The Indian Diamond Industry

(An Introduction)

1.1 Historical Significance

From time immemorial, India is very well known in the world as the birthplace for
diamonds. It has remained the home of diamonds for over two millenniums. It is difficult
to trace the origin of diamonds but history says, that in the remote past, diamonds were
mined only in India. Diamond production in India can be traced back to almost 8th
century B.C. India in fact, remained undisputed leader till 18th century when Brazilian
fields were discovered in 1725 followed by emergence of South Africa, Russia and
Australia. World famous diamonds such as the Koh-i-noor, The Orloff, The Great Mogul,
The Sancy Hope, Florentine, Nassak, Regent, Pitli and the Nizam etc. were produces of
India and many of these world famous diamonds were recovered from India in 16th &
17th centuries. It is also said that, India was the sole producer and supplier of diamonds
to the world before the discovery of Brazilian fields till the 17th century and the later
emergence of South Africa, Russia and Australia, as major producers.

The success story of the Indian diamond industry is unique. From humble beginnings,
India rose to become the world leader in a span of just two decades. No other export
segment of the country has such a significant share in the world market. It is rightly said,
that India has indeed 'democratised' diamonds, which in the past were the exclusive
preserve of only the rich and famous.

1.2: The success story of the Indian Diamond Industry

This achievement of the Indian diamond industry was possible only due to the fortuitous
combination of the manufacturing skills of the Indian workforce and the untiring and
unflagging efforts of the Indian diamantaires, supported by progressive Government
policies.
But how did the Indian diamantaires get the diamonds? The answer to this query lies in
the business acumen and core competency of the early Indian diamantaires who migrated
from small towns of Gujarat (specifically Palanpur in Surat and other nearby areas) to
Antwerpen (in Belgium) which was then the diamond hub of the world, a market
dominated by the orthodox Jews of Israel who claimed expertise in the cutting and
processing of large diamonds (sized more than two carats, 1 carat =0.2 grams). The
visionary Indian diamantaires started their trade with the cutting and manufacturing of
diamonds of very small sizes, which nobody was ready to process (less than two carats,
especially one carat and lesser) and gradually made it their core competency, a niche field
in which no other country had the mastery in; and coupled with the lowest manufacturing
and labour costs worldwide, India assumed greater market presence in the global
diamond industry.

This venture had a cascading effect both on India and on other countries; a great demand
was generated for the manufacture of smaller sized diamonds and also for the low cost
and high skilled labour that only India could provide. Seeing this, more and more Indian
traders migrated to Antwerp to make the most of this opportunity; and gradually Indian
companies also started importing diamonds to India and exported the cut and polished
diamonds to countries abroad, which then form a part of diamond jewellery.

Value Holding: Diamond Cutting

Diamantaires processing diamonds
greater than 1carat
10%

20% India 1.2 bn

China 0.1 bn
Israel 0.4 bn
India Russia 0.1 bn
Belgium USA 0.1bn
40% USA S. Africa 0.1 bn
Rest of World Thailand 0.1 bn
30% Others 0.2bn
Belgium 0.1bn

The above graph shows the break-up of the processing expertise of the major
diamantaires, clearly showing the status of the Indian diamantaires, the Indian processing
expertise since then was in diamonds lesser than 1 carat (upto 7 pts, 7-29 pts and 30+ pts)
and even today the Indian diamond traders are the global market leaders, with a rapidly
increasing rate of exports (2004-05, US$ 15 bn).

1.3 Family Owned Business Enterprises (FOBE)

The area of study of family owned businesses derives its importance from the huge
conglomerate of family run organizations which operate in the diamond industry since
many generations (not only in India, but all the diamond traders globally are family run
businesses); the analysis of which would help to internalize the attributes that have
helped them achieve the stupendous growth.

Family-owned businesses play a crucial role in the economy of most countries. Much of
the retail trade, the small-scale industry, and the service sector is run by family
businesses. Worldwide, family-managed businesses employ half the world's workforce
and generate well over half the world's GDP. In the United States, 24 million family
businesses employ 62 per cent of the workforce and account for 64 per cent of the GDP.
In India, it is estimated that 95 per cent of the registered firms are family businesses.

Some of the basic traits of family run business enterprises:

• Spirit of entrepreneurship: Family businesses have done an excellent job

of keeping the spirit of enterprise alive especially through the 40 years of
quasi-socialism with their commitment, integrity and aggression. The spirit
survived onerous taxation and repeated government attempts to undo
supposed 'concentration' of economic power. Today, as India competes in an
increasingly globalised economy, family businesses are playing a major role
in turning the engines of growth.
 • Trust lowers transaction costs: It is a well-documented fact that 'trust'
lowers transaction costs, corruption, and bureaucracy. Trust can be a source of
significant competitive advantage to a family business, the entire diamond
industry operates majorly on the basis of trust between suppliers, contractors,
buyers and competitors
• Small, nimble, and quick to react: Family businesses, both small and large,
tend to be quick to react to threats as well as opportunities. There are fewer
decision-making gates and constituencies to deal with. Very often, the
survival of the family depends on the survival of the business. This results in
sharp and decisive action in the face of threats that could be potentially fatal
for the business.
• Information as a source of advantage: Many family businesses are private
enterprises. This is an advantage since a private company can see the strengths
and weaknesses of its public competitor and act accordingly while the
converse is not true. Further, private companies can have private strategies to
which analysts and the competition are not privy. And, private family
businesses have the freedom to pursue truly long-term strategies that are not
constrained by 'quarterly reporting'.
• Philanthropy: Lastly, Indian family businesses have played a significant
role in giving back to the community. To the average Indian, names of large
Indian business groups are synonymous with philanthropic efforts in
education, environment, health, culture, heritage conservation and upliftment
of people of their community. And it is not just the large groups that have
been active; numerous foundations engaged in charitable work are supported
by scores of small and medium family enterprises.

However, continued success for the family businesses is not guaranteed; in order to
prosper further, the family owned businesses would clearly need to improve on many
fronts:

• Higher standards of corporate governance: Family businesses need to

clearly distinguish between family interest and company interest. Good
corporate governance in family business should promote the long-term good
of the company and not necessarily of the majority or minority stakeholders. It
is essential for family businesses to acknowledge the distinction between
ownership and management and above all; the perception of fairness should
reign. There needs to be emphasis on attributes such as ethics, values, morals
and meritocracy.

• Long-term, performance-focussed strategies: Family businesses tend to

build 'long-term strategies' that assume that today's business model and assets
that will not be valuable tomorrow. Long-term strategy means emphasis on
core competency, investing in technical capabilities, employees, R&D, brand
building, and acquisition of customer knowledge, which are surely one of the
most globally competitive parameters.
 • Modern management and technology: Family businesses should strive to
hire the best people, and be capable of recruiting and retaining outside
professional talent. In a competitive world this is a sine-qua-non. The inability
to professionalise management can lead to family businesses being shut out of
sectors that require complex management, scale and constant technological
improvements. Family businesses will need to constantly seek and embrace
the latest technology and productivity enhancing techniques such as
improvements in Information Technology, TQM, Six Sigma, et al.

