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Positioning is the act of designing the companys offering and image to occupy a distinctive place in the mind of the target market. Positioning forms the basis of all the other elements of the marketing mix. Branded diamond players credit a lot of importance to positioning (whether they want it to be exclusive or common or differentiated) and hence base all their budgets and strategies on it.

The current nascent scenario of the branded diamond jewellery segment in India wouldnt permit many of the branded diamond players to move ahead with a very optimistic strategy, in simpler words; all the players are following a wait and watch strategy, which would give them ample time for the current nascent status of the industry to grow and the growth would help them leverage their status also; but at the same time, also important is to continuously maintain the relationship with the brand so as not to lose the essence.

Besides the designing of the diamond jewellery, also important is the estimation of demand of positioning the jewellery at the outlets (i.e. which type of jewellery and quantity to be positioned at which outlets and in what price range) the most popular method is the constant feedback from the sales team which gives not only a clear picture of what is the latest trend, but also an idea about competitors sales. Some of the currently followed methods of demand estimation include conducting of a formal market research(usually by an independent organization with a view to avoid bias) and use of Management Information System (MIS) software which technically prioritize areas geographically, based on purchasing power parity and decide what goods to be exhibited in the respective counters.

Price is the only element of the marketing mix that produces revenues all other elements add costs. The pricing of diamond jewellery (especially in the Indian context) is a very crucial aspect considering the price-sensitivity of the Indian market, and the notion of people about branded products being expensive. Branded diamond players have taken this aspect very seriously and with a view to attract consumers towards buying branded jewellery have priced their jewellery very low at the entry level and have concentrated more in the lower price ranges and have larger varieties in this range.

Branded diamond players follow three basic methods of pricing their jewellery Exclusive pricing: Price the jewellery exclusively without any inhibitions regarding competitors prices, aiming to be perceived exclusively by consumers. Competitor-based pricing: Pricing the jewellery based on competitors prices and adjusting prices (either higher or lower) in accordance with then competitor Consumer-based pricing: Taking views from the consumers regarding the prices they would be ready to pay for the jewellery they aspire.

Besides self-pricing, another important aspect for the branded diamond jewellers is the impact of price changes by competitors, some branded players react immediately and also follow the same trend; others react by introducing attractive offers (free gifts, vouchers etc.), some others do not react all, mainly because of the willingness to be exclusively perceived and not reactive to competitors price changes; all this again indicates the positioning of the brand, which is one of the most important parameters of branding a product, especially in branded diamond jewellery. Some other methods of differentiated pricing involve having tie-ups with popular banks and provide easy instalment schemes to the consumers, mainly to compete with the offering of credit periods by local jewellers (an alternative to paying upfront, allowing the consumer to pay a remainder of the amount at a later date).

The Internal Environment: The internal environment analysis comprises of the evaluation of a companys strengths and weaknesses, with a view to analyse its current status and the areas where it can correct or strengthen itself. The strong areas of the Indian Diamond Industry include the large workforce of skilled craftsmen (about 800,000), lowest manufacturing and labour costs, a well distributed marketing network and supportive governmental policies. Weaknesses of the Indian Diamond Industry include areas where it can correct itself, such as low levels of productivity as compared to places like China, huge stocking of inventory and thus handling costs and high working capital to be maintained.

The External Environment: The analysis of the external environment is related to the opportunities and threats that the industry should be prepared for. The opportunities the Indian diamond industry could utilise include the growing domestic demand for diamond jewellery and tapping potential newer markets in Europe and Latin America. The threats facing the Indian Diamond Industry include the entry of countries such as China, Sri Lanka and Thailand in the small-sized diamond segment, the over dependence on single-channel suppliers such as the Diamond Trading Company (DTC, the marketing arm of the De Beers Group) and most importantly, the emergence of newer substitutes such as synthetic diamonds (cubic zircon, HPHT etc.) which are much cheaper than the real diamonds.

The essence of formulating a competitive strategy is relating an industry to its environment. Although the relevant environment is very broad, encompassing social as well as economic forces. The industry structure has a strong influence in determining the competitive rules of the game as well as the strategies potentially available to the firm. The goal of competitive strategy for an industry is to find a position in the industry where it can best defend itself against these competitive forces or can influence them in its favour. There are, as defined by Michael Porter; Competitive Strategy1980, five competitive forces (threat of entry, threat of substitution, bargaining power among buyers, of suppliers and the rivalry among current competitors) determine the intensity of industry competition and profitability, and the strongest force or forces governing and become crucial from the point of view of strategy formulation.

Entry barriers are economic and technological forces that prevent outside firms from competing in an industry. These barriers protect existing competitors from outsiders attracted to join the industry, some of whom might be highly diversified and powerful. If entry barriers are low, threats from potential entrants are viable because outsiders can easily come into the industry and increase competition within it. This reduces the total profits industry participants can share. If entry barriers are high, outsiders cannot easily join the industry. This protects the industry and its profits. Entry barriers depend on technological and commercial relationships within the industry. The most important barriers to entry are cost advantages, product differentiation, access to distribution channels, and miscellaneous barriers such as patents and monopolistic control over raw materials.

