Tanishq - The Turnaround Story

The Unsuccessful Launch

In 1995, Titan Industries, India's leading manufacturer of watches, launched the Tanishq range of gold
watches and jewellery. Till then, the Indian jewellery market was to a large extent unorganied, with a
few recognied names such as Tri!ho"andas #himji $ha"eri and %ehrason's. Tanishq, an entirely new
conce&t in the Indian market, thus had to struggle hard to !e acce&ted !y the customers. Industry watchers
were extremely ske&tical of Tanishq and dou!ts were !eing cast o"er its &ros&ects. Tanishq !egan !y
offering jewellery in the 1'(carat gold range, with designs !orrowed hea"ily from contem&orary
)uro&ean !rands. The com&any justified its decision saying that it wanted to !e 'different' from the
traditional Indian offerings. Tanishq &erformed "ery !adly in the next three years, &osting a huge loss in
199*(9', &ro"ing its detractors right. $aco! +urian, Tanishq's chief o&erating officer admitted, ,Tanishq,
as a conce&t, was far too ahead of its times., )"en if one agreed with +urian, it could not !e denied that
Tanishq did commit mistakes. -nalysts decreed that the com&any's strategies were wary. -t this &oint,
Tanishq took "arious ste&s to correct the mistakes it had committed and "ery soon, &osted its first e"er
o&erating &rofit in 1999. In 1999(.., sales dou!led to /s 1501 million against /s *20.' million recorded
in 199'(99 and reached /s 1... million in 1...(.1. Tanishq fared equally well on the ex&ort front also
with hea"y ex&orts to 3+, 34, -ustralia and 5est -sia. Tanishq was the largest o"erseas chain in 34
with 1,1.. outlets. In the year 1..., ex&orts contri!uted 1.6 to the com&any's turno"er. The story of
Tanishq, once written off as a losing &ro&osition, making a remarka!le turnaround was an exam&le of a
com&any single(mindedly working to make its own mark in the tradition !ound Indian jewellery market.
#ehind this success was, of course, a well(&lanned and well(executed marketing &lan.
Setting Things Right
Tanishq found out that it had gone wrong mainly in two areas ( the &roduct &ro&osition and retailing.
Initially with a focus on the ex&ort market, its designs were &redominantly 5estern, and the same line of
jewellery was sold in India as well. 7owe"er, when it shifted its focus to the domestic market, it was
una!le to sell these designs. Therefore the first ste& was to change the !rand &ositioning from that of an
elitist and 5esternied offering to a more mainstream, Indian one. The 1'(carat jewellery range was
ex&anded to include 11 and 12 carat ornaments as well. Tanishq also made attem&ts to redefine traditional
styles in its designs. Tanishq realied that, gi"en the di"erse nature of Indian ethnicity, it would ha"e to
cater to tastes of all regions. Therefore, the em&hasis shifted from the erstwhile modern designs to more
ethnic ones and traditional ornaments 8!ased on designs from "arious states9 were launched. The
com&any also !egan seasonal and localied &romotions !ased on Indian festi"als, such as during :urga
;uja in 5est #engal, <nam in +erala, :iwali in north India, etc. $ohnson =erghese, di"isional head, sales
and marketing, said, ,5e also decided to go in for transmigration of designs. 4o we not only got in more
Indian motifs !ut also started stocking ty&ical designs from Tamil >adu in %um!ai and those from
#engal in :elhi. These designs, though Indian, &ro"ided "ariety to what the &eo&le in a &articular area
were used to seeing., Tanishq's team of in(house designers came out with a!out 0,5.. designs !ased on
current trends and the feed!ack from stores. -t least 1.6 of these designs were changed e"ery quarter
and fresh ones were added to the stock. Tanishq ga"e com&lete freedom to the retail outlets to &ick u&
designs, which they thought would sell in their stores. -lmost all the outlets stocked the '!est selling'
range of designs, which did well across the country. Tanishq was now &itted directly against the
traditional jewellers who were offering similar ornaments. In order to add some "alue &ro&osition to rise
a!o"e the com&etition, Tanishq decided to address the issue of gold &urity, which was most im&ortant to
the customers. Traditionally, con"entional jewellers used the touchstone
1
to test the &urity of gold. -&art
from the fact that the customers did not trust the method, it was also alleged that a slight amount of gold
was always lost while testing. The customers had to acce&t this for want of an alternati"e. In 1999,
Tanishq introduced the re"olutionary conce&t of +aratmeters in its retail !outiques. The +aratmeter used
?(rays to gi"e an accurate reading of the constitution of gold in the ornament within three minutes.
