CHAPTER 1 INTRODUCTION

“Gold is worshipped in all climates, without a single temple, and by all classes, without
a single hypocrite.” - Caleb C. Colton

Au, Atomic number 79, An object of worship, Gold. Gold is forever beautiful, useful,
and never wears out. Gold has a universal appeal and is worshipped in all climates, without a
single temple, and by all classes, without a single hypocrite. The reason may be it is the only
metal that combines lustrous beauty, easy workability, rarity and virtual indestructibility. No
other commodity enjoys as much universal acceptability and marketability as gold. Physical
purchases of gold in the form of bars, biscuits, coins and jewellery are the various options
available to invest in gold. Jewellery is one of the oldest forms of body adornment, and the first
pieces of jewellery were made from natural materials such as animal teeth, shell, wood and
carved stone. Gold jewellery for Indian woman is not only for festivals, also for work and other
casual occasions. Non-jewellery gold saving usually occurs in the form of coin, bar and wire.

The definition of the word ‘Jewellery’ is literally any piece of fine material that
someone uses to adorn themselves. The word jewellery is derived from the word jewel, which
was anglicised / in English idiom from the old French “Jouel” in around the 13th century.
Further tracing leads back to the Latin word “Jocale”, which means plaything. In old English
Gelo, stands for yellow. Jewellery can be made out of almost every substance known to man
and has been made to decorate nearly every body part, from hairpins to toe rings. Jewellery is
one of the oldest forms of body adornment, and the first pieces of jewellery were made from
natural materials such as animal teeth, shell, wood and carved stone.

Of all the world’s precious metals, only gold combines the lustrous beauty, easy
workability, rarity and virtual indestructibility and can be depended forever. There is no other
metal that can combine these qualities. It is called a precious metal because it has a high
economic value and is relatively scarce in relation to the level of demand for it. The best things
that make gold worth are its characteristics: malleability, ductility, reflectivity, resistance to
corrosion and unparalleled ability as a thermal and electrical conductor making it the best metal
to work upon. Gold is an indestructible metal which is completely recyclable and virtually
immune to the effects of air, water, and oxygen. Gold will not tarnish, rust, or corrode. This
unique combination of properties makes gold a vital component in many medical, industrial,
and electrical applications.

Gold is more than a precious metal in Indian culture and is truly entrenched in their
belief system. Over centuries and millennia, gold has become an inseparable part of the Indian
society and fused well into the psyche of an Indian. The Sanskrit language gives at least seven
synonyms for gold, viz. Swarna, Suvarna, Hiranya, Kanak, Kanchan, Hem and Ashtapada. Au
is the chemical symbol of gold, also short for the Latin word for gold, 'Aurum' which literally
means 'Glowing Dawn'. Gold, the yellow metal is used along with other metals to produce
jewellery masterpieces. Gold Jewellery forms an integral part of Indian tradition. 24 carat is the
purest form of gold available on the surface of Earth. Demand for gold in India has witnessed
an increasing trend in the past, despite soaring prices of gold for many years now. Gold and
silver are considered as sacred metals by Hindus. This is the reason why gold and silver is used
for making idols and pooja vessels from these metals. Gold symbolizes Sun and Silver
symbolizes Moon. The Vedic Hindu belief of cosmological creation, the source of physical and
spiritual human life originated in and evolved from a golden womb which (hiranyagarbha) or
egg (hiranyanda), a metaphor of the sun.

The beauty of gold lies not only in glitter, but also in its ability to make one happy in
bad times. Gold is the best security, the safest hedge, an asset that has stood the test of time.
Gold has traditionally been considered an attractive investment in India, and its excitement
performance in recent years has substantially confirmed the wisdom of that tradition. Physical
purchases of gold in the form of bars, biscuits, coins and jewellery are the various options
available to invest in gold. One of the important reason people prefer to invest on gold is it does
not require any document work to possess and sell gold.

Traditionally it is the men who do the gold craftsmanship and work. Their specialization
in craftsmanship reflected their native regions jewellery preference. Today women are breaking
this tradition by taking up jewellery designing courses and are professionally trained in the
industry. In the Vedic period, goldsmiths had a much higher standing in society than most other
artisans because they worked with a precious metal. The gold smiths enjoyed royal patronage.
Historical evidence suggests that Indian Jewellers mastered various skills required to make fine
jewellery, such as mixing alloys, moulding, setting stones, inlay work, drawing gold into fine
wires, plating and gilding. There is hardly any village or town, even in the remote corners of
India, where there is no goldsmith.

