MARKETING CHARGES AND MARGINS IN JEWELLERY...

MARKETING CHARGES AND MARGINS

IN JEWELLERY INDUSTRY

In modern marketing system, the marketing area of a product

becomes so wide that the commodity reaches in the hands of ultimate

consumers passing through different marketing channels. This is also

done in case of Jewellery. In case of Jewellery the marketing cost

starts from manufacturer's/wholesaler's level and ends at the point

when the Jewellery reaches in the hands of the buyers.

These marketing channels have their eminent importance but it

is a bare fact that each and every marketing channel, used for

physical distribution of a product has its own cost. So it becomes

inevitable to go through all the expenses and margins at different

levels of marketing, so that it may clearly be judged whether these

expenses and margins are justified, and every marketing channel is

getting its share in a justified manner.

(A) MARKETING CHARGES

A number of marketing charges are incurred by different

marketing intermediaries involved in the business of Jewellery. A

brief description of these charges is given below:

141

STORING EXPENSES These expenses are incurred only at manufacturer's

/wholesaler's level. In fact the wholesaler has to store the

manufactured Jewellery for some time for which he has to incur

some expenses and it forms the part of their marketing charges.

STAFF SALARY & OTHER EXPENSES These expenses are incurred by manufacturer /wholesaler as

well as by retailer. The owner of the firm has to pay the salary to his

staff and various other expenses like dress, bonus, refreshment etc.

The amount of these expenses depends upon the size of the firm. All

these expenses which are incurred on the staff form the part of

marketing charges.

OFFICE EXPENSES Generally the wholesaler has to maintain his office from where

he runs his wholesale business. To run this office he has to incur

some expenses which form the part of his marketing charges. It was

observed that these offices are established on the less important

location because only the retailers and agents make their approaches

to them and the ultimate buyers do not make any purchase from

them.

TRANSPORTATION COST

Transportation cost is also a very important cost contributing to

the marketing charges in case of Jewellery industry. This is the cost

which is concerned with bringing raw material i.e. gold from one

142

place to another place and carrying the finished products from

manufacturers to wholesalers and retailers. Only in few cases the

jewellers provide transportation facility to some specific customers

from their shop to their place.

SHOWROOM EXPENSES

Showroom expenses are also of great importance in case of

marketing expenses. Show room is a place where direct marketing of

the product is being made by the jewellers. The ambience of the shop

must be so nice it may prove helpful in attracting customers. These

expenses include shop rent, if shop is rented, and if it is own at least

opportunity cost of the amount blocked in shop, furniture, electricity,

security and other maintenance charges. It was observed that

showrooms are established only by retailers.

ADVERTISEMENT

It is the expenses made by the jewellers to promote their sales.

It includes advertisement made in the news papers, televisions and

other Medias. Distribution of various gift items on various auspicious

occasions such as Deepawali, Holi, Iid, X-max day, Valentine Day,

Akshya Tritya etc. is in very much practice in Meerut district.

Jewellers also invite various celebrities to inaugurate their Jewellery

designs in their showrooms. It is also another way of making their

shops advertised. Also the packing material which is provided by the

jewellers is also in printed form making their shop name advertised.

All these expenses form the part of marketing charges at retailer’s

level.

143

ENTERTAINMENT EXPENSES Generally the retailers entertain their customers by providing

them tea, coffee, snacks, cold drink etc. These expenses depend upon

the size of showroom and the number of customers. All these

expenses are the part of marketing charges at retailer’s level.

PACKING EXPENSES

Packing plays a vital role in case of Jewellery marketing.

Actually Jewellery is a costly item and is beloved especially by

ladies. Due to this reason it demands for attractive packing so that it

may increase the grace of the selected pieces by the buyers and they

may feel good by purchasing it. The packing is made as per the size

and price of the Jewellery items. If a customer buys Diamond

Jewellery the packing is found in some special form which gives its

different looks as compared to the packing of gold Jewellery. It was

observed that all the packing expenses are incurred by the retailers.

INSURANCE EXPENSES

Insurance expenses are incurred by both

manufacturers/wholesalers and retailers. They have to get

their stock insured against fire, theft, robbery or any other

calamity. These expenses form the part of marketing charges.

CREDIT EXPENSES

These expenses are incurred only by retailers. In some cases the

retailers have to sell their Jewellery on credit and they receive the

payment after some time. During this period they have to bear the

144

interest loss. In few cases the debtors do not make the payment

and the jewellers have to treat it as bad debt. Though such loss is

not the part of marketing expenses yet it affects the margins of

jewellers directly.

