Transcript Why Gold Jewellery Needs Marketing

Why Gold Jewellery Needs Marketing
Dubai City Of Gold Conference
February 2005
Private and Confidential: © WGC 2005
www.gold.org
2
The mainstay of gold demand has been under pressure
Jewellery Demand
3,500
3,000
tonnes
2,500
2,000
1,500
1,000
500
1992
1993
1994
India
Source: GFMS, WGC
1995
1996
China
1997
1998
Middle East
1999
USA
2000
2001
Europe
2002
Others
2003
2004
est
3
The gold jewellery market is significant in value
* Value definitions vary across sectors
40,000
35,000
30,000
US$m
25,000
20,000
15,000
10,000
5,000
0
1999
2000
2001
Diamonds ( DTC sales)
Platinum jewellery (prodn. value)
Source: WGC, JM, Company reports, analyst estimates
2002
2003
2004 est
Gold jewellery (prodn. value)
Luxury goods (top 3 co.'s sales)
Marketing investment in gold has been weak and volatile
 Under-supported compared to competition
 Gold spends 0.1% of sales, luxury goods spend 11%
 Supported as a category by WGC members and retailers
 Marketing was not fact-based
 Lack of integrated message and category leadership
 Marketing focused on product rather than “why buy gold?”
4
5
Gold was losing share of wallet in most markets
Gold jewellery value c.f. retail indices
110
100
1998 = 100
90
80
70
60
50
1998
Source:WGC
1999
2000
India
2001
China
2002
Saudi Arabia
2003
USA
2004
Understanding the reasons can make a difference
In depth consumer research and segmentation analysis in all
gold’s main markets showed….
 Reduced contemporary relevance to consumers







Relatively low consumer marketing investment
Increased competitive activity and choice
Lack of “why buy gold?” proposition
Inconsistent consumer messages
Poor quality retail environments
Lack of reasons and occasions to purchase
Lack of innovative product
The main drivers of consumer attitudes and purchasing of gold
jewellery are consistent worldwide
6
Major reason for wearing gold jewellery is “feel good” factor
Because it makes me feel
good about myself
60
To express my individuality
20
Because it has sentimental
value
20
Because it makes me look
and feel special
19
China
%
Because it has sentimental
value
54
Because it makes me feel
good about myself
To express my individuality
To please my spouse or
partner
Because it makes me look
and feel special
31
22
19
55
Because it makes me look
and feel special
34
To be modern and up-to-date
Because it makes me feel
good about myself
46
To please my spouse or
partner
36
Because it makes me look
and feel glamorous
35
To be modern and up-to-date
34
Saudi
%
Because it makes me feel
good about myself
53
51
To express my individuality
Italy
Because it has sentimental
value
38
Because it makes me look
and feel special
38
%
To please my spouse or
partner
7
40
US
%
25
Source: WGC Research
Main discretionary reasons for not buying gold jewellery are lack of
relative desirability and occasions to purchase
Have other things need to spend on
58
The gold price has been too high
41
Prefer to spend on other things
22
19
No occasion to buy gold jewellery as a gift
Don't want to buy as investment/security
Have enough gold jewellery
Don't often find gold jewellery that I like
Don't really wear gold jewellery
Gold jewellery not for me, prefer other types
Gold jewellery usually bought for me as gift
%
14
13
12
Only buy gold jewellery now & then
4
3
3
2
Other
35
26
19
41
Have other things I need to spend on
37
36
No occasion to buy gold jewellery as a gift
Prefer to spend on other things
21
Gold jewellery usually bought for me as gift
%
19
16
Only buy gold jewellery now & then
Have enough gold jewellery
10
The gold price has been too high
9
38
5
2
3
12 12
Have other things need to spend on
65
Prefer to spend on other things
47
Don't really wear gold jewellery
22
Gold jewellery usually bought for me as gift
16
Only buy gold jewellery now & then
15
12
Don't want to buy as investment/security
12
No occasion to buy gold jewellery as a gift
Don't often find gold jewellery that I like
Gold jewellery not for me, prefer other
types
The gold price changing too much
6
Gold jewellery not for me, prefer other types
8
6
Don't often find gold jewellery that I like
The gold price changing too much
8
13
No particular reason/no answer
%
14
Have enough gold jewellery
7
No particular reason/no answer
India-Saudi
RuralArabia
36
Don't really wear gold jewellery
2
%
5 10
The gold price has been too high
Italy
22
12 12
Don't want to buyinvestment/security
as investment/security
3
No money for buying gold 0
Gold jewellery usually bought for me as gift
2
Other
2
No
reason/noanswer
answer
No particular
particular reason/no
4
35
28
13 14
Don't really wear
Don't
weargold
goldjewellery
jewellery
Don't oftennot
find
that Itypes
like
Gold jewellery
forgold
me,jewellery
prefer other
Gold jewellery not for me, prefer other
Don't often find
jewellery
thatasI like
types
Don'tgold
want
to buy gold
an
India- Urban
Don't want to buy as investment/security
40
Have enough
jewellery
Gold jewellery usually
boughtgold
for me
as gift
7
No particular reason/no answer
57
43
Have
other
things
on
The
gold
price
hasmust
beenspend
too high
Prefer
to
spend
on
other
things
Have other things need to spend on
Only buy gold jewellery now & then
No occasion to buy gold jewellery as a gift
No occasion to buy gold jewellery as gift
Prefer to spend on other things
Gold price too high
Only buy gold jewellery now & then
Have enough gold jewellery
The gold
too much
much
Goldprice
price changing
changing too
31
The gold price changing too much
8
US
11
2
11
Source: WGC Research
9
Main competitors to gold are not other jewellery categories
How would you spend $500 (or equivalent)?