Clearly, for Indian family businesses, the path to sustained excellence is one that requires
willingness to change, learn and excel. However, there is no doubt that Indian family
businesses will be able to make the transition and, thus, play a vital role in contributing to
India's development.

1.4 Structure, Size and Growth of the Indian Diamond Industry

1.4.1: The structure of the Indian Diamond Industry:

The Indian diamond industry, similar to its origin, is based more in the villages, towns
and cities of Gujarat, where most of the processing facilities are installed; the corporate
operations of marketing and finance for all the diamond traders takes place from
Mumbai, where all the major traders have their registered offices.

Majority of the diamantaires procure the rough diamonds from the Diamond Trading
Company (DTC, the marketing arm of the De Beers Group, which mines its diamonds in
South Africa), which holds the maximum share of rough diamonds in the world. The
DTC sells its rough diamonds through two channels: in the primary market to preferred
clients called Sightholders, the world’s leading diamantaires, carefully chosen for their
diamond and marketing expertise; and also form a part of the DTC’s Supplier of Choice
program; the remainder of the rough diamonds are sold by the DTC in the secondary
market worldwide. The other companies, besides DTC, supplying rough diamonds (but to
a lesser extent) include Rio Tinto diamonds, Argyle, BHP Biliton and since recently, Lev
Leviev Diamonds. All the rough diamonds supplied by each of the companies mentioned
follow the Kimberley Process Certification as a proof of its purity, identity and place of
origin.

1.4.2: Industry Structure Analysis of the Indian Diamond Industry

1.4.2.1: SWOT Analysis of the Indian Diamond Industry:

SWOT analysis is the overall evaluation of an industry’s Internal Environment (strengths

and weaknesses), and External Environment (opportunities and threats) to understand the
present status of the company and use it as an aid in strategic planning.
The Internal Environment: The internal environment analysis comprises of the evaluation
of a company’s strengths and weaknesses, with a view to analyse it’s current status and
the areas where it can correct or strengthen itself.

The strong areas of the Indian Diamond Industry include the large workforce of skilled
craftsmen (about 800,000), lowest manufacturing and labour costs, a well-distributed
marketing network and supportive governmental policies

Weaknesses of the Indian Diamond Industry include areas where it can correct itself,
such as low levels of productivity as compared to places like China, huge stocking of
inventory and thus handling costs and high working capital to be maintained.

The External Environment: The analysis of the external environment is related to the
opportunities and threats that the industry should be prepared for.

The opportunities the Indian diamond industry could utlise include the growing domestic
demand for diamond jewellery and tapping potential newer markets in Europe and Latin
America

The threats facing the Indian Diamond Industry include the entry of countries such as
China, Sri Lanka and Thailand in the small-sized diamond segment, the over dependence
on single-channel suppliers such as the Diamond Trading Company (DTC, the marketing
arm of the De Beers Group) and most importantly, the emergence of newer substitutes
such as synthetic diamonds (cubic zircon, HPHT etc.) which are much cheaper than the
real diamonds.

1.4.2.2 Structural Analysis:

The essence of formulating a competitive strategy is relating an industry to its

environment. Although the relevant environment is very broad, encompassing social as
well as economic forces. The industry structure has a strong influence in determining the
competitive rules of the game as well as the strategies potentially available to the firm.

The goal of competitive strategy for an industry is to find a position in the industry where
it can best defend itself against these competitive forces or can influence them in its
favour.
There are, as defined by Michael Porter; Competitive Strategy-1980, five competitive
forces (threat of entry, threat of substitution, bargaining power among buyers, of
suppliers and the rivalry among current competitors) determine the intensity of industry
competition and profitability, and the strongest force or forces governing and become
crucial from the point of view of strategy formulation. (a detailed template indicating all
the competitive forces and their weights has also been used to analyse the various barriers
of entry, refer appendix I).
(i) Threat of Entry: Entry barriers are economic and technological forces that prevent
outside firms from competing in an industry. These barriers protect existing
competitors from outsiders attracted to join the industry, some of whom might be
highly diversified and powerful. If entry barriers are low, threats from potential
entrants are viable because outsiders can easily come into the industry and increase
competition within it. This reduces the total profits industry participants can share. If
entry barriers are high, outsiders cannot easily join the industry. This protects the
industry and its profits. Entry barriers depend on technological and commercial
relationships within the industry. The most important barriers to entry are cost
advantages, product differentiation, access to distribution channels, and
miscellaneous barriers such as patents and monopolistic control over raw materials.

(ii) Intensity of rivalry among existing competitors: Competition and profitability

within an industry also depend on the intensity of rivalry among existing competitors.
Competitive rivalry consists of dynamic moves and countermoves by competitors to
attract buyers and capture a larger share of demand. Every time one firm makes a
strategic move it can expect its competitors to retaliate. This retaliation may take the
form of changes in product designs, promotional strategies, packaging, advertising,
and prices. Price reduction is a commonly used competitive strategy. However, price
wars reduce total industry profits by reducing industry revenues. Thus, fierce rivalry
within an industry can be detrimental to its profitability. Rivalry among competitors
depends on several factors. They include the number of competitors and their relative
power and size distribution, industry growth rate, fixed and storage costs, switching
costs, size of capacity augmentation, diversity of competitors, stakes of individual
competitors, and exit barriers
 Exit Barriers
Low High
Low, Low,
stable returns risky returns
High, High,
stable returns risky returns
Low
Entry Barriers
High

(iii) Pressure from substitute products: Substitute products erode the sales and
revenues of the industry. They may even eliminate demand for an industry’s product
altogether. Industries with products that can be easily replaced by products from
other industries are always under revenue and profit pressures (e.g. Ball pens eroding
the market of fountain pens, and synthetic diamonds like Cubic Zircon as against the
real diamonds). Besides product substitution, another form of substitution
(substitution of new raw materials, components, and subassemblies) can create
pressure on industry profitability and competition by directly affecting the cost of
manufacture.

(iv) Bargaining power of buyers: Buyer power refers to the ability of purchasers to
get favorable terms of trade with sellers. Powerful buyers can get attractive price
discounts, better credit terms, better product quality, and more product support
services from industry suppliers. Because these concessions are costly, they have the
effect of reducing industry profits. Buyers attempt to get the best value for their
money, and by so doing they put downward pressure on industry profitability. The
power of buyers depends on several factors: buyer concentration, degree of product
differentiation, buyer switching costs, access to backward integration, impact of the
product on the buyer’s product quality, and the amount of information available to
the buyer.

(v) Bargaining power of suppliers: Suppliers of raw materials (the DTC in the case of
the Indian diamond industry) influence industry profitability and competition by
affecting the cost of supply. If suppliers are powerful, they can obtain high prices for
the raw materials they provide. They may also negotiate favorable terms of trade.
They can decide product features, packaging, payment schedule, credit terms,
transportation, delivery costs and schedules. The bargaining power of suppliers
depends on the same variables that shape the bargaining power of buyers. These
include concentration of suppliers, importance of industry to suppliers, threat of
forward integration, access to other sources of supply, and the nature of labor supply.

