Final Project Kalpita

Consumer preference for branded jewellery vis-a-vis non branded jewellery and the promotional strategies adopted by in Mumbai

Subject title:

CONSUMER PREFERENCE FOR BRANDED JEWELLERY VIS-À-VIS NON-

BRANDED JEWELLERY AND THE PROMOTIONAL STRATEGIES

ADOPTED BY EACH IN MUMBAI

1.1 RATIONAL OF THE STUDY

Till the early 1990s, the average Indian bought jewellery for investment rather than for adornment.

Jewellery made of 18-karat gold was not favoured as it was considered a poor investment.

Confidence in the local jeweller was the hallmark of the gold jewellery trade in India. A jeweller or

goldsmith in a local area had a fixed and loyal clientele. The buyer had implicit faith in his jeweller.

Additionally, the local jeweller catered to the local taste for traditional jewellery. However, since the

late 1990s, there was a shift in consumer tastes: women were increasingly opting for fashionable and

lightweight jewellery instead of traditional chunky jewellery. There was a rise in demand for

lightweight jewellery, especially from consumers in the 16 to 25 age group, who regarded jewellery as

an accessory and not an investment. The new millennium witnessed a definite change in consumer

preferences.

Branded jewellery also gained acceptance forcing traditional jewellers to go in for branding. Given

the opportunities the branded jewellery market offered; the number of gold retailers in the country

increased sharply. Branded players such as Tanishq, Oyzterbay, Gili and Carbon opened outlets in

various parts of the country. Traditional jewellers also began to bring out lightweight jewellery, and

some of them even launched their in-house brands. However, the share of branded jewellery in the

total jewellery market was still small (about Rs. 10 billion of the Rs. 400 billion per annum jewellery

market in 2002), though growing at a pace of 20 to 30 percent annually. The branded jewellery

segment occupied only a small share of the total jewellery market because of the mindset of the

average Indian buyer who still regarded jewellery as an investment. Moreover, consumers trusted only

their family jewellers when buying jewellery. Consequently, the branded jewellery players tried to

change the mindset of the people and woo customers with attractive designs at affordable prices.

However branded jewellery players will continue to face lot of competition from local jewellers. In

order to gain market share, they will have to come up with designs that customers want and win the

trust and confidence of consumers by hallmarking and demonstrating the purity of the gold used by

them.

Viva- Institute of management studies Page 1


To compete with traditional players, branded players must also find some way to differentiate

themselves. While the success of a particular brand will depend on differentiation, affordability and

quality will be a key element in sustaining a brand. In addition, branded players require focused

advertising and astute salesmanship to compete with traditional jewellers. Besides the major brands-

Tanishq, Carbon, Oyzterbay, Gili and Trendsmith - several regional players have opened branches to

leverage the trust and reputation that they have built up over the years.

1.2 RESEARCH OBJECTIVES



The objective to study the “Consumer preference for branded jewellery vis-à-vis non-branded

jewellery and the promotional strategies adopted by each in Mumbai.” is to find out

1. To compare between Branded and Non-Branded Jewellery.

2. To know Consumer perception towards Jewellery.

3. To know the Major Players of Jewellery industry.

4. To identify which parameters play a vital role in the selection of Jewellery.

5. To identify the segment under which branded and unbranded jewellery is mostly preferred.

6. To identify whether price factor plays an important role in the purchase of jewellery.

7. To know the Marketing strategies used by various jewellery brands.

1.3 RESEARCH METHODOLOGY



1.3 (1) Literature Review

1) Jewellery goes branded

By TFW Bureau

CONSIDERING Indian women's love for the yellow metal and precious stones, including the finery

that goes along with it, and the prospect of a huge consumer market that India boasts of, it would be

natural for more retailers to seek their share in developing the branded jewellery market in India.

With consumers becoming judiciously demanding, brands, today, are seeking to establish exclusive

outlets at a fast pace. The Indian market, of late, has also attracted the attention of international

retailers. The already very strong Indian jewellery market, with the coming of international brands

like DeBeers, Tiffany and Cartiers and other multi-national players, has seen a significant change.

Given the opportunities that the branded jewellery market offered, the number of gold retailers in the

country increased sharply. However, the share of branded jewellery in the total jewellery market is

still small (about Rs 10 billion of the Rs 400 billion per annum jewellery market in 2002), growing at

a pace of 20 to 30 per cent annually. The branded jewellery segment occupied only a small share of

the total jewellery market because of the mindset of the average Indian buyer who regarded jewellery

as an investment. Moreover, consumers trusted only their family jewellers when buying jewellery.

Consequently, the branded jewellery players tried to change the mindset of the people and woo

customers with attractive designs at affordable prices.

Jewellery market in India

Jewellery business primarily runs on goodwill and clientele, and no matter where a jeweller moves his

base, his customers will still follow him. The Indian jewellery market witnessed a shift in the

consumer perceptions of jewellery in the late 90s. Instead of being regarded as only an investment

option, jewellery today is being prized for its aesthetic appeal. According to Mr Vijay Jain, CEO,

Orra, “The jewellery market in India is a very exciting and versatile industry with the diamond

jewellery market recording a growth of 20 per cent plus.” Similarly, Mr Biju John, Chief Manager

Franchise Operations, D’damas Jewellery India Pvt. Ltd, comments, “The jewellery market in India is

witnessing a new awakening in the form of arrival of branded jewellery. The lightweight, trendy

jewellery with an international flair has sure made its mark thus changing the mindset of a lot of

customers in the country.”The focus of the consumers has shifted from content to design. Trendy,

affordable and lightweight jewellery has gained familiarity, and branded jewellery has also gained

acceptance forcing traditional jewellers to go in for branding. According to Mr Jatin R Chhadva,

CEO, SIA Art Jewellery, “The jewellery market in India is only three per cent branded, however, the

percentage is expected to increase from 24 to 30 per cent in the coming few years.”



Delving on the changes that have occurred in the jewellery industry, Mr Jain opines lot of changes

have occurred in jewellery industry in India. There is a total change in the attitude of the people as

jewellery is no more considered to be an investment. People today are largely going for readymade

jewellery, and diamond jewellery is found in shop ‘n’ shop environment in shopping malls. Today

jewellery is not bought to kept in lockers rather it is used regularly and people wear jewellery to

enhance the way they look.“During the past few years there is lot of consciousness among people

regarding the quality and standard of the jewellery. People today have become more practical and

they do not mind wearing art jewellery which was earlier considered to be a bad taboo,” says Mr

Chhadva. Players, such as Tanishq, Oyzterbay, Gili and Carbon, have opened outlets in various parts

of the country, and likewise traditional jewellers have now begun to concentrate on lightweight

jewellery, with some even launching their in-house brands.

Brands dominating the market

The national and international jewellery brands drawing the attention in the Indian jewellery sector

includes Gitanjali Gems, the owners of jewellery brands D'damas, Asmi, Nakshatra and Gili.

According to Mr John, “Considering the huge customer base of D’damas over the years the branded

jewellery is here to stay. Depending upon the variety of products or brands offered teamed with the

popularity of these brands, the parent company is sure to embrace success.”

Adora, launched by Mumbai-based Concept Jewellery (India) Pvt. Ltd, is a part of M Suresh Group.

Adora’s rate of growth has earned it the distinction of being the fastest-growing jewellery brand in

India. Each piece of Adora diamond jewellery comes with an authenticity certificate from the

International Gemological Institute and a buyback guarantee. It has also ventured into the

international marketplace, starting with Dubai to be followed by Malaysia and Singapore.

Inter Gold Gems Pvt. Ltd. is a part of the Rosy Blue Group, world’s largest diamond jewellery

manufacturing company with the presence in 14 countries. Inter Gold is India’s largest diamond

jewellery exporter. Today Inter Gold Gems Pvt Ltd is present 15 cities across India with 24 stores in

two store formats Orra and Inter Gold. From traditional jeweller’s category Tribhovandas Bhimji

Zaveri, is the name that strikes. Trendsmith, one of the finest jewellers dealing with diamond and gold

jewellery, in association with the Tribhovandas Bhimji Zaveri (TBZ) and Nirmal Zaveri group of

Mumbai, has presented exclusive lightweight gold collections from the house of TBZ and Nirmal

Zaveri group. The brand that is leading the race in jewellery industry in India is Tanishq. Tanishq

challenged the age-old jeweller's word with Tata's guaranteed purity. Tanishq introduced innovations

like, Karatmeter, the only non-destructive means to check the purity of machine-made gold jewellery,

far superior finish and value to the customer, and beautiful handcrafted jewellery influenced by



various jewellery traditions of India. Other than these there are brands like SIA Art Jewellery,

Oyzterbay, Carbon, Kiah, Cygnus, etc that are dominating the Indian jewellery market. After having

gone through all these upcoming brands it can be estimated that jewellery is growing tremendously.

Thus, astonishing is the outcome of the change in the attitude of the people towards jewellery. Today

jewellery is no more considered as an investment in fact these days people have come to know the

exact significance of jewellery and that is to enhance the beauty and looks.

Jewellery franchising

Franchising has more or less covered almost all the areas of human needs, be it food, clothing,

footwear, bags, makeup kits, electronics, education, or the IT sector. Although the jewellery sector is

very popular in India, franchising in this sector is yet to pick up. Starting at a slow pace, franchising in

jewellery is expected to flourish in the coming times. “Franchising is doing very well in the jewellery

sector. Tanishq is the leading franchise company in India,” says Mr Jain. Expressing similar views,

Mr John acknowledges, “Indeed jewellery franchising is one of the better options for profitable

expansion by any company.”Companies like Eros, Orra, Tanishq, Sia Art Jewellery, and Cygnus, etc,

have already adopted franchising as an expansion model.Mr Jain opines, “Orra has opted for franchise

model. The consumer must experience brand in totality and franchising is the best way to expand in a

set pattern. Training of the franchisees helps in making consumer experience the product in totality.”

Eros jewellery has expanded in a big way by opening 65 more franchise showrooms in the country

within a year. The group has approximately 85 outlets all over India.It has recently launched a new

range of gold ornaments for the firm in Dubai. The company plans to expand in Dubai and Middle

East through franchising with retailers. Gitanjali is the largest manufacturer and retailer of jewellery

in India. The company has in place a large retail set up, which includes 26 exclusive distributors

across the country, around 620 outlets including those in host stores, five stand alone stores and 17

franchised stores in 30 cities and towns. It continues to be a leading diamond processor in the world.

Oyzterbay focuses on easy-to-wear, non-traditional jewellery, non-locker jewellery and claims to

offer a variety in design, reliability and standardisation. The unique feature of the business model is

the franchising structure proposed by the company. It is introducing an innovative store management

concept. The exclusive Oyzterbay signature stores will be given out on wet lease to franchisees that

will run it on day-to-day basis. Titan's jewellery arm Tanishq presently has six company-owned

boutiques, 29 franchise boutiques and 18 service centres. Besides, Tanishq is ready for its US foray

with the seven-stone diamond collection Aria. The collection will be distributed through US company

Highglow, which caters to the ethnic Indian and Asian population there. The collection will be sold

under the Tanishq name with no sub-branding so as to cash in on the brand equity Tanishq enjoys.

The launch coincides with Mother's Day on May 3. This move is significant for the company as it will

be a first stage in testing when to roll out franchised Tanishq stores there as well as in the UK.



