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PLATINUM: OWNER`S PRIDE WITHOUT NEIGHBOUR`S ENVY

While Kapish Mehta was going through his daily dose oI the pink papers and a cuppa, a
Iront page news item drew his attention. It said that Mahindra is about to launch a luxary
tractor, with a 80 hp engine and an airconditioned driver`s cabin, priced at Rs. 14-16 lakh
and thus being at par with a Civic, Corolla, or Jetta. The positioning oI course would be
on status platIorm and not utility based. A Ireshly minted MBA Irom Wharton, Kapish
was the scion oI a Iamily oI reputed jewellers Irom Delhi. Market Ior luxuries has surely
come oII age here, he surmised. (It is another matter that a Iew weeks hence he would
review his own impression). Like many oI his ilk he too wanted to make a mark Ior
himselI, which he thought was not possible by joining the Iamily business. Yet the Iact
remained that jewellery business was into his blood. Lo and behold! Turn oI a Iew pages
more and came in sight the ad. by the Platinum Guild International. He sat upright Iully
awake now and began wondering iI it would be a good idea to dabble into platinum
jewellery.
PLATINUM IN INDIA
He decided to do the obvious over the next couple oI days, viz, know more about the
market Ior platinum jewellery in India. The Google search told him that the leading
producer oI platinum Rustenburg Platinum Mines (in South AIrica) had established the
Platinum Guild International (PGI) in 1975 as the jewellery marketing arm. PGI
introduced platinum in Indian market in 2000 through tie ups with leading Indian
designers, jewellery manuIacturers, and retailers to launch an exclusive range oI platinum
jewellery here. According to PGI Indian customer needs to be educated and persuaded to
buy platinum jewellery since she believes that it is out oI reach Ior most buyers, beIitting
only ultra rich. Moreover, India is world`s biggest gold consumer. Here demand Ior
platinum is likely to amount to merely 1.2° oI gold consumption; in absolute terms
platinum consumption should climb Irom 2-2.5 tons currently to about 5 tons by 2013-14.
Thus it is evident that platinum, the white metal, will have to win new customers in the
Iace oI eternal love Ior bullions oI the Indian buyer. Unlike gold, India is not going to be
a mass market as Iar as platinum is concerned; it will sit at the top end oI the jewellery
market. Extremely well oII perhaps would want to bring in some variety in their
jewellery through platinum. Yet the comIorting Iactor, according to a Capegemini SA
and Merrill Lynch Global Wealth Management report, is that India is one among the top
12 countries oI dollar millionnaires (2010 Iigures), with these millionnaires numbering
153000. Women and young millionnaires account Ior an increasing portion oI this Iigure.
About 27° oI them are women, against 24° in 2008. Likewise, compared with 13° in
2008, in 2010 nearly 17° were aged 45 or below.
When Kapish scanned through the recent ads released by the PGI he could sense that the
organization wanted to appeal to younger women Irom metros and tier-1 cities who were
aIIluent, well exposed to English media, and having a global outlook. A recently released
advertorial is captioned: A rare metal Ior a rare individual`. II the ad is to be believed
platinum, the awe inspiring metal, has been on the wish list oI high and mighties all
across the globe. The A-list includes the likes oI Prince Edward VIII, Princess Kate, Paul
McCartney, Tom Cruise, Katie Homes, and others who could give them company. The ad
inIorms us that by being thirty times rarer, it is a greater object d`desire than gold. And
being naturally white it does not Iade over time. Platinum, the ad goes on to say,
symbolizes elegance, contemporariness, and eternal beauty.
Another ad tells us that Anne Hathaway walked the red carpet at the 83rd Annual
Academy Awards adorning a gorgeous platinum and diamond neckless. It also showcases
a handbag, priced £1 million, embellished with platinum detachable strap that can be
worn as a neckless or a bracelet plus a pear shaped diamond that can be worn as a broach.
Third ad shows Halle Berry in platinum and diamond studded earrings and bracelets at
the 68th Annual Golden Globe awards, and Natalia Portman in a platinum and diamond
neckless. Finally an India speciIic ad seeks to Ilatter accomplished Indian ladies by
crediting them with having the ability to balance tradition and modernity, obliquely
reIerring to platinum (modern) metal in traditional designs.
A common message: Rare product for rare people.
Well, Kapish knew it well that notwithstanding the allure oI advertising, in India gold is
still the last word when it comes to Ieeling rich. Through the decade oI 90`s Indians did
brieIly Ilirt with diamonds and platinum, but ultimately the golden metal has triumphed.