Size and Growth of the Indian diamond industry

Started in a very small way, the Indian diamond industry has grown multifold since the
time it has started exporting. Presented below is a table showing growth of exports over
the last 35 years both in terms of caratage and in terms of value) Also grown has the
number of countries India has been exporting to; today India exports cut and polished
diamonds to almost 20 countries worldwide (refer appendix for the latest export figures),
with a growth of 171% over the last ten years. The industry totally employs 13,00,000
people and coupled with its extensive network and global presence; the Indian diamond
industry is all set to become a global leader.

Export
Cts Rs. US $
Year
[Millions] [Crores] [Millions]
1970-1971 0.53 28.00 38.00
1975-1976 1.00 99.00 118.00
1980-1981 4.15 590.65 703.24
1985-1986 5.41 1,344.25 1,064.75
1990-1991 8.34 4,738.71 2,641.01
1995-1996 19.21 15,500.98 4,661.90
2000-2001 29.91 28,041.80 6,186.70
2004-2005 [Prov.] 47.95 50,073.37 11,181.48

Present Status: Despite increase in rough diamond prices over the last year and also
issues such as transfer pricing, excise duty on branded jewellery and the newly
introduced value added tax, the diamond industry has performed very well, especially in
the jewellery sector which is the future of the industry.

Some other basic facts about the Indian Diamond Industry:

• Exports of Cut and Polished diamonds form 14% of the total India’s
foreign exports (US$ 11.2 bn out of US$ 78 bn), total gem & jewellery
exports US$ 15.7 bn (2004-05)
• World’s largest diamond cutting and processing center:
• Estimated workforce – 800,000 skilled craftsmen
• 60% global market share by volume and 80% by volume
• 94% of global workers in diamond are Indians
• 11 out of every 12 diamonds polished pass through Indian hands
• 50 banks provide US$ 3 bn credit
• Manufacturing and sales offices worldwide
• Diversified into jewellery manufacturing since 1990 (Diamond Jewellery
market inclusive of exports: Rs. 13,000 crores approx.)
• Conglomerate of family businesses, thus committed and enterprising

Future Trends in the Indian Diamond Industry

With the exponential growth the industry has achieved over the past years, the future is
also equally bright for the Indian diamond industry. The global presence and recognition
for Indian diamantaires over the years has been amazing, coupled with the positive vibes
the Indian economy (GDP growth, increase in awareness levels) is expecting from the
future; India is surely tending to become the global headquarters for diamond and
jewellery.

Some of the emerging trends that can be seen for the Indian diamond industry:

• Further increases in trading activity, foreign export target for 2007 =US$
20 bn
• Infrastructure development: 19 more special economic zones (SEZ)
approved (one SEZ specially for Surat –in Gujarat), this would greatly
facilitate export
• Setting up of the Bharat Diamond Bourse (BDB) to centrally locate
diamond trading operations and would greatly benefit the Indian industry
• Diversifying into jewellery using state-of-the art manufacturing facilities
in export/economic zones, special economic zones to provide one-window
clearance
• Great growth curve for the branded diamond jewellery segment, coupled
with the growing levels of consumer awareness; the branded segment is sure
to grow; India’s jewellery market is the world’s fastest growing market
• Value-addition capability and investment in technology would give Indian
diamantaires the real edge
• Joint ventures / Alliances on the rise; indicating a shrink in the distribution
chain and Indian players have started to dominate
• Extensive network of offices worldwide: (US = 1250, Belgium=325,
Bangkok=325, HK=250, Japan=75)
• Changing retail setup, emergence of malls, superstores, hyper markets and
branded stores, to benefit the diamond industry
• Diamond mining to be started in India also (Central and Southern regions)

Besides the emerging indicators; the Indian diamond industry also would need to prepare
itself for some challenges that might also emerge in the future:

• Emergence of China as a manufacturing alternative

• Greater use of Information technology, the current use if very limited
compared to the other industries
• Need to move from production/ manufacturing orientation to a marketing
led business
• Emphasis on operational and ethical standards to build world class
organizations; more investment in employees required, greater abiding to the
DTC’s Best Practice Principals (BPP)
• Co-ordination amongst all stakeholders –producer, manufactures and
retailers to protect and increase diamond industry reach
• Forward integration into brand building (B2C segment) very much
required for all leading diamantaires
 • Reduction in credit period, Indian diamantaires offer the largest credit
period in the world to their buyers
• Growing demands of the single-channel supplier (the DTC), increasing
rough prices
• Saturation of the US & European retail industries, newer markets need to
be tapped
• Productivity levels in diamond processing need to be increased as newer
players like Sri Lanka and Thailand are also entering in the small carat
segment
• Investment into greater use of technology, better jewellery designs and
into research and development (of gaining expertise in cutting bigger
diamonds as well)

The India diamond industry if able to overcome the above challenges would surely be a
force to reckon with.
 Consumer Survey and Analysis

Branded Diamond Jewellery as a business opportunity (Marketing Plan)

Introduction

The diamond jewellery industry in India today is worth about Rs. 6000 crores (US $1.33
bn) and is rated amongst the fastest growing diamond jewellery markets in the world.
India ranks third in the world in domestic diamond consumption (behind only USA &
Japan). The year 2004 saw a 27% nationwide increase in diamond jewellery sales.
Branding of diamond jewellery started way back in 1994 with Gili (from the house of
Gitanjali Jewels) and today the diamond jewellery market has about 50 brands. Branded
diamond jewellery currently constitutes about 15% (Rs. 900 crores approx.) of the
market for diamond jewellery and is growing at a rate of 40%, this growth can be
attributed to many factors such higher disposable incomes, changing outlook and attitude
of the consumers, aggressive marketing and promotional activities by the branded
players.

To gauge the current perception of the consumers towards branded diamond jewellery
and their responses, a survey was conducted and the responses were analysed.

Objective

The objective of the survey was to gauge the consumer attitude towards branded diamond
jewellery and measure it statistically with a view to facilitate decision-making for the
company to enter into Branded Diamond Jewellery.

Survey Details

As mentioned, the survey was aimed at gauging the attitude of consumers towards
branded diamond jewellery and the reasons for opting or not opting to purchase branded
diamond jewellery; and their desire to purchase diamond jewellery in the near future.
Also, the respondents were asked to rate the factors that influence them the most while
making a jewellery purchase (either Gold or Diamond). Besides these, also the awareness
of the major diamond jewellery brands was measured, with a view to gauge the level of
acceptance of diamond jewellery brands.

Sampling & Survey methods: In order to select the respondents for the survey, the quota
sampling method (but there was also a visual distinction made of the respondent, to judge
his / her spending potential) was followed. All the respondents of the survey also
complied with the eligibility requirements of the survey. The survey method followed
during the course of the survey was the Questionnaire method (refer Appendix IV for
sample questionnaire); with a comprehensive questionnaire focusing on all the relevant
aspects of the objective of the study. The responses obtained were numerically codified
for easier statistical analysis (using SPSS ver.11.5).

Eligibility Criteria: The eligibility for any respondent to answer the questionnaire,
required that the respondent be atleast 18 years of age and needed to have purchased any
sort of jewellery (Gold or Diamond, but not Silver) within the last one year. Although, all
the respondents were women, there was no restriction on the gender of the respondent.