The gems and jewellery sector, basically deals with sourcing , processing,
manufacturing and selling of precious metals and gemstones, such as platinum, gold, silver,
diamond, ruby and sapphire. The sector majorly comprises of : Polished Diamonds, Gemstones,
Gold Jewellery and Synthetic stones.

Yellow gold has a perceived longevity, purity and value that sets it apart from other
luxury goods. White gold has fewer unique attributes associated with it than yellow, partly due
to the perception that it can be easily substituted with cheaper silver or more expensive
platinum. However, white gold’s perceived strengths are particularly

related to style and design, rather than the solid and dependable attributes relating to heritage,
tradition and longevity that form yellow gold’s preserve. Indians place great faith in wealth
preservation qualities of gold, which inspires confidence, stability and security. Therefore, the
view that Indian demand for gold will be driven by the concept of enduring value, not price.
4-C’s which Determine the quality of Gold

Design of Hallmark on Gold Jewellery

BIS Hallmark

Purity/Fineness

Pure gold is purchased for the purpose of investment. But when jewellery has to be
made it is usually mixed, or alloyed, with other metals. Not only do they harden it, but
influence the colour like white shades are achieved by alloying gold with silver, nickel or
palladium; red alloys contain mainly copper. The below colour palette gives a brief description
of mixtures to form various colour of Gold.

Table 1-1 : Color Palette of Gold / Gold Composition

Properties of Gold

These properties include:

 Melting point of 1064 degrees centigrade

 Boiling point of 2808 degrees centigrade

 Excellent conductive properties and

 Inability to react with water or oxygen.

GOLD AND ITS ECONOMIC IMPORTANCE

By the year 1914 gold was the measuring stick for almost all the currencies in the
world. Dollars from the United States, francs from France, marks from Germany, and so on, all
had set value in terms of gold. At any time the currencies could be changed into gold. This
system was known as the gold standard and is no longer in use, but gold is still very important
in international trade.

Gold’s liquidity, acceptability and portability are particularly important in times of

crisis and may well be more important than gold’s rate of exchange with paper money at such
times. In periods of economic and social instability, when the value of other assets has been all
but wiped out, gold has been a safe haven. In times of war, the prices of other commodities,
more directly needed for the war effort, tend to rise faster. But during the period of Germany’s
massive inflation of 1918-24, when the value of bonds and stocks was severely diminished,
gold maintained its purchasing power. Though price of the Gold fluctuates, gold has
consistently reverted to its historic purchasing power parity against other commodities and
intermediate products. Over time, gold has proved to be an effective preserver of wealth.

MAJOR FACTORS INFLUENCING DEMAND FOR GOLD IN INDIA

a. Traditional demand

It is the customary practice and part of Indian culture that on every auspicious occasion
gold is purchased. Gold jewellery is gifted the moment the child is born. In rural India, farmers
typically buy gold jewellery after every successful harvesting season.

b. Festivals and Wedding

Gold is purchased during festivals like Diwali (DhanTeras), Akshaya Tritiya, Dussehra.
No wedding in India is complete without the purchase of gold jewellery. Rich or poor people
buy as per their ability to spend. With 10 million marriages a year taking place in India,
wedding-related demand is big business.

c. Increasing affluent and middle class population

Rising income and affluence of young and urban population has influenced
consumption of goods ranging from high end cars to luxury items. Jewellery is also included on
their purchase list as part of investment or savings scheme.

Practitioners of traditional medicine in India claim that pure gold has several therapeutic
qualities. When consumed regularly, gold is good for circulation of the blood and enhancement
of the mind, lifting the spirit. Gold is a good conductor of electricity and is used in various
technological equipments.
The global retail jewellery including diamond and gemstones is expected to cross total sales of
USD 230 billion by the year 2015 growing at CAGR of 4.6% between 2010 and 2015.