Launched by Laxmi Diamond Group, Cygnus is another jewellery brand with range consisting of

rings, pendants, earrings, bracelets, neckwear, bangles and designer wear. The range, priced between

Rs 1,000 and Rs 30,000, will be originally marketed through lifestyle stores, traditional jewellers and

exclusive franchise outlets. Cygnus claims to offer a range for everyone and for every occasion. It

primarily targets women in the age group of 18 to 30. The range also offers a variety of gift options .

Pallazzio, a 13,000 sq. ft store at Crossroads, the mega shopping and recreation mall at Haji Ali in

Mumbai, is billed as India's first multibranded, multinational, one-stop centre for jewellery, watches

and accessories. Pallazzio is managed on a franchise basis where the mother company provides the

systems and products while the franchisee enjoys the advantage of being a local entrepreneur.

Says Mr John, “Jewellery franchising has emerged over the years as a preferred option for investing

money in. Entrepreneurs invest in jewellery franchisee outlets because buying jewellery is one of the

favourite shopping activities among the Indian women.”

Emergence of international brands

With a large number of foreign brands making their way into the Indian market the Indian brands may

perceive a threat. Mr Jain believes, “The entry of global brands in India in jewellery sector will hardly

affect traditional jewellers. They have already started reinventing themselves, and they understand the

mindset of the Indian consumer.”Giving his opinion on the treat, Mr Ashok Verma, Director,

Diamond Hut says, “The consumer tries anything new once on an experimentation bases, even

ignoring the price tag and other factors. But again, if you talk about the longevity of the product, then,

the Indian jewellery companies are in a better position because of their benevolence in the sector.”

“With the entry of global brands lot of restorations will take place in jewellery sector in India whether

it is fine jewellery market or art jewellery. The traditional jewellers are required to become more

practical in their approach. They need to keep their expansions in pace with the global players and

should follow rigorous expansion plans,” says Mr Chhadva

Steps to consider on franchising

Franchising in the jewellery sector in India is still at its nascent stages. Therefore, it becomes

necessary for aspiring franchisees to consider certain cautionary factors before initiating jewellery

franchising. Mr Jain believes, “One should go in for jewellery franchising only if one cherishes the

love and passion for jewellery as this sector requires lot of understanding and interest.”

Mr Chhadva, suggests the aspiring franchisees to evaluate their investment powers and the investment

policies of the companies, study the market and the brand before opting for any franchisee. Spelling

out some of these factors, Mr Verma says, “In jewellery franchising, some of the important

considerations are to actually look into the market value of the jeweller, the specimen and the quality



of the material used, and the guarantee policy of the franchisor. Moreover the number of existing

showrooms and their performance should also be taken into thought.”

Future of jewellery franchising

With a middle class population of 30 crore, India will be one of the biggest markets for the premium

brands that will also push the concept of branded jewellery in India. What may speed up the process

of big brands like Tiffany, Cartier, Zales and Harry Winston in jewellery to come to India is the

Finance Minister's announcement in this year's Budget to set up an expert body which will help

increase FDI in the gems and jewellery sector.The future of jewellery franchising, says Mr Jain

appears to be quite bright and is expected to grow tremendously in the coming years. He adds, “FDI is

not going to make much a difference as jewellery is mainly country specific. More over lot of trust is

attached in buying jewellery. People will definitely take time to accept global brands.”

The liberalisation of gold imports will help make India a global hub for manufacturing gold products,

while the establishment of a gold trading centre will generate revenues, increase employment and

stabilise the trade. According to Mr John, “With the passage of time trends change and so is the case

in the jewellery sector. The product keeps on evolving to suit customer needs.” Expressing positive

growth in jewellery franchising due to the huge potential in India Mr Chhadva goes on to say that FDI

will definitely affect the present jewellery industry. “With the opening of FDI large number of global

brand will enter the Indian market,” says Mr Chadhva. Mr John believes that the opening of FDI will

hardly make a difference to franchising in the jewellery sector in India

An overview

Jewellery industry is booming and lot of aspiring entrepreneurs are looking forward to enter into it.

Branded and non-branded majors in the Indian jewellery market are offering the best quality products

to the consumers who now do not consider jewellery as an investment or something kept in lockers

for difficult times. Jewellery sector is quite different from others as there is no fear of depreciation as

is the case with other products. Jewellery sector has highest per sq. ft yield. Despite all this there are

certain challenges in jewellery industry. It is highly unorganised and there is hardly any code of

conduct to business in jewellery sector. There is lot of competition in this sector and franchising in

this sector requires special interest and skills. Franchising in this sector has been slow in being

adopted by investors. However, branded as well as non-branded jewellery companies have identified

franchising as the most appealing way to expand business. They have recognised that franchising



offers a set pattern of expansion strategy and that the consumer enjoys the same kind of experience

wherever he goes.

2) Indian branded jewellery segment to grow 40% p.a: McKinsey report

By: Diamond World News Service

Analysts have pegged good hope for the branded jewellery market in India, which accounts for

around less than 10 percent of the entire domestic jewellery market pie according to Credit Analysis

and Research Limited (CARE). According to a report by McKinsey, the same is likely to witness a

growth rate of 40 percent per annum to touch Rs. 10,000 crores this year. The report predicts sales of

non-branded jewellery products to grow at around 12 percent. CARE pegs the domestic jewellery

market at US$ 16 billion. It is estimated that the domestic jewellery pie id sliced as about 96 percent

being unorganized (representing 300,000 traditional retailers or ‘family jewellers present only in one

town, while 4 percent comprise of the organized sector.

The branded jewellery segment offers around 50 brands today from 30 players six years ago. Many

players are reporting close to 80 percent growth rate. With names like Tanishq, Nakshatra, Gili,

Cygnus, Sangini, Asmi, D'damas, and more, the domestic market has also seen some penetration of

international luxury brands, like Tiffany, Dolce Vita, Bvlgari, Chopard, Cartier, Harry Winston,

Damiani, Di Modolo, Pranda Jewelry and Christian Dior ( are expected to venture into Indian

domestic jewellery market). The McKinsey study has pegged the Indian luxury market size at $3.5

billion with a growth upto $30 billion by 2015.

The Gem and Jewellery Export Promotion Council (apex body for the Indian G&J industry) has been

making efforts to promote ‘Brand India’ in the global jewellery market, with concepts like ‘Anant’,

India International Jewellery Week, and such other events, and representing the sector to the

government for ‘friendlier policies’ for the sector

3) Jewellers say duty on branded items will hinder new entrants

ET Bureau, Feb 28, 2011

MUMBAI: The next time a consumer enters a branded jewellery store of Tanishq or Gitanjali, she

will have to shell out a tad more on her purchase. This is because government has reintroduced 1%

excise duty on branded jewellery and branded articles made from precious metals like gold, silver and



platinum after waiving it two years ago. The levy will not apply to unbranded jewellery and articles

such as utensils made from precious metals, etc. Even branded jewellery or branded precious metal

articles that are exported are exempt from such a levy since it would otherwise end up in exporting

taxes.

Leading jewellers such as Gitanjali have termed the move as "one that will lead to a lot of nuisance

since the brand is not marked on the jewellery pieces." ML Arora, AGM of Bank of India, said the

amount would be absorbed by the consumer since it was not "very significant." Another leading PSU

banker, who earlier worked in the bank's bullion division, said jewellers could resort to under-

reporting of branded jewellery manufactured to avoid the levy.

While one jeweller said the levy could result in unmarked jewellery sales being stepped up, the PSU

banker said such a step was unlikely as it would reduce the brand equity of the seller. "I think the

margins branded jewellers earn are good enough to absorb the excise duty if they decide not to pass it

on to their consumers. If they choose to pass on the cost, it will not make much of a difference to the

consumer as she buys branded jewellery assured of purity and resale value."

The Gems & Jewellery Federation, a nodal body of domestic jewellers, is set to appeal to the

government to waive the levy. "The reintroduction of the abolished 1% excise duty on "branded"

jewellery, is a retrograde step for the industry. Five years ago we made representations to the

government and subsequently the excise duty was withdrawn two years ago. We do not understand

the rationale behind this step. These kind of levies and back door licence raj measures will create

hardship, litigation and encourage corruption. We urge the finance minister to rollback the 1% excise

duty on "branded" jewellery. Interestingly, to give a boost to local gold refining and improve the

backward integration process, the government has decided to reduce the excise duty on serially

numbered gold bars, other than tola bars, made from ore/concentrate in the same factory to Rs 200

per 10 gms from Rs 280 per 10 gms. This concessional excise rate is also being extended to serially

number gold bars made from gold dore bars. A gold dore bar consists of gold in the raw form.

"The decision to allow imports of ore and concentrate was introduced in the previous budget and the

reduction in excise is to encourage people set up gold refining facilities here and strengthen backward

integration," said Rajesh Mehta, chairman, Rajesh Exports. He added that his company would take a

call on setting up a refining facility in due course.

The reduction in excise on bars will benefit the upcoming MMTC-PAMP gold refinery being set up



in north India.

Apart from these measures, an excise duty of Rs 300 per 10 gm will be levied on gold produced

during the copper smelting process. Hindalco and Sterlite are the major copper smelters in the

domestic market. An excise duty of Rs 1500 per kilo will also be levied on silver manufactured

during gold refining from ore or concentrate, dore bar and also during copper smelting stage.

Analysis of literature Review

The review also brings light to the fact that the Indian consumers are price sensitive and

hence the branded jewellers cannot charge exuberant prices for the same.

The jewellers have to offer designs that are more Indian in their culture rather than aping the

west this can be proved by the e.g. of Tanishq and should also be affordable.

Since the thesis focuses on a comparative study of the popularity of branded v/s non branded

jewellery the review helps understand the growth of the retail industry which have leased

branded jewellery stores and also the popularity of traditional goldsmith

The number of foreign entrants also pose a challenge to the traditional jewellers and hence

we can see that these jewellers also come up with strategies to retain their customers these

practices were not prevalent in the market previously.

The branded jewellers on the other hand have to adapt strategies to win the trust of their

customers and attract new customers.

A few research reports also help us gauge the changing trends in the jewellery market and the

popularity of diamonds.

1.3.2 RESEARCH DESIGN AND HYPOTHESIS

1.3.2 (A) RESEARCH DESIGN

Purpose Of Study

The previous research done on branded and non branded jewellery markets are

1) Indian Gems and Jewellery Market - Future Prospects to 2011



2) The impact of recession on the jewellery industry

3) The growth of the Branded jewellery market in India

No study has been done to find out the preference of consumer’s between branded and non

branded jewellers. The study would also help to find out the consumer preference and their

buying behaviour towards branded and non branded jeweller’s, this would help both the retailers

to know what are the consumer preference and what strategies should they adapt to grab the

market.

Problem Statement

In spite of product quality, services branded retailers provides why do people still prefer buying

jewellery from local retailers.

1.3.2(B) HYPOTHESIS

H working hypothesis:

There is no significance difference among the consumer in the parameters such as Celebrity

endorsement, Promotion, Wide Variety of designs, Brand Name, Exhibition and New Collection

which attract them for the purchase of jewellery.

Ha:

There is a significance difference among the consumer in the parameters such as Celebrity




Purchase of jewellery is not preferred from the family jeweller compared to that of branded Jeweller

Ha:

Purchase of jewellery is preferred from the family jeweller compared to that of branded Jeweller




Jewellery is not considered as status symbol for most of the consumer.

