Tanishq: Positioning to Capture the Indian Women’s Heart
Situation Analysis: Tanishq was the jewellery division of India’s leading watchmaker, Titan Industries, a subsidiary of the Tata Group, one of India’s most trusted and respected business houses. It was country’s only ‘national jeweller that sold gold and gem-studded jewellery in boutiques across India. Indian jewellers were retail stockist, who took supplies from vendors. These vendors controlled 3-4 head ‘karigars’ or craftsmen who in turn controlled 10 to 20 ‘karigars’ respectively. These jewellers had long standing relationships with their vendors and were very loyal to them. With lifting of controls in the Indian market by the Indian government, Titan shifted its attention to domestic jewellery market in 1995 after redefining the Indian watch industry.
Jewellery watches under the new brand- Tanishq were introduced in Indian market and it targeted the country’s high end customers. However, sales did not follow and the move was a failure. The titan management then decided to market high end jewellery under Tanishq brand. The focus was on studded jewellery whose price was difficult to analyse for the customer, unlike gold price. However, Tanishq was using 18-karat gold against the Indian standard of 22 karat gold because 22 karat was too fragile to hold gemstones. In February 1996, tanishq launched its first 18-karat jewellery range which was distinctly western in style and design and opened its first boutique in Chennai. However, Indian consumers did not perceive 18-karat jewellery to be suited for wedding and festivals and the designs were perceived to be too ‘Western’. As a result, in 1997, tanishq also started offering 22-karat plain gold jewellery. Although the sale rose by Rs.24 crores by April 1998, the mainstream buyers eluded the firm as the designs were considered too ‘western’.
Meanwhile, a research done by Tanishq revealed various buying behaviours of Indian Consumers and their perception towards the brand. Apart from a strong brand identity of ‘Tata Group’, people who had not visited the showroom perceived the brand to be for young consumers, and for high-society people. In order to gain mainstream market, the brand included “Indian-inspired designs” in their 22 karat plain gold offerings. Taking on the local jewellers, Tanishq also pioneered the ‘karat meter’ which measured the purity of jewellery in three minutes without altering its purity. It promoted this through a press campaign and highlighted the under karatage problem and stressed upon the company’s stringent process control. This improved the walk-ins and by 2000, tanishq had reached a milestone of Rs.100 crores as a brand.
However, the brand faced lot of challenges by selling plain gold jewellery as its potential customers started comparing its prices with the local jewellers that were cheaper. 1999-2001 spelled trouble for Titan due to Tanishq’s continued losses. However, in late 2001, collection sales made a turning point for the brand. The idea was to tell new stories and tanishq launched collections such as ‘Diva’ an ‘Aria’. In 2002-2003, the retail sales stood at Rs. 416 crore, but the brand was still perceived to be expensive and high-end. Study showed that Tanishq had been moving towards regional jewellers, while its competitors had also moved up the spectrum.
After launching several new jewellery collections like Araka, Colors and Amara that targeted different segments of women, the brand also tied up with events such as Femina Miss India and Milan Fashion Week when they noticed an increase in the Indian consumer’s disposable income. This resulted in sales exceeding Rs.550 crores. After doing a psychographic segmentation of jewellery market, Tanishq decided to target the ‘confident matriarch’- a women in her mid 30’s who is cultured as well as independent and the ‘balancer’-a typically younger new-age working woman, both these segments consisted on women who were wealthy and had high adornment orientation. The brand also positioned itself as a ‘traditional brand’ by associating itself with a Bollywood movie ‘Paheli’ which got nominated for Oscars and was beneficial to the brand. In spite of such progress and impressive sales figure, the brand still had an elitist air.
In mid 2004, L.R.Natarajan of Tanishq proposed an idea to target semi-urban and rural market by offering traditional plain gold jewellery in form of its new ‘Gold plus stores’. The proposition was accepted and two stores were opened in Erode and Ratlam. These stores were based on the franchisee-model and were selected where Tanishq did not have presence. The stores were given a traditional look and ‘Tata’ brand name was aggressively used for promotions that were targeted on families and young couples. These stores broke even in no time and started giving impressive profits. The future plan was to roll out such stores in nine towns and estimated revenues of Rs. 2000 crores by 2010.