Competition and profitability within an industry also depend on the intensity of rivalry among existing competitors. Competitive rivalry consists of dynamic moves and countermoves by competitors to attract buyers and capture a larger share of demand. Every time one firm makes a strategic move it can expect its competitors to retaliate. This retaliation may take the form of changes in product designs, promotional strategies, packaging, advertising, and prices. Price reduction is a commonly used competitive strategy. However, price wars reduce total industry profits by reducing industry revenues. Thus, fierce rivalry within an industry can be detrimental to its profitability. Rivalry among competitors depends on several factors. They include the number of competitors and their relative power and size distribution, industry growth rate, fixed and storage costs, switching costs, size of capacity augmentation, diversity of competitors, stakes of individual competitors, and exit barriers.

Substitute products erode the sales and revenues of the industry. They may even eliminate demand for an industrys product altogether. Industries with products that can be easily replaced by products from other industries are always under revenue and profit pressures (e.g. Ball pens eroding the market of fountain pens, and synthetic diamonds like Cubic Zircon as against the real diamonds). Besides product substitution, another form of substitution (substitution of new raw materials, components, and subassemblies) can create pressure on industry profitability and competition by directly affecting the cost of manufacture.

Buyer power refers to the ability of purchasers to get favourable terms of trade with sellers. Powerful buyers can get attractive price discounts, better credit terms, better product quality, and more product support services from industry suppliers. Because these concessions are costly, they have the effect of reducing industry profits. Buyers attempt to get the best value for their money, and by so doing they put downward pressure on industry profitability. The power of buyers depends on several factors: buyer concentration, degree of product differentiation, buyer switching costs, access to backward integration, impact of the product on the buyers product quality, and the amount of information available to the buyer.

Suppliers of raw materials (the DTC in the case of the Indian diamond industry) influence industry profitability and competition by affecting the cost of supply. If suppliers are powerful, they can obtain high prices for the raw materials they provide. They may also negotiate favourable terms of trade. They can decide product features, packaging, payment schedule, credit terms, transportation, delivery costs and schedules. The bargaining power of suppliers depends on the same variables that shape the bargaining power of buyers. These include concentration of suppliers, importance of industry to suppliers, threat of forward integration, access to other sources of supply, and the nature of labour supply.

Despite increase in rough diamond prices over the last year and also issues such as transfer pricing, excise duty on branded jewellery and the newly introduced value added tax, the diamond industry has performed very well, especially in the jewellery sector which is the future of the industry.

Some other basic facts about the Indian Diamond Industry: Exports of Cut and Polished diamonds form 14% of the total Indias foreign exports (US$ 11.2 bn out of US$ 78 bn), total gem & jewellery exports US$ 15.7 bn Worlds largest diamond cutting and processing centre: Estimated workforce 800,000 skilled craftsmen 60% global market share by volume and 80% by volume 94% of global workers in diamond are Indians 11 out of every 12 diamonds polished pass through Indian hands 50 banks provide US$ 3 bn credit Manufacturing and sales offices worldwide Diversified into jewellery manufacturing since 1990 (Diamond Jewellery market inclusive of exports: Rs. 13,000 crores approx.) Conglomerate of family businesses, thus committed and enterprising

With the exponential growth the industry has achieved over the past years, the future is also equally bright for the Indian diamond industry. The global presence and recognition for Indian diamantaires over the years has been amazing, coupled with the positive vibes the Indian economy (GDP growth, increase in awareness levels) is expecting from the future; India is surely tending to become the global headquarters for diamond and jewellery.

Infrastructure development: 19 more special economic zones (SEZ) approved (one SEZ specially for Surat in Gujarat), this would greatly facilitate export Setting up of the Bharat Diamond Bourse (BDB) to centrally locate diamond trading operations and would greatly benefit the Indian industry Diversifying into jewellery using state-of-the art manufacturing facilities in export/economic zones, special economic zones to provide one-window clearance Great growth curve for the branded diamond jewellery segment, coupled with the growing levels of consumer awareness; the branded segment is sure to grow. Indias jewellery market is the worlds fastest growing market Value-addition capability and investment in technology would give Indian diamantaires the real edge

Emergence of China as a manufacturing alternative Greater use of Information technology, the current use if very limited compared to the other industries Need to move from production/ manufacturing orientation to marketing led business Emphasis on operational and ethical standards to build world class organizations; more investment in employees required, greater abiding to the DTCs Best Practice Principals (BPP) Co-ordination amongst all stakeholders producer, manufactures and retailers to protect and increase diamond industry reach Forward integration into brand building (B2C segment) very much required for all leading diamantaires Reduction in credit period, Indian diamantaires offer the largest credit period in the world to their buyers

Growing demands of the single-channel supplier (the DTC), increasing rough prices Saturation of the US & European retail industries, newer markets need to be tapped Productivity levels in diamond processing need to be increased as newer players like Sri Lanka and Thailand are also entering in the small carat segment Investment into greater use of technology, better jewellery designs and into research and development (of gaining expertise in cutting bigger diamonds as well) The India diamond industry if able to overcome the above challenges would surely be a force to reckon with.

http://timesofindia.indiatimes.com/news /business/india-business/Surat-diamondindustry http://www.forcesofindia.com/resources /presentations/Gems&Jewellery200607.pdf www.moneycontrol.com www.wikipedia.com www.gjepcindia.org

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