings relative to competitors have still been negative. Design :Overall ratings have increased by nearly 30% with innovation being the biggest gainer. However they are still behind competitors and considerable work needs to be done in this area irrespective of the segment they are planning to operate in.
Image : Tanishq has considerably moved towards young, rich and Ultra Modern customer base. They have come off as a fashionable, individualistic, lavish and sophisticated in 2004. Main Issues faced by the Tata Group The current dilemma faced by the Tata Group is how to decide to proceed in the future with respect to the two brands: Tanishq and GoldPlus. The team of Tanishq claims that they can succeed in both the high end and the wedding jewellery market. However, Tanishq has been trying to penetrate this segment for a long time now, with limited success.
The emergence of GoldPlus has given the group a different option. The pilot phase of GoldPlus, implemented in Ratlam and Erode, has been a success and shown a lot of promise for expansion. However, there are worries over whether this success can be scaled over a much larger level. Also, there are worries from Tanishq’s side that having spent a lot of effort and investment to move into the lower end market, GoldPlus will undo all the good work. Being from the same brand, but having very different policies (like negotiations being allowed in GoldPlus) will create complications for both brands.
Way Ahead: The overall strategy of Tata Group will be to make sure that the two brands, Tanishq and GoldPlus, cover all the segments present in the market. While Tanishq will mainly focus on the high-end customers and GoldPlus on the lower-end customers, they will have a small overlap of products which would appeal to both segments. There can be a bit more collaboration from both sides, with Tanishq’s smaller products being sold in GoldPlus, and the higher end GoldPlus items could be displayed in Tanishq showrooms as well.
Items sold across both stores could include earrings, bangles, rings and pendants. Tanishq has not been able to penetrate the semi-urban and traditional markets well, despite its consistent efforts over the years. Hence, it’s logical to stay with the core competency of being a differentiator, and focussing on the high end market, while allowing a new brand to go for the traditional segment. This decision has been taken keeping in mind the expected rise in disposable incomes of the middle class as well the number of earning single/working women in the years to come, by being a product differentiator.
Hence, there is expected to be a sufficient market for the high end products for Tanishq, and enough room for GoldPlus to operate as well in semi-urban and lower-income urban areas by being a cost-leader. In order to scale what GoldPlus did, Mr. LR Natarajan has to train selected brand managers for each state or region who will in turn device customized strategy to capture local markets. How to capture respective markets? Suggested strategy for Tanishq : * Tanishq should concentrate its efforts on Balancer and Display driven segments. With the number of high income families increasing Tanishq can exploit the spending power of people by offering small budget (5-10K) jewellery. * Tanishq should give some assured gift to customers who buys in bulk from them for special occasions like marriage, engagement etc. * Tanishq should put up its displays in high end places like malls in posh areas, corporate functions etc. Tanishq can get in established actresses which can portray both the old tradition and a fresh energy to attract older generation to Tanishq. Tanishq should start sponsoring daily soaps because a lot of women are influenced by what is portrayed on the screen, both in terms of glamour and values thus targeting both buyer groups. * Tanishq should offer some value added services like ability to pay in instalments to target working women, home delivery of orders. * Tanishq should try to tie up with high end boutiques who sell bridal dresses, so that the designers can suggest the customer matching jewellery from Tanishq. We can give a special catalogue to such boutiques. Tanishq can a have tie up wedding planners and can give discounts to referred such buyers.
Suggested strategy for GoldPlus : * GoldPlus should open new stores in semi urban and urban areas as well to tap the potential which was not captured by Tanishq. In semi urban or rural areas they should position the Stores strategically so that it covers maximum number of surrounding areas effectively. * The local Karigars should be from the same region to incorporate the flavour and sensibilities of the region. * One of the main advantages going to the Local vendors is the Credit facility. GoldPlus should capitalise on this by providing credit facilities through tie-ups with local banks or by themselves. Since there is a significant portion of Old gold is destroyed and remade during marriages , there is a huge opportunity for GoldPlus to enter by giving “Gold Exchange Programs” with a minimal amount reduction for the old gold price. * In cities GoldPlus can contact big corporate houses for bulk gold coin contracts. * GoldPlus should put promote aggressively on festivals like Diwali, Dhanteras and specially on local festivals like Akshaya tritia, Pongal, Onam etc. because traditional people buy a lot of gold during festive seasons as it is considered to be auspicious.