FACTORS INFLUENCING GOLD PRICE

The price of gold is determined by the fundamental demand supply dynamics of the
bullion market and gold is considered to provide a sense of security when faced by economic
volatility and uncertainty. With the recent weakness and high fiscal debt levels of major
western paper currencies, gold has yet again charmed many investors attracting to it a lot of
attention which was reflected in its record high prices in the last two years.
Incidentally, the Indian consumer is very sophisticated and price sensitive and remains very
risk averse when the prices are volatile. When prices are high an increase in the sale of scrap
gold is noted and conversely when prices fall or show signs of stability, it results in an increase
in demand.

a. Supply Demand

The price of gold is driven by supply and demand, including hoarding and disposal. The
main source of supply elasticity is recycled gold. Demand for gold comes from all over the
world, but the supply from mines is low i.e., the availability of gold is limited. As Demand is
more than supply it leads to high price.

b. War, Invasion, Looting, Crisis

In times of great uncertainty like war, invasion, looting, national crisis - it is feared that
the demand for gold rises. People fear that their assets may be seized and that the currency may
become worthless. They see gold as a solid asset which will always buy food or transportation.

c. Low or negative real interest rates

If the return on bonds, equities and real estate is not adequately compensating for risk
and inflation then the demand for gold and other alternative investments such as commodities
increases.
d. Government Policy and Regulation

The policies and regulations made by government from time to time relating to gold
buying and hoarding by both individuals and jewellery making and selling impact the price of
gold.

MATERIALS USED IN GOLD JEWELLERY MAKING

Diamonds

Of the world polished diamond market, 11 out of 12 diamonds set in jewellery,

worldwide, are cut and polished in India. India is the largest cutting center in the world with
one million strong workforce accounting for more than 90% of the total workforce, worldwide.
Indian Diamantaries are capable of cutting diamonds of all sizes and shapes-92% in terms of
pieces, 85% in terms of volume and 60% in terms of value.

India was the world’s only source of diamonds for more than 2,000 years until they
were discovered in Brazil in 1729. This means that every diamond used in Europe and America
prior to 1729 originated in India. The most famous and productive area was the Gloconda mine
in Hyderabad, which was known for extremely fine white diamonds. These were associated
with volcanic activity in the Deccan Plateau, but they have not produced diamonds for more
than a century. Diamonds exported from India have been traced to the 4th century BC. The
most famous Indian diamond from the Gloconda mine is the Koh-I-Nur diamond weighing 186
cts. It is believed to have been owned by the first Mughal emperor, Akbar. It is also known to
have been worn by Shah Jahan. In 1849, the diamond was sent to England and was recut into a
105 ct stone with more European proportions.

Gemstones

A gemstone or gem also called a precious or semi-precious stone is a piece of mineral,

which is in cut and polished form. Gems are used to make jewellery adornments. Most
gemstones were natural and enhanced by cutting and polishing, are hard, but some soft
minerals are used in jewellery because of their luster or other physical properties that have
aesthetic value. Navaratna is a Sanskrit word meaning "nine gems" which includes: A ruby
(representing the Sun) is always in the center, surrounded by a diamond, a natural pearl, red
coral, hessonite, a blue sapphire, cat's eye, a yellow sapphire, and an emerald. This arrangement
represents the nine planets or Navagrahas. If these gems are selected carefully and worn it is
believed that they provide luck and prosperity. These gems can also be worn individually as per
the zodiac signs. Today gems are available in multiple colours to fit in as per the jewellery
requirement.

Pearls

A large, flawless pearl was extremely rare, and to make a necklace of matched flawless
pearls could take generations. Pearls were extremely rare and far more valuable during the time
of the Maharajas before they were first cultured by Mikimoto in 1916. Pearls are perhaps the
first gemstone that ancient people enjoyed by polishing or shaping. They are delightful straight
out of the shell. The primary pearl sources were off the islands near Bahrain in the Persian
Gulf, and off the west coast of Sri Lanka. Oysters were harvested by the millions, but only a
few contained the prize of a natural pearl. Today Pearls are artificially cultivated with various
fabricating techniques and are available in multiple colors, size and quality. In India
Hyderabad, the capital of Andrapradesh is famous for pearls.

Kundan

A fillet of 24 karat pure gold foil is forced between the sides of the stones in kundan
work. A thin overlapping layer of gold traps the stones along the edges. Kundan style jewellery
is ideal for setting irregular diamonds. A trained goldsmith applies the foil and applies pressure
with a burnisher such that a molecular bond is achieved as the layers of foil are applied to each
other to create the desired thickness or strength. This is done at room temperature. The high
temperatures necessary for soldering or enameling are not required for this ancient process.
Additionally, a silver reflective foil is placed behind the stone to assist with the reflection of
light and to give the diamond or gemstone more fire. There is no other place in the world where
Kundan setting is more widely practiced than it is in India.