Ha:

Jewellery is considered as status symbol for most of the consumer.


Price does not play an important role in purchase of jewellery

Ha:

Price does play an important role in purchase of jewellery

1.3.3 PERIOD OF STUDY

The proposed study shall be covering the period from 15th September 2010 to 15th March 2011.

1.4 SAMPLING

1.4(1) Sampling universe:

Primary Data:

The data for this research project would be collected through questionnaire. A structured

questionnaire would be framed as it is less time consuming, generates specific and to the point

information, easier to tabulate and interpret. Moreover respondents prefer to give direct answers. Both

type of questions i.e. Open ended and closed ended, would be used. The Sampling Universe shall



consist of Mumbai.

1.4(2) Sampling Techniques:

Primary data:

They were the main source of Primary data. The method of collection of primary data would be direct

personal interview through a structured questionnaire.

I will use the simple random sampling for collecting the data.

Secondary Data:

It was collected from internal sources. The secondary data was collected from the articles, news

papers, management books, and the internet.

The secondary data would be collected from:

1) Books

2) Magazines/ Project report

3) Internet

4) Articles

1.4(3)Sample Size

100 respondent

The sample size has been determined using Moser and Kalton (1972) formula;

n’ = P’ (1-P’) / (SEp)2

where,

n :- The required sample size

P: - The estimate proportion of the sample universe who prefer Branded



Jewellery over Unbranded Jewellery. (50%)

SEp:- Level of significance i.e. 5 % (0.05)

The primary data would be collected from

1) Non branded and branded jeweller’s

-Non Branded jeweller: Mahalaxmi jewelers and more

-Branded Jeweller: P.P Jewellers

2) The population of Mumbai city

The secondary data would be collected from:

5) Books

6) Magazines/ Project report

7) Internet

8) Articles

The questionnaire’s response format for the population would be close ended questions. With a mix

of question types varying from ranking, multiple choice to checklist questions. The attitude of the

respondents would be measured by itemized category scales, pictorial scale. The questionnaire’s

response format for the branded and non branded jewelers would be open ended as well as close

ended questions.

1.5 DATA:-

1.5.1 Type of Data:-

Primary data obtained through questionnaire filled by respondents residing in Suburban

Mumbai (Bandra to Virar). The data thus obtained is used in combination with secondary data

obtained from web sites, books, research magazines etc.

1.5.2 Data Sources:-

The data was collected through primary collection method, i.e. The source of data collected, was

questionnaires filled by the respondents. Also data supporting the primary data was collected from

web sites.



1.5.3 Method of data collection:-

The method of data collection was survey method. In the survey method, individual survey was

conducted on the respondents residing in suburban Mumbai.

1.6 TOOLS AND TECHNIQUES OF DATA ANALYSIS:-

1.6.1 Graphical analysis:-

The study conducted was of a descriptive nature and involved an element of comparisons and

contrasts between the defined variables. The data obtained was thus subjected to pie-charts and

column charts for comparative analysis.

1.6.2 Statistical analysis:-

The data collected contained both parametric as well as non-parametric forms. Thus chisquare test

was applied for testing the hypothesis.

1.7 SCOPE AND LIMITATIONS OF THE STUDY

1.7.1 SCOPE OF THE STUDY

The gems and jewellery industry occupies an important position in the Indian economy and is one of

the fastest growing industries in the country.

The study considered sample respondents residing in Suburban Mumbai i.e Bandra to Virar only.

Study would help both the retailers to know what are the consumer preferences and what strategies

should they adapt to grab the market.



1.7.2 LIMITATIONS OF STUDY

The scope of study is limited due to the following reasons:

1) Sample size - the sample size of the study is only 100 which would not give a comprehensive

result. Many important samples may not be considered at all. The conclusion of the study

may not result to an accurate outcome due to the sample size being small.

2) Bound to only western suburbs of Mumbai - the other limitation of the study is it is limited to

only the western suburbs of Mumbai and ignores the samples from the central as well as the

harbour and south end. The buying behaviour of an individual varies from place to place.

3) Awareness - the sample taken and the conclusion drawn can be led to only one side if there is

lack of awareness about branded jewellery.

4) Time constraint - since the time span for the thesis is only few months and in depth study and

analysis will become a little difficult.

1.8 EXPECTED CONTRIBUTION FROM STUDY:-

It shall throw some light about the perception in the mind of the respondents with respect to

the branded and unbranded jewellery.

It shall indicate whether the price really plays a role in the buying decision of the

respondents.

It shall also cover the strategies used by various jewellery brands.

1.9 DIRECTION FOR THE FUTURE RESEARCH:

In future a larger sample size and more prudent sampling techniques may be used for drawing



conclusions about the conducted study.

The study has an element of subjectivity to it which can be improvised upon by the use of

more prudent research methods.

2.1 MEANINGS AND DEFINITIONS

Introduction to Indian Gems and Jewellery Industry

India is a leading player in the global gems and jewellery market. The gems and jewellery industry

occupies an important position in the Indian economy. It is a leading foreign exchange earner, as well

as one of the fastest growing industries in the country. The GJ sector may be further categorised into

the following sub-sectors based on characteristics, processing techniques, preciousness in terms of

price range and marketability.

Gemstones

1. Diamonds

2. Coloured Stones-precious, semi-precious, synthetic

Jewellery

1. Plain gold Jewellery

2. Studded Jewellery



3. Silver Jewellery

4. Costume Jewellery

The two major segments of the GJ business in India are gold jewellery and diamond jewellery. While

a predominant portion of gold jewellery manufactured in India is for domestic consumption, a

predominant portion of rough, uncut diamonds processed in India in the form of either polished

diamonds or finished diamond jewellery is exported. Gold jewellery forms around 80 per cent of the

Indian jewellery market, with the balance comprising fabricated studded jewellery that includes

diamond studded as well as gemstone studded jewellery. Preference for gold dominates the domestic

jewellery demand. The domestic demand for gold jewellery is estimated at Rs. 390 billion in 2005,

accounting for an estimated 80% of the Indian jewellery market of Rs. 490 billion. The balance

comprises diamond jewellery (Rs. 80 billion), and other fabricated jewellery (Rs. 20 billion).

The Indian gems and jewellery industry is competitive in the world market due to its low cost of

production and the availability of skilled labour. In addition, the industry has set up a worldwide

distribution network, of more than 3,000 offices for the promotion and marketing of Indian diamonds.

THE SECTOR IS LARGELY UNORGANIZED AT PRESENT WITH A SMALL BUT

GROWING ORGANIZED SECTOR

The Indian gems and jewellery sector is largely unorganized at present. There are over 15000 players

across the country in the gold processing industry, of which only about 80 players have a turnover of

over US$ 4.15 million (Rs 200 million). There are about 450,000 goldsmiths spread throughout the

country. India was one of the first countries to start making fine jewellery from minerals and metals

and even today, most of the jewellery made in India is handmade.



4%

96%

Share of India's Gem & Jewellery Sector

Organised SectorUnorganised Sector (Fam-ily Jewellers)

The industry is dominated by family jewellers, who constitute nearly 96 per cent of the market.

Organized players such as Tata with its Tanishq brand, have, however, been growing steadily carving

a 4 per cent market share. As India’s jewellery market matures, it is expected to get more organized

and the share of family jewellers is expected to decline.

There are more than 6000 players in domestic diamond processing industry. The average gestation

period for setting up a diamond cutting and polishing unit is 15 months. The low gestation period,

coupled with low capital cost allows easy entry into the sector. This has led to the industry being

largely characterized by a large number of small scale players. However, just as in the case of

jewellery, the share of the organized sector has increased significantly in recent years due to an

increase in demand for better and finer quality finished goods.

CHANGING SCENARIO



THE INDUSTRY STRUCTURE

The Gems and Jewellery (G&J) market essentially comprises of sourcing, processing, manufacturing

and selling of precious metals and gemstones, such as, Gold, Platinum, Silver, Diamond, Ruby, and

Sapphire etc. The G&J market is a significant contributor to the Indian economy, based on the size of

the domestic market and through its contribution to the country’s exports. The GJ industry has

registered a remarkable growth with exports having grown from US $29.35 million in 1966-67

to US $ 21.11 billion in 2008-09 accounting for 19.1 percent of total Indian exports. Export of cut

and polished diamonds (CPD) accounts for 67% of the export basket of Indian Gems and Jewellery

and is therefore a leading foreign exchange earner for India. India is the largest consumer of gold

(around 20 percent of global consumption) and also the largest diamond processor (around 90

percent by pieces and 55 percent by value) of the global market.



MARKET STRUCTURE AND POTENTIAL

Gems & Jewellery exports are the back-bone of the sector and also of our overall exports. The current

Slowdown had hit the sector badly and in 2008 some months showed negative growth. However the

sector is expected to grow at a CAGR of 15% to reach a size of US $ 58 billion by 2015 from the

current US $ 25 billion. The government has taken significant steps for the Gems & Jewellery exports

in terms of duties and taxes, infrastructure (SEZ, EPZ’s etc) and policy (EXIM Policy for 2002-07)

but this is not the time to get complacent for the government or the industry as the recent global

economic crisis has shown. We need to keep working at making the sector more resilient and

competitive especially in the wake of rising competition from countries such as China.



The domestic market of gems and jewellery is estimated to be in the US $ 18-20 billion range and is

expected to grow by about 13% per annum to reach US $ 35-40 billion by 2015. Given the

fragmented nature of the business it is very difficult to estimate the exact range. With per capita

consumption almost 1/10th that of any matured market India presents a very large potential market. If

some of the recommendations suggested by us in this report are acted upon appropriately, the industry

size could potentially reach US $27- 35 billion. More importantly there is a significant opportunity to

create additional value through higher margins possible through differentiation and branding.

GEMS AND JWELLERY CLUSTER

The Indian gems and jewellery sector employs around 1 million people directly and indirectly. The

sector is primarily concentrated in Maharashtra and Gujarat, and Mumbai and Surat are the most

important diamond-cutting-and-polishing centres in both states, respectively. Mumbai is an important

export-import centre for gems and jewellery and Surat is an important centre for processing diamonds.

Furthermore, Gujarat accounts for 80% of the total diamonds processed in India and 72% of the

diamonds processed in the world — almost 8 out of the 10 diamonds processed in the world are

processed in Gujarat. Popularly known as the silky city sparkling with diamonds, Surat is the largest

diamond processing centre, with around 10,000 diamond units located in and around the city. Surat

accounts for more than 50% of Gujarat’s total exports of processed diamonds from India. Apart from

Surat, Ahmedabad and Rajkot are the other major gems and jewellery clusters in Gujarat of which,

Rajkot is also famous for its exclusive handmade gold and silver jewellery.

The Indian government has set up gems and jewellery parks in special economic zones (SEZ) in

Mumbai and Surat to promote the diamond industry. Mumbai has an SEZ called SEEPZ SEZ, which

has a gems and jewellery complex that houses more than 150 gems and jewellery units. Similarly,

Surat also has a SEZ that houses a diamond park. However, the sector is gradually spreading its

wings to other parts in India such as cities in the south (Coimbatore, Bangalore, Hyderabad, Nellore,

Thrissur), West Bengal (Kolkata) and the north (Delhi and Jaipur).