OTHER EXPENSES

Apart from the above expenses Jewellers have to incur some

other expenses like security expenses, theft by customers, repair

expenses, collection charges etc. All these expenses form the part of

marketing charges at retailers’ level.

AGENT COMMISSION

Generally the big jewellers import the Jewellery of some

specific designs from out side the state and from abroad. In such case

they have to get the services of commission agents and the due

commission is paid to them for their services which becomes part of

marketing charges.

MARKETING CHARGES AT MANUFACTURER'S/WHOLESALER'S LEVEL

The following table nos. from 7.1 to 7.4 are showing the marketing

charges incurred at manufacturer's/wholesaler's level in case of 18 carat,

20 carat, 22 carat and 23 carat Jewellery in Meerut District:

145

Table No. 7.1

MARKETING CHARGES AT MANUFACTURER'S / WHOLESALER'S LEVEL

[In case of 75% (18 carat) Jewellery per 10 gms.]

S.No.

Heads of Expenses

Amount Rs. %age

1. Storing Expenses 55.20 24.17 2. Staff Salary & Other

Expenses 20.00 8.75

3. Office Expenses 75.00 32.84 4. Transportation 18.00 7.88 5. Insurance Expenses 60.20 26.36 6. Total 228.40 100.00

Source: Personal Survey.

The above table no. 7.1 reveals that in case of 75% (18 carat)

Jewellery the manufacturers/wholesalers pay Rs. 228.40 as marketing

charges per 10 gms of Jewellery. Out of these charges they make an

expenditure of Rs. 55.20 (24.17%) on storing the Jewellery, Rs. 20.00

(8.75%) as staff salary and other expenses, Rs. 75.00 (32.84%)as office

expenses, Rs. 18.00 (7.88%) on transportation and Rs. 60.20 (26.36%) on

insurance of the Jewellery. All these expenditures may be said quite

justified at this level.

146

Table No. 7.2

MARKETING CHARGES AT MANUFACTURER'S /

WHOLESALER'S LEVEL [In case of 83.33% (20 carat) Jewellery per 10 gms.]

S.No.

Heads of Expenses

Amount Rs. %age


Expenses 28.00 11.40



The above table no. 7.2 reveals that in case of 83.33% (20 carat)




(11.40%) as staff salary and other expenses, Rs. 80.00 (32.57%) as office




147

Table No. 7.3

MARKETING CHARGES AT MANUFACTURER'S /

WHOLESALER'S LEVEL [In case of 91.66% (22 carat) Jewellery per 10 gms.]

S.No.

Heads of Expenses

Amount Rs. %age

1. Storing Expenses 55.20 20.00

2. Staff Salary & Other Expenses 36.80 13.33

3. Office Expenses 92.00 33.33

4. Transportation 18.40 6.67

5. Insurance Expenses 73.60 26.67

6. Total 276.00 100.00










148

Table No. 7.4

MARKETING CHARGES AT MANUFACTURER'S / WHOLESALER'S LEVEL

[In case of 95.83% (23 carat) Jewellery per 10 gms.]

S.No.

Heads of Expenses

Amount Rs. %age


Expenses 36.80 12.87











149

MARKETING CHARGES AT RETAILER’S The following table nos. from 7.5 to 7.8 are showing the marketing

charges incurred at retailer’s level in case of 18 carat, 20 carat, 22 carat

and 23 carat Jewellery in Meerut District:

Table No. 7.5

MARKETING CHARGES AT RETAILER’S LEVEL


S.No. Heads of Expenses

Amount Rs. %age

1. Showroom Expenses 75.50 19.82

2. Staff Salary and Other Expenses 60.50 15.88

3. Advertisement Expenses 40.00 10.50

4. Entertainment Expenses 28.70 7.54

5. Packing Expenses 18.40 4.83


7. Credit Expenses 22.58 5.93

8. Other Expenses 75.00 19.69

9. Total 380.88 100.00


The above table no. 7.5 reveals that in case of 75% (18 carat)

Jewellery the retailers pay Rs. 380.88 as marketing charges per 10 gms of

Jewellery. Out of these charges they make an expenditure of Rs. 75.50

(19.82%) as showroom expenses, Rs. 60.50 (15.88%) as staff salary and

150

other expenses, Rs. 40.00 (10.50%) on advertisement, Rs. 28.70 (7.54%)

on entertainment, Rs. 18.40 (4.83%) as packing expenses, Rs. 60.20

(15.81%) on insurance, Rs. 22.58 (5.93%) as credit expenses and Rs. 75

(19.69%) as other expenses. Excluding Other expenses, all these

expenditures may be said quite justified at this level. Other expenses may

be reduced to some extent.