Enamel

The Minakari style of jewellery is famous from the Eastern India. Many of these pieces
have delicate, colorful enamel backs, as well as accents on the front. This style of enamel is
typically referred to as champlevé. In most cases, a sharp graver or chisel is used to remove a
tiny bit of gold, leaving a depression that is filled with glass powder. The artists typically work
in geometric or floral motifs, or a combination thereof. Different hues of enamel powder are
delicately placed in these depressions and fired to a temperature above 1500 degrees
Fahrenheit. Additionally, the tools, methods and procedures have changed little over the
centuries.

Varieties of jewellery are used as functional or to adorn body parts. They are:

 Hair Ornaments - Hairpins, Brooches, Tikkas

 Head Ornaments - Earrings, Nose Studs, Crowns

 Neck Ornaments - Necklace, Chains, Pendants

 Arms Ornaments – Armlets, Bracelets, Cuff Links, Bangles

 Hand Ornaments – Bracelets, Finger Rings, Watch

 Body – Waist band, Costume Jewellery

 Legs and Feet Ornaments - Anklets, Toe Rings, Sandals

 Other - Amulets, Japa Malas, Vow Rings, Membership pins, Emblems, Lockets,
Medallions

TYPES OF GOLD JEWELLERY

A part from the normal jewellery like earrings, fingerings, chains and bracelets below
are the special jewellery worn by women from different parts of India.

 Tikka – In India married women are supposed to put vermillion in their head , or wear a
delicate piece of jewellery called the maang teeka, as a symbol of their married status.

 Naath / Nath or nose ring or stud is worn by brides of some regions of India.

 Jhommar/ Jhumka is the earring hangings in different designs

  Mangalsutra / Thaali is an auspicious thread which the groom ties around the neck of
his wife at the wedding ceremony. Mangalsutra is the symbol of being married and is
worn by Hindu ladies in the greater part of Western and southern India.

 Baju Bandh / Armlet is the armlet worn on arms especially during weddings.

 Chudis / Kadas are Thin or thick Bangles/bracelets which are a symbol of Indian
worldwide and are worn by girls and married women alike.

 Payals / Bichua are jewellery meant to be worn on the feet. It is a chain which comes in
a pair and is worn on both the ankles. These could come in silver too.

 Hasli / Haar is quite a simple necklace having Rajasthani arty flair while gold Kasu
Malai, which is necklace of coins very popular with the woman from south India.

RETAILING JEWELLERY INDUSTRY

India is one of the world's largest consumers of gold. The gem & jewellery industry is
projected to grow over $16 billion in the next few years. As a large number of branded players
have entered the jewellery business in the last few years, competition has been growing to cater
to the widespread demand for jewellery which is contemporary and in tune with changing
lifestyles. Organized retailing is projected to grow at the rate of 25percent – 30 percent per
annum. Global Jewellery industry has the potential to grow to USD 280 billion by 2015, with
approximately 10 million marriages happening in a country like India every year.
 Brands can segment the market innovatively to spur growth in a manner that
commodities cannot, because by their very nature, commodities do not take a consumer-
oriented approach in the manner that brands can. India by which the growth of the jewellery
market has been spurred by occasions of wear and purchase. Both have yielded fantastic results
in India, and the brand players are sure this segmentation would have similar success where
young is attracted to brands.

Branded jewellery has been a relatively recent phenomenon in India, with most
jewellery retailed in the unorganized sector. Consumers have become more informed about the
quality and certification of gold jewellery and are now insisting for certification. Traditionally,
gold has been purchased because of its investment value along with aesthetic value, unlike in
countries other than India, where it is bought only for ornamental purposes. With changing
demographics, the branding of jewellery and the retail revolution, young customers from age
groups of 20-40 years prefer buying jewellery for fashion and status rather than for
investments. Many companies have started investing in brand-building exercises for their
products. All these efforts will lead to a much higher growth in the brands and therefore also
organised jewellery market.