Location and Duration of the survey: The survey was conducted in and around the city of
Mumbai, covering all the areas where local and branded jewellery outlets existed. The
survey was conducted in the months of May and June 2005 and lasted for about 21 days.
Interaction with all the survey respondents was done on a one-to-one basis and the
interaction lasted for about 10-20 minutes. A pilot survey was also conducted prior to the
actual survey with a view to verify the validity of the questionnaire.

The Respondent: The respondent for the survey was classified under four basic categories
on the basis of the most jewellery recent purchase made by them (within the last one
year), the ones which have purchased gold jewellery (branded or unbranded), the ones
who have purchased diamond jewellery (unbranded and branded) and the ones who have
purchased both gold and diamond jewellery (branded or unbranded).

The majority of the questions asked, were specific to the category of the respondent but
also asked were some common questions focusing on awareness about the various brands
of diamond jewellery, about the factors which influence their purchase etc.

Pilot Survey: A pilot / test survey (with 10% of the sample size) was conducted prior to
the actual survey; with a view to verify the validity of the questionnaire and the amount
of time it would take. The pilot / test survey was conducted in almost the same areas
where the actual survey was to be conducted. The findings of the pilot survey were not
included during the analysis of the sample size.

Statistical Analysis: The statistical analysis of the responses is done on the basis of the
category to which he/ she belongs. The statistical software used for the purpose of
analysis was SPSS (Statistical Package for the Social Sciences, ver. 11.5). The various
tests conducted to analyse the responses included Descriptive frequency, Cross-tabulation
Chi-square, Correlation Regression, Paired samples test and Anova.

Analysis

The analysis of the respondents is presented below; the analysis is presented under
various sub-classifications corresponding to the category to which the respondent
belongs. The analysis starts with describing the profile of the respondent and also
presenting some basic facts that evolved from the survey. Due to space constraints and to
avoid unnecessary clutter, only the main charts are shown alongside the analysis, for the
detailed analysis, please refer appendix V.

Profile of the respondent

For replying to the survey, the respondent needed to be aged atleast 18 years and needs to
have purchased (or assisted in purchase) gold / diamond jewellery (unbranded or
branded) within the last one year.

Basic facts: The following are some of the basic facts, which evolved from the analysis of
the survey. The facts are serially listed as the flow of the questionnaire. The details of the
analysis would follow in the category specific. To avoid unnecessary clutter, the
graphical representation of the facts has been placed in appendix.

• 30% of the respondents (the biggest chunk) were aged 48 yrs and above,
the next biggest constituent (28%) were respondents aged between 28 and 37
yrs.

• 46% of the respondents (the highest) were housewives, 24% were

employed part-time, 20% were full-time working and 10% of them were
students

• 47% (the maximum) of the respondents said “watching TV” was their
most frequented hobby, cooking (21% of the respondents) was the next
frequented. The other popular hobbies included painting, traveling, teaching,
reading & yoga.

• 32% of the respondents (the highest) purchased their jewellery

(gold/diamond or both) 4-to-6 months prior to answering the survey. The next
frequented period was 7-to-9 months (30% of the sample size) prior to the
date of answering the survey.

• Awareness levels: 63% of all respondents rated “Nakshatra” as the brand

on top of their minds (TOM or top-of-mind awareness is tested as the first
name which one replies when asked about the particular category, in this case
it was awareness about diamond jewellery brands) when asked about diamond
jewellery brands. Asmi was next with a 24% TOM awareness. Amongst non-
DTC brands Kiah had the highest TOM awareness.

• Age-wise Recall: Across all the age categories, the brand Nakshatra also
had the maximum top-of-mind recall. Across the most populous category of
respondents (aged 48 years and above), Nakshatra had the maximum top-of-
mind recall (50%), closely followed by Asmi (40%). Among the non-DTC
brands, Kiah had a 17% top-of-mind recall among the respondents aged 18-27
years.

• Aided Awareness: 26% of all respondents (the highest) were able to recall
the brand Gili when aided with some excerpts about the brand. Kiah was the
next most recalled brand with 25% aided awareness. The other brands having
aided awareness were Carbon, Orra, Sangini and Asmi. 23% of the
respondents were not able to recall any brand of diamond jewellery.
• Age-wise aided awareness: The age-wise aided recall for non-DTC brands
was better than in the earlier cases, with respondents being able to recall
brands with easy references. Kiah had 36% aided recall across the category of
respondents aged between 37-48 years. The other brands having good aided
recall were Gili and Carbon. Atleast 20% of the respondents across each age-
category were not able to recall any brand of diamond jewellery. (for the
graphical representation of the charts refer Appendix)

• Repurchase: 28% of all the respondents said they would go back to their
earlier retailer to make their next purchase.

• Influencing factors for purchase: 51% of all the respondents rated the
attitude / knowledge of the sales person as an important factor influencing
their purchase of jewellery

52% of all the respondents said that the pricing of the jewellery was the single
most important and influencing parameter while making their jewellery
purchase

50% of all respondents rated “variety of designs” as the most important factor
influencing their purchase of jewellery.

67% of all respondents said that the shopping environment was not a very
influencing parameter while making their purchase.

51% of all the respondents rated after-sales service as an important

influencing parameter while making their purchases.

(for the detailed graphical representation of each of the influencing parameters

refer appendix)

• A graphical representation of the top 2 boxes and bottom 2 boxes of the

responses towards the various influencing factors is presented below; the top 2
boxes consist of the highest rated parameters (“important” & “very
important”); and the bottom 2 boxes comprise of the least rated parameters
(“not important” and “required-but not important”). A value of 70% and
above for either the top 2 or bottom 2 boxes shows inclination of the majority.
 Influencing Parameters to purchase

Top 2 Boxes
Bottom 2 Boxes

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Attitude of Shopping Payment Variety of In-store env t Brand Name After Sales Pricing Personal Attn. Other
Sales person experience methods Designs serv ice attractiv e
offers
Attributes

Analysis: Jewellery buyer

The gold jewellery buyer is defined as that respondent whose most recent jewellery
purchase was gold jewellery (branded or unbranded). Gold Jewellery buyers constituted
about 60% of the whole sample size. The respondents in this category were asked
questions pertaining to their most recent purchase and the reasons for not opting for
diamond jewellery, their awareness about diamond jewellery brands, the possibility of
them buying diamond jewellery in the near future (within the next 9 months) and their
opinion about branded diamond jewellery (for detailed questionnaire refer Appendix).

Some of the basic facts pertaining to the jewellery buyers:

• 80% of the sample constituted of female buyers, and the rest were male
buyers; but in almost all the cases it was the woman who made most of the
purchase decision.

• 60% of the sample size constituted of gold jewellery buyers (20% branded
gold jewellery buyers), the rest were either buyers of diamond jewellery or of
precious and semi-precious stones (emeralds, rubies, sapphires and others)
 • 10% of the respondents had made their last purchase at TBZ
(Tribhovandas Bhimji Zaveri) outlets, all over Mumbai

• 50% of the respondents purchased atleast three items of jewellery in their

last purchase (out of rings, precious stones, pendants, earrings, bangles, chains
or necklaces)

• Among the gold jewellery respondents, Nakshatra had the highest TOM
recall with 68%, Kiah had the highest aided recall of 37%

• 36% of the respondents were planning to purchase diamond jewellery

(branded or unbranded) within the next 7-to-9 months, but however the
majority of them (55%) were not sure about their next diamond jewellery
purchase.