Table No. 7.6



S.No.

Heads of Expenses

Amount Rs. %age









9. Total 459.73 100.00



Jewellery the retailers pay Rs. 459.73 as marketing charges per 10 gms of

151

Jewellery. Out of these charges they make an expenditure of Rs. 105


other expenses, Rs. 60 (13.05%) on advertisement, Rs. 30.50 (6.63%) on

entertainment, Rs. 18.40 (4.00%) as packing expenses, Rs. 66.90

(14.55%) on insurance, Rs. 25.10 (5.46 %) as credit expenses and Rs.

83.33 (18.13%) as other expenses. Excluding Other expenses, all these

expenditures may be said quite justified at this level.

Table No. 7.7



S.No.

Heads of Expenses

Amount Rs. %age









9. Total 625.60 100.00


152


Jewellery the retailers pay Rs. 625.60 as marketing charges per 10 gms

of Jewellery. Out of these charges they make an expenditure of Rs. 138

(22.60%) as showroom expenses, Rs. 110.40 (17.65%) as staff salary

and other expenses, Rs. 128.80 (20.59%) on advertisement, Rs. 36.80

(5.88%) on entertainment, Rs. 18.40 (2.94%) as packing expenses, Rs.

73.60 (11.76%) on insurance, Rs. 27.60 (4.41 %) as credit expenses and

Rs. 92 (14.71%) as other expenses. Excluding Other expenses, all these


Table No. 7.8

MARKETING CHARGES AT RETAILER’S LEVEL [In case of 95.83% (23 carat) Jewellery per 10 gms.]

S.No.

Heads of Expenses

Amount Rs. %age









9. Total 634.00 100.00


153


Jewellery the retailers pay Rs. 634 as marketing charges per 10 gms of

Jewellery. Out of these charges they make an expenditure of Rs. 138


other expenses, Rs. 128.80 (20.32%) on advertisement, Rs. 36.80 (5.80%)

on entertainment, Rs. 18.40 (2.90%) as packing expenses, Rs. 76.95

(12.14%) on insurance, Rs. 28.85 (4.55 %) as credit expenses and Rs.

95.80 (15.11%) as other expenses. Excluding Other expenses, all these


COMPARATIVE STATUS OF MARKETING CHARGES AT DIFFERENT LEVELS IN JEWELLERY INDUSTRY

OF MEERUT DISTRICT The following table nos. from 7.9 to 7.12 are showing the

comparative analysis of marketing charges incurred by different

intermediaries in jewellery industry of District Meerut:

154

155

The above table no. 7.9 is showing the comparative status of

marketing charges of 75% (18 carat) Jewellery per 10 gms. The table

reveals that the total marketing charges are Rs. 609.28 out of which Rs.

228.40 i.e. 37.49% is paid by manufacturers/wholesalers and the rest Rs.

380.88 is 62.51% is paid by retailers. On analyzing the figures head wise

this fact comes into light those storing expenses, office expenses and

transportation expenses are exclusively incurred at manufacturers &

wholesalers level. Likewise, showroom expenses, advertisement

expenses, entertainment expenses, packing expenses, credit expenses and

other expenses are incurred only at retailer’s level. So far staff salary and

other expenses are concerned these are paid 24.84% by

manufacturers/wholesalers and 75.16% by retailers. Likewise, Insurances

expenses are incurred 50% at manufacturer's/wholesaler's level and 50%

at retailer’s level.

156

157


marketing charges of 83.33% (20 carat) Jewellery per 10 gms. The table









other expenses are concerned these are paid 28.43% by

manufacturers/wholesalers and 71.57% by retailers. Likewise, Insurances



158

159




276 i.e. 30.61% is paid by manufacturers/wholesalers and the rest Rs.







other expenses are concerned these are paid 25% by

manufacturers/wholesalers and 75% by retailers. Likewise, Insurances



160

161





634 is 68.92% is paid by retailers. On analyzing the figures head wise this

fact comes into light those storing expenses, office expenses and





other expenses are concerned these are paid 25% by

manufacturers/wholesalers and 75% by retailers. Likewise, Insurances



(B) MARKETING MARGINS

In jewellery business marketing margins are earned by

different marketing intermediaries. These intermediaries are

manufacturers/wholesalers and retailers. The following chart depicts

the marketing margins clearly:

MARGIN OF JEWELLERS

GROSS MARGIN NET MARGIN

162

GROSS MARGIN Gross margin of the jeweller is basically the difference

between selling price received from the buyers and payment made to

Karigars for labour and material. It is merely the difference between

selling price and prime cost.