IS IT LIKE FIGHTING A LOST BATTLE, THEN?
Not exactly. Propelled by economic boom in India there has been an unprecedented level
oI wealth creation. Average income levels have risen maniIold, with several individuals
suddenly joining the millionnaire club. The resulting increase in money available Ior
spending and the nation`s increasing integration with the world economy have widened
the Indian`s exposure to major luxary brands Irom all over the world, triggering a luxary
revolution. India`s HNI population at 1,53,000 in 2010 has grown 20.8° (126,000 people
in 2009), the highest growth rate among all the countries oI the world.
The number oI ultra high network Indian households is likely to grow exponentially in
the next 5 years. Presently there are 62 thousand households with an average income oI
Rs.750 million. This number is likely to go up by 2,19,000 with average income going up
to Rs. 1000 million by 2015-16.
Kapish decided to get serious. He engaged a marketing research Iirm to give him an idea
about the potential oI luxary retailing, speciIically the scope Ior retailing platinum based
products. Another 34 days later Indian Council Ior Marketing Research (ICMR), the
agency, submitted a report. Presently, Kapish was reviewing that report.
Indian market, the report began, is a sum oI many parts. It has classically rich people
(who have inherited riches) and nouveau rich. While the latter preIer luxuries with logos
that immediately communicate their status and wealth, old money buys luxary Ior its
subtle eIIect. For the new rich it has to be a Louis Vuitton bag with the logo splashed all
over and not a Bottega Veneta, the understated exclusivity. New money shouts, old
money merely buys. First or second generation businessmen want luxary Ior a show oII.
For men status symbols go in this order-home, cars, yachts, watches, and clothes. For
women these symbols come alive through handbags and jewellery, especially diamonds.
The report also quoted another study across 11 countries which said that one third people
surveyed Ielt guilty about using luxary products in slow down; in sharp contrast Indians
did not mind dishing out an extra Iew lakhs iI a luxary product really appealed to them.
ver 70° don`t Ieel pangs oI guilt. While worldwide only 47° preIerred to buy a logoed
item, 79° Indians buy luxary items only iI the logo`s reputation impress them. No
wonder 28° Indians surveyed admitted that Ior them a luxary product is mainly a show
oII and reputation oI the brand matters the most. 79° Indians also said that they based
their buying decision heavily inIluenced by the Iact as to which celebrity was seen
endorsing a brand.
The top end oI urban consumers, however, is a small segment comprising about 5° oI all
urban households. But this segment contributes one third oI total oI urban expenditure.
High end purchases Ior those households who have joined the club in past one decade or
so act as signals that they have made it into the elite club. Reading this Kapish
immediately recalled his proIessor oI behavioural economics, John Burns, at Wharton. In
one oI his sessions he had oIIered an interesting poser: Why do rational buyers make
luxary purchases since Iunctionally luxuries hardly justiIy the price diIIerential? Then he
oIIered an answer himselI: Luxaries have a signalling` role - the user wants to tell the
world he is distinct and more successIul. Concentrating back on the report he resumed
reading.

The report said Iurther that ultra rich HNIs are highly brand conseious and in some cases
have strong brand loyalties; price, thus, is not the only consideration dictating a purchase.
Luxary brands don`t merely send social signals, but these also act as power boosters:
brand names act like marketing place bo, since they make the users Ieel they are superior,
and this becomes a selI IulIilling prophecy. They are willing to experiment with taste and
Iashion. With merely 11.5° oI their spend being on Iood, and another 6° on FMCGs,
they hold immense promise Ior sellers oI other goods and services, including jewellery.

