In myevaluationof the Goldplus decision, I didananalysis onmarket sizebased on some information from the case,with the help ofsome assumptions.One pieceof informationthat affected my analysis (specifically, the second bullet point in thesupplementary document containing my analysis of market size) wasGoldplus' performance in thepilot test.Now imagine that afterpiloting GoldplusinErode and Ratlam,Tanishq managerspilotedthe brandin3moresmalltownsthat are very similar to Ratlamandperformanceinthe three additional towns was very similar to that inRatlam.Clearly explain, with suitable numbers/calculationsasneeded, as tohow this new piece of informationwouldaffect my analysis of market size and conclusions therefrom.Note that this is a rather precise task with something of a "correct" answer although stylistic variations would naturally occur andexpected.However, please be precise but clear (not cryptic) in your responseand structure your response properly.

Quality of communication will be a major determinant of your grade on this task, besides my inference on the quality and depth of your thinking, as reflected in your write-up.

Word limit for Task2.2: 700.

The urban jewelry market is estimated at about Rs. 24, 000 crores.The semi-urban/rural market is over Rs.36,000 crores. Furthermore, the traditional plain gold jewelry segment is around 80% of the overall market,or about Rs. 48, 000 crores.This market segment only wants ethnic design plain gold jewelry at a competitive price. To serve this segment, we need to leverage our supply chain capabilities and compete on price.

Tanishq case Goldplus decision: Supplement on market size - Estimated total market size for jewelry 2 Rs. 60, 000 Crore annually (page 2; also can be inferred from page 10) % $15 billion (@Rs. 40 = $1). - Market size of investment-driven consumers 2 Rs. 48, 000 C (page 10) O_R $12 billion. - Market size for Goldplus = Rs. 36, 000 C (page 10) $9 billion. - Market size for Tanishq [SJ+PGJ] = Rs. 24, 000 C Q $6 billion. ' Market size for SJ only = Rs. 12, 000 C Q $3 billion. - [_ogi_c: If Rs. 48, 000 C is the total market for investment-driven consumers and Rs. 36, 000 C of this is in the rural areas, then it follows that Rs. 12, 000 C is in the urban areas to which Tanishq [directs itsPGJ: 'Since'the'total urban market'isRs."24;000 C, it' i follows that the estimated market size for SJ is Rs. 12, 000 C.] In summary, if Tanishq continues to chase the urban markets with SJ & PGJ, then it is after a market size of Rs. 24, 000 C ($6 hi) and if it chases SJ only, it is after a market size of Rs. 12, 000 C ($3 billion). Two observations: - Tanishq's revenue in 2004-2005 was Rs. 570 Crore ($142.5 million; page 9). Given the market size for SJ+PGJ in the urban areas to be Rs. 24, 000 C, this implies a market share of 2.38%. If we consider the market for SJ only, it means a market share of 1.19 %, assuming 25% of the revenue in 2004-2005 came from SJ [Market share for S] = (25% of Rs. 570 C)/ (Rs. 12, 000 C) x 100]. - These are not high numbers for market share at all, especially for SJ, and hence mean that there is plenty of room to grow in the urban markets especially given the pioneering status Tanishq enjoys for SJ and to some extent for PGJ given their hybrid designs. In other words, there is plenty of incentive for them to stick to the urban markets with SJ & PGJ. - According to Bhat, the company's goal was to reach a revenue of Rs. 5, 000 C ($1.25 bi) by 2010 (top of Page 2). This represents a market share of 21% for the urban markets. Ambitious, perhaps, but they would be chasing a high market share in the rural areas also. Let's see why. The pilot tests show that the entire rural market does not promise success, but only a portion does. From the pilot tests, if we assume that 50% of the rural markets have promise for Goldplus's success, then the effective market they are chasing is Rs. 18, 000 C (=50% of the Rs. 36, 000 C rural market). Assuming they hope to earn Rs. 4, 000 C of their Rs. 5, 000 C goal from the rural markets, this would mean a market share of 22.2% - not trivial, especially given the erce competition they would face in those markets (e.g., the case mentions that many regional jewelers were re-organizing to battle national jewelry brands). If they can achieve 22.2% market share in the urban markets, they could earn Rs. 5, 326 Crore (=22.2% of Rs. 24, 000), Le, more than their target of $5, 000 C. Given that Tanishq had a strong foothold in the urban markets whereas the rural markets characterized a red ocean where regional jewelers were re-organizing to compete with national chains, achieving a 22.2% market share is more likely in the urban markets and on top of that it promises higher returns. [An alternative way of looking at this: they need an urban market share of 21% but a rural market share of 22.2% to achieve their target of Rs. 5, 000 C]. . Overall conclusion: Tanishq would be better off chasing the urban markets than the rural markets