DIFFERENCE BETWEEN LUXURY BRANDS AND REGULAR BRANDS (JEWELLERY
INDUSTRY) CASE STUDY: Repositioning of Ganjam as a luxury
brand.
Submitted in partial fulfilment of the requirement for the award
of the degree of Bachelors of Business Management of Christ
College, Autonomous BY NIDHI.B 07D-1863 UNDER THE GUIDANCE OF
MRS.PHINU JOSE,
THE DEPARTMENT OF MANAGEMENT STUDIES CHRIST COLLEGE, AUTONOMOUS
BANGALORE 560029 2009-2010
CERTIFICATE
This is certify that Ms. Nidhi.B, 07D-1863, is a bonafide
student of VI Semester BBM programme studying in this Institution.
She has prepared and submitted a project report titled difference
between luxury brands and regular brands in the jewellery industry,
along with a case study, in partial fulfillment for the requirement
for the award of the degree of Bachelors Of Business Management
[BBM] programme of Christ College, Autonomous, for the Academic
Year 20092010.
This project has not formed the basis for the award of any
Degree of Diploma of any other university or institute.
Jain Mathew Head of the Department Place: Bangalore Date:
Department of Management Studies Christ College, Bangalore
2
GUIDE CERTIFICATE This is to certify that, this project titled,
difference between luxury brands and regular brands in the
jewellery industry, along with a case study, submitted to Christ
College, Autonomous for the award of a degree in Bachelor of
Business Management [BBM] as a record of original and independent
work carried out by Ms. Nidhi.B, 07D1863, under my guidance and
supervision.
This has not formed the basis for the award of any Degree or
Diploma by Christ College, Autonomous or any other University.
Mrs.Phinu Jose Place: Bangalore Date: Project Guide Christ
College, Bangalore
3
DECLARATIONI, Nidhi.B, hereby declare that this project report,
difference between luxury brands and
regular brands in the jewellery industry, along with a case
study, submitted to ChristCollege, Autonomous, is a record of
original and independent work carried out in partial fulfillment of
the requirement for the award of a degree of Bachelors Of Business
Management [BBM].
I also declare that this representation has not been previously
published or submitted as a project report for the award of any
Degree or Diploma of Christ College, Autonomous or any other
University.
Place: Bangalore Date:
Name: Nidhi.B Reg. No: 07D1863
4
ACKNOWLEDGEMENTI would like to express my profound gratitude to
all those who have been instrumental in guiding me through my
research .I express our sincere thanks to Dr. Fr. Thomas C. Mathew,
Principal of Christ College and Mr. Jain Mathew, Head of
Department, Management Studies for their encouragement and support.
I extend my gratitude to Mr.Suresh Subramaniam, Marketing advisor
of Ganjam who gave me an opportunity to be an intern in such an
organisation that has helped me gather so much information about
marketing in Ganjam and hence prepare my research report. I also
thank all the marketing staff at Ganjam who took me through all the
processes in the organisation and helped me understand the luxury
industry on which my study was based. I am deeply grateful to
Mrs.Phinu Jose, Project Guide, Department of Management Studies,
Christ College, for the cooperation extended by her to conduct this
study, advising us on the project report and furnishing the
required information. I would also like to thank the faculty for
their constant support. Last, but not the least I would like to
thank my parents and friends for their constant help and
support.
5
TABLE OF CONTENTSSL.NO CONTENT CHAPTER 1 INTRODUCTION1.1
Introduction to the topic 1.2 Introduction to the industry 1.3
Introduction to the company 1.4 Review of Literature
PG.NO8 29 34 44
1.
2.
CHAPTER 2 RESEARCH DESIGN2.1- Title of the study 2.2- Objectives
of the study 2.3- Scope of the study 2.4- Type of research 2.5-
Sample size and sampling method 2.6- Data collection methods 2.7 -
Statistical tool used 2.8- Limitations of the study 2.9-
Respondents profile. 53 53 54 54 55 57 58 59 59
3.
CHAPTER 3 DATA ANALYSIS AND INTERPRETATION3.1- Table and
analysis 3.2- Chart and interpretation 62 62 76
4. 5.
CHAPTER 4 SUMARY OF FINDINGS CHAPTER 5 - BIBLIOGRAPHY AND
ANNEXURE5.1 Bibliography 5.2 - Annexure
80 81
6
CHAPTER 1 INTRODUCTION
7
1.1 INTRODUCTION TO THE TOPIC
8
MEANING OF LUXURY
Luxury can be defined as a material object or service conducive
to sumptuous living, usually a delicacy, elegance, or refinement of
living rather than a necessity. India has never been a stranger to
luxury, nor to creators and crafters of luxurys symbols. The worlds
most famous couturiers, jewellers and chronographers have always
been part of the fabulous lifestyles of Indias elite, even before
independence. In this reference, India is regarded as one of the
leading future luxury retailing destinations in the world. Ganjam
also has been a luxury brand and knows that what sets it apart is
solely defined by the statements it makes, the discerning eye it
has for distinctive and exclusive life. No one has to search for it
it is merely its second nature.
9
THE CONCEPT OF LUXURY
Luxury goods are said to have high income elasticity of demand:
as people become wealthier, they will buy more and more of the
luxury good. This also means, however, that should there be a
decline in income its demand will drop. Income elasticity of demand
is not constant with respect to income, and may change sign at
different levels of income. That is to say, a luxury good may
become a normal good or even an inferior good at different income
levels, e.g. a wealthy person stops buying increasing numbers of
luxury cars for his automobile collection to start collecting
airplanes (at such an income level, the luxury car would become an
inferior good). Certain manufactured products attain the status of
"luxury goods" due to their design, quality, durability or
performance that are remarkably superior to the comparable
substitutes. Thus, virtually every category of goods available on
the market today includes a subset of similar products whose
"luxury" is marked by better-quality components and materials,
solid construction, stylish appearance, increased durability,
better performance, advanced features, and so on. As such, these
luxury goods may retain or improve the basic functionality for
which all items of a given category are originally designed. There
are also goods that are perceived as luxurious by the public simply
because they play a role of status symbols as such goods tend to
signify the purchasing power of those who acquire them. These
items, while not necessarily being better (in quality, performance,
or appearance) than their less expensive substitutes, are purchased
with the main purpose of displaying wealth or income of their
owners.
10
MARKET CHARACTERISITICS Some luxury products have been claimed
to be examples of goods, with a positive price elasticity of
demand: for example, making a perfume more expensive can increase
its perceived value as a luxury good to such an extent that sales
can go up, rather than down. Although the technical term luxury
good is independent of the goods' quality, they are generally
considered to be goods at the highest end of the market in terms of
quality and price. Classic luxury goods include haute couture
clothing, accessories, and luggage. Many markets have a luxury
segment including, for instance, automobile, wine, bottled water,
tea, and chocolate. Luxuries may be services. The hiring of
full-time or live-in domestic servants is a luxury reflecting
disparities of income. Some financial services, especially in some
brokerage houses, can be considered luxury services by default
because persons in lower-income brackets generally do not use them.
LUXURY BRANDS A luxury brand or prestige brand is a brand for which
a majority of its products are luxury goods. It may also include
certain brands whose names are associated with luxury, high price,
or high quality, though few, if any, of their goods are currently
considered luxury goods. Another market characteristic of luxury
goods is their very high sensitivity to economic upturns and
downturns, high profit margins as well as prices, and very tightly
controlled brands. For example, following a nearly crippling
attempt to widely license their brand in the 1970s and 1980s, the
Gucci brand is now largely sold in directly-owned stores. The
Burberry brand is generally considered to have diluted its brand
image in the UK in the early 2000s by over-licensing its brand,
thus reducing its cachet as a brand whose products were consumed
only by the elite.
11
LVMH (Louis Vuitton Moet Hennessy) is the largest luxury good
producer in the world with over fifty brands, including Louis
Vuitton, the brand with the world's first designer label. The LVMH
group made a profit of 2bn on sales of 12bn in 2003.
MARKET SIZE
The luxury goods market has been on an upward climb for many
years. Apart from the setback caused by the 1997 Asian Financial
Crisis, the industry has performed well, particularly in 2000. In
that year, the world luxury goods market which includes drinks,
fashion, cosmetics, fragrances, watches, jewelry, luggage, handbags
was worth close to US$170 billion and grew 7.9 percent. The largest
sector in this category was luxury drinks, including premium
whisky, Champagne, Cognac. This sector was the only one that
suffered a decline in value (-0.9 percent). The watches and jewelry
section showed the strongest performance, growing in value by 23.3
percent, while the clothing and accessories section grew 11.6
percent between 1996 and 2000, to US$32.8 billion. North America is
the largest regional market for luxury goods: unlike the modest 2.9
percent growth experienced by the Western European market, the
North American market achieved growth of just under 10 percent. The
top ten markets for luxury goods account for 83 percent of the
market, and include the U.S., Japan, China (and Hong Kong),
Germany, Italy, France, UK, Brazil, Spain, and Switzerland.
12
MARKET TRENDS The three dominant trends in the global luxury
goods market are: Globalization Consolidation Diversification.
Globalization is a result of the increased availability of these
goods, additional luxury brands, and an increase in tourism.
Consolidation involves the growth of big companies and ownership of
brands across many segments of luxury products. Primary examples
include LVMH and Gucci, which dominate the market in areas ranging
from luxury drinks to fashion and cosmetics. Leading global
consumer companies, such as Procter & Gamble, are also
attracted to the industry, due to the difficulty of making a profit
in the mass consumer goods market.
