Supply and demand statistics

Gold Supply and Demand – 2008

At US$21.2bn, global dollar demand for gold reached new heights in the second
quarter of 2008, rising 9% on year earlier levels. Global investment demand for
gold showed the strongest surge, reaching $3.5 billion in Q2 2008, 29% higher than
Q2 2007, with particular strength in the US, China, Egypt and Vietnam.

However, with a decrease of 19% on Q2’07 to 735.6 tones, the continued high and
volatile price of gold dampened total demand in tonnage terms during the quarter,
according to Gold Demand Trends, which was released on August 13 by the World
Gold Council (WGC). This particularly impinged on jewellery demand, which fell
24% to 504 tonnes and was also affected by tightened consumer spending due to
the global credit squeeze and growing inflationary pressures. Markets which saw
the largest decline in jewellery demand were India, which fell 47% to 118 tonnes,
and the US, which fell 30% to 33 tunes.

However, positive news came from China and Egypt, which saw a 2% and 8%
increase in jewellery demand respectively.

Despite a number of markets turning to gold due to its investment attributes as a

safe haven in times of rising inflation and unstable equity markets, identifiable
global investment demand in tonnage terms was down by 4% over Q2 2007 to
119.8, as some investors took profits. This decline represents a 9% decrease in net
retail investment, which was partly offset by a move to positive net investment in
Exchange Traded Funds (ETFs) and similar products.
 CONCEPTUAL BACKGROUND

Marketing mix is a set of controllable tactical marketing tools- product, price, place
and promotion- that the firm blends to produce the response it wants in the target
market. The product gives a solution to the customer, the price gives the cost that
the customer has to bear, place gives the convenience with which customer can
acquire a product and promotion provides a means for communication.

Figure-

the 4 Ps of marketing

These four P's are the parameters that the marketing manager can control, subject to the
internal and external constraints of the marketing environment. The goal is to make
decisions that center the four P's on the customers in the target market in order to
create perceived value and generate a positive response.
 INTRODUCTION

We chose gold necklace as our product for the project. We selected a jeweler in our
city and studied their product and then did analysis for the gold necklace they
manufacture and did the Marketing mix for it. The jeweler we selected is
Syndicate jewelers who have various in the country, mainly operating from
Kolkata. It is their family business and they establishment started in 1980’s and
have been in the business ever since.
 PRODUCT

Various types of gold ornaments are made by Syndicate jewelers like necklace,
chain, ear rings, rings and bracelets. Out of which we have chosen gold chain as
our product. Gold chains are bought by both genders, different age groups as well
as different social classes. Gold chains are worn as a style statement and at times
are even seen as a status symbol by some.

The design and the requirement vary from place to place depending up on the
culture and ethnicity. Gold chains are very famous among the women of all age
groups. Gold chains are even worn by men and children. Depending up on the age
and gender the design are very specific.

• STYLING:

Specific designs are developed for different genders. More intricate designs are
preferred in case of women and generally men prefer plain designs. For special
occasions like marriages and festivals people flaunt attractive designs. The style
changes from time to time. The style gets influenced from different style icons like
cine stars and famous personalities.

• QUALITY:

Brand image is very much dependent on the quality of the product. We stick to our
promise to provide high quality product. All the products have hallmark
certification from the BIS. So the quality is reliable. The chains provided by
syndicate jewelers carry 22 carat gold. The design and crafting of the ornaments
are of international standards.
 • SAFETY

The chains are made in such a way that they do not harm the person who wears it.
The chains are carefully crafted so that they do not have any sharp edges and we
also test the reaction of the jewelry average humans skin.

• PACKAGING:

The packaging depends on the size of the chain. We usually provide boxes for
chain of higher price. The packing is made in an attractive way in order to attract
customers. The boxes are designed in such a way that they could be used for many
years.

• WARRANTY:

We generally do not provide any warranty but give purity guarantee.

MANUFACTURING PROCESS OF GOLD ORNAMENTS

Initially, to start with 100gms of solid gold (24 carat) is taken then it is heated to
around 1100 degree Celsius to get it in the liquid form. While heating for every
11.6gms of gold, 1.1gm of copper is mixed so that it becomes as 22 carat gold.
Generally 22 carat gold is used so that it could be cut to any form according to the
requirements. For a chain, it is cut in the form of rod and by passing through
different machines (manual rolling mill, single rolling mill, double rolling mill and
wire rolling mill) and golden threads are produced. After that the threads are
converted in the form of small rings and these rings are attached by heating. While
heating, cadmium substance is used to join the rings and that cadmium substance
gets evaporated and the rings are attached.
1 2 3

4 5

• Pictures 2 and 4 show the manufacturing process of gold by goldsmiths.

• Picture 1 and 3 show gold chains.
• Picture 5 shows gold wires.

6- Picture showing a gold workshop.