• The most common reason (62% of the respondents) for not having
purchased branded diamond jewellery so far, was that they trusted their local
jeweller and thus have made most of their purchases from them; 25% of the
respondents said the pricing of the branded diamond jewellery was too high
and thus haven’t purchased it as yet.

• Influencing parameters to purchase: Majority of the respondents rated

“attitude of the sales person attending them”, “variety of designs”, “after sales
service offered” and “pricing of the jewellery” as factors most influencing to
their purchase. Respondents were least interested in attributes such as “in-
store environment”, “the shopping experience”, “personal attention given” and
“brand name of the store”.

Detailed Analysis

The gold jewellery buyer comprised of the major chunk of the respondents for the survey,
with about 80% of the respondents of this segment comprising of unbranded buyers, the
major reasons for this could be the established relationship with their family jeweller, or
due to bulk purchases (as most of the respondents of this category had purchased atleast
three items of gold jewellery) made.

When asked about the reasons for not opting for branded jewellery, the most common
replies were that they had been purchasing from their local jeweller since a long time,
thus were assured while making their purchases and so didn’t find the reason to purchase
branded jewellery.

According to the respondents, the major advantages of purchasing from the local
jewellers was assurance of the purchase, good customer service offered (knowledgeable
sales person, personal attention by the proprietor of the store, prompt after sales service),
accountability of the purchase, wide range of designs offered (even customizing the
designs), within-budget pricing.

About 20% of the respondents also constituted of buyers who had bought branded gold
jewellery (mainly from Tanishq outlets) within the last one-year or so. Their responses
were also similar, stating that assurance of the purchase made, good customer service
offered and wide range of designs were big advantages of them purchasing from a
particular store.

Diamond Jewellery: Asking the respondents about diamond jewellery most of them
replied that the pricing of the diamond jewellery was a key aspect for their inclination
towards purchase, also many of them said that they would first try it out at their local
jeweller. But, many of the respondents (42%) were also planning to make diamond
jewellery purchases within the next nine months, indicating that people have started
looking at diamonds as an investment option, a trend which has grown over the last many
years.

Branded Diamond Jewellery: The respondents (across all categories) were asked more on
the lines of branded diamond jewellery, the reasons for not purchasing it as yet and their
perception about it. Almost all the respondents were aware about diamond jewellery
brands and were able to recall them with ease. The DTC brands (Nakshatra, Asmi,
Sangini & Arisia) had good recall and were seemingly better than the other non-DTC
brands; this could be attributed to the large-scale promotional and marketing activities
made by the Diamond Promotion Service (DPS, having spent Rs. 28 crore in the year
2004-05 purely on the promotional activities of their flagship brands)

The non-DTC brands (prominently Gili, Carbon & Kiah) had a considerable amount of
recall, but were very strong among certain age-groups (18-27 yrs and 38-47 yrs). Such a
response could be attributed to the large advertising spends by them in the recent past (as
in the case of Kiah), and the substantial name gained by the brand due to its presence in
the market since a long time (as in the case of Gili –since 1994- and Carbon –since
1997). Besides these brands there were many other brands (Oyzterbay, Sparkles,
Ciemme, etc), which were recalled by the respondents, but their percentage of recall was
miniscule as compared to the other ones.

There also existed a percentage of the gold jewellery buyers (13%) who were not able to
recall even a single brand of diamond jewellery inspite of giving references, such a
response could be attributed to many factors such as lack of awareness, inability to recall,
disinterested about branded diamond jewellery, shortage of time etc.

Influencing Parameters to purchase: The respondents were asked to rate a list of 10

factors (on a scale of 1-to-4, where “1” means “not important” and “4” means “very
important”), which they felt influenced their purchase of jewellery to a large extent. The
response to these factors would help to gauge the attributes that consumers relied on
while making a purchase and a proper interpretation of these could facilitate better
decision-making.
The parameters were carefully chosen, keeping in mind the activities a consumer
undergoes while making a jewellery purchase, such as the sales person attending them,
the whole experience of shopping, the brand name of the store, the after-sales-services
offered by the retailer and most importantly, the pricing of the jewellery.

Apart from calculating the frequencies for the various parameters, the degree of
correlation within the various parameters was also calculated with a view to understand
how the influencing parameters were related within themselves (viz. some parameters
were together very influencing e.g. respondents who rated “shopping experience” high,
also rated “brand name” as very high; this could give an inference that the shopping
experience is proportional to the place where a consumer purchases his jewellery,).

The following pairs of attributes had a strong correlation value:

• The variety of designs offered was related to the pricing of the jewellery,
this implies that the respondents felt that these two factors influenced their
purchase to a large extent (Sigma value =0.264*), or in simple words, the
respondents who felt variety of designs was an influencing factor, also felt
that the pricing of the jewellery was very important.

• The attitude of the sales person attending the consumer was related to the
in-store environment of the jeweller, meaning that the respondents felt that the
sales people differed from store to store and also differed within each store.

• The shopping experience was negatively correlated (sigma= - 0.273*) to

the after sales service, which clearly meant that the respondents didn’t value
intangible attributes such as the showroom outlook as much as they valued the
after sales services, a retailer offers them.

• There also existed a mild correlation within other pairs of attributes as

well (such as payment methods offered by the jeweller –credit period, half
payment- and the pricing of the jewellery, and between attitude of the sales
person and the personal attention given to each customer).

Reasons for not opting for branded diamond jewellery: The respondents were also asked
questions on their opinions about not purchasing diamond jewellery, with a view to
understand the psyche of the consumer towards diamond jewellery brands and proper
interpretation of this could facilitate better decision-making.

The majority of the consumers (62% of the respondents), when asked about the reasons
for not opting for branded diamond jewellery as yet, said that they have been regular
purchasers from their local jewellers and have already established a certain relationship
with the retailer in terms of the services offered by the retailer and other similar benefits.
About 25% of the respondents also said that the pricing of the branded jewellery was too
high and thus they have not opted for buying branded diamond jewellery.
Further expectations from diamond brands: The respondents were asked questions
regarding their future expectation from branded diamond jewellery and some other
attributes that they felt were important for a diamond jewellery brand to succeed.

As noticed in the earlier responses, pricing of the jewellery and larger variety of designs
were among the majority of the responses by the consumers. Many of them also
suggested that there needs to be more accountability in terms of the jewellery purchase,
viz. the consumer needs to feel assured while purchasing the jewellery (a factor which the
local jewelers have adeptly capitalized upon) in terms of knowledge and transparency
about the product (and its constituents, i.e. weight of gold, colour and caratage of
diamonds etc.), which indicates the need of good and knowledgeable sales person at the
counter attending the consumer.

