How TITAN developed the trust among Indians to go to TANISHQ rather than their trusted traditional local Jeweller.
TITAN has a market capitalisation of 2.19LCr & TITAN brand as a whole has many iconic products. FastTrack Watches, Titan eyeplus, Mont blanc pens, Sonata, Caratlane & Tanishq branded Jewellery are few.
Xerxes Desai started TITAN in 1984 with Tamil Nadu govt. Its an interesting story how this arm of TATA started. You can hear the same from the legend himself below. Once when he went to Delhi for licence for TITAN watches, he was told “over my dead body” by an IAS officer.
He also adds “It was a time,” he recalled of days in the 60s, “When one had to write an application to HMT to get a watch…you see, one couldn’t buy it in the open market. You then got a letter of approval from the department & then over a couple of weeks you had to go to a store to collect it.”
How did Tanishq Jewellery manage to garner the trust of Indian public who were more comfortable with their local trusted jewellers where even their parents & grandparents frequented is interesting. Answer — “TRUST”.
They started with watches & later forayed into exquisite range of gold & diamond jewellery(in 1995). Those days 22 carat jewellery was the norm but to position themselves differently, They came up with 18 carat Gold. They also believed that 18 karat would be less expensive, scratch-proof & so would enable consumers to buy more & larger pieces. But soon Tanishq realised that Indians bought Gold as an asset, store of value, a symbol of wealth & status, and gold was a fundamental part of many rituals & so Indians wanted the purest form. They tried everything in the book which could make Indians love 18 carat gold but failed miserably. Infact in 2001, share price of TITAN nose dived to Rs.2/-. Company made huge loses & at one point its cumulative loses was 150 Cr. Infact McKinsey was engaged by Titan to run a study of Tanishq. They advised to close down the business. However, Ratan Tata left the final decision to Xerxes Desai.
In 2002, Tanishq finally accepted their mistake & introduced 22 carat gold jewellery to their stores. Customers still didnt come in. Inshort they realised there was a huge trust deficit in the whole scheme of things which needed to be corrected.
So TITAN decided to work on this factor & also make the same, its USP.
TITAN bought Indias first KARAT METER — a spectroscopic device that used X-ray to provide an accurate & non-destructive method of testing the purity of gold to its major retail stores from Germany for 12 lacs.
Armed with the new gadget, Tanishq ran advt campaigns saying public could bring their Jewellery & get it tested for purity at their showroom free of cost. This lead to a huge footfall. Customers started going to the nearest Tanishq showroom to get their traditional gold tested & this also became an opportunity for Tanishq to showcase their exquisite gold & diamond designs.
Now the karat meters did a very important job which shocked the customers who came to test their traditional gold for its purity. 58% of the jewellery tested in the Karat meters were found to be less pure than what their traditional local jewellers had promised. This was a rude shock to the customers which hurt the trust they had on their local family jeweller. So now Tanishq had a reason as to why the public should be buying the gold from their showroom. But the management soon realised that even this was not enough. Customers checked their gold for purity but when they realised they were cheated by their local trusted jewellers, they felt bad & went back feeling helpless. This was not helping Tanishq to increase their sales which was the ultimate objective.
Here Jacob Kurien, the then COO had a plan. Now that Tanishq had made the public realise their mistake of trusting the local jeweller but Question remained about what was the solution ? What do customers do with the less pure gold they have been sold to by their local jeweller ? Kurien realised that if Tanishq can provide a solution to this question, they might win big time. Kurien introduced the ‘Impure to Pure scheme’ which meant If a customer brought jewellery that was lower than 22 carats but higher than 19 carats pure, they could exchange it with Tanishq’s 22-carat jewellery by just paying for the making charges. For purity below 19 carats, the customer would need to pay out the difference as well. This was widely publicised in the media. The magic was done. Customers started making use of this scheme & soon most showrooms across India started doing robust business.
The TATA Group name stands for TRUST. The same TRUST became their USP. TITAN understood the consumer psyche, reformed their thinking using science & now consistently delights them with newer & newer designs through Mia, Lyana, Ekatvam, Rivaah & Padmaavat brands.
Jewellery is a high indulgence category where people want to see it & feel it before buying. So post covid times, expect lot more robust numbers from Tanishq. Titan saw its December quarter (Q3) net profit zoom 91%to Rs 1004 cr compared to the year-ago. Tanishq has 313 stores across the country and they are creating over 18500 new jewellery designs every year.
This company has more legs. Stay invested. Happy Investing.
You can read my earlier blog on TITAN at the below link.
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@nareshbahrain