The problem: Looking at the case, we can infer that Tanishq had undergone several strategic retooling from time to time in order to gain hold of the traditional yet modern Indian women. Finally after trying several strategies and introducing several collections in both traditional and non traditional categories, the brand was confident that they had positioned it right at the heart of the Indian wedding jewellery market. During this process, another initiative that started as a small experiment called ‘Gold Plus stores ‘gained momentum and sales in semi- urban markets. A visible difference developed between the tanishq and gold plus team members as both the brands gave profits. Tanishq team felt that Gold Plus would confuse the market and affect ‘Tanishq’ brand image while Gold plus team stressed that their model was better than that of Tanishq. According to the tanishq team, they had proved that they can target both the high-end and the wedding jewellery market in big towns and it was a matter of time that they win over wedding jewellery market in small towns as well. Launching Gold plus would close door for tanishq to go after plain gold jewellery market. The main problem in this situation from the company’s perspective was: Whether Tanishq should enter plain gold market or not? And, should Gold Plus stores be allowed to expand in towns?
Evaluation and criteria to make the correct decision: Mr. Bhaskar Bhat, the managing director of Titan has a tricky situation in his hand. The issue was whether tanishq should be allowed to enter the plain gold jewellery market by discontinuing Gold Plus stores or allow Gold Plus stores to expand further. If we analyse the cost and revenue projections of tanishq and gold plus in 2006 (exhibit 1 and 2) we find that net sales growth for ‘Gold plus’ was higher that ‘Tanishq’ by almost 50% for 2010-2011. These figures were made on the assumptions that Tanishq would do 70% of what Gold Plus has planned to do considering its brand image and customer perception. Tanishq would also have a premium of 15 % as against 11% of Gold Plus.
Decision and alternative: According to me, the Titan Board must discontinue ‘Gold Plus’ and allow Tanishq to enter the plain gold jewellery market. The Goal for Tanishq must be to penetrate the gold jewellery market and become the market leaders in semi urban and rural areas which are still dominated by small jewellers and where Gold plus had tasted some success. This must be done by following a planned promotion and marketing campaign and reinforcing the brand image of Tanishq along with the trust factor of Tata group. Elaborating on why Tanishq must enter plain jewellery market:
- Titan group had spent a lot in promoting its Tanishq brand. Right from 1995 till present, the brand had undergone several changes in order to gain acceptance in the domestic jewellery market of India which was earlier dominated by local jeweller. Tanishq brought in a new era of trust and purity that was earlier not associated with the jewellery industry. It also tried very hard to change its ‘elitist’ image and succeeded to some extent. Gold Plus’s positioning was based on Tata name, when its customers found out that it was also a part of Tanishq, it would harm Tanishq’s sales. Customers would demand same flexibility and price reductions that they got in Gold plus, and this would hurt Tanishq’s profits. Also, Tanishq would spend only 1/3rd of total Gold Plus’s advertising budget.
- Through Tanishq’s several brand initiatives, campaigns, collections and tie-ups, it had created a unique brand image in the mind of its customers. The customers associated Tanishq with quality, style and trust. Sales in 2004 touched a spectacular Rs. 570 crores, easily surpassing the ambitious target of Rs 550 crores. Going by these results, the Tanishq team believed that it was only a matter of time before they take over the wedding jewellery and gold market in the smaller towns as well. Going by the facts and figures, one had to agree with Tanishq team.
- For the upcoming year, the government of India had passed an excise duty on branded jewellery, expansion of Gold plus stores beyond 20 meant that it was to be considered a brand and taxed. This would increase company’s tax from the current 2% to 6%. Hence, financially, it was safer to allow Tanishq enter gold jewellery market and not Gold plus.
- Tanishq had earlier, through an extensive press campaign, confronted the under karatge problem that existed in the Indian Jewellery market using stark and bold images through its press campaign. This was industry problem and also existed in rural and semi-urban markets. Tanishq could again use this to its advantage by highlighting this problem and stress on its product’s purity. This could be a great move for Tanishq in plain gold market because Indian consumer, although loyal to its local jeweller, was still largely unaware of this problem. This would enable the brand to establish its credibility and hold in the largely untapped gold jewellery market and could be a game changer for Titan.
The Tanishq brand must, therefore, enter the gold business and try and win the market as it did before.
References
Herman,K. NarayandasD( 2009). Tanishq: Positioning to Capture the Indian Woman’s Heart. Harvard Business School, U.K.
