Assignment 1

Fundamentals of Marketing

In 1995, Titan Industries, India's leading manufacturer of watches, launched the Tanishq range of
gold watches and jewellery. Till then, the Indian jewellery market was to a large extent
unorganized, with a few recognized names such as Tribhovandas Bhimji Jhaveri and Mehrason's.
Tanishq, an entirely new concept in the Indian market, thus had to struggle hard to be accepted
by the customers. Industry watchers were extremely skeptical of Tanishq and doubts were being
cast over its prospects. Tanishq began by offering jewellery in the 18-carat gold range, with
designs borrowed heavily from contemporary European brands. The company justified its
decision saying that it wanted to be 'different' from the traditional Indian offerings.
Tanishq performed very badly in the next three years, posting a huge loss in 1997-98, proving its
detractors right. Jacob Kurian, Tanishq's chief operating officer admitted, "Tanishq, as a concept,
was far too ahead of its times." Even if one agreed with Kurian, it could not be denied that Tanishq
did commit mistakes.

Analysts decreed that the company's strategies were wary. At this point, Tanishq took various
steps to correct the mistakes it had committed and very soon, posted its first ever operating
profit in 1999. In 1999-00, sales doubled to Rs 1532 million against Rs 743.8 million recorded in
1998-99 and reached Rs 2000 million in 2000-01. Tanishq fared equally well on the export front
also with heavy exports to UK, US, Australia and West Asia.

Tanishq was the largest overseas chain in US with 1,200 outlets. In the year 2000, exports
contributed 10% to the company's turnover. The story of Tanishq, once written off as a losing
proposition, making a remarkable turnaround was an example of a company single-mindedly
working to make its own mark in the tradition bound Indian jewellery market. Behind this success
was, of course, a well-planned and well-executed marketing plan.
Background Note
Titan Watches Limited was promoted jointly by Questar Investments Limited (a Tata group
company) and Tamil Nadu Industrial Development Corporation Limited (TIDCO). The company,
incorporated in July 1984 in Chennai, was started in technical collaboration with France Ebauches
(a French company), one of the world's largest manufacturers of watch movements. Initially
involved in the watches and clocks business, Titan later ventured into the jewellery businesses.
The company was India's leading manufacturer of watches, marketed under the Titan and Sonata
brand names with a 25% share of the total domestic market.
Titan established its first manufacturing facility in Hosur, Tamil Nadu and its first satellite watch
assembly unit at Dehradun, Uttar Pradesh was started in 1990. In 1992, Titan set up a joint
venture, Timex Watches Limited, with Timex Corporation of USA to market Timex watches in
India.1 And in 1995, Titan changed its name from 'Titan Watches Ltd.' to 'Titan Industries Ltd.' in
order to change its image from that of a watch manufacturer to that of a fashion accessories
manufacturer. In the same year, it also started its jewellery division under the Tanishq brand. At
this point of time, the jewellery business was highly localized and the concept of branded
jewellery did not exist. In the late 1990s, India had around 0.2 million jewellers scattered across
the country.

Jewellery had predominantly been used as an investment rather than adornment. Hence, a
change in the perception of jewellery from an asset to a fashion accessory was extremely difficult
to bring about. People generally bought gold from the same family jeweller they had trusted
implicitly for generations. Moreover, these jewellers made the jewellery to order and often
bought back their products at the prevailing market rates.

Thus, from the very beginning, Tanishq found it hard to overcome the Indian consumer's
preference for buying traditional jewellery only from family jewellers. The sleek and
contemporary designs being offered did not go down well with the Indian customer who was
used to heavy, traditional designs.