13
Characteristics of the luxury industry1. Luxury means different
things to different people Luxury has no certified origins. But
luxury branding is said to have taken birth in the west with the
appearance of high-end brands.
2. Luxury is a product category in itself This can be best
explained by the fact that both an expensive watch and an artwork
can be considered to be luxury items. Therefore, all luxury
marketers are not just competing in their technically defined
product categories (like manufacturers of refrigerators compete
amongst themselves) but for the wallet share of luxury goods in
total. 3. The meaning of luxury had changed Luxury has moved from
its old meaning of ownership (also known as conspicuous consumption
- Conspicuous consumption is a term used to describe the lavish
spending on goods and services that are acquired mainly for the
purpose of displaying income or wealth rather than to satisfy a
real need of the consumer. In the mind of a conspicuous consumer,
such display serves as a means of attaining or maintaining social
status. Invidious consumption, a necessary corollary, is the term
applied to consumption of goods and services for the deliberate
purpose of inspiring envy in others) of objects to the new meaning
of the experience / fulfilment derived from possessing a certain
object. 3
14
4. Aura is more important than exclusivity Exclusivity is
something that cannot be ensured to a great extent and neither is
it the prime requirement of a luxury consumer. The consumer bases
his decisions on the relevance of the aura of the brand to his
fulfilment or actualization needs. 5. Classification of luxury
consumers SRI Consulting Business Intelligence places consumers in
3 groups according to what luxury means to them:
Luxury is Functional these consumers tend to buy luxury products
for their superior functionality and quality. Consumers in this
segment, the largest of the three, tend to be older and wealthier
and are willing to spend more money to buy things that will last
and have enduring value. They buy a wide array of luxury goods,
from artwork to vacations, and conduct extensive pre-purchase
research, making logical decisions rather than emotional or
impulsive. Messages that highlight product quality and are
information-intensive are powerful with this group. Luxury is
Reward these consumers tend to be younger than the first group but
older than the third. They use luxury goods as a status symbol to
say Ive made it! They are motivated by their desire to be
successful and demonstrate this to others. Luxury brands that have
widespread recognition are popular; however they dont wish to
appear lavish or hedonistic in their appearance. They want to
purchase smart luxury that demonstrates importance while not
leaving them open to criticism. Marketing messages that communicate
acceptable exclusivity resonate with this group. Luxury is
Indulgence this group is the smallest of the three and tends to
include younger consumers and slightly more males than the other
two groups. Their purpose for luxury goods is to lavish themselves
in self-indulgence. They are willing to pay a premium for goods
that
15
express their individuality and make others take notice and are
not overly concerned with product longevity or possible criticism.
They enjoy luxury for the way it makes them feel; therefore have a
more emotional approach to purchases. They respond well to messages
that highlight the unique and emotional qualities of a product.
6. Trading up A mass of wealthy people have emerged the world
over, give rise to a large section of consumers who are now moving
to luxury / premium brands, thereby creating greater business
opportunity for luxury marketers. 7. Emergence of luxury brands Sea
of luxury brands have emerged giving a wide choice to consumers, in
all segments of luxury goods. 8. Trading down Today, fashion brands
are giving luxury brands competition because of marketing mix and
branding strategies, which make it acceptable to pair these two
brands. This is something that was not practiced before. eg.
Wearing an Armani shirt with a pair of GAP jeans 9. Factors at play
In luxury marketing there is a subtle interplay between three
factors that most strongly influence the luxury consumer to buy:
product brand; dealer or stores brand or service providers
reputation; and price/value relationship
16
10. Customer loyalty is more important that brand awareness
Rather than focus on measuring the brand awareness of a luxury
company, measuring customer loyalty is far more significant a
metric regarding the success or failure of corporate strategy to
connect with the luxury consumer.
Luxury in IndiaTo be successful in India, it is both necessary
to gauge the financial potential as well as the mindset of the
Indian luxury consumer. This will help in bringing forth the right
product offerings to the Indian consumer as well as targeting them
better. Qualitative Insights 1. According to a study by American
Express, Inside the Affluent Space, the mindset of the Indian
consumer is a desire to prove that Ive made it. This can be related
to the luxury categorization which is based on the fact that luxury
is seen as a reward, both for achievements in life as well as
showcasing these achievements to others. 2. The Luxury Marketing
Council Worldwide has established a chapter in India, with the aim
of promoting luxury in India. Their task will also be to build
synergy between various luxury brands interested in India by way of
sharing of consumer insights as well as best practices. 3. Even the
Asian region is not uniform in its preference for luxury in terms
of need fulfilment. Therefore, it becomes important to delineate
the needs of the Indian consumer from the other Asian regions to
target them better. This agenda gains importance because many
Indians look at acquiring luxury from places such as Hong Kong,
Tokyo, China etc.
17
4. Hindustan Times has been at the forefront of driving the
luxury revolution in India by organizing two Indian Luxury
Conferences in the last 4 years. To add to it, it also brings out a
monthly supplement of luxury goods available in India, thereby
creating awareness for the luxury brands.
Quantitative Insights 1. As far as quantitative estimates are
concerned, there will be 135,000 millionaires (in US dollar terms)
in India by 2009. 2. The affluent market is set to grow at a rate
of 13% in India, and by 2009, there will be approximately 1.1
million affluents here. 3. The wealth potential of Indias affluents
was to the tune of US$ 203 billion as of 2005.
18
Strategies for Luxury Marketing in IndiaThere are conventional
foundations for ensuring success of a brand and they are listed
below in brief: 1. The brand must be expansive Which means it
should be full of innovation opportunities for the marketer and in
terms of satisfying the divergent needs of the luxury consumer 2.
The brand must tell a story It is this story, of either heritage or
performance or other aspects that goes on to build the aura of a
brand over time. The story always accentuates the identity of the
brand. 3. The brand must be relevant to the consumers needs
Depending upon the mindset of the luxury class, it is imperative
for a brand to satisfy those needs, whether they be for recognition
or functional use etc. 4. The brand must align with consumers
values A brand that does not concur with the basic values of a
consumers society has a small chance of succeeding because luxury
items are forms of expression or identification for a luxury
consumer. This makes it difficult for the consumer to adopt the
brand in such cases. 5. The brand must perform Irrespective of
which category the brand belongs to, a performance assurance is a
must for the brand if it wishes to be in the evoked set of luxury
consumers, considering the price being paid for luxury.
19
It can be noted that for jewellery, 40% brand loyalty is present
in the luxury segment.
20
RE-DEFINING THE CONCEPT OF LUXURYLuxury brands have often been
associated with the core competences of creativity, exclusivity,
craftsmanship, precision, high quality, innovation and premium
pricing. These product attributes give the consumers the
satisfaction of not only owning expensive items but the extra-added
psychological benefits like esteem, prestige and a sense of a high
status that reminds them and others that they belong to an
exclusive group of only a select few, who can afford these pricey
items. The luxury sector targets its products and services at
consumers on the top-end of the wealth spectrum. These
self-selected elite are price insensitive and choose to spend their
time and money on clothes and accessories that are plainly opulence
rather than necessities. For these reasons, luxury and prestige
brands have for centuries commanded an unwavering and often
illogical customer loyalty. Several luxury and prestige brands such
as Louis Vuitton, Burberry and Chanel were launched in the
nineteenth and early twentieth centuries when a strict social class
system defined society and royalty and aristocracy reigned supreme.
During this period, designers like Christian Dior, Louis Vuitton
and Gucci. Gucci designed clothes, luggage and leather goods
exclusively for the noble men and women of society. Their work was
an art form that took several weeks and sometimes months to produce
and this was all a part of the luxury and prestige experience.
During this period, it was the norm to literally dress in one brand
from head-to-toe. In the present 21st century environment, the
story is different. The luxury scene has changed due to several
factors. First a mass class of wealthy people have emerged the
world over. At the beginning of the century, luxury consumers were
a small segment of the population who all looked the same. In the
last three to four decades however, a vast amount of wealth has
been amassed by individuals due to several economic, social, and
technological breakthroughs. Secondly, there has emerged a sea of
luxury brands and this has affected the high entry barrier that the
industry guarded for centuries. It has also given luxury consumers
more choice than ever before. Thirdly, the rapid growth of
digital,
21
information and communications technology has given consumers
more variety in luxury product offering, easier access to view the
choices and lower switching costs especially on the Internet. This
has empowered the consumers to become more individualistic,
experimental and bold enough to mix luxury and high-street fashion
in one outfit; something that their mothers and grandmothers would
have considered a taboo in the past. The result of this change is
the phenomenon of trading-up and trading-down. The new wealthy mass
class who are enjoying their ability to trade up to acquiring
luxury products practice trading-up. Trading-down is the practice
of mixing the use of luxury items with fashion brands. This
practice is also popularly called the democratisation of luxury.