BUSINESS PLAN FOR THE POTENTIAL TO FORAY INTO THE BRANDED

DIAMOND JEWELLERY SEGMENT:

Introduction

Branding in the diamond jewellery segment in India was initiated first by Gili (Gitanjali
Jewels, in 1994) and today (mid-2005) there exist about 45-odd diamond jewellery
brands in the marketplace, indicating a transition in not only the retail setup of the Indian
market, but also in the vision of the various diamond trading companies who were earlier
(some still do so) mainly exporting diamonds (rough diamonds or cut and polished ones).
The vision to move lower down the value chain (forward integration) is the indication of
a desire to get closer to the end consumer by retailing diamond jewellery all by
themselves, which was earlier wholesaled to the local jeweller who later sold it to the end
consumers and enjoyed not only tangible benefits such as high profit margins and market
shares, but also intangibles such as trust and goodwill of their customers. The change in
vision made the diamond exporting companies look at branded diamond jewellery as a
business opportunity worth capitalizing.

This section of the report looks at the various facets a firm needs while moving into
branding their own jewellery. The analysis is backed by a qualitative survey conducted of
various Business-to-Consumer (B2C) sightholders of the Diamond Trading Company
(DTC, the marketing arm of the De Beers Group) and also of companies who have
ventured into retailing in a different way: through direct marketing (mail catalogues,
online retailing, home shopping etc.).

WHY BRANDING?

Simply put, branding means giving a name to a product and signaling to the outside
world that such a product has been stamped with the mark and imprint of an organization
and behind the brand exists corporate long-term involvement, a high level of resources
and professional skills. Communicating the information is the core essence of a brand.
When it comes to products, customers make a comparison, but with brands they make a
choice (i.e. products increase customer choices, brands simplify it).
Branding has five reasons /advantages to it:

• Differentiation: Branding helps a product to stand out from the rest and
thus gives an identity to its seller or maker.

• Promise: Branding gives the assurance (or the promise) of an understood

experience, something which promises what you expect from it.

• Preference: Branding facilitates the making of a preference or a choice

over its unbranded counterpart

• Targeting: Branding helps in targeting the right group of customers,

which is very difficult with an unbranded commodity, mainly because it is
easier for a customer to related a branded good with his aspirations than an
unbranded product

• Premium: The ability to command that extra premium in lieu of the

relationship that can be associated with the brand.

Putting it simply again, what distinguishes a branded product from its unbranded
commodity counterparts is the consumer’s perceptions and feelings about the product’s
attributes and how they perform. Ultimately, a brand resides in the minds of the
consumer.

Similar is the ideology while branding luxury goods, the creation of a new layer of
credibility and personality to a brand by connecting powerfully with people on a personal
and holistic level known widely as Emotional branding.

Emotional Orientation of Branding

Emotional branding is more than a process or research technique; it is based on the

connections between people that transcend charts and graphs. It is a culture and a way of
living; a fundamental belief that people are the real force in commerce and that business
and the street cannot survive separately. Emotional means how a brand engages
consumers on the level of senses and emotions; how a brand comes to life for people and
forges a deeper, lasting connection with them.

The most compelling aspect of emotional branding is that, it focuses on the most
compelling aspect of the human character, the desire to transcend material satisfaction,
and experience emotional fulfillment.

Analogous to this, is the approach towards branding diamond jewellery, where the
objective is to tap into the aspirational drives, which underlie human motivation towards
the jewellery. The underlying concept of branding diamond jewellery is based on four
essential pillars:

• Relationship: The ability to create an identity facilitating consumers to

connect and relate with it

• Sensorial Experiences: To impact the senses of the consumer and stay in

one’s memory, thus establishing brand preference and loyalty

• Imagination: The approach that makes the branding process real, make
the consumer to relish the other facets of the brand besides the product (the
packaging, the retail experience, the advertisements and their like)

• Vision: The ultimate factor of a brand’s long-term success, the mode of

conceiving where to project and position the brand and relate everything to
this. Probably, the most critical parameter for a brand to succeed.

Detailed Market Analysis / Marketing Plan:

The above-presented facts constitute the basic revelations from the survey conducted
with the respondents under the domain of branded diamond jewellery. The detailed
analysis would now correspond to the marketing mix (the product, price, place and
promotion mixes) and how each firm balances this marketing mix to cater to this forward
integration, and also a brief insight into one of the key aspects of positioning; which gives
the clearest perception of where the firm wants the customers to perceive them; which is
one of the most fundamental parameters to judge a brand, and more so for the category of
diamond jewellery.

The Positioning:

Pedantically speaking, positioning is the act of designing the company’s offering and
image to occupy a distinctive place in the mind of the target market. The end result of
positioning is the successful creation of a customer-focussed value-proposition, a cogent
reason of how the target market should see the brand and why the consumer should buy
the product. Positioning forms the basis of all the other elements of the marketing mix;
branded diamond players credit a lot of importance to positioning (whether they want it
to be exclusive or common or differentiated) and hence base all their budgets and
strategies on it.

To get a clear view, shown below is a brand positioning square that gives the reasoning
for the positioning of a brand:

Why? For whom?

 When? Against whom?

The above brand-positioning square would give a clear concept of what positioning
actually means for a brand. Similar to this ideology, the respondents of the survey also
rated the attribute of positioning as one of the most important factors for further
formulation of strategies especially with respect to their competitors. Positioning also
helps in giving confidence to the branded players in looking at the brand as a suitable
proposition and this substantiates the value offering further.

The current nascent scenario of the branded diamond jewellery segment in India wouldn’t
permit many of the branded diamond players to move ahead with a very optimistic
strategy, in simpler words; all the players are following a wait and watch strategy, which
would give them ample time for the current nascent status of the industry to grow and the
growth would help them leverage their status also; but at the same time, also important is
to continuously maintain the relationship with the brand so as not to lose the essence.

The Product: The product is the key element in market offering, and also the most
important aspect of the marketing mix. The marketing-mix planning begins with
formulating an offering (the product) to meet target customer’s needs or wants (or
desires, in the case of diamond jewellery). The consumer judges the product offering by
three basic elements: product features, the quality and the price (greatly in the Indian
context).

Simply put, a product is anything that can be offered to a market to satisfy a want, a need
or a desire. As seen in markets elsewhere, diamond jewellery too has various product
levels (the core benefit –of purchasing the product-, the basic product, the expected
product –the attributes expected from the purchase of the product, the augmented product
and the potential the product has) by which it can be marketed.

The product aspect in the marketing of diamond jewellery is definitely the most
important element of the marketing mix; all the advertising and the promotion cannot
make the consumers buy a product if they do not like it. Thus, the concept of the product
mix requires the greatest attention during the formulation of any marketing strategy; the
other elements of the marketing mix mainly supplement the product

The product, the diamond jewellery, is ideated with designing of the jewellery to be
exhibited; the design also needs to be in sync with the price a customer would be willing
to offer (again arises the aspect of positioning of the brand and the company) for the
product to be made. The designs are made keeping in mind several current trends, youth
and bridal, and also sometimes references are made to popular foreign designs and
patterns that could be adapted to the Indian market. Generally, very highly priced
jewellery doesn’t form a part of a company’s initial product line, unless the brand wants
to position itself exclusively.
The design after approval moves for production (refer appendix III for the jewellery
manufacturing process) where it is continuously tested for quality (quality control) at all
stages of its manufacturing process. Jewellery not conforming at any level is immediately
rejected (and either sent for reworking of the affected area or is rejected and relieved off
its gold and diamonds) before further processing. The diamond jewellery after the final
quality check is approved for packaging and further sale.