VALUE CHAIN OF THE SECTOR

Value Chain - Diamonds

Diamonds pass through a series of processes before they are finally sold in the retail market. The

value chain of diamonds begins with exploration of diamonds from mines and is followed by

processing, manufacturing, whole selling and retailing.

Mining

There are very few commercially-viable diamond mines operating in the world currently. Diamonds

are sourced through three ways, open pit mining, underground mining and extraction from alluvial

deposits. The rough diamonds that are sought from mining are then sorted in different categories

according to the quality, shape, colour, and size. The diamonds that are not good in quality are used

for industrial purposes and the good quality diamonds are sent for further processing.

Processing

Processing is the next and the most important step as the greatest value addition takes place at this

stage. Diamonds are sorted, graded, and valued at this step and then sent for further processing. Not

all countries that produce diamonds also process it. The sorted and graded diamonds are sent to the

cutting and polishing centres such as Antwerp (particularly high-value diamonds), Tel Aviv, Israel

(for medium-value diamonds), India (for low value diamonds), China, Johannesburg, New York and

Thailand. These processed diamonds are then exported or sold in domestic markets as finished

diamonds or as diamond-studded jewellery.

Manufacturing and Retailing

Once the diamonds are processed, they are then sold to manufacturers directly or through registered

diamond exchanges. Much of the value addition is done at this stage, as the diamonds are converted

into jewellery. Jewellery making has high margins and therefore, many cutting and polishing centres

across the globe are aiming to move up the value chain to gain maximum revenue. The jewellery that

is manufactured from the diamonds is sold either through a wholesaler or directly in the retail

market, domestically or internationally.

India is not a major miner of precious metals and stones such as diamonds but it is the largest

processor of diamonds in the world owing to its skilled labour and low cost of processing.



Value Chain – Gold

South Africa is the largest producer of gold in the world. Gold mining, the process of mining gold

out of the earth, is done through the following methods: hard rock mining, gold ore processing,

placer mining and by-product gold mining. The gold that is extracted from mines is in impure form,

and it is obtained in its purest form through a series of chemical processes called refining. The gold

that is refined is converted into cast bars/gold bars through fabrication. The fabricated gold is then

used for either making jewellery or for making coins, industrial products and dental products —

jewellery fabrication garners the highest share among the value chain activities. The gold jewellery is

then sold in the retail outlets in domestic as well as international markets.



SWOT ANALYSIS

STRENGTHS

1. Strong Reserves and Surplus backed by an additional Rs. 10 cr. to Foreign Exchange and

metal price fluctuation reserve.

2. 19% growth rate in operating income and 22% growth in Net Profit.

3. Strong risk management focus as part of strategy.

4. Investments in upgrading the technology and setting up new units in Kolkotta and Bangalore.

5. Manufacture handicraft jewellery along with branded jewellery to cater to diverse markets.

6. Long standing relationship with dealers in US, Antwerp, Dubai etc.

WEAKNESS



1. A smaller player in size compared to the rest of the competitors such as Rajesh Exports and

Gitanjali Gems and Jewellery, and therefore would not be able to enjoy the same benefits of

returns to scale as the others.

2. No well established brand like other firms (e.g. Gili from Gitanjali Gems and Jewellery or

Tanishq from Tata).

3. At present, no tie up with the retail sector firms which could have increased the reach of the

Su-Raj to the non-accessible market.

4. Lacked infrastructure to cater to the retail customers abroad. Company sells most of its

product to the wholesalers in which case they have much of the bargaining power. Such

power with the consumer puts pressure on the margins of a firm and Su-Raj diamond does not

have bargaining power here.

OPPORTUNITIES

1. Gems and Jewellery to grow by 12% (as calculated by the demand forecasting).India’s share

is projected to be around 1.5 to 2 percent of the global industry.

2. Tax regime to be structured to develop India as a global hub for gems and jewellery.

3. Increase in wealth leading to increase consumption is expected to boost demand for this

sector.

4. Global Silver to Gold ratio is improved to 15:3 from 7:3 in 2000 in the world market; this is

mainly because of a younger generation’s preference for a white metal than gold.

5. Increase demand in Middle East and North American countries, forming the largest segment

and offering the highest growth in the previous financial year.

North America Increase of 23.25 %

Europe Increase of 6.02%

Middle East Increase of 51.67%

Asia Increase of 19.02%

6. Availability of high skilled labor in production of gold jewellery.

THREATS



1. Emergence of China as a competitor.

2. Unusual increase in the price of gold and rough diamonds.

3. Fluctuation in currency, especially appreciation of rupee against the dollar.

4. Change in fashion trends.

5. As per the CMIE data, only 4% of the gems and jewellery sector is in the organized hands,

Tanisq, Gili (subsidiary of Gitanjali Gems), Oysterbay, being the major players from whom

company faces a lot of competition.

6. Substitution of gold and other banking products as a better source of investment has lead to

the decline in the consumption of silver.

7. The reduction of consumption of silver in the Indian market. Witnessed a decrease of 53.1%

from 1996 to 2005 in consumption.

8. Low availability of skilled labour in processing of diamonds.

9. Infrastructure bottlenecks, absence of latest technology.

10. China, Sri Lanka and Thailand's entry in small diamond segment.



PORTER'S FIVE FORCES MODEL OF GEMS AND JEWELLERY INDUSTRY



2.2 HISTORICAL PERSPECTIVE OF THE TOPIC

Indian Gems & Jewellery Industry Profile



Exports of the Gems and Jewellery sector



The Gems & Jewellery sector has experienced high growth over the years on the back of a buoyant

performance in its exports. Total exports of Gems and Jewellery has registered an impressive growth

from US$ 2.99 bn in FY91 to 21.12 bn in FY09 which translates into a CAGR of around 11.47%.

However, during FY01-FY02, the slowdown in the US, which is the largest importer of India's gems

and jewellery, and some other importer countries, led to a demand contraction and a subsequent

decline in the export growth rate for the sector; while the decline was mainly in exports of cut and

polished diamonds (CPD), gold jewellery exports had remained resilient as it registered a positive

growth. Net exports during FY01 and FY02 fell to US$ 7.8 bn and US$ 7.6 bn, respectively, as

compared with US$ 8.1 bn during FY00. The government took important policy initiatives, including

de-licensing of the import of rough diamonds (with effect from April 1, 2002), which was a long

standing need, to give a boost to this sector. This was reflected in the growth in the exports during

FY03. Exports during FY03 grew by 21.36% as compared to a decline of around 3% during the

previous financial year.

The growth momentum in exports continued during the following two successive financial years;

however, during FY06 and FY07 the sector witnessed a deceleration in the rate of growth (6.5%

during FY06 and 2.7% during FY07) in net exports due to the dismal performance in the cut and

polished diamonds segment.

Factors such as abolition of the Target plus Scheme affected the exports during the first quarter of

FY06. Under the above scheme exporters of medallions and coins used to register their exports in the

jewellery category and these exports constituted a significant part of the jewellery exports due to

their size. Besides, the change in the value-added norms, as per which value addition was to be

calculated on the entire piece of jewellery (including diamond and precious stone content) instead of



the earlier method, as per which only the gold content was considered as the base, also affected the

exporters. Besides, heavy rains that flooded Surat and Mumbai affected the diamond exporters and

disrupted office attendance, production and movement of goods. Further, owing to the market

slowdown in the US, the sector witnessed a decline in exports during the last two quarters of FY06.

Sluggish demand from the US continued during FY07 as well. The exporters also faced delay in

payments especially from the US. Moreover, there was a decrease in the diamond trading activities

of bonded warehouses.

In FY08 the gems and jewellery sector showed resilience amid turbulent market conditions. The

facility of duty-free treatment under the General Scheme of Preferences (GSP) for precious metals

(other than silver) and articles of jewellery enjoyed by the Indian exporters was terminated by the US

from July 1, 2007. The US GSP benefit was terminated on the grounds that the articles from India

were exported in quantities exceeding the applicable competitive need limitation during 2006. After

the termination of the benefit, a basic import duty of 5.50% was implemented on the precious metals

and jewellery exported from India to the US.

However, the sector achieved a commendable export growth rate of 21.47% (y-o-y) during FY08 in

the face of high interest rates, appreciating rupee, termination of GSP benefits and economic

slowdown in major export markets. This growth could be partially attributed to the increase in

trading activities. Moreover, fiscal measures such as reduction of import duty on cut and polished

diamond (CPD) to 0%, reduction of import duty on un-worked corals and rough synthetic stones

from 30% to 10% coupled with various trade facilitation measures undertaken by the government

provided a boost to the sector. The appreciation of the rupee during FY08, which helped in

increasing the competitiveness of gems and jewellery sector by making imports of raw materials

cheaper, had also benefitted the sector to some extent.

However during FY08, India’s exports of gold jewellery recorded a significant moderation. Due to

the volatility in gold prices in FY08 and global economic downturn, a slowdown in demand for gold

jewellery was witnessed worldwide. Growth in the exports of gold jewellery moderated to 6.67%

during FY08 as compared with a high growth rate of 34.18% during FY07.

During FY09, the global economic slowdown, which manifested during the second half of FY09,

severely hindered the purchasing power of the jewellery customers, both external as well as

domestic. In spite of this, the growth in the net exports during FY09 remained in the positive

territory mainly due to the robust performance during the first half of the year. Despite the slump in

exports of CPD segment (the CPD segment witnessed a decline of around 8% in exports in dollar



terms), the sector was able to achieve a marginal growth rate of 1.32% in dollar terms on account of

gold jewellery export sales, which clocked a high growth rate of 23.29% during FY09. Besides,

tightening of foreign currency credit facilities and high interest rate during the first half of the year

also adversely affected the CPD sector, which is heavily dependent on bank financing.

The overseas demand erosion, mainly from US led to postponement or cancellation of orders

resulting in inventory build up, erosion of profit margins, shutting down of manufacturing units and

retrenchment in the sector. However, the March 09 export figures point out to the fact that the pace at

which the exports were declining has been arrested to some extent. Exports during March 2009

registered a decline of 16.75% on a y-o-y basis, while they were down by about 33.94% (y-o-y)

during January 2009.

The contraction in the decline in exports continued during the first five consecutive months of FY10

as well. With the stabilising of demand conditions from India’s major trading partners, there has

been a growth in exports in dollar terms from the sector since September 09. However, the export

growth in rupee terms had turned positive since July 2009 mainly due to the depreciation of the

rupee against the US dollar. The various incentives announced by the government for the sector to

combat the slowdown have also in part helped the sector in its recovery.

Nonetheless, the increase in export growth rates since October 2009 can be partly attributed to the

base effect, as export figures had started declining in absolute value terms since October 2008 due to

the onslaught of the global financial crisis.

The growth in Gems and Jewellery exports has been primarily driven by the CPD segment over the

years. As one of the largest cutting and polishing centre of diamonds in the world, the Indian CPD



segment has always held the largest share in the total exports of gems and jewellery. India primarily

focussed on exports in cut and polished diamonds owing to its traditional expertise in diamond

cutting and polishing. Growing by around an annual average growth rate of 9%, this segment held an

average share of around 83% in the net exports of gems and jewellery during FY92 to FY02.

However, since, FY03, its share shrank to around 69%. Even though its share in net exports had

fallen, it had continued to register an average growth rate of around 13% during the above mentioned

period. CPD exports grew from US$ 7.11 bn in FY03 to US$ 13.02 bn in FY09; however, over the

years, the fall in the share of CPD exports has been increasingly replaced by the growth in exports of

gold jewellery.