Therefore it is no longer a surprise to find a wealthy celebrity
wearing jeans from H&M, earrings from Chanel, shoes from Coach,
a shirt from Zara and a bag from Louis Vuitton. Luxury consumers
have unconsciously formed a pedestal for fashion brands to stand
side by side with luxury brands. The so-called fashion brands such
as H&M, Zara, Mango, Gap and TopShop are redefining their
branding and marketing strategies to reflect a luxurious appeal to
the consumer. As a result of this, for the first time in their
history, luxury brands are facing competition from the lesser mass
fashion brands that are gradually edging into the lives of luxury
consumers. Luxury brands have always had well-defined territories
along which they operate and there has never been any question that
they hold the strings in determining their consumers behaviours
until now. The mass fashion brands are showing that they have
understood the language of differentiation and individualism and
are able to offer the luxury consumer alternatives to their luxury
products or complimentary goods at better price-value. They have
also developed sophisticated operations techniques to spin off
their products in a short time. This has enabled the mass brands to
graduate from mass to mass-premium brands, as they like to be
referred. While they are still fantastic consumer brands, they are
no longer low-end or middle-end brands. They have understood that
it is no longer a problem for a young wealthy Duchess to combine a
50 pair of jeans from Zara with a 3,000 bag from Vuitton and a
5,000 J12 watch from Chanel, and they are exploiting this
development. This goes to say that the 22
luxury bag or watch alone is not solely required to enable the
consumer fulfil the needs of esteem. Another factor that has
enabled the christening of the fashion brands as premium brands is
the manipulation of the marketing mix strategies to be similar to
those of the luxury brands. A typical example is the introduction
of limited edition clothes and accessories by high street brands
such as the UKs Marks and Spencers or the recent wave of high
advertisement expenditure in fashion magazines like Vogue and
Harpers & Queen, which were previously the sole domains of
luxury brands. Viewing a Top Shop advertisement beside Chanel or
Hermes advertisement in Vogue undoubtedly does something to the
mind of the consumer. In addition, the mass-premium brands now open
in the best locations in fashion capitals of New York, Paris, Milan
and London. They now act and speak as if they are really the
high-end brands that set the trends. They have become aggressive in
their manner of communication to their target audience, who are
largely luxury consumers. Another example is the teaming up of
legendary luxury fashion designer and Designer of the House of
Chanel, Karl Lagerfeld with H&M to design a limited edition
womens wear collection in November 2004. This collaborative effort
would have been unthinkable ten years ago.
23
The crucial questions are:
Are luxury brands now mass brands like fashion brands? Are
fashion brands becoming luxury brands? Where can we draw the line
between luxury and fashion brands?
According to industry experts, luxury and prestige brands such
as Rolex, Louis Vuitton and Cartier represent the highest form of
craftsmanship and command a staunch consumer loyalty that is not
affected by trends. These brands create and set the seasonal trends
and have the ability to sell an item for 20,000 and another for 200
to different consumer groups. They are also capable to pulling all
of their consumers with them wherever they go. Premium brands are
those brands like Polo Ralph Lauren, Calvin Klein and Tommy
Hilfiger that aspire to be luxury and prestige brands but their
marketing mix strategies are more attuned to a mass market, albeit
a luxury mass market. Some experts also call this group,
mass-premium brands while others have termed them mass-luxury
brands and yet some others refer to them as high-end brands. This
category has perhaps witnessed the greatest changes from the
consumer and aggressive competition from global fashion brands like
Zara and H&M. Fashion brands on the other hand are those that
dress the masses. A recent evolution brought about by competition
has created a significant change in the fashion brands category.
Brands like Zara, H&M and Gap can no longer be considered as
merely fashion brands, in the same boat as any high street fashion
brand as they have elevated their offerings and strategies. In
order to differentiate themselves from the massfashion brands, they
now refer to themselves as Premium Fashion brands. They are playing
a key role in the trading-down phenomenon of the luxury
consumer.
24
The difference between luxury brands and fashion brands is not
only in the aspects of product quality and pricing but also applies
to availability and exclusivity of the products. Fashion brands are
for the mass market, whether they are of high quality or not.
Luxury brands are for a distinct narrow market and are defined by
high quality, differentiation and precision in product design and
manufacture. A brand is either a luxury brand or it is not. There
is no go-between. If a brand does not set out to target the
high-end market, then it is difficult to become a luxury brand.
Economists think of a luxury product as something that people
"outspend" their income increases. This means that if your income
increases by, say 10%, people will increase their spending on a
luxury product at a rate greater than 10%.
So what brands are the true luxury brands? Heritage and
tradition have always played a vital role in this sector. This is
the reason that the industry is emphasizing the differences between
luxury and prestige brands, premium brands and fashion brands. The
traditional view of luxury has been affected by the recent changes
in the consumer landscape. Despite this, the true luxury and
prestige brands such as Louis Vuitton, Chanel, Hermes, Cartier,
Rolex and Gucci, remain unwavering and not compromising their core
values and continuously influencing their consumers thinking,
albeit a more mass consumer base. These brands have strategies that
address the difficult paradox of the combination of exclusivity and
availability and to appeal to many while appearing to be right for
only a special few. Finally, a simple test can be used to ascertain
that a brand is a true luxury and prestige brand. If you move the
Louis Vuitton boutique 30km away, will the consumer be ready to
follow the store 30 km away to the new location? If you take the
H&M boutique 30 km away, will the consumer go an extra 30 km
for a pair of H&M trousers or will they find an
alternative?
25
DIFFERENCE BETWEEN A LUXURY BRAND AND A REGULAR BRAND(From a
sellers point of view and a customers point of view) A luxury brand
differs from a regular brand in various ways. From a sellers point
of view the difference is seen in the quality of the product. For
example, Ganjam sticks to F-VVS benchmark in quality. From a
customers point of view, the difference comes in positioning the
brand. The brand is positioned in such a way that it occupies a
higher and distinct position in the minds of customers. In short, a
regular brand is rational and a luxury brand is emotional i.e. a
regular brand fulfils a customers necessity but a luxury brand
touches the emotional aspect.Luxury branding is a whole new
ball-game altogether, both from the perspective of the marketer as
well as the luxury consumer. It therefore becomes important to view
it both in relation and isolation from the regular goods
marketing.
26
Difference between regular & luxury goods
27
HOW ONE BRAND ACHIEVES THE STATUS OF A LUXURY BRAND
Luxury builds in a customers mind over years. A luxury brand is
not created overnight. Every luxury brand usually ahs a history
attached to it which would have helped it in becoming a luxury
brand. And if one may notice, majority of the luxury brands are old
brands and have been in the market for a long time (exceptions
exist). A luxury brand has to be subtle at all times and
communicate very gently with the public. A loud marketing strategy
is not a characteristic of a luxury brand.
28
1.2 INTRODUCTION TO THE INDUSTRY
29
The jewellery industry in India is one of the most booming
industries present. It contributes more than 15% of the country's
total exports and provides employment to 1.3 million people
directly and indirectly. Gold jewellery forms around 80% of the
Indian jewellery market, with the balance comprising fabricated
studded jewellery that includes diamonds as well as gemstone
studded jewellery. India consumes nearly 800 tonnes of gold
accounting for about 20% of the world gold consumption, of which
nearly 600 tonnes goes into making jewellery. The Indian jewellery
market, estimated to be $13.5 billion in fiscal year 2006, accounts
for 8.3% of world jewellery sales, according to a study by KPMG.
India is the world's largest diamond processing (cutting and
polishing) country with an estimated 1 million processors handling
more than 57% of the worlds rough diamonds by value. According to
industry estimates, 11 out of 12 diamonds set in jewellery are cut
and polished in India. Processing is done on rough diamonds in full
range of sizes and qualities, including stones larger than 10
carats. In terms of carat, India's share in this sector is about
80% of the world market. Employing more than 90% of the global
diamond industry workforce, India also accounts for 90% of the
volume of diamonds processed in the world. Exports from the
jewellery industry fetched $17.1 billion in 2006 against $16.64
billion in 2005, showing a growth of 26%. While diamonds accounted
for 64% of the total exports, gold jewellery accounted for 30.47%,
and coloured gem stones and others accounted for 1.44% and 1.04%
respectively last year. Cut and polished diamond segment exports
were $10.90 billion, while gold jewellery exports fetched $5.21
billion last year. Coloured gemstone exports yielded $246.48
million last year, against $232.35 million in 2005. The growth
momentum has continued into the current fiscal year. The gems and
jewellery export industry grew by a robust 27% export during the
first half of the 30
current fiscal at $9.4 billion, as compared to $7.4 billion in
the corresponding period of 2006, according to the Gems and
Jewellery Export Promotion Council (GJEPC). The growth in diamond
exports was 28%, in jewellery it was 21% and in coloured gemstones
it was 22%. The major destinations for exports have been the U.S.,
UAE, Hong Kong, Belgium and Israel. In fact, the U.S., UAE and Hong
Kong together accounted for more than 70% of the total exports in
the previous fiscal year. The increasing levels of disposable
household income have resulted in record consumption levels in the
domestic market. Indian jewellery demand rose by 70% during the
first half of 2007 compared with the same period last year.
Jewellery demand increased to 387 tonnes from 227 tonnes during the
period. Gold consumption during the first six months of 2007 grew
by 70% to 528 tonnes compared to 307 tonnes in the same period last
year. Indias total gold consumption in 2006 was slightly over 700
tonnes. While jewellery accounted for around 73% of gold demand,
investments in the forms of coins and bars accounted for the
rest.