Im&orted from @ermany at a cost of /s 1 million each, +aratmeters though ex&ensi"e, &ro"ed to !e the
!iggest 34; for Tanishq in the coming years. In fact, its sales increased !y 1.(0.6. The conce&t was later
on heralded as a !old ste& towards &rofessionaliing the Indian jewellery !usiness. In an attem&t to el!ow
out com&etition, Tanishq conducted tests on 1.,... ornaments selected at random. In some cases the
caratage was found to !e as low as 1.6 and almost A56 of the gold tested was !elow 11 carats. -s the
caratage offered was on the lower side in traditional jewels, the jewellers ke&t the making charges "ery
low to entice customers. This had !ecome the norm all o"er the country. Tanishq had to struggle hard to
!reak this con"ention. -s the conce&t of +aratmeter !ecame more widely known, customers !egan to
realie that the rates they were &aying for Tanishq jewellery were indeed justified. - Tanishq official
commented, ,They ha"e !egun to understand the total "alue &ro&osition that Tanishq offers., -n all(India
customer satisfaction sur"ey conducted !y Tanishq in 1..1 re"ealed that o"er 5.6 of all Tanishq
customers intended to make it their jeweller, re&lacing many long(standing relationshi&s with the
traditional jeweller. 5hen Tanishq was launched, it sold most of its &roducts through multi!rand stores.
This did not hel& the Tanishq !rand to make its mark. 7a"ing realied this, Tanishq decided to set u& its
own chain of retail showrooms in 199'. This &ro"ed to !e a "ery wise mo"e as sales &icked u& almost
immediately. #y $uly 1..1, it had 2* 'Tanishq !outiques' in 0* cities B 11 were in the metros ( :elhi,
%um!ai, +olkata, Chennai and #angalore, the rest in smaller cities with a &o&ulation of at least ..5
million such as Trichy, >ag&ur, -mritsar and ;atna. The focus on smaller cities &aid off well with the
annual growth !eing as high as 15.6 as com&ared to the 256 growth in metros. The num!er of !outiques
was ex&ected to reach 5. !y the end of 1..1 and to *. !y 1..1. Tanishq's efforts to standardie the &rice
of its ornaments &ro"ed to !e another milestone in its success. @old &rices differed across the country as
they were !ased on different &arameters concerning the local markets. In a !id to control gold &rice
"ariations in different &arts of the country, Tanishq decided to ha"e a standard gold &rice across all its
showrooms from %arch 1.... The standard &rice was made !inding on all Tanishq showrooms. Tanishq
!ased its gold &rices on international exchange &rices, resulting in &rices often !eing lower than the local
market &rices. >angia said, ,5e already ha"e a kind of standard &ricing in &lace, !ut this would re&resent
a formaliation of that system to the &u!lic., Tanishq e"en had &lans to link directly with the Dondon
%etal )xchange 8D%)9 for daily quotes in the future. Tanishq set u& an ultra(modern and large(scale
manufacturing unit in 7osur, Tamil >adu at a cost of /s A.. million. The unit had facilities like refining,
alloying and stone casting and a dust(extraction system that ke&t gold losses down to 16 of the raw
material while local jewellers ty&ically lost '(1.6. This in(house manufacturing facility was the main
reason, which ena!led Tanishq to charge the same &rice across the country. <ne of the com&any's most
im&ortant initiati"es was customer ser"ice enhancement. Tanishq launched a direct consumer contact
&rogramme and conducted sur"eys to monitor store walk(ins and footfalls and &ercentage of re&eat
customers. The com&any also ke&t the entry(le"el &rice as low as /s A.. 8for a &endant9 and offered a
range, which far exceeded that offered !y any other jeweller. -ll Tanishq outlets ga"e a 1..6 return
guarantee on its !rand of jewellery and also exchanged other jewellery after deductions de&ending on
&urity. - customer satisfaction measurement &rogram was started with the hel& of Customer 4atisfaction
%easurement %anagement 8C4%%9, an associate of I%/#. C4%% tracked customer satisfaction
&arameters for Tanishq on a quarterly !asis. This ga"e the com&any the !enefit of !enchmarking against
local and international &layers and also aided in im&ro"ing re&eat &urchases. -s a result, Tanishq was a!le
to directly link the remuneration of franchisees with customer satisfaction. The com&any's cor&orate gold
gift scheme 8'5hen you want to say thank you, say it in gold'9, launched in :ecem!er 199' &ro"ed to !e a
major success. Tanishq deli"ered 5.,... customied gold coins to ..15 million %aruti car owners
nationwide as &art of the 15
th
anni"ersary cele!rations of %aruti 3dyog. #y 1..1, the scheme accounted
for almost 56 of the turno"er and o"er 0. cor&orate clients like Coca(Cola, the 3# @rou&, 5hirl&ool, the
T=4 @rou&, Ceat and Di!erty 4hoes. The communication and &romotion !udget was increased from /s.
A5 million in 1999(1... to /s 1.. million in 1...(.1. - majority of this was s&ent towards ad"ertising,
while a &ortion was also earmarked for &romotions tailored to match regional &references. Eor instance, in
>ew :elhi, which was Tanishq's single largest market, su!stantial &romotions were carried out. The /s
1.. million was s&lit into four &arts, com&rising national(le"el s&ends 8!oth electronic and &rint media9,
regional !udgets, direct mail and research. Eor the first time, Tanishq initiated a long(term media &lan,
aiming to gi"e the !rand a round(the(year &resence and enhance awareness. The communication focused
on design and quality instead of the &rice.