NET MARGIN Net margin of the jeweller comes after deducting total cost of

manufacturing and marketing charges from the selling price. This is

the margin which comes in the form of net profit to the jewellers. It

can be said that it is the difference between gross margins –

marketing charges.

MARKETING MARGINS AT

MANUFACTURER'S/WHOLESALER'S LEVEL The following table nos. from 7.13 to 7.16 are showing the

marketing margins earned at manufacturer's/wholesaler's level in case of

18 carat, 20 carat, 22 carat and 23 carat Jewellery in Meerut District:

163

Table No. 7.13

MARKETING MARGINS AT MANUFACTURER'S & WHOLESALER'S LEVEL


S.No.

Particulars

Amount Rs. %age

1. Sales 16700.00 100.00 2. Less: Manufacturing Cost 16200.00 97.01 3. Gross Margin 500.00 2.99 4. Less: Marketing Charges 228.40 1.37 5. Net Margins 271.60 1.62


The above table no. 7.13 is showing that in case of 75% (18 carat)

Jewellery, the gross margin at manufacturer's/wholesaler's level is Rs. 500

i.e. 2.99% of their sales price. On the other hand the net margin of the

same is Rs. 271.60 i.e. 1.62% of their sales price. This margin may be

considered quite genuine at this level.

164

Table No. 7.14



S.No.

Particulars

Amount Rs. %age



The above table no. 7.14 is showing that in case of 83.33% (20

carat) Jewellery, the gross margin at manufacturer's/wholesaler's level is

Rs. 484 i.e. 2.61% of their sales price. On the other hand the net margin of

the same is Rs. 238.40 i.e. 1.29% of their sales price. This margin may be


165

Table No. 7.15



Source: Personal Survey. The above table no. 7.15 is showing that in case of 91.66% (22



the same is Rs. 292 i.e. 1.42% of their sales price. This margin may be


S.No.

Particulars

Amount Rs. %age


166

Table No. 7.16



S.No.

Particulars

Amount Rs. %age






the same is Rs. 348.05 i.e. 1.62% of their sales price. This margin may be


MARKETING MARGINS AT RETAILER’S LEVEL The following table nos. from 7.17 to 7.20 are showing the

marketing margins earned at retailer’s level in case of 18 carat, 20 carat,

22 carat and 23 carat Jewellery in Meerut District:

167

Table No. 7.17

MARKETING MARGINS AT RETAILER’S LEVEL [In case of 75% (18 carat) Jewellery per 10 gms.]

S.No.

Particulars

Amount Rs. %age


Source: Personal Survey. The above table no. 7.17 is showing that in case of 75% (18 carat)

Jewellery, the gross margin at retailer’s level is Rs. 800 i.e. 4.57% of their

sales price. On the other hand the net margin of the same is Rs. 419.12 i.e.

2.39% of their sales price. This margin may be considered quite genuine

at this level.

168

Table No. 7.18

MARKETING MARGINS AT RETAILER’S LEVEL [In case of 83.33% (20 carat) Jewellery per 10 gms.]

Source: Personal Survey .


carat) Jewellery, the gross margin at retailer’s level is Rs. 900 i.e. 4.63%

of their sales price. On the other hand the net margin of the same is Rs.

440.27 i.e. 2.26% of their sales price. This margin may be considered

quite genuine at this level.

S.No.

Particulars

Amount Rs. %age


169

Table No. 7.19


S.No.

Particulars

Amount Rs. %age






574.40 i.e. 2.65% of their sales price. This margin may be considered

slightly high at this level which should be brought down to some

reasonable level.

170

Table No. 7.20


S.No.

Particulars

Amount Rs. %age






866 i.e. 3.77% of their sales price. This margin may be considered quite

genuine at this level.