31
GROWTH IN THE JEWELLERY INDUSTRY IN INDIAIndia's fascinating
success story in the gems and jewellery industry continues to
glitter. In the last few years, there has been a massive growth in
the purchasing parity of the middle class and surging income levels
in India. This has resulted in the rising consumption growth of
gems and jewellery by about 11 percent in the five-year period this
year. The Indian gem and jewellery industry has registered 22.27
percent growth rate amounting to total exports of US$ 20.8 billion
(INR 84,058.19 crores) in 2007-08 against US$ 17.1 billion (INR
77,100.12 crores) in the previous year. The gem and jewellery
sector accounted for 13.41 percent of Indias total merchandise
exports. The Gem and Jewellery Export Promotion Council (GJEPC)
released the financial results for 2007-08 on April 15. Export of
cut and polished diamonds which was the performance driver for the
period in consideration amounting to nearly 68 percent of the
export basket, grew from US$ 10.9 billion (INR 49,156.28 crores) in
2006-07 to US$ 14.2 billion (INR 57,061.45 crores) in 2007-08. Hong
Kong emerged as the largest export market for cut and polished
diamonds with a share of 35 percent while the US and UAE stand at
second and third position with 24 percent and 13 percent share
respectively. Export of coloured gemstones and others grew from US$
246.4 million (INR 1112.33 crores) in 2006-07 to US$ 276.42 million
(Rs 1112.32 crores) in 2007-08. The export of gold jewellery rose
by 8.07 percent with total exports amounting to US$ 5622.41 million
(Rs 22624.59 crores) in 2007-08 as compared to US$ 5202.48 million
in 2006-07 (Rs 23478.81 crores).
32
Efforts from Government:In March 2008, Jairam Ramesh, minister
of State for Commerce led a delegation to Angola and Namibia so
that India can directly source rough from these countries. A Joint
Working Group has been formed between Namibia and India to prepare
a detailed plan for long term partnership in the diamond sector.
The Indian government is also planning to set up factories and
training institutes. The delegation in Angola, talked over plans
for ENDIAMA, a diamond mining company, to shortly open an office in
India. Angola has invited Indian diamond companies to set up
factories and training institutes in Angola. The council has
invited the president of Angola as the chief guest for Mines to
Market 2009. The industry is well-supported by government policies
and the banking sector around 50 banks provide nearly $3 billion in
credit to the Indian diamond industry. In addition, India is
expected to have a diamond bourse soon
33
1.3 INTRODUCTION TO THE COMPANY
34
GANJAM A LUXURY BRAND INTRODUCTION
Sought after by collectors the world over, Ganjam jewellery is a
harmonious unity of the old and new. Their designs are borne from
experience and expertise coming together to create jewellery that
defies traditional concepts and styles of craftsmanship. The
jewellery is crafted in Metals that blend with each other in a
unique, inimitable style and in precious stones that are
hand-picked with an eye that needs to see a thousand or more to
select those very few that are perfectly matched. Ganjam jewellery
is hand-crafted without compromising time or expense, the very best
that human skill can achieve. And all this comes together to create
a brand whose designs are recognised across the world, having won
The World Gold Council Virtuosi twice, The Perles de Tahiti
International Trophy, and having been commissioned by The Platinum
Guild International to create the masterpiece for their world-wide
exhibitions in 2007-2008.
35
HISTORY OF GANJAM16th Century Ganjams origins date back to the
heyday of the Vijayanagar Empire, when they were trading in musk
and precious gemstones on the East coast of Orissa. They had to
flee, as a result of invasion, setting out on a long and eventful
trek ultimately settling down again at Hampi. 1889 Ganjam Nagappa
opens a business in the small town of Bangalore and becomes the
Royal Jeweller. During the reign of Maharaja Jayachama Rajendra
Wodeyar of Mysore the firm receives the Royal Appointment. Ganjam
soon establishes itself as the pre-eminent diamond jeweller of
Karnataka. 1971 Ganjam open their first emporium in Bangalore, the
predecessor of the current flagship showroom in Infantry road. 1998
Ganjam pioneers the working of Platinum in India and within a
decade, are commissioned by the Platinum Guild International to
create a special masterpiece for display at the international
jewellery fair in Basel. , Switzerland in 2007. This had become the
inspiration for their new Riverdance collection. 2009 Ganjam opens
a boutique at DLF emporium in Vasant Kunj, New Delhi. This adds to
their existing boutiques in The Leela Palace galleria in Bangalore
and The Taj Mahal Palace Hotel in Mumbai. Internationally, Ganjam
sponsors The Ganjam Jaipur Trophy at Guards Polo Club in Windsor
Great Park UK and is exhibited to illustrate traditional skills of
craftsmanship at The Lucca Preziosa in Italy.
36
PR IN GANJAMPublic relations can be crudely defined as an unpaid
form of advertising or an unpaid form of gaining visibility. PR is
a genuine, authentic effort on behalf of the company to maintain
good relations with the media, public and stakeholders. PR in the
case of Ganjam gains more importance as it is a luxury brand. PR
within the luxury segment is planned in a very restricted
framework. Word of mouth plays a very important role in the case of
Ganjam. For them, its a very serious affair. Few of the policies
they keep in mind are: They keep their PR totally genuine and
authentic. It is completely unpaid. They believe that if it is paid
it is as good as marketing. Observing the clear difference between
marketing and PR and knowing exactly when what is necessary is a
very important aspect for Ganjam. They are also very careful about
what is to be seen, when it is to be seen and how it should be seen
by the public. They do not believe in being seen everywhere, all
the time. They subtly choose the right location and occasion. Media
Relations is given utmost importance in Ganjam. They like to pamper
the media people as they believe that usually customers are
targeted and the media is given least importance. Personal touch is
very important for Ganjam. They believe that thats the most
effective way of reaching out to the public and also in keeping
good relations with the media people. They have a set of Dos and
Donts that they always follow and are very selective about the
publications and magazines that they choose. The most popular ways
in which they maintain public relations are by organising sports
events, musical events and events that do not focus on money-making
but focus on promoting some form of art.
37
GANJAM AS A LUXURY BRANDWHY GANJAM IS CALLED A LUXURY BRAND
Ganjam is now a luxury brand because of a very determined decision
made by Mr.Umesh Ganjam. He decided that people should not buy
Ganjam jewellery to adorn themselves but they should buy it to own
a Ganjam! He did not want people to buy it out of necessity but for
a hint of luxury.
NEED FOR RE-POSTIONING GANJAM AS A LUXURY BRAND
Initially Ganjam did not portray itself as a luxury brand. In
the beginning Ganjam was scattering to the masses with bulk
jewellery. Its target audience was so different that it once even
had a campaign advertising the fact that it now has an A/C
showroom. Initially the Ganjam family had a small place outside
their home and they traded jewellery there. Even back then they
were famous for the quality of their products. It was only later
that they shifted gears and over time it has become a luxury brand.
It never started off with that intention The sole reason for the
re-positioning was Mr.Umeshs decision to take it one step higher.
It is said that one builds a luxury brand when he thinks he has
made enough money but is looking for something more than just money
i.e. personal satisfaction. So even in the case of Ganjam this was
proved right.
38
WAYS IN WHICH GANJAM STARTED COMMUNICATING TO THE PUBLIC THAT IT
IS A LUXURY BRAND.
One of the main aspects of luxury in a luxury brand is quality.
A luxury brand is answerable to the society as when people pay a
higher price their expectations automatically increase. Hence, the
first change that was incorporated in Ganjam was the quality
standards and it stands as the first jeweller in the country to
upgrade to the f-colour standard. Then, Ganjam decked up the design
studio and approached famous designers. They made sure that the
designers style would match Ganjams style and their ideologies
would match. The marketing strategies changed along with their
approach. The first step in this direction was the change in the
advertising agency. Ganjam used to consult an Indian agency but
somewhere down the lane felt that Indian agencies did not get the
exact concept of luxury and a concept like this actually did not
exist in India. Hence they started consulting a UK-based agency was
happy that the ideas now matched. They began a campaign that read-
Heighten your senses and eventually removed even that line from
their campaign. Being a luxury brand, they believe that the lesser
they say, the more they can convey and till date they follow that
strategy.
39
CHALLENGES FACED IN THE PROCESS
Luxury as a concept does not exist in India and this caused most
of the problems. Firstly, hiring the right personnel was not easy
as people all over India were not very familiar with the concept of
luxury. Intensive training programmes had to be conducted and
Mr.Umesh also spent a lot of time travelling abroad to find good
employees. Then problems were faced with the Indian agency as they
felt here, the concept of luxury would not be clearly communicated
to the public and they had to shift to a UKbased agency. Because
the concept of luxury was unknown here, targeting and capturing the
local audience was quite a task. CHALLENGES STILL BEING FACED:
Limited Target audience : A luxury brand is not sought after as
much as a regular brand is as not everyone aims at buying a luxury
brand. Hence, the target audience is reduced to a great extent.
Limited advertising: A luxury brand does not opt for extensive
marketing or promotion and hence have to try in subtle ways to
advertise and get recognized in order to emphasize their presence
in the market.
40
FACTORS THAT HELPED IN THE RE-POSITIONING At that time, the
Bangalore market started booming and a lot of IT crowd came into
Bangalore bringing in a lot of youth. Hence Ganjam tried to attract
this crowd and tackled new customers. It was also noticed that now
people are much more conscious of what jewellery they pick and the
demand for designer jewellery is increasing day by day ADVANTAGES
TODAY:
Higher status: The main advantage of being a luxury brand is
that it gets a higher status and a reserved position in the minds
of people. It is an honor to be a luxury brand. Distinct brand
recognition: A luxury brand is not just another brand and is
recognized distinctly as a luxury brand and also a better brand.