42
Weekend away
28
Gold jewellery
Beauty/Spa treatments
25
Designer fashion accessories
24
20
Fine Leather goods
17
Fine fragrances/ Lux cosmetics
13
Personal electronic items
12
Consumer durables
Eating out in a good restaurant
10
Italy
Diamond jewellery
7
7
Silver jewellery
5
Education
4
Investment
%
3
Imitation jewellery
Platinum jewellery
3
Land 0
5
Other
6
None of these, I would save it
Weekend away
Gold jewellery
Eating out in a good restaurant
Consumer durables
Personal electronic items
Beauty/Spa treatments
Designer fashion accessories
Education
Fine fragrances
Investment
Fine Leather goods
Diamond jewellery
Silver jewellery
Land
Platinum jewellery
Costume jewellery
Other
None of these, I would save it
42
21
19
19
16
15
11
11
10
10
10
9
9
3
3
3
6
12
US
%
Gold jewellery
Fine fragrances
Weekend away
15
Eating out in a good restaurant
15
Personal electronic items
12
Designer fashion accessories
12
Consumer durables
12
Fine Leather goods
8
Education
5
Imitation jewellery
5
Diamond jewellery
5
Investment
5
Silver jewellery
4
Beauty/Spa treatments
4
Other
3
Platinum jewellery 2
Land 1
None, I would save it
5
Gold jewellery
Investment
Consumer durables
Silk Sarees
Education
Land
Personal electronic items
Silver jewellery
Diamond jewellery
Fine fragrances/ Lux cosmetics
Weekend away
Fine Leather goods
Eating out in a good restaurant
Silver vessels
Designer fashion accessories
Beauty/Spa treatments
Imitation jewellery)
Costume jewellery
Platinum jewellery
Other
None of these, I would save it
53
34
Saudi Arabia
%
66
40
25
23
18
11
9
9
8
7
6
5
5
4
3
2
1
1
1
3
3
India
%
Source: WGC Research
10
Marketing can have an effect even in mature markets
INDIA BRAND EQUITY RESULTS 2004: Gold sees a significant increase on nearly every
statement: WGC advertising has had a positive effect on rejuvenating the brand image.
Here are some some statements people have made about luxury goods. For each one please indicate to
which product or products the statement applies.
Desirable
P ro vides financial security
Co nsistently high value
M o dern and co ntempo rary
Really different
Value
Aspiration
Financial investment
Warm
A n affo rdable luxury
P restigio us
Suitable fo r mo dern o ccasio ns
Fashio nable
Suitable fo r weddings/festivals
Lo o k go o d
I buy to reward myself
Usage
Occasions
Ideal gift
Feel go o d when I wear it
Fo r a wo man like yo u
Relevance
Co sts mo re than I expect
Ostentatio us
Only fo r o lder peo ple
Negatives
Source: IPSOS Brand Equity tracking survey
Emotional
Pre
Post
Gold competitors…….leisure, indulgence
11
Gold competitors…….electronics and accessories
12
Gold competitors…….lifestyle brands
13
New interest in gold by luxury brands
14
Why does gold jewellery need marketing?
 Without action, share and volume erosion
 No other source of demand will fill the gap
 Potential loss of consumer confidence
 Additional jewellery demand will not compensate for any
possible price reduction
 Weaker investment demand
 Further share loss to more desirable competition in both
jewellery and investment
 Basic rule of premium marketing = demand (even if latent)
must exceed supply
15
Driving gold jewellery demand is the only solution
 Jewellery = 80% of the gold market - we can influence it
 Address the loss of share in our primary markets
 We must improve gold’s desirability c.f. competition
 WGC can and will drive this: initial results are very positive
 Positive jewellery demand supports investment demand
 We must be more consumer focused
 Industry needs to collaborate more and drive consumer
demand for gold jewellery
 Requires longer-term strategic and financial commitment
16
What’s the WGC doing about it?
17
 Fact-based, consumer-focused marketing
 Driving consumer desirability of the gold jewellery category
 Consumer marketing programs under common “umbrella”
 Focus on main markets
 Marketing tie-ups with key strategic partners (esp. retailers)
 Links into partner operations (product, POS, training) as
well as advertising
 Clearly defined measures of success
 Proven commercial success with key partners
 Roll-out to additional partners and markets
The Marketing Platform for Gold: what’s new?
18
 “Speak gold”..a unique proposition for gold: a universal truth
based on gold’s role in life, supported by consumer research
 Integrates at multiple levels with partners across all media
 Flexible and has longevity
 Highly measurable
 Desirable, contemporary, relevant and aspirational
 Provides strong emotional “hook” to balance gold’s role as
store of value
 Call to action to specific consumers: drives reasons and
occasions to purchase
Is it working?
23
Middle East region as priority market for gold
 World’s highest per capita sales (6.5 x world average)
 2004 demand = 535 tonnes, +10% in volume, +24% in value
 Strong affinity for high carat gold jewellery
 Purchase motivations similar across region
 Large emerging youth market (50% < 18yrs)
 Strong, high quality regional jewellery trade
 Dubai City of Gold: hub for region
 WGC plan 75% increase in marketing spend for 2005
24
Worldwide results have been encouraging
 2004 jewellery demand + 6% in tonnes, +19% in $ value
 Demand up in all key markets (despite price increase)
 Positive results from WGC marketing programmes, e.g.
 Retail transformation in USA
 K-Gold in China
 Gold brand image improvements in India
 Dubai City of Gold
 Product innovation in Italy
 Marketing support for gold remains under-funded
 Gold sales still need to recover to former levels
We are making progress, but gold marketing still requires
more support from the industry
25
Why Gold Jewellery Needs Marketing
Dubai Gold Conference
February 2005
Private and Confidential: © WGC 2005
www.gold.org