Besides the designing of the diamond jewellery, also important is the estimation of
demand of positioning the jewellery at the outlets (i.e. which type of jewellery and
quantity to be positioned at which outlets and in what price range) the most popular
method is the constant feedback from the sales team which gives not only a clear picture
of what is the latest trend, but also an idea about competitors’ sales. Some of the currently
followed methods of demand estimation include conducting of a formal market research
(usually by an independent organization with a view to avoid bias) and use of
Management Information System (MIS) software which technically prioritize areas
geographically, based on purchasing power parity and decide what goods to be exhibited
in the respective counters. Sometimes, market research agencies constitute the whole
activity of finding out the latest trends in the market, the prioritized list of areas based on
spending power and also an idea of the future trends.

The Sales Personnel: The aspect of the sales personnel at the counter was rated as one of
the most influencing parameters to the purchase of any kind of jewellery. The advantages
of knowledgeable sales personnel at the jewellery counter are many (better
communication about the product, information gathering and giving feedback to the
retailer about the responses by the consumers etc.) and these advantages can surely be
used to leverage the company’s profitability.

A sales person definitely needs to have the required knowledge about the product and its
features, it’s policies, the services it offers –both pre and post sale. Concrete measures are
being taken by the branded players in the aspect of having a smart and knowledgeable
team of sales personnel at the counters that exhibit the diamond jewellery. The
professional influx has benefited the companies in this aspect, with the salesmen going
through rigorous in-house training (starting with the shop floor of the jewellery
manufacturing and giving them various inputs on communication skills) and outdoor
training at the counters of the jewellery outlets.

But, inspite of dedicated perusal towards strengthening of their sales personnel,

companies are facing high attrition rates, and this is posing as a grave problem to the just
nascent branded diamond jewellery segment. On the contrary, the local jewelers have
many advantages in this area with their experienced and knowledgeable sales personnel
catering to the customers’ needs. The respondents of the survey said that the constitution
of smart and aggressive sales personnel was a very important aspect for the branded
diamond jewellery segment to compete with the local jewelers and to succeed.

After-sales service: The attribute of after-sales service is classified as one of the

determining factors towards the repurchase of the product and thus brand loyalty. This
aspect was also rated as one of the most influencing factors towards the purchase of
jewellery, mainly in contention with the view that many consumers of local jewellery had
experienced problems with matters related to maintenance (re-polishing, re-sizing of the
jewellery), repair or remaking of the jewellery. The respondents in the consumer survey
also rated this as one of the most looked upon factors before the purchase of any product.
Branded jewellery players are indeed working in this direction, constantly assuring
customers of the services to be provided for charging the extra premium.

Attractive offers and policies: The aspect of augmenting the product with various other
benefits is a common practice followed by branded players, with the consumer expecting
indirect benefits in lieu of the premium he pays for the branded product. Policies such as
buy-back of the jewellery, exchange of jewellery purchased for a newer purchase are
some of the policies introduced by branded diamond jewelers with a view to benefit the
customer and ensure consistency in their approach. Majority of the policies formulated
are derivations from similar policies followed by popular American jewelers. Branded
players exhibit greater consistency in their approach towards policy making than the local
jewelers.

The Price mix: Price is the only element of the marketing mix that produces revenues all
other elements add costs. The pricing of diamond jewellery (especially in the Indian
context) is a very crucial aspect considering the price-sensitivity of the Indian market,
and the notion of people about branded products being expensive.

Branded diamond players have taken this aspect very seriously and with a view to attract
consumers towards buying branded jewellery have priced their jewellery very low at the
entry level and have concentrated more in the lower price ranges and have larger varieties
in this range. Consumers say that pricing isn’t as important as the justification of the
pricing, and branded players are continuously making strategies in this regard to explain
customers the justification for the premium charged.

The aspect of pricing of the jewellery again depends on the self-notion of the company
and the perception it assumes to gain in the consumer’s mind. Jewellery pricing mainly
communicates to the market the company’s intended value proposition of its product or
brand. Branded diamond players follow three basic methods of pricing their jewellery

• Exclusive pricing: Price the jewellery exclusively without any inhibitions

regarding competitor’s prices, aiming to be perceived exclusively by
consumers

• Competitor-based pricing: Pricing the jewellery based on competitor’s

prices and adjusting prices (either higher or lower) in accordance with the
competitor

• Consumer-based pricing: Taking views from the consumer’s regarding the

prices they would be ready to pay for the jewellery they aspire; a market
research could also be conducted to supplement this

There exist many more methods of pricing besides the popular ones mentioned above.
The element of pricing assumes great importance in markets such as India, which have a
tendency of sensitivity towards high prices. Most of the branded diamond jewellery
players follow their own costing methods (Gold costs + Diamond costs +Labour charges
+tax + overheads +profit margin), but also have a look at competitor’s prices and sales to
avoid diversion. The respondents who deal in online retailing mainly have exclusive
pricing, but have a general look at other retailers to mainly verify their pricing. Online
jewellery retailing has lower pricing than the OTC (over-the-counter) pricing mainly as
the costs of promotion and overheads are much lower than the others and their mode of
advertising is direct (Catalogues, via Internet, Television shopping etc.) and thus is
exclusive in its approach.

Besides self-pricing, another important aspect for the branded diamond jewelers is the
impact of price changes by competitors, some branded players react immediately and also
follow the same trend; others react by introducing attractive offers (free gifts, vouchers
etc.), some others do not react all, mainly because of the willingness to be exclusively
perceived and not reactive to competitors price changes; all this again indicates the
positioning of the brand, which is one of the most important parameters of branding a
product, especially in branded diamond jewellery.

Some other methods of differentiated pricing involve having tie-ups with popular banks
and provide easy installment schemes to the consumers, mainly to compete with the
offering of credit periods by local jewelers (an alternative to paying upfront, allowing the
consumer to pay a remainder of the amount at a later date).

The Place mix: In a hyper-competitive economy with increasingly rational buyers, a

company can only win by creating and delivering superior value. The element of the
place mix attributes to the offering of value to the consumer through its various facets
such as the distribution network, the logistics involved, the whole inventory set-up and
the way it is conceptualized.

The current basis of the distribution setup for branded diamond jewellery follows
centralized network, wherein all the inventory is distributed from the company’s central
location (mostly Mumbai or Bangalore), all the goods to be dispatched leave from the
central location and similarly, all the returnables (damaged, replaced or unsold stock) also
return back to the central location. Some companies also maintain some inventory at
regional outlets mainly to cater to buffer requirements during peak seasons. Future trends
in distribution setup include setting up fully functional regional offices of the brand, with
a view to cater to the expansion in the number of outlets that is to happen in the near
future. All companies surveyed predict atleast a 25% increase in the number of their
outlets within the end of the year.

The very nature of branded diamond jewellery makes it very expensive and insecure to
stock unnecessary inventory at outlets (MBOs and SISBs), this not only increases
handling costs but also increases opportunity costs for the jewellery, where in it could
have been stocked elsewhere. This indicates the importance of prioritization of the
jewellery to be distributed, as in what type of jewellery should go to which region
(because demands within India are also geographically different and are influenced by
culture); such prioritization is usually done on the basis of feedback from the regional
sales team or from the local jewelers who buy wholesale from them, or also with the help
of softwares which track the region based on purchasing power parity and technically
generate the requirement to be distributed.