Pride of owning a luxury brand: A luxury brand automatically
achieves a higher status and hence people would want to own one as
a matter of pride.
IMPORTANCE OF DISTINCT BRAND DIFFERENTIATION BETWEEN A REGULAR
AND A LUXURY BRAND It is very difficult to balance between what
Ganjam was and what it is now. Gears should never be shifted
quickly as it will not be a smooth ride. Similarly, Ganjam has to
slowly bring in the distinct difference between what it was and
what it is now. It is almost like walking on a tight rope. A slight
imbalance in this process will ruin everything. To help bring in
this difference, Ganjam opened a boutique in Bangalore, Delhi and
Mumbai as a boutique clearly differentiates itself from a
showroom.
41
CAUSES PROMOTED BY GANJAMGanjam has sponsored several events,
each of which was dedicated to a special cause. Few of them are:
PAKSHI This was an event organised at The Leela, Bangalore, in
January,2005. It was actually a succession of an event that was
planned called wings of love which unfortunately did not reach its
final stage due to the occurrence of the Tsunami. It was an event
to raise awareness of endangered birds and their habitats in
collaboration with Bird Life International. The craftsmen prepared
various kinds of models of birds with different materials. In order
to showcase the same, Pakshi was organised. BMDP This was a Bone
Marrow Donor Programme that was held in October, 2005. Ganjam was
one of the sponsors of the event which was held in Singapore. WINGS
OF LOVE This event was to promote the protection of endangered
birds and was held in Japan in 2005 and the same in Malaysia in
2006.
42
EVENTS BY GANJAM In 1998, Ganjam pioneered the working of
Platinum in India and within a decade, are commissioned by the
Platinum Guild International to create a special masterpiece for
display at the international jewellery fair in Basel. , Switzerland
in 2007. This had become the inspiration for their new Riverdance
collection. In 2006, Ganjam organised the Lucca Preziosa where they
displayed their heritage collection of jewellery. In 2009, Ganjam
sponsored The Ganjam Jaipur Trophy at Guards Polo Club in Windsor
Great Park UK .
43
1.4 LITERATURE REVIEW
44
A literature review is a body of text that aims to review the
critical points of current knowledge and or methodological
approaches on a particular topic. Literature reviews are secondary
sources, and as such, do not report any new or original
experimental work. Most often associated with academic-oriented
literature, such as theses, a literature review usually precedes a
research proposal and results section. Its ultimate goal is to
bring the reader up to date with current literature on a topic and
forms the basis for another goal, such as future research that may
be needed in the area. A well-structured literature review is
characterized by a logical flow of ideas; current and relevant
references with consistent, appropriate referencing style; proper
use of terminology; and an unbiased and comprehensive view of the
previous research on the topic. The literature review is a critical
look at the existing research that is significant to the work that
you are carrying out. Some people think that it is a summary: this
is not true. Although you need to summarize relevant research, it
is also vital that you evaluate this work, show the relationships
between different work, and show how it relates to your work. In
other words, you cannot simply give a concise description of, for
example, an article: you need to select what parts of the research
to discuss (e.g. the methodology), show how it relates to the other
work (e.g. What other methodologies have been used? How are they
similar? How are they different?) and show how it relates to your
work (what is its relationship to your methodology?).
45
ARTICLE 1 - ABSTRACTEXPANDING A LUXURY BRAND WITHOUT LOSING ITS
CACHET!SOURCE: National Jeweler; 3/16/2003, Vol. 97 Issue 6, p27,
2/5p
In times of recession, luxury brands have deciphered the code to
success. Though their revenues are slightly affected, they believe
expansion is the secret to retaining customers and not facing the
same plight as others in times of economic depression. Expanding
the customer base and increasing product range seem to solve many
problems of the highly acclaimed luxury brand Harry Winston. While
indulging in expansion strategies, it is very essential to remember
that keeping the core identity of the brand intact is of utmost
importance. In the process of expansion if brands lose their
identity or divert the customers attention from the main element of
the brand, it may prove to be dangerous. While brand image is given
top most priority at the time of deciding new expansion strategies,
customer service is looked into carefully.
46
ARTICLE 2 ABSTRACTINDIA ATTRACTING LUXE PLAYERSSOURCE: By:
Zargani, Luisa. WWD: Women's Wear Daily, 12/27/2006, Vol. 192 Issue
133, p2-2, 2/3p, 2 color;
Despite a limited retail space and a cumbersome economic system,
India has been successful in reaching the zenith in the luxury
industry. According to a study by luxury goods consultant Armando
Branchini for the luxury goods association Altagamma, consumption
of international luxury products and brands in India is expected to
triple in the next five years. In 2005, the total market size for
upscale and luxury products in India was estimated at $14.8
billion, and Branchini said he estimated a 14 percent annual growth
rate of the market. By 2010, India is expected to have 150,000
families with an income level of $250,000 per year or higher. It is
also interesting to note that jewellery constitutes 27% of the
luxury industry in India. The sales of luxury products are rapidly
increasing and companies are doing everything they possible can to
seize this moment. The need to display the best brands and look the
best is increasing day by day in India. Surprisingly, this holds
true for the young and the old. The manacles that were binding the
country have finally been broken leading to a revelation of new
ideas and a change in the mindset, proving highly advantageous to
the luxury industry
47
ARTCILE 3 ABSTRACTINDIA JEWELLERY INDUSTRY ADJUSTS TO U.S.
ECONOMIC WOES
SOURCE: JCK; Jan2009, Vol. 180 Issue 1, p80-84, 5p
This article touches upon the effort of the jewellery industry
in India to adjust to U.S. economic crisis. According to Sanjay
Kothari, the jewellery exports from the special economic zone in
Mumbai that promotes rapid economic growth using tax and business
incentives to increase exports (SEEPZ) to the U.S. has declined by
30% during the first six months of 2008. In relevance, some
manufacturers have moved out of SEEPZ and set up shop in other
areas to take advantage of the burgeoning domestic market.
According to him, India's jewellery market has been hit especially
hard. Though most of the brands have been affected, few try to pick
the positive aspects of the economic downturn and have already
started finding new strategies to face this situation.
48
ARTICLE 4 - ABSTRACT
THE NEW GUIDELINES TO LUXURY BRAND MARKETING.
SOURCE: Media: Asia's Media & Marketing Newspaper;
9/22/2006, p23-23, 1/2p, 5 colour
The article presents new directions to luxury brand marketing.
Brands today can create experience through distinctive
limited-edition products and services, and cobranding which allows
brands to communicate across different platforms. Money is no
object when consumers are fulfilling a passion. Further, living up
to the image of the luxury consumer is no longer important. The
affluent are becoming more confident and are more comfortable
indulging in the ordinary. The article touches upon five topics
Creating an experience, importance of passion, not having to think,
adding a precious element to the ordinary and exclusivity. When it
comes to luxury brands only selling is not enough; it is more
important to create an experience. The other important aspect is
that when customers are out looking for luxury brand money does not
matter. It is the passion towards the product. Hence it is
important to take care of their needs and demands. To add on,
people dont like to waste too much time to think about buying the
product. Thinking about all little details does not appeal to them
and hence product that can cater to all their needs need to
designed. The last two things to be kept in mind is exclusivity and
making the product precious in every aspect.
49
ARTICLE 5 ABSTRACTTHE PRICE OF LUXURYBrand Strategy; Nov2008,
Issue 227, p46-47, 2p
The article reflects on how luxury brands keep their customers
during global economic slowdown. He compares the two consumer
segments, the super-rich who are not affected by the economic
downturn, and the aspirationals who are attracted to the luxury and
focus on brand names in their buying decisions. The author believes
that companies should be aware that consumers' willingness to pay
higher does not mean that they have to raise their prices. First it
is very important to decide the target group. Only then can the
company decide which strategy it has to use to attract the target
group. A study we recently undertook revealed that more than half
of the price-setting decisions among luxury brands are informed by
the cost of manufacture and predecessor product prices. Twenty per
cent are set because of competitor price levels and just a third is
given a level according to their perceived consumer value. But only
adjustments in the price will not help the luxury market as it is
way beyond than just prices. Service is equally vital in this
segment.
50
CHAPTER 2 RESEARCH DESIGN
51
Research can be defined to be search for knowledge or any
systematic investigation to establish facts. The primary purpose
for applied research (as opposed to basic research) is discovering,
interpreting, and the development of methods and systems for the
advancement of human knowledge on a wide variety of scientific
matters of our world and the universe. Research design can be
thought of as the structure of research -- it is the "glue" that
holds all of the elements in a research project together. We often
describe a design using a concise notation that enables us to
summarize a complex design structure efficiently. The research
process consists of the following steps :
PROBLEM RECOGNITION AND DEFINITION CREATING THE RESEARCH DESIGN
SAMPLING DATA COLLECTION DATA ANALYSIS VALIDITY AND RELIABLILITY
SUMMARY
52
2.1 TITLE OF THE STUDYA study of the difference between luxury
and regular brands. CASE STUDY Ganjam The repositioning of Ganjam
as a luxury brand.