Vasant Nangia, erstwhile Chief Operating Officer, Tanishq said, "When we launched the Tanishq
range, our designs were not appreciated initially as they were believed to be extremely Western.
Also, we offered only 18 carat gold." Over a period of time, Tanishq's research revealed many
other loopholes in its strategies.
Setting Things Right
Tanishq found out that it had gone wrong mainly in two areas - the product proposition and
retailing. Initially with a focus on the export market, its designs were predominantly Western,
and the same line of jewellery was sold in India as well. However, when it shifted its focus to the
domestic market, it was unable to sell these designs. Therefore the first step was to change the
brand positioning from that of an elitist and Westernized offering to a more mainstream, Indian
one. The 18-carat jewellery range was expanded to include 22 and 24 carat ornaments as well.
Tanishq also made attempts to redefine traditional styles in its designs. Tanishq realized that,
given the diverse nature of Indian ethnicity, it would have to cater to tastes of all regions.
Therefore, the emphasis shifted from the erstwhile modern designs to more ethnic ones and
traditional ornaments (based on designs from various states) were launched. The company also
began seasonal and localized promotions based on Indian festivals, such as during Durga Puja in
West Bengal, Onam in Kerala, Diwali in north India, etc. Johnson Verghese, divisional head, sales
and marketing, said, "We also decided to go in for transmigration of designs. So we not only got
in more Indian motifs but also started stocking typical designs from Tamil Nadu in Mumbai and
those from Bengal in Delhi. These designs, though Indian, provided variety to what the people in
a particular area were used to seeing."
Tanishq's team of in-house designers came out with about 3,500 designs based on current trends
and the feedback from stores. At least 10% of these designs were changed every quarter and
fresh ones were added to the stock. Tanishq gave complete freedom to the retail outlets to pick
up designs, which they thought would sell in their stores. Almost all the outlets stocked the 'best
selling' range of designs, which did well across the country.
Tanishq was now pitted directly against the traditional jewellers who were offering similar
ornaments. In order to add some value proposition to rise above the competition, Tanishq
decided to address the issue of gold purity, which was most important to the customers.
Traditionally, conventional jewellers used the touchstone2 to test the purity of gold. Apart from
the fact that the customers did not trust the method, it was also alleged that a slight amount of
gold was always lost while testing. The customers had to accept this for want of an alternative.
In 1999, Tanishq introduced the revolutionary concept of Karatmeters in its retail boutiques. The
Karatmeter used X-rays to give an accurate reading of the constitution of gold in the ornament
within three minutes. Imported from Germany at a cost of Rs 1 million each, Karatmeters though
expensive, proved to be the biggest USP for Tanishq in the coming years.
In fact, its sales increased by 20-30%. The concept was later on heralded as a bold step towards
professionalizing the Indian jewellery business. In an attempt to elbow out competition, Tanishq
conducted tests on 10,000 ornaments selected at random. In some cases the caratage was found
to be as low as 10% and almost 65% of the gold tested was below 22 carats. As the caratage
offered was on the lower side in traditional jewels, the jewellers kept the making charges very
low to entice customers. This had become the norm all over the country. Tanishq had to struggle
hard to break this convention.
As the concept of Karatmeter became more widely known, customers began to realize that the
rates they were paying for Tanishq jewellery were indeed justified. A Tanishq official commented,
"They have begun to understand the total value proposition that Tanishq offers."

An all-India customer satisfaction survey conducted by Tanishq in 2001 revealed that over 50%
of all Tanishq customers intended to make it their jeweller, replacing many long-standing
relationships with the traditional jeweller. When Tanishq was launched, it sold most of its
products through multibrand stores. This did not help the Tanishq brand to make its mark. Having
realized this, Tanishq decided to set up its own chain of retail showrooms in 1998.

This proved to be a very wise move as sales picked up almost immediately. By July 2001, it had
47 'Tanishq boutiques' in 37 cities – 12 were in the metros - Delhi, Mumbai, Kolkata, Chennai and
Bangalore, the rest in smaller cities with a population of at least 0.5 million such as Trichy,
Nagpur, Amritsar and Patna.

The focus on smaller cities paid off well with the annual growth being as high as 150% as
compared to the 45% growth in metros. The number of boutiques was expected to reach 50 by
the end of 2001 and to 70 by 2002. Tanishq's efforts to standardize the price of its ornaments
proved to be another milestone in its success.

Gold prices differed across the country as they were based on different parameters concerning
the local markets. In a bid to control gold price variations in different parts of the country, Tanishq
decided to have a standard gold price across all its showrooms from March 2000.
The standard price was made binding on all Tanishq showrooms. Tanishq based its gold prices on
international exchange prices, resulting in prices often being lower than the local market prices.
Nangia said, "We already have a kind of standard pricing in place, but this would represent a
formalization of that system to the public." Tanishq even had plans to link directly with the
London Metal Exchange (LME) for daily quotes in the future. Tanishq set up an ultra-modern and
large-scale manufacturing unit in Hosur, Tamil Nadu at a cost of Rs 600 million. The unit had
facilities like refining, alloying and stone casting and a dust-extraction system that kept gold
losses down to 2% of the raw material while local jewellers typically lost 8-10%.
This in-house manufacturing facility was the main reason, which enabled Tanishq to charge the
same price across the country. One of the company's most important initiatives was customer
service enhancement. Tanishq launched a direct consumer contact programme and conducted
surveys to monitor store walk-ins and footfalls and percentage of repeat customers.

