Pioneering can be a poisoned chalice. Tanishq, as much a trailblazer in the Indian jewellery business as its parent, Titan, was in the watch industry, knows this better than most.
The division was in dire straits in 2000 after posting losses for the third successive year. That made four years of dripping red in Tanishq's seven-year life. To make matters worse, the executive team had resigned, and stakeholders and store franchisees were utterly disillusioned.
The going could not have been tougher when Tanishq got going with its efforts to rekindle and rejuvenate an idea that had promised so much. With a never-say-die spirit for company, a new and inexperienced team set about turning around the divisions fortunes.
Today, three years later, Tanishq's turnover has trebled to Rs389 crore, with profits of Rs7.82 crore, a whopping 318 per cent rise over 2001-02. The annual growth rate is now pegged at 40 per cent.
Harish Bhat, the newly appointed chief operating officer of the division, is justifiably delighted: "Team Tanishq is very proud of this spectacular achievement," he says. "Our people have driven this turnaround; they brought resolute belief, immense energy and abiding focus to everything that we did."
During this landmark year, Tanishq has also generated positive economic value by delivering a return higher than the company's weighted average cost of capital. This is an important milestone in its history.
This year Tanishq has toppled its parent brand to take the top slot in the internal-revenues sweepstakes. The divisions contribution to Titan is expected to increase from the current 43 per cent to 55 per cent by 2007.
The excitement and enthusiasm at Tanishq's headquarters in Bangalore is palpable. With this dramatic swivel towards success, the division has effectively silenced sceptics who had predicted it would be impossible for an entity in the jewellery business to make profits through legitimate means.
Far from resting on its laurels, Tanishq is looking forward to the next milestone. The challenge now is to, by 2006-07, double turnover to Rs800 crore and multiply profits to Rs50 crore. A recent review by McKinsey states that Tanishq's jewellery business is on firm ground. The reasons: first-mover advantage (the pioneer part has its benefits); a scalable national model in organised retailing; and an increasing contribution to Titan's revenues.
Designs on women
The Rs40,000-crore jewellery business in India is fragmented and ruled by traditional local players. For Tanishq to be able to break the stranglehold, it had to find a way to connect with the need for finely crafted jewellery at affordable prices. Previously, Tanishq was positioned as an international jewellery brand for the Indian elite. This meant it catered to a niche market; the masses were ignored. Moreover, its Italian designs in 18-carat, mostly studded jewellery did not go down well with the traditional Indian woman, used as she was to 22-carat jewellery.
Given this reality, design was back in focus at Tanishq but with a difference. Abandoning its westernised look from the past, head designer Elizabeth Mathan and her team chose to work on a fusion of contemporary and traditional Indian motifs. Says Mathan, "Our primary customer is the young Indian woman, who has a modern, contemporary outlook towards life but is still firmly rooted in her traditional Indian values." Tanishq Aria was the first line to be launched with the new concept. It gave a fresh perspective to the traditional seven stone setting. It was a great success. Then, came Diva, which combined the brilliance of diamonds with the soft luminosity of pearls. Another success.
Looking back, Bhaskar Bhat, managing director, Titan says, "Our biggest change was targeting the mainstream Indian customer. The introduction of 22-carat plain jewellery was the first step in getting us where we are today." The range was strikingly different from the standard fare available in the market, yet it was traditional. The lightweight collection looked heavy, but felt light, just under 25 gm. This met the working woman's growing need for great-looking and beautiful jewellery that was affordable and extremely comfortable to wear.
The production process was made more flexible. New Japanese manufacturing machines were introduced at Tanishq's Hosur plant. The emphasis turned to customer demands across all segments and surveys were conducted to tweak business strategies.
"We have to meet a relevant consumer need," explains Saroja YL, the division's group manager, "so when we develop strategies for any marketing programme, our core philosophy is to link it with a particular consumer need, felt or otherwise, and then bring it to light in the most evocative way possible." Collection G and Tanishq Solo are examples of this doctrine.
Surveys showed work-wear jewellery to be a dilemma for the working woman. Tanishq's Collection G 9 to 5 range, with its modern, innovative designs, marked the first-ever collection custom-made to suit their requirements. Unique finishes and different textures, as well as a contemporary touch gave a distinctive look to the jewellery crafted in pure 22-carat gold. Moreover, it also addressed the homemakers' need for everyday-wear jewellery. The entry points for the collection was just Rs595, with more than 90 unique designs, including earring-pendant sets, neckwear, bangles, bracelets, chains and rings. The concept took the market by storm.
Likewise, solitaires were a woman's dream. But solitaires were perceived to be the sole preserve of the upper middle class, as only diamonds above 40 cents were considered solitaires. Tanishq debunked the myth and launched an exclusive brand of solitaire diamonds Solo, priced at Rs7,500 and upwards.
"Taking a fresh look at our brand exercise meant challenging the existing order in the marketplace and taking bold, if risky, business decisions. Today we have successfully democratised luxury and fashion in jewellery and by making the best of designs accessible to a wide segment of Indian women. In 2002, more than 1 million Indian women shopped at Tanishq, a fact that's testimony to the brand's broad appeal, and an indicator of its success in enabling consumers to access higher levels of quality," reveals Mr Harish Bhat.
Customer acquisition meant employing innovative marketing initiatives. Like some players in the apparel industry, it decided to launch an innovative collection in every quarter of the year to encourage customers to frequent the stores. The path-breaking 'impure to pure exchange' enabled customers to exchange impure gold for 22-carat gold.
During the offer period, customers could go to the Tanishq showroom and get a free gold purity check done on a 'Karatmeter' (an internationally acclaimed device for purity checking). Even if they find their jewellery to be less than 22c (up 19 carat pure), they could exchange it for Tanishq's certified jewellery.
The response was tremendous. "Most of our strategy has revolved around breaking the bond of customers with their jeweller by building on the weakness of the jeweller and on our strengths," says Ms Saroja. Which explains why Tanishq is now synonymous with trust and purity, and is perceived as a leader in jewellery design in India.
Over the last three years it has worked overtime to make its boutiques far more productive and responsive to consumer needs; they were made the centrestage of all marketing activity. Tanishq is the only national jeweller in India with an unmatched consumer reach through 62 exclusive boutiques in 47 cities.
In India, gold buying still marks special occasions like festivals, anniversaries and auspicious days like akshaya tritiya. So, whether it was Varalakshmi Puja in Andhra Pradesh, Durga Puja in Bengal, Onam in Kerala or Karva Chauth in the north, the company celebrated it with its customers in the right cultural spirit.
Tanishq is today perceived as a design leader in jewellery; as a distinct, fashionable brand which defines trends in jewellery; as a retail brand which offers an elegant, clearly differentiated shopping experience which is quite unique in this category.