The share of gold jewellery in India's net exports of gems and jewellery increased from merely

6.80% in 1990-91 to 16.50% in FY03 and to 32.47% in FY09. Exports of gold jewellery (as shown

in the graph below) also witnessed an increase from US$ 1.51 bn in FY03 to US$ 6.86 bn in FY09 at

a CAGR of 28.69%.



Recognising the growing acceptance of Indian gold jewellery in the world market the government

had initiated several measures including a medium term strategy in FY06.

The following measures were a part of this medium-term strategy:

a. Hallmarking and certification of gold to aid the development of Indian brands in the jewellery

market.

b. Integration throughout the jewellery supply chain from mining of raw materials to retailing of

end products as well as joint venture manufacturing with the leading suppliers of the world.

c. Developing market intelligence with a focus on key markets including NRIs.

Measures such as gradual liberalisation of gold import in the country and opening of gold trading in

exchanges had also provided a boost to the gold segment.

The sustained buoyancy in exports of gems and jewellery over the years reflects the effects of

continuing policy initiatives taken by the government over the years. As raw materials for the sector

are largely imported, the government has focussed on reducing the barriers to import raw materials.

Identified as a thrust sector which has prospects for export expansion and for employment generation

under the Foreign Trade Policy of 2004-09, special policy initiatives had been announced to increase

the competitiveness of the Gems and Jewellery sector.

Under the Market Development Assistance and Market Access Initiative scheme of the Government

undertaken during the foreign trade policy of 2004-09, steps have also been taken to encourage:

creation of training infrastructure to impart skills to artisans in jewellery designing; participation of



exporters in international fairs, and arrangement of buyerseller meets abroad to showcase the quality

and variety of Indian products.

The share of exports of coloured gemstones in India’s net exports is very small. Moreover, India is a

net importer of pearls and synthetic stones. In fact, rough coloured gemstones, synthetic stones and

raw pearls are largely imported for value addition and for preparation of final products, which are

then sold either in the domestic or international market. India has a rich resource of highly skilled

and low cost labourers which is effectively utilised by the Indian manufacturers in this sector for

creation of highly value added goods.

Even though platinum jewellery is highly sought-after in the international markets, India does not

export the same because it lacks natural resources for platinum; however, platinum bars are imported

into India, though in very low quantities, as the demand for platinum jewellery is restricted to high-

end customers and is not very robust.

Imports of Gems and Jewellery

The raw materials required for manufacturing gems and jewellery are scarcely produced in India and

hence, the sector heavily depends on imports. Thus, for this highly export oriented sector, one of the

competitive disadvantage that it faces is the fact that most of the raw materials required are imported.

Consequently, the manufacturers have to endure the risk of exchange rate and global commodity

price volatility, which affects the profitability of the sector to a large extent. The government has

time and again taken various measures such as: de-licensing gold imports; reducing the barriers to

imported raw materials; lowering the customs and excise duties to facilitate imports and for

enhancing the competitiveness of the sector. The total imports in the sector have witnessed a steady



increase over the years, especially since FY03, which could be partly attributed to the various

measures taken under the EXIM policies to facilitate imports of this sector. Total imports increased

from US$ 5.81 bn in FY00 to US$ 7.71 bn in FY03 and to US$ 19.54 bn during FY09.

In recent years, India has been increasingly importing cut and polished diamonds. The CPD has been

completely exempted from import duty (as on May 3, 2007); as a result, the imports of these

diamonds saw more than two-fold increase during FY08 from FY07 and the trend continued in FY09

as well. Further, this exemption of import duty of cut and polished diamonds would provide a boost

for the diamond sector and will enable India, which is one of the largest diamond manufacturing

centres, to gain a strong foothold in the global market as a global trading hub for gems and jewellery.



India imports almost its entire requirement of rough diamonds. However, imports of rough diamonds

during FY09 witnessed a significant decline of 23.19% (y-o-y). Even though low demand from

domestic as well as external markets was one of the reasons, another reason could also be that the

players in the diamond sector decided to reduce the import of rough diamonds for some time to ease

the pressure on inventory and to help the sector face the challenge that had

risen out of turmoil in the global financial market.

While most categories of gems and jewellery imports declined during FY09, imports of gold bars

and platinum bars witnessed a sizeable increase. The increase in imports of gold bars in value terms

could be in part attributed to the steep rise in gold prices during FY09. Increase in gold price and its

volatility, which continued during FY10, had an impact on the demand for gold in the domestic

market. During the first 2 quarters of FY10, demand remained severely subdued; nonetheless, during

the third quarter of FY10, demand for gold rebounded due to seasonal factors such as weddings,

festivals et al.

In India, direct import of precious metals including gold is restricted to certain agencies and

institutions. This leads to supply tightness during the peak season.

Factors Affecting Imports of Gems and Jewellery

Exchange Rate Volatility

The rupee-dollar exchange rate determines the manufacturing competitiveness of this sector by

impacting the import cost. Rupee had started depreciating against the dollar since end-FY08, and

during FY09, it witnessed a steep depreciation that resulted in high import cost of raw materials.

Consequently, the profitability of the sector came under duress, as raw material cost constitutes a

significant part of the production cost of gems and jewellery.

The depreciation of the rupee against the dollar, which would have provided some fillip to the export

demand in normal market conditions, was not able to provide support as major export destinations

were bearing the brunt of economic recession during FY09. Manufactures were, thus, not only facing

a decline in demand due to global slowdown but also bearing the brunt of increasing cost of raw

materials on account of rupee depreciation. The rupee, which continued to depreciate from April 09

onwards, started witnessing appreciation from October 09. While appreciation of the rupee might

benefit exporters, it is unlikely to benefit importers through reduced import cost given the rise in the

international prices of the raw materials.



Volatile Commodity Prices

Commodity prices, especially gold prices, remained highly volatile since 2008. The spike in the gold

prices has affected the demand for gold jewellery in the domestic market during 2008. Besides,

uncertainty in the global and domestic markets followed by retrenchment across the sectors, have led

to postponement of purchase plans of gold jewellery among the gold customers. Faced with credit

crunch and low demand conditions investors and bullion dealers have imported less gold to India

during FY08.

According to the World Gold Council, in CY 2008, gold jewellery demand in India, traditionally the

world’s largest gold market, declined by 15% while gold investment demand fell by 12%. The total



demand for gold in India declined significantly by 83% (y-o-y) during Jan-Mar FY09 to just 17.7

tonnes owing to high price of the precious metal coupled with a slowdown in demand conditions in

the domestic economy. High prices of gold as well as volatility kept the demand highly subdued

during the first 2 quarters of FY10 as well. However, the demand witnessed a strong recovery during

the third quarter of FY10, despite high prices, due to the festival (for example Diwali) and wedding-

related purchases.

Outlook

With the gradual recovery in demand in the global economy and the efforts for diversification of

markets by the domestic players, export in this sector is likely to pick up in the near future. Further,

the e-commerce opportunities that are being explored by the players will also aid their plans to tap

into new markets. The imports of gems and jewellery, on the other hand, will improve due to the

buoyant domestic demand conditions, stability in the volatile prices of precious metals and

appreciation of rupee, coupled with low currency volatility. However, the government also needs to

continue to facilitate the players in this sector to help them gain a stronger ground

2.3REGULATORY ASPECTS

Introduction

The gems and jewellery sector is a major foreign exchange earner. Due to its importance in India’s

foreign trade, the government has taken many initiatives to boost the sector. The government, for

instance, has declared this sector as a thrust area for exports. During the global economic meltdown

especially the government has dealt out many initiatives for the badly-affected sector. This chapter

focuses on the various policies and measures that were taken by the government for the gems and

jewellery sector.

Regulating Bodies

Gems & Jewellery Export Promotion Council (GJEPC): Established in 1966, the GJEPC is the

apex body of the Indian gems and jewellery industry, and has around 6,500 members across India.

The primary goal of the Council is to introduce the Indian gems and jewellery to the international



market and to promote their exports. The Council provides market information to its members

regarding foreign trade inquiries, trade and tariff regulations, rates of import duties, and information

about jewellery fairs and exhibitions. The roles played by the GJPEC are broadly highlighted below:

Trade Facilitator

The Council promotes the Indian gems and jewellery industry in the international market. It organises

international jewellery shows, hosts trade delegations, and undertakes image-building exercises

through advertisements, publications and audio-visual means.

Advisory Role

The Council also aids better interaction and understanding between traders and government. The

Council takes up relevant issues with the government and agencies connected with exports. It also

submits documents for consideration and inclusion in the Exim Policy.

Nodal Agency for Kimberley Process Certification Scheme

GJEPC works closely with the Indian government and the traders to implement and oversee the

Kimberley Process Certification Scheme; in fact, the Council has been appointed as the nodal agency

in India under the Kimberley Process Certification Scheme.

Training and Research

The GJEPC runs many institutes that provide training in all aspects of manufacturing and design in

Mumbai, Delhi, Surat and Jaipur.

Varied Interests

The Council publishes many brochures, statistical booklets, trade directories and a bi-monthly

magazine - Solitaire International, which is distributed internationally as well as to its members.

Gem & Jewellery Trade Council of India (GJTCI):

The GJTCI was founded in 2000, and is tasked with resolving any issue arising from trade in gems

and jewellery. It plays an important role in showcasing the Indian gems and jewellery to the

international as well as the domestic market. Like the GJEPC, GJTCI also provides information to its

members through a monthly newsletter, various educative and trade-motivational events such as

seminars, workshops, exhibitions, festivals etc.



The Bureau of Indian Standards:

The Bureau of Indian Standards (BIS), the National Standards Body of India, is a statutory body set

up under the Bureau of Indian Standards Act, 1986 and is responsible for hallmarking gold jewellery

in India.The Indian Gems & Jewellery (G&J) industry has reported a significant growth in the current

financial year primarily due to rising demand and subsequent exports to the US, Hong Kong, UAE

and Europe. For the period between April 2010 and January 2011, exports of Cut & Polished (C&P)

diamonds have surged 53.5% y-o-y to US$21 billion. In FY2010, UAE and Hong Kong were two of

the biggest destinations for India's G&J industry, together accounting for 64.5% of the country’s total

G&J exports. According to the World Gold Council (WGC), India’s gold outlook for CY2011 looks

robust despite record high prices. India’s gold demand in CY2010 increased 66% y-o-y to 963 tonnes

and accounted for 25% of global gold demand of 3,812 tonnes (up 9% y-o-y). Also, rough diamond

prices have increased 25-30% in CY2010 and any further rise in rough prices could impact the

margins of diamond companies.

Duty Structure

Budget Proposals

Concessional Excise duty of 1% without CENVAT credit facility is being imposed on the following

goods, namely:-



Impact on the industry

The reduction of customs duty on specified gems and jewellery machinery is a step towards

improving G&J manufacturing activity in India and is a welcome step.

Marginal impact of imposition of excise duty on serially numbered gold bars.