2.2 OBJECTIVES OF THE STUDYThe main objectives of this study are
To gain more knowledge about the luxury industry especially in the
jewellery segment. To differentiate a luxury brand from a regular
brand in terms of the marketing. To understand peoples perception
of luxury brands, especially jewellery luxury brands. To study in
detail the case of repositioning of Ganjam as a luxury brand and
analyse the challenges faced in the process. To analyse on the
whole the way a luxury brand is thought of and the ways in which it
differs from a regular one.
53
2.3 SCOPE OF THE STUDYThis research extends up to all people who
are aware about luxury brands and understand the difference between
luxury brands and regular brands. It not only includes customers of
luxury brands and especially jewellery brands but also people who
are keenly observing the luxury segment. Customers of Ganjam in
particular constitute an essential part of the research. The study
was limited to Bangalore only and all the respondents were from
Bangalore only.
2.4 TYPE OF RESEARCHThe type of research here is basic
research.Basic research or fundamental research (sometimes pure
research) is research carried out to increase understanding of
fundamental principles. Many times the end results have no direct
or immediate commercial benefits: basic research can be thought of
as arising out of curiosity. However, in the long term it is the
basis for many commercial products and applied research. Basic
research is mainly carried out by universities.
54
2.5 SAMPLE SIZE AND SAMPLINGSAMPLE SIZE
The sample size of a statistical sample is the number of
observations that constitute it. It is typically denoted n, a
positive integer (natural number). Typically, all else being equal,
a larger sample size leads to increased precision in estimates of
various properties of the population, though the results will
become less accurate if there is a systematic error in the
experiment. This can be seen in such statistical rules as the law
of large numbers and the central limit theorem. Repeated
measurements and replication of independent samples are often
required in measurement and experiments to reach a desired
precision.
The sample size here is 50Sampling is that part of statistical
practice concerned with the selection of individual observations
intended to yield some knowledge about a population of concern,
especially for the purposes of statistical inference. Researchers
rarely survey the entire population for two reasons: (1) The cost
is too high and (2) The population is dynamic, i.e., the component
of population could change over time. There are three main
advantages of sampling: (1) The cost is lower, (2) Data collection
is faster, and (3) It is possible to ensure homogeneity and to
improve the accuracy and quality of the data because the data set
is smaller. Each observation measures one or more properties
(weight, location, etc.) of an observable entity enumerated to
distinguish objects or individuals. Survey weights often need to be
applied to the data to adjust for the sample design. Results from
probability theory and statistical theory are employed to guide
practice. In business, sampling is widely used for gathering
information about a population.
55
Process The sampling process comprises several stages:
Defining the population of concern Specifying a sampling frame,
a set of items or events possible to measure Specifying a sampling
method for selecting items or events from the frame Determining the
sample size Implementing the sampling plan Sampling and data
collecting Reviewing the sampling process
Simple random sampling In a simple random sample ('SRS') of a
given size, all such subsets of the frame are given an equal
probability. Each element of the frame thus has an equal
probability of selection: the frame is not subdivided or
partitioned. Furthermore, any given pair of elements has the same
chance of selection as any other such pair (and similarly for
triples, and so on). This minimises bias and simplifies analysis of
results. In particular, the variance between individual results
within the sample is a good indicator of variance in the overall
population, which makes it relatively easy to estimate the accuracy
of results. However, SRS can be vulnerable to sampling error
because the randomness of the selection may result in a sample that
doesn't reflect the makeup of the population. For instance, a
simple random sample of ten people from a given country will on
average produce five men and five women, but any given trial is
likely to over represent one sex and under represent the other.
Systematic and stratified techniques, discussed below, attempt to
overcome this problem by using information about the population to
choose a more representative sample. SRS may also be cumbersome and
tedious when sampling from an unusually large target
population.
56
2.6 DATA COLLECTION METHOD
PRIMARY DATA SECONDARY DATA
In primary data collection, you collect the data yourself using
methods such as interviews and questionnaires. The key point here
is that the data you collect is unique to you and your research
and, until you publish, no one else has access to it. There are
many methods of collecting primary data and the main methods that
have been used in this research include:
questionnaires interviews
Secondary data is data collected by someone other than the user.
Common sources of secondary data for social science include
censuses, surveys, organizational records and data collected
through qualitative methodologies or qualitative research. Primary
data, by contrast, are collected by the investigator conducting the
research. Secondary data analysis saves time that would otherwise
be spent collecting data and, particularly in the case of
quantitative data, provides larger and higher-quality databases
than would be unfeasible for any individual researcher to collect
on their own. In addition to that, analysts of social and economic
change consider secondary data essential, since it is impossible to
conduct a new survey that can adequately capture past change and/or
developments.
57
2.7 STATISTICAL TOOL USEDQUESTIONNAIREA questionnaire is a
research instrument consisting of a series of questions and other
prompts for the purpose of gathering information from respondents.
Questionnaires have advantages over some other types of surveys in
that they are cheap, do not require as much effort from the
questioner as verbal or telephone surveys, and often have
standardized answers that make it simple to compile data. However,
such standardized answers may frustrate users. Questionnaires are
also sharply limited by the fact that respondents must be able to
read the questions and respond to them. Thus, for some demographic
groups conducting a survey by questionnaire may not be practical.
As a type of survey, questionnaires also have many of the same
problems relating to question construction and wording that exist
in other types of opinion polls.
58
2.8 LIMITATIONS OF THE STUDYThe limitations of the study are as
follows: The study was limited to luxury brands specifically hence
narrowing down the research to a great extent. Very few people are
well-versed with luxury brands and actually understand the
difference between luxury brands and regular brands. Jewellery
luxury brands in specific had to be studied and details regarding
the same were very limited. Since it was a very specific topic only
50 respondents could be approached.
2.9 RESPONDENTS PROFILE
Fifty respondents were asked to fill up questionnaires. The
Respondent population was as follows: Youth ( between 19 and 30) 20
Older population (between 31-55) - 30
The Respondents were limited to Bangalore.
59
CHAPTER 3 DATA ANALYSIS AND INTERPRETATION
60
The process of the collection, organization, and interpretation
of numerical data, especially the analysis of population
characteristics by inference from sampling is known as Data
Analysis and Interpretation. Scientific data collection involves
more care than you might use in a casual glance at the thermometer
to see what you should wear. Because scientists build on their own
work and the work of others, it is important that they are
systematic and consistent in their data collection methods and make
detailed records so that others can see and use the data they
collect. But collecting data is only one step in a scientific
investigation, and scientific knowledge is much more than a simple
compilation of data points. The world is full of observations that
can be made, but not every observation constitutes a useful piece
of data. For example, your meteorologist could record the outside
air temperature every second of the day, but would that make the
forecast any more accurate than recording it once an hour? Probably
not. All scientists make choices about which data are most relevant
to their research and what to do with that data: how to turn a
collection of measurements into a useful dataset through processing
and analysis, and how to interpret those analyzed data in the
context of what they already know. The thoughtful and systematic
collection, analysis, and interpretation of data allow it to be
developed into evidence that supports scientific ideas, arguments,
and hypotheses.
Following is the graphical representation and interpretation of
the survey conducted with the help of a Questionnaire.
61
RESULTS OF THE SURVEY
THE REASONS FOR DIFFERENCE BETWEEN A LUXURY BRAND AND A REGULAR
BRAND
9 8 Number of people 7 6 5 4 3 2 1 0 Marketing Design or look
Quality Price Reasons for difference
Reasons for difference Number of people -
MARKETING 2
DESIGN 2
QUALITY 8
PRICE 8
It can be interpreted that most of the people feel that the
primary aspect of differentiation between a luxury brand and a
regular brand is the quality and price of the product.
62
THE WAYS IN WHICH ONE CAN DIFFERENTIATE A LUXURY BRAND FROM A
REGULAR BRAND
30 25 Number of people 20 15 10 5 0 Look Price Packaging
Ways of differentiation Number of people -
LOOK
PRICE
PACKAGING
14
26
10
Here people feel that the way in which they can easily
differentiate a luxury brand from a regular brand is by looking at
the price. Some people also feel that the ay a product looks also
can determine whether it is a luxury brand or a regular brand.
63
INDICATION OF LUXURY BRAND AS GOOD QUALITY
25
20 Number of people 15 10 5 0 Yes No Cant say
Answers Number of people -
YES 20
NO 16
CANT SAY 14
From the above graph it can be noted that a general assumption
is that if it is a luxury brand, it indicates better quality. But
surprisingly, similar number of people disagree to the same.
64
PURCHASING A LUXURY BRAND CREATES AN EXPERIENCE
30 25 Number of people 20 15 10 5 0 Yes No Cant say
Answer Number of people -
YES 26
NO 12
CANT SAY 12
The way in which a luxury brand is portrayed itself shows that
people want to buy luxury brands as it creates an experience.
65
SIMILARITY OF FREQUENCY OF ADS OF LUXURY BRANDS AND REGULAR
BRANDS
35 30 Number of people 25 20 15 10 5 0 Yes No Cant say
Answer Number of people -
YES 10
NO 30
CANT SAY 10
It is a known fact that luxury brands do not advertise as much
as regular brands. This itself is a very important factor that
helps differentiate it from other brands. Luxury brands rely on
their brand image and do not opt for extensive marketing
strategies.
66
REASONS FOR PURCHASING A LUXURY BRAND
30 25 Number of people 20 15 10 5 0 Quality Experience Sake of
owning a luxury brand
Reasons -
QUALITY
EXPERIENCE
SAKE OF OWNING A LUXURY BRAND 8
Number of people-
16
26
Majority of the respondents seem to buy a luxury brand as they
believe it creates an experience and also somewhere believe that
the quality of a luxury brand is higher than that of a regular
brand.