BRANDED GOLD JEWELLERY

The growth of branded jewellery segment is fuelled by the ‘retail revolution’. Huge
diversity is visible among jewellers. It consists of:

a. Family-Based Jewellers

The traditional market of family based jewellers were majorly the goldsmiths who passed this
as a profession from one generation to other. Later few considered gold jewellery making and
selling with their own brand names. They can sustain inflation and international pricing by
standardizing their processes and technology. They may have branches at local, regional and
overseas and have mostly corporatized their business.

b. Branded Dealers

The latest and lateral entrants trying to create value by ‘adding esteem to possession’ are the
Branded gold jewellery dealers with their unique selling proposition. They focus on premium
pricing with ‘latest design of best brands’. They belong to the established Indian business
houses and are more an extension of the brands in the jewellery sector. They use the latest
technology and are in a growth phase. They involve in promotions and international branding.

c. Stand-Alone Dealers

These jewellers are small time players having limited investments. They either belong to
jewellery making families or communities or are interested in catering to low-middle income
group. Their designs are old and are not trend based. They do not offer credit facilities and use
cheaper gemstones and do not adhere to carat standards. Their motto is ‘selling cheaper’. They
even rotate old jewellery and take the customers for a ride.

STATEMENT OF THE PROBLEM

Gold is a time tested asset. Even when the price rises, people continue to buy it. The real value
of gold for investor lies, not in its price performance, but in its reliable diversification return.
India being the world’s second largest gold jewellery market after the US has undergone
tremendous change. The Indian jewellery consumer is getting more & more trend
conscious. The branded gold jewellery segment occupies a small share of the total
jewellery market because of the mindset of the average Indian buyer still considers
jewellery as an investment. Consumers’ attitudes and perceptions towards gold
jewellery as changed. People are not accepting the traditional and classical jewellery
even though they are made for order. A far more aggressive, but a well-defined,
strategic marketing policy for creating brand awareness is the need of the hour. The
industry needs to break the perception prevalent among consumers of gold jewellery.
Traditional marketing focused on selling products projecting family values and bond.
However current sentiment focuses on individuality. It projects as I am important and I
deserve it!

Studies are conducted in the area of gold by the World Gold Council Organization.
There are limited number of researches conducted to explore the gold jewellery
particularly the branded gold jewellery which falls under organized sector. 85% of the
gold jewellery is still dominated by unorganized gold jewellery sector. Also not much of
work is carried out to explore the Indian women and her relationship with gold
jewellery. Thus this study analyses the various perceptional aspects of women which
influence in purchasing the branded gold jewellery and thereby help to design market
strategies to promote the sale of branded gold jewellery.

This research explores answers for the following problems:

 Research Problem 1: Does brand attributes influence women consumers’

perception and purchasing behavior aspects with respect to various demographic
factors?

 Research Problem 2: Does branded gold jewellery signify social status and
content assurance?

 Research Problem 3: Does advertising have an impact on the choice of brand

selection while gold jewellery is purchased?

 Research Problem 4: Which dimensions of branded gold jewellery influence the

purchase of branded gold jewellery?

Further it also aims to explore the related aspects of :

 Are women satisfied with the designs and prices?

 What makes the choices of working women different from the non-working
group?

OBJECTIVES OF THE STUDY

The objectives of study were to understand the latest trends in the gold market
with respect to:

1. To examine the history, growth, evolution and current trends in gold market.
2a. To understand the factors influencing the perceptions of women towards branded
gold jewellery.

2b. To examine the relationship between factors influencing perceptions about

branded gold jewellery (i.e., 2a) and its impact on branded gold jewellery buying
behavior.

3. To study purchasing pattern and brand communication in promoting markets for

branded gold jewellery.

4. To offer suggestions on the basis of findings which focus on factors influencing

the brand perceptions and buying decisions.

METHODOLOGY

Descriptive and Analytical research method was used to explore different

dimension of factors which effect consumer preference for branded gold jewellery over
unbranded gold jewellery. In order to analyze the perception towards branded gold
jewellery among women in Bangalore, data was collected from both primary and
secondary sources. Hypothesis was developed to get a statistically significant result.
Primary data was collected through the survey method with the help of a structured
questionnaire. Population data was collected from Datanet India Pvt. Ltd., and sample
size was derived by a scientific method using sample calculation formula for infinite
population as the population of Bangalore was more than 50,000. Sloven’s formula was
also used for calculating sample size so that more accurate sample size could be arrived.