Impact on companies

Foreign Trade Policy 2009-2014



Foreign Trade Policy has identified the gems and jewellery sector as a thrust area with prospects for

export expansion and employment generation. The highlights of the policy are:

a. Import of gold of 8 carat and above allowed under replenishment scheme subject to import

being accompanied by an Assay Certificate specifying purity, weight and alloy content.

b. Duty Free Import Entitlement (based on FOB value of exports during the previous financial

year) of consumables and tools, for:

1. Jewellery made out of:

i. Precious metals (other than gold and platinum) – 2%

ii. Gold and platinum – 1%

iii. Rhodium finished silver – 3%

2. Cut and polished diamonds – 1%

3. Duty free import entitlement of consumables for metals other than gold, platinum will

be 2% of FOB value of exports during the previous financial year.

c. Duty-free import entitlement of commercial samples shall be Rs 300,000.

d. Duty free re-import entitlement for rejected jewellery shall be 2% of FOB value of exports.

e. Import of diamonds on consignment basis for certification/ grading and re-export by the

authorised offices/agencies of Gemmological Institute of America (GIA) in India or other

approved agencies will be permitted.

f. To promote export of gems and jewellery products, the value limits of personal carriage of

gems and jewellery products in case of holding/participating in overseas exhibitions increased

to US$ 5 mn and to US$ 1 mn in case of export promotion tours. Further, the limit in case of

personal carriage, as samples, for export promotion tours, has been increased from US$ 0.1

mn to US$ 1 mn.

g. Extension in number of days for re-import of unsold items in case of participation in an

exhibition in the US increased to 90 days.

h. In an endeavour to make India a diamond international trading hub, diamond bourses will be

planned.

i. Gems and jewellery units may sell up to 10% of FOB value of exports of the preceding year

in Domestic Tariff Area (DTA), subject to fulfilment of positive Net Foreign Exchange

(NFE). In respect of sale of plain jewellery, recipient shall pay concessional rate of duty as

applicable to sale from nominated agencies.



3.1 METHOD OF DATA COLLECTION IN DETAIL:-

The research design was of a descriptive nature, and hence the method of data collection was through

the Survey method.

The Survey was carried through the individual mode. It involved personal interviews conducted on

the respondents.

The data collection involved the following steps:-

a. Designing of the questionnaire.

b. Selection of respondents based on the sample size calculated and the parameters defined.

c. Distribution of the questionnaire to the respondents.

d. Respondents filled the questionnaire.



e. The questionnaires were collected.

The data for the purpose of research was thus of a primary nature.

In addition to the primary data, secondary data was also sought through web sites, journals, reference

books etc.

3.2 (1) METHOD OF DATA COMPILATION:-

The data of score of features and score of brand perception was fed into the excel sheet. Separate

Excel sheets were employed for analysis:

3.2(2) GRAPHICAL REPRESENTATIONS OF DATA:-

The objectives of the study was to understand the consumer’s buying preferences, the reach of

branded jeweller’s, brand awareness of various brands in the jeweller’s market, the type of

promotional strategy adopted by each to attract their customer’s, when do they plan their promotional

strategies, implement them and the effectiveness of the same.

Hence the first question was to find out the factors that guide a customer while purchasing jewellery

which dealt with nine attributes. The respondents where just asked to tick on the attribute that guided

that purchase decision. The result is as follows

Design Price Purity Image Variety Display Promotion and Offers

Service Family and

Friends

85 92 87 65 67 5 10 2 12

Table 1 Factors that guide while purchasing jewellery

From the above results an observation can be drawn that out of the 100 respondents 92 of them feel

that price is a major factor that guides their purchase decision. Apart from price purity also is

considered important by 87 respondents, followed by design with 85 respondents feel it is an

important factor. Variety and image are the other important attributes that are considered while



making a purchase decision. Attributes like family and friends, promotions and offers are still not

very popular among the respondents selected for this research. The attributes like service and display

have been selected only by 2 and 5 respondents respectively showing that these are the least important

thing that guide an individual to purchase jewellery.

The diagram below shows the guiding factor of the respondents while purchasing jewellery in an

ascending manner.

Servi

ce

Display

Promotion an

d Offers

Family

and Fr

iends

Imag

e

Variety

Design

Purity

Price

0

20

40

60

80

100

2 5 10 12

65 67

85 87 92

Figure 1 Factors that guide while purchasing jewellery

The question was to find out the popularity of 5 brands. The respondents were asked to tick against

the brands that they are aware about. The 5 brands considered here are Gili, Tanishq, Ddamas,

Oyzterbay, and Trendsmith. These are the prominent brands for gold jewellery there are many other

players but the research is limited to gold jewellery.

Brands Gili Tanishq Ddamas Oyzterbay Trendsmith

No of Respondents’

100 100 100 84 45

Table 2 Popularity of brands



Gili

Tanish

q

Ddamas

Oyzterb

ay

Trendsm

ith0

102030405060708090

100

100 100 100

84

45

Brand Awareness

No of Resondents

Figure 2 Popularity of brands

From the above table and figure inference can be drawn that brands like Gili, Tanishq and Ddamas are

extremely popular as they have 100% awareness. Oyzterbay is popular among 84 respondents and

Trendsmith that is brand of TBZ is popular with a little less then 50% of the respondents that is 45%.

Oyzterbay has a brand has been discontinued from the market however as observed it was quiet

popular among the population.

The question was to find out the reason why the respondent purchases jewellery that is the reason for

purchasing. Is it purchased as an investment option or on occasions, festivals or as a fashion

statement?

Investment

Fashion

Occasions

Festivals

No of Responden

ts

34 39 11 16

Table 4 The reason for the purchase of jewellery

34 respondents buy jewellery for investment purpose, 39 respondents look out for fashion or the latest

trends while purchasing jewellery. 11 respondents buy jewellery during occasions like weddings,

anniversary, birthday’s etc. and 16 respondents buy jewellery during festivals.



34

39

11

16

No of Respondents

InvestmentFashionOccasionsFestivals

Figure 3 The reason for the purchase of jewellery



The question is a direct question which inquires the respondent preference for jewellery that is it

branded or family jeweler.

Preference Branded Jeweller

y

Family Jeweler

No of Respondents

24 76

Table 5 Preference of jewellery

From the above table it can be observed that 24 respondents prefer branded jewellery and 76 respondents prefer family jewellery. This makes non-branded jewellery more popular among the respondents.

24%

76%

Respondent Preference

Branded JewelleryNon-Branded Jewellery

Figure 4 Preference of jewellery



The question further probes into finding out how many among the respondents have bought branded jewellery.

Branded Jewellery

Bought Not bought

No of Respondents

22 78

Table 6 No. Person bought branded jewellery

78%

22%

No of Respondents purchasing branded jewellery

Not boughtBought

Figure 5 persons who bought branded jewellery

Out of the 100 respondents 78 have not bought branded jewellery and 22 have bought branded

jewellery. However even if these 78 respondents have not bought branded jewellery they are aware of

branded jewellery being sold and also know the brands by their names.



Since the sample consist of females and males the next set of question deals with whether jewellery is

bought for gifting purpose

If the respondents do buy jewellery for gifting purpose then where is it bought from family jeweller or

branded shops.

Buy jewellery for gifting

Yes No

No of Respondents

29 71

Table 7 No of person bought jewellery for gifting purpose

29 respondents of the 100 buy jewellery for gifting purpose among these 29, 12 are men. 71% of the

respondents do not buy jewellery for gifting purpose.

The next question was the jewellery purchased for gifting is branded or non-branded and the result

found are as under

Branded Family jeweler

No of Respondents

09 20

Table 8 no of people bought branded jewellery for gifting purpose

09 respondents out of 29 buy branded jewellery for gifting and 20 out of 29 buy jewellery from their

family jeweller for gifting. Percentage wise 31.03% buy branded jewellery for gifts and 68.97% buy

jewellery for gifting from their family jeweller



69%

31%

Percentage of respondent

Family JewellerBranded Jeweller

.

Figure 6 People bought branded jewellery for gifting purpose



Given below are few characteristics of traditional family jeweller’s (or local jewellery retail stores). Please give each characteristic some points based on your assessment, such that the points range from 1 to 10. (1 being the lowest and 10 being the highest).

Characteristics of Family Jeweler’s Number of points

Convenient Trustworthy

Good Investment Price

Traditional design

This question will help gain an insight as to which parameter of a family jeweler attracts respondent

towards them.

Since the points are given out of 10 and there are 100 respondents each parameter will be out of 1000.

Characteristics of Family Jeweler’s

Convenient Trustworthy Good Investment

Price Traditional design

Number of points 660 895 775 870 745

Table 9 characteristics of a family jeweller which attracts people

The respondents were asked to give points on a scale of 1 to 10 where 10 was the highest hence the

total figures are arrived by adding the points given by all the 100 respondents. Hence if the

‘convenience’ characteristic was to be taken then it scored 660 out of the grand total of 1000.

The respondents have rated trust aspect of family jewellers high hence it has scored 895. The

respondents also feel that the price charged by the family jewellers is reasonable and hence have

given it decent point’s i.e. 870. While purchasing jewellery from family jewellers the respondents

consider it to be a good investment. Family jewellers are popular for traditional designs and the

respondents have given it points that add up to 745.



If you purchase branded jewellery then given below are a few characteristics. Please give each characteristic some points based on your assessment, such that the points range from 1 to 10. (1 being the lowest and 10 being the highest).

Characteristics of branded jewellery Number of points

Wide range of products under one roof

Shopping experience

Trendy and fashionable jewellery Price

Since the points are out of 10 and the no of respondents who have bought branded jewellery are 22.

Hence the assessment of this question is based on the points given only by these 22 respondents.

Hence the total would be 220 and not 1000 here.

Characteristics of branded jewellery

Wide range of products under one

roof

Shopping experience

Trendy and fashionable

jewellery

Price

Number of points 153 137 195 123

Table 10 characteristics of Branded jeweller which attracts people

Respondents rate trendy and fashionable jewellery highest when it comes to branded jewellery. It

scores 195 out of 220. Price according to the respondents is high hence it scores 123. Shopping

experience wise branded showroom scores least among the other characteristics. This could also be

because when a customer goes to buy jewellery he may not be looking for the experience but wanting

good trendy jewellery which is priced appropriately.



The e question was to find the level of satisfaction on a scale of 1 to 10 for family jewellers. Since the

points are given out of 10 and there are 100 respondents the level of satisfaction will be out of 1000.

Family jeweler Level of satisfaction

No of respondents 765

Table 11 Level of satisfaction of family jeweller’s customer

The level of satisfaction that the respondents have is 765. Hence if the average were to be removed it

would be between 7 and 8.

The last question was to find the level of satisfaction for branded jewellery on a scale of 1 to 10. Here

again the rating is out of 220 because only those respondents who have bought branded jewellery are

being considered.

Branded jewellery

Level of satisfaction

No of respondents

144

Table 12 Level of satisfaction of family jeweller’s customer

The level of satisfaction on the whole for branded jewellery is 693 and if the mean were to be

removed then it would be between 6 and 7 hence the level of satisfaction that the respondents have

towards branded jewellery is lower than that towards family jewellers.



3.3 MATHEMATICAL & STATISTICAL ANALYSIS AND INTERPRETATIONS

Hypothesis Testing


There is no significance difference among the consumer in the parameters such as Celebrity



Ha:




SUMMARY

Groups Count Sum Average Variance

Celebrity endorsement 100 306 3.06 3.2489

Promotion 100 392 3.92 2.4582

Wide Variety of Designs 100 545 5.45 1.8662

Brand Name 100 466 4.66 2.9943

Exhibition 100 401 4.01 2.7777

New Collection 100 551 5.51 2.0908

Source of Variation SS Df MS F P-value F crit

Between Groups 457.29 5 91.459 35.55 7E-32 2.2292

Within Groups 1528.2 594 2.5727

Total 1985.5 599

Anova for the parameter which attract for purchase of jewellery



Since the p-value is less than 0.05, at 95% significance level we reject the H working hypothesis .





