Question

The jewellery industry is undergoing a vast transformation. There has been a shift in the mindset of buyers who prefer branded jewellers over traditional retailers. Thus, there is a need for small retail jewellers to accept the change and think like big corporations. Even luxury jewellery brands need to attract buyers to their stores using different techniques. Another hindrance to the traditional jewellery business is the growing popularity of online jewellery stores. Thus, there is a greater need for jewellery business owners to plan and implement jewellery marketing strategies that cater to their audience including setting up e-commerce for their brand. Some of the ways in which Jewellery companies are promoting their business are by building Informed Trust.The branded and organised jewellers have cautiously been spreading and educating customers with relevant information about products, their qualities, grades, assessments, malpractices and unethical means that can occur during their purchasing experience. Use of blogs, social media and in-store booklets are helpful in creating this awareness. The customers naturally tend to get attracted towards jewellers which claim to be pioneering in ethical business. A second way of business promotion is by differentiation through designs and brands. Organised jewellers have become more design oriented. The times when jewelry was bought only for an occasion or as an investment is now no longer seen. In urban areas, jewelry is fast catching up as a fashion statement. Hence, the customer's choice has evolved and so has the designs.Unique, theme based jewelry designs are created to cater to this new customer requirement.
Also, certain organised jewellers have successfully built separate brands to cater to different segments of customers. For example, Tanishq is built and known for heavy and wedding based jewelry and its own brand, Zoya caters to high end minimalist diamond jewelry customers. There is now great focus on Quality Control. Branded jewellers have taken concerted efforts to bring regular repeat customers. Additional quality check departments have been set up to review the products received from the manufacturers to ensure quality such as diamond grades, gold finishing, stone settings, etc. This ensures a positive experience for the customers who eventually become the rand ambassador for the company. As the focus on customer experience increases, the jewellers have been trying to reduce the delivery time of the jewelry purchases.Accordingly, cautious attempt is being made by selecting manufacturers that are using latest technology for production efficiencies. This includes latest machines for 3D printing, polishing, casting, etc.
Read the above and answer the questions below.
1. What kind of a market is Jewellery business? What is the nature of the demand curve of every jewellery firm? (5)
2. What are some of the ways in which the jewellers are promoting their business? What would the implication of these befor the average cost of the firm? (7)
3. What will be the impact of production efficiency on the profitability of the jewellery firms? (3)

Answer 1

Answer 1:

Since there are many firms in the market selling products that are close substitutes of each other, thus, the Jewellery business resembles Monopolistic Competitive Market. Since there are many sellers of the product, thus, the demand curve of every firm is relatively elastic.

Answer 2:

The businesses are promoting their products using social media and e commerce methods because online marketing practices has increased. This helps in creating awareness about the brand and also increase sales of the brand. This increases efficiency of the firm in the long run which will help in reducing average cost in the long run.

Answer 3:

As production efficiency of the firm increases, output produced by the firm increases and there is also reduction in the cost of the firm. This will help in increasing the profitability of the businesses.