COMPARATIVE STATUS OF MARKETING MARGINS AT DIFFERENT LEVELS IN JEWELLERY INDUSTRY

OF MEERUT DISTRICT The following table nos. from 7.21 to 7.24 are showing the

comparative analysis of margins earned by different marketing

intermediaries in jewellery industry of District Meerut:

171

Table No. 7.21

TOTAL MARKETING MARGINS AT DIFFERENT LEVELS


S.No.

Particulars

Amount Rs. %age

1. Manufacturers & Wholesalers Net Margins 271.60 39.32

2. Retailers Net Margins 419.12 60.68

3. Total Net Margins 690.72 100.00

Source: On the Basis of Table nos. 13 &17. The above table no. 7.21 is indicating that in case of 10 gms

Jewellery of 75% (18carat), the net margins at manufacturer's/wholesaler's

level is 271.60 i.e. 39.32% of the total net margins in Jewellery business

in the area selected for the study. Likewise, the retailer’s net margin is Rs.

419.12 i.e. 60.68% of the total net margins at this level. These margins at

both the levels are quite genuine.

172

Table No. 7.22



S.No.

Particulars

Amount Rs. %age




Source: On the Basis of Table nos. 14 &18.

The above table no. 7.22 is indicating that in case of 10 gms

Jewellery of 83.33% (20carat), the net margins at manufacturer's

/wholesaler's level is 238.40 i.e. 35.13% of the total net margins in

Jewellery business in the area selected for the study. Likewise, the

retailer’s net margin is Rs. 440.27 i.e. 64.87% of the total net margins at

this level. These margins at both the levels are quite genuine.

173

Table No. 7.23



S.No.

Particulars

Amount Rs. %age




Source: On the Basis of Table nos. 15 &19.

The above table no. 7.23 is indicating that in case of 10 gms Jewellery of

91.66% (22carat), the net margins at manufacturer's/wholesaler's level is

292 i.e. 33.70% of the total net margins in Jewellery business in the area

selected for the study. Likewise, the retailer’s net margin is Rs 574.40 i.e.

66.30% of the total net margins at this level. These margins at both the

levels are quite genuine.

174

Table No. 7.24



S.No.

Particulars

Amount Rs. %age




Source: On the Basis of Table nos. 16& 20. The above table no. 7.24 is indicating that in case of 10 gms

Jewellery of 95.83% (23carat), the net margins at manufacturer's

/wholesaler's level is 348.05 i.e. 28.67% of the total net margins in

Jewellery business in the area selected for the study. Likewise, the

retailer’s net margin is Rs. 866 i.e. 71.33% of the total net margins at this

level. At this level retailer’s margins are considerably high which should

be reduced to a justified level.

In case of branded Jewellery it was observed that the manufacturers

establish their outlets at the heart places of different cities and they do not

engage any marketing intermediaries. They incur the marketing charges at

their own level which comes about 3% of the price of the jewellery and

marketing margins remain about 2% at manufacturer’s level and about 3%

at outlet level. As the whole business of branded Jewellery is controlled

by the head office, so it was not feasible to conduct a detailed study about

marketing charges and margins.

175

In case of diamond jewellery it was noted that it is sold on piece

basis keeping in view the quality and carat of the diamond. The marketing

charges remain almost as in the case of gold jewellery while marketing

margins remain about 4% of the price of the diamond Jewellery at

manufacturer’s level and about 6% at retailer’s level. The detailed analysis

of marketing charges and margins is not feasible in this case because this

Jewellery is not manufactured in the area selected for the study.

Thus it can be concluded that a number of marketing charges are

incurred at manufacturer's/wholesaler's and retailer’s level. These

expenses are Storing Expenses, staff salary and other expenses, office

expenses, transportation expenses, showroom expenses, advertisement

expenses, entertainment expenses, packing expenses, insurance expenses,

credit expenses and other expenses. It was further noted that storing

expenses, office expenses and transportation expenses are incurred

exclusively at manufacturer's /wholesaler's level. On the other side,

showroom expenses, advertisement expenses, entertainment expenses,

packing expenses, credit expenses and other expenses are incurred

exclusively at retailer’s level. Staff salary and insurance expenses are

incurred at both the levels.

It was further observed that in case of in case of 18 carat, 20 carat

and 22 carat the marketing margins are quite genuine but in case of 23

carat Jewellery the marketing margins remain slightly high at retailer’s

point which should be brought down to the justifiable level.

* * *

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MARKETING CHARGES AND MARGINS IN JEWELLERY...

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