Purchase of jewellery is not preferred from the family jeweller compared to that of branded Jeweller

Ha:

Purchase of jewellery is preferred from the family jeweller compared to that of branded Jeweller

Family_Jeweller_over_Branded_Jewellery

Observed N Expected N Residual

Strongly Disagree 7 20.0 -13.0

Disagree 21 20.0 1.0

Neutral 22 20.0 2.0

Agree 32 20.0 12.0

Strongly Agree 18 20.0 -2.0

Total 100

Observed and Expected value for preference of Family jeweller over Branded jewellery store

Test Statistics

Family_Jeweller_over_Branded_Jewellery

Chi-Square 16.100a

Df 4

Asymp. Sig. .003

Test Statistics for preference of Family jeweller over Branded jewellery store




Hence, Purchase of jewellery is preferred from the family jeweller compared to that of branded Jewellery.


Jewellery is not considered as status symbol for most of the consumer.

Ha:

Jewellery is considered as status symbol for most of the consumer.

Status_Symbol


Disagree 3 25.0 -22.0

Neutral 10 25.0 -15.0

Agree 42 25.0 17.0

Strongly Agree 45 25.0 20.0

Total 100

Observed and Expected value for Status Symbol

Test Statistics

Status_Symbol

Chi-Square 55.920a

Df 3

Asymp. Sig. .000

Test Statistic for Status Symbol




Hence, jewellery is considered as status symbol for most of the customers.


Price does not play an important role in purchase of jewellery

Ha:


Imp_of_Price


Strongly Disagree 1 20.0 -19.0

Disagree 10 20.0 -10.0

Neutral 9 20.0 -11.0

Agree 43 20.0 23.0

Strongly Agree 37 20.0 17.0

Total 100

Observed and Expected value for Importance of Price

Test Statistics

Imp_of_Certification

Chi-Square 70.000a

Df 4

Asymp. Sig. .000

Test Statistics for Importance of Price




Hence, Price plays an important role in purchase of Diamond jewellery.

Promotional Strategies adopted by Non Branded/ Family Jewellers



The other set of questionnaire was to find out the promotional strategies that are used by the non

branded stores and jewellers to face competition. The sample set consist of 30 jewellers spread across

Mumbai In this set of questionnaire first the information about the number of years of operations is

found out. All the jewellers that are into this business for over a period of 60 years and above have

been considered.

The first question here again is to find out whether these traditional jewellers are aware of branded

jewellery.

Awareness Yes No

No of respondents

30 0

Table 13 Awareness of branded jewellery among traditional jeweller

All the 30 traditional jewellers are aware of branded jewellery in the market.

The next question is to find whether the entry of these brands has affected their sales.

Effect on Business

Yes No

No of respondents

11 19

Table 14 Effect of branded jewellery on traditional jeweller

11 out of the 30 respondent have seen an effect on their business due to the entry of branded jewellers

making it 36.37%. 63.33% of the respondents feel that their business has not been affected due to the

entry of branded jewellers they claim to have a loyal set of customers which not only generate

revenue but also help them bring new business.



36%

64%

Percentage of Respondent

yesno

Figure 7 Effect of branded jewellery on traditional jeweller

The third question deals with whether these family/ traditional jewellers have adopted any strategies to fight competition.

Strategies adopted

Yes No

No of respondent

s

25 5

Table 15 No of traditional jeweller adopted strategies

25 respondents have adopted strategies to fight competition. 5 respondents are still functioning in

their traditional old fashion and have not adapted any strategy to increase their sales or revenue.

83.33% of the traditional jewellers have adopted strategies to upgrade themselves with the market

demands.

The next question is to find what type of strategy they have adopted. Since it was a close ended

question the strategies selected were discounts, cash back, zero making charges, gifts, others.

Strategies adopted

Discounts Cash back

Zero making charges

Gifts Others

No of respondents

19 6 22 23 5

Table 16 types of strategies adopted by family jeweller



Discounts

Cash back

Zero making charges

Gifts

Others

0 5 10 15 20 25

19

6

22

23

5

Strategies adopted by Family jew-elers

No of respondents

Figure 8 strategies adopted by family jeweller

This question was asked to know what the strategies that the family jewellers have adopted are.

Discounts are given by 19 jewellers they may be when there is a bulk purchase or when the customer

is an old and loyal customer. Cash back as a strategy is only adopted by 6 of the family jewellers

among the 25 considered under this research study. Cash back by a few are given in the form of

coupons such that on their next purchase they would get certain percentage cash back. 22 among the

25 respondents have a strategy where in they plan a period such where they would not be charging

any making charges. Another most popular strategy among these jewellers is gifts which are given

when their purchase limits exceed a certain amount or to their loyal customers during festivals. Other

strategies that are undertaken are like giving free polishing and maintenance services.

The next question is to find when they plan these strategies. Where in are the strategies planned

during festivals, wedding season or during the off season when the sales are low.

When are the strategies planned

Festivals Wedding season

Off season

No of respondents

11 3 11

Table 17 strategy duration

Among the 30 respondents 11 plan these strategies during festival. Another 3 respondents plan the strategies during the wedding season and the remaining 11 during the off season.



44%

12%

44%

Percentage of respondents

FestivalsWedding seasonOff season

Figure 9 strategy duration of family jewellers

In terms of percentage 44% plan their strategies during the festival season, 12% plan their strategies during the wedding season and the remaining 44% plan the strategies during off season.

The sixth question is to find out the effectiveness of their planned strategies in terms of increased

sales.

Increased sales Yes No

No of Respondents

21 4

Table 18 Effectiveness of strategy

Out of the 25 respondents who have adopted some strategy to increase their sales only 21 have seen

an increase in their actual turnover the remaining 4 have not seen any increase or decrease in their

sales.



84%

16%

Percentage of Respondents

YesNo

Figure 10 Effectiveness of strategy

In terms of percentage 84% out of the 25 respondents have seen an increase in their sale and the remaining 16% have not seen any significant increase in their turnover.

The last question is an open ended question that asks whether they have adopted any other strategy to retain and attract customers.

Here the respondents say that they have taken steps to build relation with their customers where in

they make a note of their customers’ birthdays, anniversaries send them cards on these days, and they

also send them calendars’.



Promotional strategies adopted by Branded Jewellers

Tanishq:

Among the branded jewellery players in the Indian market, Tanishq is considered to be a trendsetter.

Tanishq began with 18-carat jewellery. Realizing that such jewellery did not sell well in the domestic

market, the 18-carat jewellery range was expanded to include 22 and 24-carat ornaments as well.

When Tanishq was launched, it sold most of its products through multi brand stores. In 1998, Tanishq

decided to set up its own chain of retail showrooms to create a distinctive brand image. 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. Tanishq’s strategy was to create differentiation and build trust. Differentiation

plays the role of primary attraction; trust takes care of lifelong loyalty. The differentiation was created

through designs. The emphasis had to be on design because local jewelers could offer to design any

pattern according to the customer's specifications. For a national brand a generic design concept with

regional variations had to be evolved.

Oyzterbay:

Oyzterbay seeks to build a national brand in the jewellery industry in India and aspires to be the

largest branded jewellery company in the country with a chain of 100 stores. Oyzterbay has been

taken over by Rajesh Exports Limited in 2009. Rajesh Exports Limited is one of the largest gold

jewellery manufacturer and distributor in the world.

Trendsmith:

Mumbai-based Tribhovandas Bhimji Zaveri (TBZ), which had been in the jewellery business since

1864, saw tremendous scope in the branded segment and opened its new concept store 'Trendsmith' in

Mumbai in December 2001. Encouraged by the response towards its first store, the Zaveris planned to

take Trendsmith (India) Pvt. Ltd. all over the nation by opening as many as 50 stores by 2006.

Trendsmith offered eight lines of exclusive designer jewellery from well-known export jewellery

manufacturers and designers from Mumbai and Delhi.

Gili:

Gili offered a wide range of 18-carat plain gold and diamond-studded jewellery, designed for the

contemporary Indian woman. The designs combined both the Indian and western styles and motifs.



Some of the companies have even cleverly played on Indian customs and tradition to advertise and

establish their brands. Jewellery is now marketed for every occasion; even Valentine's Day calls for "a

special something [diamond] for a special someone".

The latest strategy adopted by leading jewellers of the world is celebration of women’s week where in

on purchase of jewellery free gifts like Morellato watches, gift vouchers from VLCC are being given.

The participating companies are Ddamas, Gili, Gitanjali jewels etc...

Today there are more than 50 brands, endorsed by models, film actors, sports celebrities and other

well-known faces. Some designs of these brands are so popular that local jewellers have begun to

copy them.

The recent entrant in branded jewellery market is reliance jewels. The marketing strategy that

Gitanjali jewels take up is advertising by having top celebrities as their brand ambassadors. Tanishq

comes up with customer schemes; it also provides jewellery in films to be easily identified. Movies

like Paheli and Jodha Akbar had its lead actresses wearing Tanishq jewellery. And they also lend their

products to contestants in beauty pageants. Reliance jewels marketing strategy is press releases.



INTERVIEW QUESTIONS

1. What are the factors that provide a competitive edge to your company?

2. How has the rising price of gold affected the jewellery business? Where do you see the gold

price in future?

3. Does the changing consumer tastes in terms of fashion affect the jewellery making business?

How does your company cope with the changing trends?

4. What are the current trends in the sector? What are the consumer preferences?

5. What are your views on hallmarking of jewellery?

6. According to you, what course of action should the government adopt to develop the Indian

gems and jewellery sector?

7. What would be the emerging areas of growth in the near future?

8. What are the growth plans of your company in the future?

Interview with Naresh Jhawar, Brand Manager, P.P.Jewellers Limited,

Q1 what are the factors that provide a competitive edge to your company?

A. We have following strategy which provides competitive edge to our company:-

Exclusive distribution rights

Wide and exclusive variety of design

Ongoing research and innovations in design process and surface ornamentation

Ready stocks

100% Hallmark jewellery.

Q2. How has the rising price of gold affected the jewellery business? Where do you see the gold

price in future?

A. In our personal experience, the rising prices of gold has not affected the jewellery business.

However, the quantum of purchases has changed. For instance, earlier Husband who used to gift gold

set to his wife has changed his preference from:



However, this change in buying preferences has not affected our business. Earlier a gold set would

cost around Rs 10,000 but with increasing prices of gold, even a gold ring costs more than Rs 10,000.

The rising prices of gold has not affected the demand but has rather led to a situation of demand

explosion as, we have three categories of consumers belonging to lower income level, middle income

level and high income level. With an increase in the disposable income levels, the preference of

lower income level consumer has been shifted to gold jewellery. Similarly, the preference of middle

income and high income level consumers has shifted from gold jewellery to diamond jewellery. This

has created a new segment for us and increased the demand for our business leading to demand

explosion.

So, in our opinion, the rising price of gold has rather increased the business. Looking at the current

trend, we feel that the price of gold will keep on increasing until the dollar becomes stable.

Q3. Does the changing consumer tastes in terms of fashion affect the jewellery making

business? How does your company cope with the changing trends?