The company also kept the entry-level price as low as Rs 600 (for a pendant) and offered a range,
which far exceeded that offered by any other jeweller. All Tanishq outlets gave a 100% return
guarantee on its brand of jewellery and also exchanged other jewellery after deductions
depending on purity.

A customer satisfaction measurement program was started with the help of Customer
Satisfaction Measurement Management (CSMM), an associate of IMRB. CSMM tracked customer
satisfaction parameters for Tanishq on a quarterly basis. This gave the company the benefit of
benchmarking against local and international players and also aided in improving repeat
purchases. As a result, Tanishq was able to directly link the remuneration of franchisees with
customer satisfaction. The company's corporate gold gift scheme ('When you want to say thank
you, say it in gold'), launched in December 1998 proved to be a major success. Tanishq delivered
50,000 customized gold coins to 0.25 million Maruti car owners nationwide as part of the
15th anniversary celebrations of Maruti Udyog. By 2001, the scheme accounted for almost 5% of
the turnover and over 30 corporate clients like Coca-Cola, the UB Group, Whirlpool, the TVS
Group, Ceat and Liberty Shoes.
The communication and promotion budget was increased from Rs. 65 million in 1999-2000 to Rs
100 million in 2000-01. A majority of this was spent towards advertising, while a portion was also
earmarked for promotions tailored to match regional preferences. For instance, in New Delhi,
which was Tanishq's single largest market, substantial promotions were carried out. The Rs 100
million was split into four parts, comprising national-level spends (both electronic and print
media), regional budgets, direct mail and research. For the first time, Tanishq initiated a long-
term media plan, aiming to give the brand a round-the-year presence and enhance awareness.
The communication focused on design and quality instead of the price.
Future Prospects
The Indian branded jewellery market, though nascent, grew at the rate of 20-30% during 1998-
2000. Besides Tanishq, other major players included Intergold, Gili and Carbon. However, in the
Rs 400 billion Indian jewellery market, Tanishq's share was not even 1%.

Not willing to accept this as a 'poor show,' Tanishq saw it as a vast opportunity instead. The
company planned to attain a 2% market share in the next few years. Kurian said, "The jewellery
market is one of the largest consumer segments in the country. It has an estimated 2,50,000
retailers with no national or international brand and no corporate player.
Titan believes that this market is right for consolidation. A consumer-oriented, highly ethical
corporate player will have great opportunity. Our growth rates in the past three years have fully
substantiated this hypothesis." Tanishq had ambitious plans to invest in information technology
and utilize Intranets and the Internet to link all of its showrooms to one another. There were also
plans to do online monitoring of sales and design popularity as well as using the Internet to place
orders. The Intranet was to contain a photo collection of all the designs in all the stores so that
even those not in stock in a particular store could be ordered by customers. In a highly innovative
move, Tanishq tied up with Countrywide Finance for providing pre-approved credit line to the
customers at selective outlets. This was expected to boost sales significantly in the future. In May
2000, Tanishq unveiled plans to surpass its parent company's turnover by 2002. Jacob Kurian who
had taken over as the CEO the same month, said, "We have finally figured out the jewellery
business and should be solidly profitable, shorn of any caveat, this year."
 Questions
1. Discuss the marketing mix of Tanishq in detail.
2. Discuss in detail the market offerings and Target Market of Tanishq.
3. What were the major reasons behind the failure of Tanishq in the initial launch?
4. Discuss the brand’s value proposition and its USP that contributed to the success of the
brand with reference to the case.
5. Which marketing orientation(s) among the below is/are best suited to the case? Justify
your answer.

6. What was the turning point for Tanishq? How was the brand able to create value and then
capture customer value?
7. Discuss the relevant actors/forces in the marketing environment of Tanishq and their
impact on the business. (Hint: Use the case information only)

Instructions
1. Please write your answers constructively (In your own words)
2. Assignment needs to be submitted in typed format (Word or pdf)
3. Student name and ERP needs to be mentioned on the top of First Page
4. Due date: 3rd April 2023 11:59 pm.

Best of Luck 😊