 PRICE

• PRICING STRATEGY:

The price of the gold is determined by the market price but the making charges
vary depending upon intricacy of the design. Whenever new outlets are opened we
usually sell in a comparatively low price(reduce making charges) in order to
promote our product.

• VOLUME DISCOUNTS & WHOLE SALE PRICING:

Whenever customers buy a large number of chains we provide certain discount.

Regular customers enjoy similar kind of discounts on the purchase of gold chains.

• SEASONAL PRICING:

During the festive seasons special offers are provided in order to promote sales. As
the demand increases during the wedding seasons the price goes up.

• PRICE FLEXIBILITY:

There is minimum price flexibility for gold as the price depends on the market
price. It also depends on the competitors pricing.

• PRICE DISCRIMINATION:

In order to maintain good relation with regular customers we follow different

prices. The making charge is reduced for the long term customers but the basic
price depends up on the market.
 • CURRENT PRICES:

Market price per 10 gram of gold= Rs. 12260

Making charges =Rs. 1300-1500/ per 20 gms (depending on the design).

Total price= Rs. 13560-13760 per 10 gram.

Suppose the length of the chain is 24 inches and the weight is 20 grams.
Then the total price of the chain ranges between Rs. 27520- 27540.

Gold sellers have little control over the market prices but there exists a price
difference on the basis of the making charges.
The use of cadmium (kadium) for welding which is known as KDM, also adds to
the weight which earns profit for jewelers. Cost of cadmium which is negligible is
also included in the additional charges.

Profit is also earned by the gold sellers by adding other metals to gold like copper
but charging them at the price of gold and also by the making charges. Every 11.6
gram of gold has 1.1 gram of copper.
Whenever a product is made the maximum profit earned is in the manufacturing
process and charging for all the wastage and charging for overall waste.

There is also reselling of gold that takes place, which is profitable too. Whenever
customer resells the gold ornaments the value of gold is depreciated and they are
paid after removing a percentage which is claimed as wastage.
So, in this manner jewelers make profit and sustain the competition and fluctuating
gold prices.
 PROMOTION

Promotion places the most important role in today’s marketing environment. Since
there are lots of competitors in every field, promoting your product and make a
mark in consumer’s mind is very essential. Promotion represents various aspects of
market communication, i.e, the communication of merits of the product with the
goal of persuading customers to buy our product.
Syndicate jewellers is a Kolkata based jeweller which is the profession since many
decades. As a result they do have their own loyal customer base, although they do
indulge in various promotional strategy to increase their base.
They have 4 branches in India namely Kolkata, Behrampur, Bhubaneswar and
Visakhapatnam.Since we are only looking at Vizag branch, so we will focus on
various promotions used here.

Promotional Strategies

PERSONAL SELLING AND SALES FORCE:

-Since gold is an expensive commodity and product differentiation between

competitors is not much, “Word of mouth” plays a very important role. So, In order
to ensure good word of mouth you need to ensure good quality product and
remarkable personal experience during the purchase. We also make sure the staff
are well experienced and generate positive experience.

ADVERTISING:

-Hoardings around the city are used to get people aware of our jewellery
showroom.

-Advertisements in various newspapers and ads in local channels are used to gain
popularity and communicate our quality and explicit designs.

-Advertisements can also be played in local theatres.

SALES PROMOTIONS:

-As buying gold is considered auspicious for various festivals, such opportunities
are used to offer sales promotions like offering discounts or exclusion of making
charges to capitalize on the festival sales.

-Bridal collections are specially exhibited as marriage purchases are in large

numbers. So, during the marriage season special offers and new designs are
showcased.
 PLACE

After promoting the product and persuading the consumers to buy the product, the
final stage is the place of sale.Place includes the company activities that make the
product available to target customers. This is done through the various distribution
channels.

HEAD OFFICE:
Syndicate jewellers pvt. Limited
22- Camac street, block A
Park Street, Kolkata- 700016

DISTRIBUTION CHANNELS

KOLKATA

VISAKHAPATNAM BEHRAMPUR BHUBANESWAR

MARKET COVERAGE:

Syndicate jewelers have very selective market coverage because of its locations in
only a few cities. It does not have any distinct channel members like the
wholesalers and distributors rather the distribution process is carried out by the
people working in the company itself. Currently it has only four exclusive
distribution centers across India. The head office is in Kolkata from where they
supply the raw materials to other centers. The other centers have individual
workshops where they process the orders of the customers.
ORDER PROCESSING:

If the designs preferred by the customers are very complex or unavailable in some
centers, then the order is transferred to Kolkata. The processing time for the orders
is 15 days.

LOGISTICS AND TRANSPORTATION:

The inbound and outbound logistics is managed personally by the company and
they do not have any agents for that. Transportation of finished items is carried out
by courier.

STORAGE:

Mostly all the ornaments are stored in the showrooms and unfinished products in
the respective workshops which are generally located adjoining to the showroom.
CONCLUSION