Gold

Set

Gold Chai

n

Gold Bracelets

Gold

Ring

Gold

Coin

Higher Income Level

Middle Income Level

Lower Income Level

Preference shifted to gold jewellery

Preference shifted from gold jewellery to diamond jewellery


A. In today’s world of ever-evolving fashion trends, we always strive to understand the current trend.

We keep a check on the available designs, latest trend, and exclusive designs as per the consumer’s

taste, and make designs accordingly. Our manufacturing process begins with the design, which

begins from generating ideas and sketches as per required market trends, capturing every dot on a

piece of paper and producing an art that would have a value tomorrow. Several versions are made, to

achieve the right aesthetic value for the jewellery and we keep on changing our designs as per the

prevailing market trend.

Q4. What are the current trends in the sector? What are the consumer preferences?

A. The rising price of gold has led to the trend of consumers opting for light weight jewellery. Also,

we are witnessing an increased trend of diamond jewellery purchases.

Q5. What are your views on hallmarking of jewellery?

A. We believe in 100% hallmark jewellery and sell and export only hallmark jewellery. We have

also promoted hallmark jewellery through a programme on Doordarshan. Hallmarking of jewellery is

an assurance for the purity of gold for consumers. The market for hallmarked jewellery will increase

if customer awareness about the benefits of hallmarked jewellery increases and subsequently, they

start demanding the same. Further, jewellers who deal in hallmark jewellery can also create

awareness and promote hallmarking, which can boost the demand for such jewellery.

Even in terms of exports, if jewellery hallmarking is made mandatory it can open new avenues for

exporters, and increase the acceptance of Indian jewellery around the world (especially in countries

where hallmarking is compulsory).

Q6. according to you, what course of action should the government adopts to develop the

Indian gems and jewellery sector?

A. According to us, the Government should allow direct import of gold to Indian gems and

jewellery sector which will definitely help in the development of this sector.

Q7. What would be the emerging areas of growth in the near future?



A. Growth in tier II cities is increasingly gathering pace and they will emerge as the focal centres of

development. The moment this happens, it will increase the purchasing power of the middle income

level group, which will ultimately help in increasing the demand for jewellery.

Q8. What are the growth plans of your company in the future?

A. P.P. Jewellers is always open to new ideas and try to mould their business to meet emerging

trends following the motto of perfection and purity. In this year, the group is about to open one of the

largest jewellery showroom of the country in Karol Bagh, the heart of Delhi’s Jewellery District.

We are also planning to open showroom in Mumbai and have acquired space in prime area of

Mumbai. This area is the main area for trading loose diamonds in the world.

Further, we are also planning to open showroom in Ludhiana and have procured 5000 meters of

space and are also planning to open an outlet in Kolkata.

The company is also in process of opening a school by the name of P.P. School.

Presently, we are concentrating in the opening of franchisee outlets. We are planning to open 50

franchise outlets across the country and two of our franchise outlets are already operational.

4.1 SUMMARY FINDINGS:



Many customers feel that price is a major factor that guides their purchase decision. Design, purity,

variety and image are the other important attributes that are considered while making a purchase

decision. Attributes like family and friends, promotions and offers are still not very popular among

the respondent. The attributes like service and display are the least important thing that guides an

individual to purchase jewellery.

Maximum number of customer buys jewellery for investment purpose.

Customers have rated trust aspect of family jewellers high. The customers also feel that the price

charged by the family jewellers is reasonable. While purchasing jewellery from family jewellers the

customers consider it to be a good investment. Family jewellers are popular for traditional designs.

When a customer goes to buy jewellery he may not be looking for the experience but wanting good

trendy jewellery which is priced appropriately.

The level of satisfaction that the respondents have towards branded jewellery is lower than that

towards family jewellers.




Purchase of jewellery is preferred from the family jeweller compared to that of branded Jewellery.

Jewellery is considered as status symbol for most of the customers.


Non-Branded jewellers have taken steps to build relation with their customers where in they make a

note of their customers’ birthdays, anniversaries send them cards on these days, and they also send

them calendars’.

Non-Branded jewellers who have adopted some strategy to increase their sales maximum numbers of

jewellers had seen an increase in their actual turnover.

4.2 CONCLUSIONS:



The main objectives of the study were to compare between Branded and Non-Branded Jewellery, to

know Consumer perception towards Jewellery, to know the Major Players of Jewellery industry, to

have an idea about parameters consumer consider while buying Jewellery, to have knowledge about

demographic segments, to know the Marketing strategies used by various jewellery brands. India is

growing at a very fast pace and jewellery sector is one which is registered to achieve 65%

international market by 2012. The jewellery sector is largely unorganized in India but is changing into

organized business because of many major and influential players entering into the market.

The booming economy along with the rapid increase in income levels is estimated to further

accelerate the growth of this industry. According to a KPMG study, India’s growing importance in the

global jewellery market is only expected to increase in the future with total estimated jewellery sales

of US$ 21 billion by 2011 and US$ 37 billion by 2015. Diamond jewellery consumption in India is

also estimated to jump by 78 per cent in 2012.

In India, brands are required as no one shop alone can do advertising due to lack of resources. Today,

there are more than 50 brands in the Indian market. For brands the right approach is to have a

continual revitalization of the brand and its position within the market.

Branding commands a premium price but it has to be justified. The consumers buying behaviour

shows a shift from content to design in jewellery i.e. fashionable jewellery is the rage nowadays and

acquires a status symbol in their minds .Branded jewellery players will continue to face lot of

competition from local jewellers.

Luxury brands have entered the jewellery market with clear strategies to reach the final consumer.

The distribution by luxury brands is also very good. Competition now is for jewellery as an accessory

rather than as a jewel. For those who want to venture into branding and retailing in India, the 7 ‘E’s’

of brand marketing strategy are recommended for the new jewellery retail environment.

4.3 SUGGESTIONS:



The making charge is affecting their sales so they should cut down their prices.

Branded jewellers should provide more number of patterns & also should increase their

market share by bringing more innovative scheme & loyalty programs.

Target young business man & young professional as they are now more in investing money in

gold.

Gold price are increasing day by day so they should increase their sales by selling biscuits of

gold rather than selling more of ornaments.

Ansoff’s Matrix

Market Penetration (Present product-Present market)

Provide EMI by tying up with banks in order to deliver the goods on time & have low

pressure on repaying the credit.

Low cost and quality manufacturing.

Product Development (New product-Present market)

Find new applications to current users: Increasing the versatility of the product in terms of

usage. For example, provision for using pendant as earrings, finger rings and vice versa.

Market Development (Present Product- New Market)



Expand geographically: Opening new outlets in US and increasing the number of outlets in

the existing cities.

Diversification (New Product- New market)

Related: Gold and diamond studded buckles in belts and footwear.

QUESTIONNAIRE

CONSUMER PREFERENCE FOR BRANDED JEWELLERY VIS-À-VIS NON-BRANDED

JEWELLERY AND THE PROMOTIONAL STRATEGIES ADOPTED BY EACH IN MUMBAI

QUESTIONNAIRE NO. ___



RESPONDENT NO. ___

Hello, I am Kalpita choudhary. I am a second year student of management pursuing my MBA from VIVA Institute of Management Studies. As a part of my curriculum I have to undertake a survey on the given topic. All the information that we collect is strictly for study purpose and will be dealt with at most confidentiality. This survey would take only 10 mins of your time.

Name: Telephone number: Age:Sex:

1) Factors that guide you while purchasing jewellery?

Design Price Purity Brand Image

Variety Display Promotions and offers

Service Family and friends influence

2) Are you aware of the various jewellery brands available in the market?

Yes No

3) Tick against the brands that you are aware about in the jewellery market

Gili Tanishq Ddamas Oyzterbay Trendsmith

Others (please specify)

4) You buy jewellery for…

Investment Fashion Occasions Festivals

5) Which jewellery do you prefer?

Branded Family Jeweller

6) Have you bought any branded jewellery?

Yes No

7) Do you buy jewellery for gifting purpose?

Yes No

8) Where do you prefer to buy the jewellery from (for gifting)?

Branded Family Jeweller



9) Rate the following parameters which attract you towards jewellery purchase? (Where 1 = Least important and 7 = Most important)

1 2 3 4 5 6 7

Celebrity endorsement

Promotion

Wide variety of designs to choose

from

Brand Name

Exhibitions

New collections

Others(please specify below)

10) Given below are few characteristics of traditional family jeweller’s (or local jewellery retail stores). Please give each characteristic some points based on your assessment, such that the points range from 1 to 10. (1 being the lowest and 10 being the highest).

Characteristics of Family Jeweller’s Number of points

Convenient Trustworthy

Good Investment Price

Traditional design

11) If you purchase branded jewellery then given below are a few characteristics. Please give each characteristic some points based on your assessment, such that the points range from 1 to 10. (1 being the lowest and 10 being the highest).

Characteristics of Branded Jeweller’s Number of points

Wide range of products under one roof

Shopping experience

Trendy and fashionable jewellery Price

11) Given below is a scale that indicates points from 10 to 1, you have to indicate a point that describes your satisfaction on the overall satisfaction on jewellery purchased from family jewellers (local jewellery retailer). 10 being the best



10 9 8 7 6 5 4 3 2 112) Given below is a scale that indicates points from 10 to 1, you have to indicate a point that describes your satisfaction on the overall experience of store and the branded jewellery that they offer. 10 being the best

10 9 8 7 6 5 4 3 2 1

13) Rate the following statements with the following options given below

Strongly

Disagree

Disagree Neutra

l

Agree Strongly

Agree

Price plays an important role in

purchase of jewellery

Purchase of jewellery is mostly

preferred from the family jeweller

compared to that of branded jeweller

Jewellery is considered as status

symbol for most of the customers

Thank you.



QUESTIONNAIRE

CONSUMER PREFERENCE FOR BRANDED JEWELLERY VIS-À-VIS NON-BRANDED

JEWELLERY AND THE PROMOTIONAL STRATEGIES ADOPTED BY EACH IN MUMBAI

Hello, I am Kalpita Choudhary. I am a second year student of management pursuing my MBA from VIVA Institute of Management studies. As a part of my curriculum I have to undertake a survey on the given topic. All the information that we collect is strictly for study purpose and will be dealt with at most confidentiality. This survey would take only 10 mins of your time.

Name of the store:Name of the owner: Number of years into this business:

1) Are you aware about jewellery being sold through brands? Yes No

2) Has your business been effected by the latest trend of branded jewellery?

Yes No

3) Have you adopted any strategy to increase your sale to fight competition?

Yes No

4) Which type of strategy have you adopted?

Discounts Cash back Zero making charges Gifts

Others (please specify)

5) When do you plan such offers?

Festivals Wedding seasons off season

6) Have your sales picked by after adapting these strategies?

Yes No

7) Is there anything else (apart from the points mentioned above) that you do to attract

new customers and retaining your loyal customers please specify.

Thank you



BIBLIOGRAPHY

Web Sites

ho.shrenuj.com

www.fine-jewellery.com

www.gitanjaligroup.com

www.gjepc.org

www.ibef.org

www.moneycontrol.com

www.myadora.com

www.rosyblue.com

www.sheetalgroup.com

www.tanishq.co.in

Magazines

International Business Times

National Jeweller

The Art of Jewellery Making

Solitaire International

Journal of Gem Industry

Books

Consumer Behaviour Basic Findings & Management Implications

Marketing books


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