67
REASONS AS TO WHY OTHERS MAY BE PURCHASING LUXURY BRANDS
30 25 Numberof people 20 15 10 5 0 Quality Experience Sake of
owning a luxury brand Others
Reasons -
QUALITY
EXPERIENCE
SAKE OF OWNING A LUXURY BRAND 26
OTHERS
Number of people -
8
10
2
Keeping their own ideas aside, people feel that other people
purchase luxury brands for the sake of owning a luxury brand. Other
reasons such as brand preference and loyalty are given least
importance. Quality may also be one of the reasons as to why people
purchase luxury brands.
68
DIFFERENCE IN THE MARKETING OF LUXURY BRANDS
25
20 Number of people
15
10
5
0 Frequency of ads Quality of ads Brand ambassadors Others
Difference Number of people -
FREQUENCY OF ADS 19
QUALITY OF ADS 20
BRAND AMBASSADORS 9
OTHERS 2
Maximum number of respondents feel that luxury brands follow a
different marketing strategy in terms of frequency and quality of
ads. They advertise much lesser and even when they do, one look at
the ad will tell us that it is a luxury brand. Few people give
credit to any brand ambassador associated with the brand, (if
any).
OPINION ON INCREASING NEED FOR OWNING A LUXURY BRAND
69
30 25 Number of people 20 15 10 5 0 Yes No Cant say
Answer Number of people-
YES 24
NO 14
CANT SAY 12
Almost 50% of the respondents feel that day-by-day the need for
owning a luxury brand is increasing. In todays world, everyone
wants to be distinct and majority of them feel, owning a luxury
brand will help them achieve that distinction.
WOTHINESS OF PRICES ASSIGNED TO LUXURY BRANDS
70
30 25 Number of people 20 15 10 5 0 Yes No Cant say
Answer Number of people-
YES 4
NO 24
CANT SAY 22
Luxury brands are always assigned much higher prices when
compared to regular brands and however welling people are to pay
for them, majority of them agree that luxury brands are not worth
the prices assigned to them. And many of them feel that it is hard
to tell whether it is justified for luxury brands to be priced so
high.
DIFFERENCE IN THE MARKETING OF LUXURY BRANDS AND REGULAR
BRANDS
71
25
20 Number of people
15
10
5
0 Yes No Cant say
Answer Number of people -
YES 20
NO 10
CANT SAY 20
Taking into consideration all facts about luxury brands , people
found it very easy to decide that there is a huge difference in the
marketing of luxury brands and regular brands.
MORE CHANNELS OF DISTRIBUTION MAY MAKE THE PURCHASING OF LUXURY
BRANDS EASIER
72
20 18 16 Number of people 14 12 10 8 6 4 2 0 Yes No Cant say
Answer Number of people -
YES 18
NO 18
CANT SAY 14
While 18 of them felt more channels of distribution will make it
easier for them to gain access to luxury brands, the same number of
people felt it wouldnt make much of a difference.
LUXURY BRANDS IN JEWELLERY: BETTER IN QUALITY AND DESIGN THAN
REGULAR BRANDS
73
25
20 Number of people
15
10
5
0 Yes No Cant say
Answer Number of people -
YES 16
NO 14
CANT SAY 20
When a question specifically regarding jewellery luxury brands
was asked, 16 of them felt jewellery brands in the luxury segment
were of higher quality and better design when compared to regular
brands.
BUYING A LUXURY BRAND IN TIMES OF RECESSION
74
30 25 Number of people 20 15 10 5 0 Yes No Cant say
Answer Number of people -
YES 10
NO 14
CANT SAY 26
Finally getting to the practicality of buying a luxury brand
even in times of recession, more than 50% of them were unable to
make up their mind and would be able to decide only when they are
confronted with a situation. But of the remaining, majority decided
it would be wiser not to spend their money on luxury brands in
times of recession.
75
CHAPTER 4 SUMMARY OF FINDINGSAfter conducting the survey and
interacting with a lot of people regarding the difference between
luxury brands and regular brands, the following points can be
listed as a summary to the entire study: Luxury brands believe in
not shouting out loud to the public about their products. They rely
on their brand image and the history of the brand. 76
The way in which a luxury brand positions itself in the minds of
the public is completely different and is portrayed in a more
sophisticated manner. The casual touch present in regular brands is
missing. Luxury has changed a lot , especially in the Indian market
and is bound to change more. The Indian luxury market is expected
to grow rapidly in the next few years. The perception of consumers
towards luxury brands is distinct and one major distinguishing
factor is the price of luxury brands. Through the survey, it was
also learnt that a lot of people cannot clearly distinguish between
a luxury brand and a regular brand especially when the brands are
offering similar features.
The Case Study of Ganjam shows that when a brand is being
re-positioned as a luxury brand, it undergoes tremendous change. It
is almost like a new brand is being created. The way in which it
was portrayed to the public changes, the means and frequency of
advertising changes and even the products dont remain the same. It
is a tedious process and has to be carefully executed; even a small
mistake can ruin the brand image of the brand forever.
The luxury industry in India especially has grown a lot in the
past few years, people have started recognising the difference.
This gives a lot of opportunity for growth in this segment.
77
The starting point for identifying successful luxury brand
strategies in India has been established by identifying certain
salient aspects of luxury brands that remain constant as well as
identifying the stage of mindset of the Indian consumer towards
these brands. The focus is now towards how soon luxury brands will
enter the market to gain a first mover advantage, which is of
significant importance in India. Apart from how soon, we primarily
focus on how will luxury brands cater to the mainly aspirational
needs of the Indian consumer. A word of caution that goes for
luxury marketers, irrespective of their brands and geographical
presence The luxury consumer is always looking for newer ways to
satisfy his continuously changing needs. Hence, the need to keep a
close tab through insightful research is of prime importance. As
far as India is concerned, given the rapidly accelerating affluence
of the masses, the scenario is set to witness a boom. The ones who
will be riding the wave will be the ones whove kept their ears open
to each and every word of their each and every customer. After all,
in the luxury business, no marketer can afford the luxury of
treating its consumers as a loosely bunched segment.
78
CHAPTER 5 BIBLIIOGRAPHY AND ANNEXURE
5.1 BIBLIOGRAPHY79
Magazines Vogue Gem and jewellery magazine Art of jewellery
magazine JCK magazine Internet unitymarketing.com brandchannel.com
britishluxurycouncil.com wikipedia.com google.com
Books Luxury Brand Management: A World of Privilege - by Michel
Chevalier , Gerald Mazzalovo Luxury World: The Past, Present and
Future of Luxury Brands - Mark Tungate
Articles Eight Things That Every Marketer Needs to Know about
the New Luxury Market; Pam Danziger The Changing Face of Luxury;
Patricia Graham and Marcus Matthews The Unmistakable sign language
of luxury; Hindu Business Line.
5.2 ANNEXURE80
QUESTIONNAIRE ON PERCEPTION OF LUXURY BRANDS- How does a luxury
brand differ from a regular brand? - How can one differentiate
between a luxury brand and a regular brand? By the look of it By
the price By the packaging
- Does a luxury brand always mean better quality? Yes No Cant
say - Does buying a luxury brand create an experience? Yes No Cant
say - Do you see as many ads of luxury brands compared to those of
regular brands? Yes No Cant say
81
- Why would you buy a luxury brand? For better quality For an
experience For the sake of owning a luxury brand Other -Why do you
think other people buy luxury brands? For better quality For an
experience For the sake of owning a luxury brand Other
- What is the difference in the marketing of luxury brands? - Is
the need for owning a luxury brand increasing day by day? Yes No
Cant say - Do you think luxury brands are worth the prices assigned
to them? Yes No Cant say -Do you find a difference in the marketing
of luxury brands and regular brands? Yes No
82
Cant say - If there are more channels of purchasing luxury
brands, such as more retail stores and online shopping service, it
will make it easier to purchase luxury brands. Yes No Cant say
-Do you think luxury brands in jewellery are better in quality
and design compared to regular jewellery brands? Yes No Cant say -
In times of recession would you still think of buying luxury
brands? Yes No Cant say
83
ARTICLES
84
ARTICLE 1 Expanding a Luxury Brand without Losing CachetTHE
ECONOMIC CLIMATE and world situation may be fragile, but for
upscale brands, the outlook is brighter than it may appear. Though
affluent consumers continue to be selective about spending,
examining the winners in today's volatile marketplace shows that
expansion, not hunkering down, is the way to strengthen a luxury
brand. Luxe marketers do face challenges. A handful of influential
celebrity customers can generate mass demand overnight. But what
keeps the brand sticky, once the fad passes? And what will keep
core clients loyal if they think a venerable brand is losing status
by expanding too far in the direction of "luxury lite"? For
prestige marketers, the challenge remains, how can you grow a
luxury brand without diluting its prestige? For an answer, consider
the recent success of Fifth Avenue jeweller Harry Winston.
