Page 21 - DECO101_MICRO_ECONOMICS_ENGLISH

Micro Economics

Notes

Task List a few products that are: a) substitutes and b) complements

Case Study Micro Factors affecting Demand for Tanishq Products

Price of Jewellery – Symbol of Quality Provided

Price of a commodity is known to have a direct influence on demand for it. This follows
from the Law of Demand. But in the case of Tanishq jewellery this does not hold true,
making it an exception to the Law. This can be explained in terms of Veblen effect, where
the price of a commodity is regarded as an indicator of its quality. Sometimes certain
commodities are demanded just because they happen to be expensive or prestige goods,
and hence have a “snob appeal”. These are generally luxury articles that are purchased
by the rich as status symbols. The price of Tanishq jewellery is regarded by patrons as
being the just cost of the purity and trustworthiness of the brand. Not only was Tanishq
the first to offer branded jewellery in India, but it was also the first to introduce concepts

such as testing the purity of jewellery through the Karat meter, a buyback guarantee as

well as other exchange schemes. Each move by Tanishq has shown its confidence in its

own product. This has in turn inspired confidence in its customers, who are loyal. Usually,
when the price of gold bullion increases people tend to curb/postpone their purchases of
gold ornaments. However, the demand for Tanishq jewellery is independent of this price
factor because each piece of jewellery represents a promise of quality and purity, each
piece is something different and new, each piece is something special. As such the income
and substitution effects do not adversely affect the demand for Tanishq jewellery, and
price has title impact overall. But it has also been observed that an escalation in the gold
price, diamonds seem to have caught the fancy of the customer and the promotional offers
are being designed to provide customers with significantly enhanced value.

Designs Offered
The average Indian has always been very discerning when it comes to the purchase of
jewellery. However, with the spread of globalization customers want the best quality in
terms of designs. Best quality is provide to meet the international standards. Creativity is
the buzzword. Tanishq’s primary customer, the urban Indian woman, has come along way.

She is smart, educated, and confident of handling career and family, and looking to secure
value for her money. Today’s urban women no longer wear jewellery only at weddings
and formal occasions. They require trendy accessories that match her attire and refl ect
her personality. In this context the demand is vast and widespread in terms of prices. The
women of today want the best of everything and have become more and more and more
selective in their choices. The brand’s designs address the needs of the modern woman.
Tanishq had crafted award-winning designs in 18 karat and 24 karat gold and gemstone
jewellery. It’s new range looks beautiful and yet is affordable and feels light.
Promotional Schemes

With cutthroat competition in the market, every company comes up with schemes to woo
the customers. These offers are all the more visible during the festival season. Purchase
of jewellery can happen any time of the year like – for birthdays, anniversaries, gifting,
impulse purchases, etc. and of course for marriages as well. Therefore, in absolute terms,
there is no lean period for jewellery – the jewellery market can be stimulated throughout
the year through a host of well-designed marketing inputs. Tanishq to promote its brand
Contd...

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