Rising wealth and disposable income, Iavourable demographics, and their proclivity to
live it oII well should raise hopes in the minds oI luxary vendors.
SO WHAT IS HOLDING THEM BACK?
But beIore Kapish could drool over these Iacts, came the dampner. The report pointed out
that the Indian market actually consists oI several submarkets, as illustrated in table
below.
HH Income
Bracket
(RS/YEAR)
Number oI
Households
Typical
ccupation
Goods Services Assets

10 - 50lakh 2,80,000
Service
industry
proIessionals
Low ticket
items like
accessories,
wines personal
care
Spas,
inIrequent
Iine dining
--
50lakh -
100lakh
2,00,000
Corporate
executives,
selI employed
proIessionals
Watches,
apparels,
accessories
Travel,
Irequent Iine
dining, spas
--
100lakh -
500lakh
1,20,000 -
1,50,000
Medium
enterprise
owners,
company
CEs, top
proIessionals
All All
Cars,
yachts,
real,
estate,
paintings
500 lakh plus
1,20,000 -
1,50,000
Large
industrialists;
traditionally
wealthy
All All
Cars,
yachts,
real,
estate,
paintings

The problem is lack oI scaling in the Indian market Ior luxary brands. Even iI there is a
growing consuming class, the luxary market is inhabited by a handIul oI buyers. The
number oI people upgrading to luxary products is slow in India. They like to move Irom
premium to super premium products (Honda Civic, Nokia N97, Sony Vivid, Body Shop)
but still hesitate to make the leap to luxary. Regular customers are very Iew, the Iourth to
IiIth generation rich Irom industrial Iamilies Ior whom luxary is a way oI liIe. The new
buyers are second generation moneyed people who may provide promising opportunities
only over next 6-7 years.
SO WHAT GIVES: POT OF RICHES BEYOND THE YONDER?
The report suggested the way Iorward. Buyer behaviour, it said, should oIIer us lessons in
strategy Iormulation. These HNIs have strong Iamily bonds and dependence while
deciding on purchases, especially high ticket item. Most purchases, barring apparels,
accessories, and liquor, are planned. SpeciIically Ior jewellery 57° purchase in planned
manner, 37 ° buy on impulse, while the remaining 6° take recourse to both. But most
consider platinum to be unaIIordable and hardly treat it as a status symbol. Hence, as the
ad Ior platinum jewellery has rightly done, the need is to appraise them about prices oI
this aIIordable luxary. ne ad shows oII a neckless craIted by Ganjam, the Iamous
jeweler Irom Hyderabad, made oI platinum and diamonds. The same ad also inIorms us
that the legendry Kohinoor diamond is set in platinum. Perhaps jewellery consultants in
the shop could educate the potential buyer?
Regionally, North India has largest share oI the total HNI population, while Mumbai and
Delhi top the list oI 20 cities with the highest share oI urban Indian rich households. But
while Ior a north Indian jewellery is Ior making a loud statement, Ior a Mumbaite it is Ior
selI expression. Not only this, the report reminded Kapish that brands like Gitanjali, TBZ,
and Malabar Gold are now launching jewellery Ior kids and men. Since whole Iamily
comes to make the purchase, on impulse jewellery Ior kids and men may also be bought.

TBZ has launched men`s jewellery (in gold and diamond, not platinum) under Iour
categories- daily, Iormal, Iestival, and club wear. AIter all men in India have always worn
heavy jewellery right Irom necklace, bracelets, and earrings to crown.
Finally, the report reminded the reader that De Beers` international campaign A
Diamond is Iorever` was extremely successIul; it made diamonds synonymous with love
and aIIection and as the attire oI rich and Iamous. Now De Beers` marketing and retail
arm Diamond Trading Corp has decided to undertake more Iocused marketing oI its own
products through De Beers Jewellers, a joint venture between the company and Louis
Vitton. So iI diamonds could succeed, why not platinum?
n an optimistic note the report promised that wide variety oI designs, aggressive
marketing and promotional strategies, including purity certiIication and innovative oIIers
like buy back schemes can bolster the growth oI platinum products.

MORE QUESTIONS THAN ANSWERS
It was Ior Kapish now to draw up the Iinal marketing plan. He had to decide about many
issues. Who should be targeted, demographically, geographically, psychographically, and
income bracketwise? And relatedly what should be his marketing strategy in terms oI
4P`s to create the market against competitors? Most importantly, he was wondering
whether the marketing plan should be devised Ior his own brand or Ior the generic
product?

Do you have the answers?
(NTE: This case is being released Ior the case analysis competition which itselI is a part
oI Amaze Iest. It is the exclusive property oI the author and cannot be used elsewhere
without a Iormal authorization by the author.)

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