President and CEO Patricia Hambrecht describes the company's growth
strategy: "We grew our business by expanding our customer base and
enlarging our product offering while remaining true to the core
values of the brand: quality of gemstones, simplicity of design,
excellence of craftsmanship." The marketing plan involved
burnishing the jewellers luxe image and, at the same time, opening
its doors to younger, less affluent customers, defining Harry
Winston as "a company where both our brand and our products are
viewed as exclusive but not elitist." So, practically speaking, how
can a luxury brand maintain its cachet while reaching out to new
customers? I put the matter to Hambrecht, Burberry President and
CEO Rose Marie Bravo and Ed Kelly, president and CEO of American
Express Publishing. Here are eight suggestions we collectively came
up with: 85
1. Maintain the core identity of your brand. Don't lose the
essence of the brand, "even as you expand and make it relevant to
today," Bravo said. 2. Build on your core competencies. Don't
abandon what you do best or sacrifice quality and service. That's
what built your brand's reputation--and loyal following--in the
first place. 3. Use brand extensions to penetrate your core market
as well as reach out to new market segments. 4. Establish a clear,
consistent brand image. Strictly limiting distribution
channels--the number and type of sales outlets--and controlling all
aspects of the selling environment are other ways to preserve brand
mystique. 5. Create synergies between audience segments. 6. Use a
mix of advertising, public relations and media to change customer
perceptions. Old customers need reassurance that the brand hasn't
lost its value, while new customers want assurance that it's not
the same old brand. 7. Market a lifestyle, not a product line. Look
for opportunities to deepen the emotional bond between your
customer and brand. 8. Set trends; don't follow them. "Young,"
"fresh," and "accessible" are bankable assets for a luxury
brand--so long as marketers also keep in mind the cardinal rule for
maintaining brand cachet: Remain true to your core values.
86
ARTICLE 2 India Attracting Luxe PlayersDespite limited retail
space, a cumbersome bureaucracy and high import duties and taxes,
India is emerging as one of the most alluring markets for the
luxury goods industry. According to a study by luxury goods
consultant Armando Branchini for the luxury goods association
Altagamma, consumption of international luxury products and brands
in India is expected to triple in the next five years. In 2005, the
total market size for upscale and luxury products in India was
estimated at $14.8 billion, and Branchini said he estimated a 14
percent annual growth rate of the market. By 2010, India is
expected to have 150,000 families with an income level of $250,000
per year or higher. "There are one million very wealthy people,
between 6 [million] and 7 million very affluent, 9 [million] to 10
million affluent and 14 [million] to 15 million upper middle
class," he said. Jewellery accounts for 27 percent of the luxury
retail market in India, followed by designer wear, accounting for
16 percent of the total. Recent trends show that spending has
shifted toward handbags and footwear and that female consumers are
earning and spending more, according to the research. "Despite
higher prices of luxury goods in India, the younger consumer is
strongly impressed with the international luxury brands and aspires
to possess them," said Branchini. "India should move fast and catch
the moment," said Michele Norse, chief executive officer of
Salvatore Farrago, during a conference about the Asian nation
organized last month by Altagamma. Norse, who said he first visited
the country 31 years ago and "loves" it, pointed to an
"unbelievable" bureaucracy, a lack of infrastructure and a poor
knowledge of India as some of the main reasons for unnecessary
delays and a stilted growth rate.
87
"Most people don't know India, and Indians themselves don't
really know their own country because they don't travel," said
Norse, who urged his peers to control their businesses there
directly out of that country. "It's a major mistake to run your
business from Hong Kong, for example," he said, noting how easy it
is to be distracted by larger markets in terms of revenues. Norse
said India needs foreign investment over the next five or six years
to develop roads, shopping malls and attract tourists. "The Indians
don't have that sense of urgency, it's their mentality, versus, for
example, the Chinese, who are much more aggressive," he said. Joey
Kaempfer, founder and chairman of real estate developer McArthur
Glen, said in other countries in Asia he generally gets "requests
each week to partner to create new outlets." In India, on the other
hand, "we are banging on their door, but there is no response.
[Indians] have a more independent mind- set," said Kaempfer.
Francesco Trapani, chief executive of Bulgari, said that while
China is more mature, "future investments in India will drastically
change [the country]," although not in the short term. Gildo Zegna,
ceo of the Ermenegildo Zegna Group, viewed both China and India as
"opportunities - you cannot go to one and miss the other, although
they have a very different state of maturity." Zegna, too, lamented
the lack of real estate spaces and said the people should work on
improving the country's image abroad, promoting it as a luxury
resort tourist destination, improving its airports and luxury
hotels. "This would really help us," he said. However, Zegna
praised the new laws that allow overseas companies to own a
majority of their single-brand stores in India. "We had a
franchisee in the late 1990s but were not happy, and the new
legislation helped us relocate our store," he said. In 2007, the
firm will open stores in Mumbai and in New Delhi. "Indian customers
are the most loyal, buying our brand from Singapore to London,"
Zegna added.
88
Indeed, the scenario in India is quickly changing thanks to the
landmark change in the store ownership law, a revision that was
promoted by Kamal Nath, India's minister of commerce and industry.
Nath was present at the conference and was part of a group of 125
Indian entrepreneurs who traveled to Italy, meeting with local
politicians and executives. Italy's prime minister, Romano Prodi,
is expected to travel to India in February, and an Altagamma
delegation is scheduled to visit India in early 2007. "Italy is
India's fourth-largest trading partner, but this is not good
enough. There is a vast potential, with 25 million people entering
middle class and reaching out to quality [and] who are able to
recognize design skills," said Nath, who pointed to a common
heritage between the two countries, which have depended on skilled
artisans, manual craftsmanship and creative design to build their
reputation. "This is a very natural partnership," said Nath. 'There
are proud people in the country, looking at the future to redeem
themselves from the history of poverty," he said. Nath himself was
proud of his country's democracy, where there are no intellectual
property issues and laws are implemented, he said. "We respect
trademark legislation, and our government never accepts
counterfeits." Leonardo Ferragamo, ceo of Palazzo Feroni
Finanziaria, which controls diversified investments for the
Ferragamo family, and chairman of Altagamma, said "counterfeits are
not relevant" in India, which promotes "creative and not imitative"
design. Ferragamo said he was hopeful the remaining barriers that
limit access to the Indian market will give way to free trade and a
more reciprocal exchange that will "be advantageous for India," as
well. "There is a change in the mind-set, an openness taking place
and a tidal wave of aspiration," said Anuradha Mahindra, editor and
publisher of Verve, India's premiere fashion and lifestyle
magazine. "There are 500 million people aged 18 to 30, a whole
generation with aspirations to be part of the best in the world,
who want to be part of the international fraternity, carrying the
best bags and wearing the best suits." Mahindra said Indians'
craving for celebrities, developed by the Bollywood film world, is
an added asset for the luxury goods industry.
89
ARTICLE 3 INDIA JEWELRY INDUSTRY ADJUSTS TO U.S.ECONOMICWOESWhen
an economic downturn disrupts the buying habits of the world s
largest consumer economy, its effects ripple far and wide. India's
jewellery market has been hit especially hard. Sanjay Kothari,
former chairman of the Gem & Jewellery Export Promotion
Council, said that jewellery exports from SEEPZ (the special
economic zone in Mumbai that promotes rapid economic growth using
tax and business incentives to spur exports) to the United States
fell by 30 percent during the first six months of 2008. In a
country where jewellery accounts for 15 percent of exports and
SEEPZ accounted for more than 40 percent of jewellery exports,
that's a grim figure. More recently, the demand for diamonds has
dropped so dramatically that in October Vasant Mehta, the newly
elected chairman of GJEPC, made a plea for the country's diamond
manufacturers to reduce their supplies. "They are suffering,"
Kothari said to reporters during the India International Jewellery
Show (held Aug. 7-1 l)."Business with the USA is going down because
of the economic condition in the U.S." In response, Kothari said,
some manufacturers that were exporting to the U.S. market have
moved out of SEEPZ and set up shop in other areas to take advantage
of the burgeoning domestic market. "Big companies started operating
outside SEEPZ so they can do business with the India market," he
said. In addition, Kothari said, manufacturers are entering other
export markets, primarily neighbouring countries, the Middle East,
and Europe. GJEPC is working to attract trade with other countries,
particularly China and Thailand. And GJEPC continues to encourage
more business with the United States through its annual Indo/US
Jewellery Business Relationship Development Conference, which
brings U.S. retailers to India to show them the breadth and depth
of India-made jewellery. Manufacturers interviewed by }CK at IIJS
confirm Kothari's view, noting that companies can find good deals
for manufacturing sites inside SEEPZ. Almost everyone said they
expect the economic problems in the United States to run until
2010. These opinions, however, were based on economic 90
conditions prior to the near collapse of the worldwide financial
markets in October. But these manufacturers, as of August, are not
fretting. Instead, they're changing strategy and focusing on
domestic and other international markets. This was evident at IIJS,
which enjoyed plenty of foot traffic throughout the show,
particularly during the weekend, and where most exhibitors reported
good business from their domestic and regional customers. The show
also has a waiting list of nearly 400 domestic and international
exhibitors. In addition, the country continues to diversify its
jewellery product by augmenting mass-market jewellery with designer
jewellery, offering small-scale production of high-end products for
the international market. GJEPC supports this effort and set up a
show for design-oriented jewellery called IIJS Signature. The
second edition will be held Feb. 20-23 in Goa. High-end design was
also evident at IIJS through its annual ABN Amro Solitaire Design
Awards, a jewellery design competition that culminated in an awards
presentation and fashion show. The industry also is taking on a
larger role in the Indian business