Place mix for online retailing: The setup for online retailing is much different from that
of over-the-counter retailing, mainly because here there is greater emphasis on factors
such as logistics, packaging of the product and on delivery time. The payment is made
electronically and the delivery starts only upon verification of the payment made.
Distribution for all types of direct marketing (online retailing, catalogue selling and mail
marketing) is centralized and all the stock is moved from the central location and is
returned to the central location. The process of online retailing is much simplified
considering that the maintenance of inventory (both in terms of handling costs and
security of the stock) is much easier than over-the-counter (OTC) sales.

The branded diamond jewellery players are seriously working on strategies to improve
upon the value-delivery-network offering to the consumer, with the local jewelers having
a great advantage in the distribution aspect mainly because of nearness to the consumer
(most of the local jewelers have outlets within the same city or region), extensive use of
third party delivery services (mostly airmail or couriers) and using technology enablers to
assist them in distribution.

As the branded diamond jewellery segment grows, aspects such as distribution and
logistics would become the key differentiating aspects for many activities such as
remaking, reshaping or replacing the jewellery to suit the requirements of the customer
(getting the product in the right time and at the right place). The branded diamond
jewellery segment, which is actually aiming to expand aggressively into smaller cities
and towns of India, will surely have to concentrate on aspects such as logistics and
inventory management.

The Promotion mix: The attributes of the promotion mix make it the most visible
element of the marketing mix. The promotion mix is basically associated with activities
such as sales promotion, advertising, public relations and their like.

Considering the present hyper-competitive marketplace, the promotion mix of a product

could actually be a determinant of its success or failure; promotion is actually speaking,
dependant very much on the way the company perceives it (again based on positioning),
some companies actually prefer a low-profile image with no emphasis on advertising at
all and on the contrary, others perceive promotion as the most important attribute of their
marketing mix, again indicating the orientation of positioning the product in the minds of
the consumer.

Analysing the responses of the people surveyed, promotion of branded diamond jewellery
was necessary but also had a subjective perception to it and it was looked at with a fixed
budget (usually 3-4 % of the sales), most of the activities of the promotion mix
(advertising, PR etc.) are outsourced. The prioritization of the markets for the promotion
mix is usually done during the planning of the marketing mix and depending on the
budget allotted; the promotion mix is carried out. Online diamond trading companies
have a different mode of promotion, where in they rely more on modes of direct
marketing (catalogue marketing, direct mailers, TV advertising and Online advertising),
which has lesser costs than the regular mode of promotion and also has many other
benefits attached with it, due to its smaller base of competitors.

The main objective of promotion for branded diamond jewellery is to connect with the
feelings and emotions of the consumers and aim to build a relationship that would last for
a long time. The various types of promotional activities followed by companies today
include print advertising, sponsoring events, celebrity endorsements, outdoor advertising
and more popularly, public relations (PR). Promotion clearly helps to relate to the
essence of the brand, which is truly one of the key aspects of branding and promoting of
luxury goods.

Inferences

After analyzing the views of the surveyed respondents, the basic inferences from the
qualitative analysis reveals:

• Brand positioning is surely one of the most determining aspects as it

probably controls all the elements of the marketing mix, giving a clear idea of
the way the brand wants itself to be perceived by its target group

• Considering the current scenario of the branded diamond jewellery

segment in India, branded players do spend a lot of time deciding where to
position themselves and then the further elements of the marketing mix

• The Product mix and its constituents (product design, sales personnel
employed, after sales service) play the greatest role while making strategies
for brand building

• Designing of the jewellery is done by analyzing various successful trends

in countries abroad, and also by conducting market surveys within the country
mainly to judge the consumer preference for the diamond jewellery and the
price they would be willing to pay, an average of 25% of the designs made
get final approval, and atleast 10% of the final designs flop every year for all
leading brands

• Good sales personnel to manage the jewellery counters are the need of the
hour, branded players rate a knowledgeable sales personnel as one of the key
requirements for the branded diamond jewellery to combat the local jewellers

• Consistency in the attributes of after-sales-service (resizing, remaking,

reshaping or repairing) will prove to a differentiating factor as the branded
diamond jewellery segment grows; the outlook of jewellers (both branded and
unbranded) towards providing services will need to change; branded players
are seriously working in this regard
• Policies of buy-back and exchange of jewellery are being used as tools to
attract branded buyers to prefer branded jewellery over buying from
unbranded jewellers, an average of only 3% of the jewellery sold comes back
for buy-back, and about 6% of the buyers exchange earlier purchases for
newer jewellery. The policies followed are basic derivations of similar
popular policies followed by American jewellers, but companies need to
maintain consistency in the policies with a view to give assurance to their
buyers

• Currently, the branded players follow very stringent quality control

measures, which is a good prospect in terms of the future for the branded
diamond segment, giving assurances to the customers on grounds of quality
and would also help them against the local jewellers (where hand-made
methods of processing are used as compared to the automated processes used
by the branded players)

• Considering the Indian context, the price mix plays a very important role
in terms of the low purchasing power parity of Indians as compared to other
major jewellery consuming countries, the method of pricing the jewellery is
usually based on it’s costing, but verification of competitor’s price ranges is
also done; exclusive pricing is followed by companies based on their
positioning; sometimes estimates of pricing are also done by market research
agencies, wherein they ask the consumers, the price they would pay for a
jewellery

• The distribution mix is a very important aspect in terms of the value

offering to the consumer; attributes such as stocking inventory, maintaining
consistent flow of jewellery, arrangements for negotiations with local
workshops for immediate resizing or repairing, proper logistics within the
head office and the regional outlets, aspects of security and maintenance of
the stocked jewellery, minimizing handling and unnecessary transporting
costs etc. are key aspects of the distribution mix; future trends for the branded
players include setting up of regional head quarters to maintain continuous
flow and oversee the distribution setup

• A good distribution setup would greatly facilitate the branded players to

expand further within India, all the branded players surveyed project atleast a
25% increase in the number of outlets by the end of the year

• The Promotion mix for branded diamond jewellery is surely a necessity,

but it needs to be implemented in the right way, or it could have recuperative
effects on both the brand and the company promoting it and also to newer
brands released by the same company

• Promotion mix currently follows a fixed-budget method (usually 3-4 % of

sales) and is kept within limits for implementing the activities of promotion
(above or below the line promotion), the aspect of promotion is important
from the point of attempting to create a relationship with the consumer, to
make the consumer connect with the jewellery and more importantly maintain
the essence of the brand or emotional branding

• Branded players are seriously looking at the aspect of promotion, although

some look at it subjectively, they understand the importance of trying to create
an image of their brand especially in the nascent stages of brand building in
the diamond jewellery segment, wherein the consumer attitude towards brands
is changing

• Overall, the consumer attitude towards branded products is changing, with

greater assurances on grounds of quality and security of purchase, consumers
are no more perceiving branded goods as expensive and with jewellery got
within affordable price ranges, the outlook towards branded diamond
jewellery is surely changing and there exists great optimism for this segment
in the future