This company of the Tata Group was making losses, but one decision by Ratan Tata turned it into a profit-churning machine. Discover the story.

Titan, a Tata Group’s company, initially started as a watchmaker but soon spread its roots into the lifestyle sector and made a base of loyal customers. Today, the company sell watches, jewelry (Tanishq), eyewear (Eyeplus), and perfumes. Notably, Tanishq played a crucial role in taking Titan to new heights. When Tanishq was launched back in 1994 it was considered as a failed brand. Things escalated to a point where people suggested Ratan Tata to shut down the jewelry business. But Tata continued it and made it profit-churning business.

Why Did Tanishq Fail Initially?

Since its inception in 1994, Tanishq failed to make its mark in the Indian jewelry market. The name Tanishq as per Xerxes Desai (Titan’s first managing director), is derived from “tan” meaning body and “nishk” meaning gold jewelry.

Titan assumed that the Indian market was price-sensitive, so they launched 18-carat jewelry instead of the preferred 22-carat. The idea was to change customer behaviour, but on a contrary the strategy failed as in India jewelry is seen as a status symbol. The purity of gold is connected to wealth and prosperity. Mixing Tanishq with other items like watches and clothing was major misstep by the leaders and took half a decade to realize it.

Refusing To Give Up

Despite facing losses, Titan hoped that people would eventually like 18-carat products. By 2001, Titan had absorbed losses of Rs 150 crore from Tanishq over five years. Its share price dropped to Rs 2.
Before Tanishq, India’s jewelry market was unorganized and dominated by local jewelers. There was no standard measure for purity or price; whatever the jeweler said was accepted by the customer.

One Decision That Changed Everything

In 2002, Titan took help of McKinsey to analyse the challenges facing Tanishq. Following the insights from McKinsey’s report, Ratan Tata made a decision, empowering then-CEO Xerxes Desai to implement changes. They discovered that a lack of trust was a significant issue. The first action taken was to rectify the earlier mistake of offering 18-carat jewelry by switching to 22-carat options in all their stores.
To further enhance customer confidence, Titan introduced a revolutionary tool known as the Karatmeter. This device, which was imported from Germany at a cost of Rs 10 lakh each, tested the purity of gold. Its installation across all stores drew in large numbers of customers keen to have their jewelry evaluated.

As a result of these initiatives, last year the company reported jewelry sales nearing Rs 42,000 crore, with a customer base of approximately 4 million and a market share of around 9percent.