Study on impact of Akshaya Tritiya on consumer buying behaviour of gold

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They considered gold as a good way to plan for the future and a manifestation of their social position and dignity. The same sentiment is much prevalent nowadays also. The Research paper studies the impact of the auspicious day called Akshaya Tritiya on consumer’s buying of gold.

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International Journal of Management (IJM) Volume 7, Issue 7, November–December 2016, pp.128–133, Article ID: IJM_07_07_013 Available online at http://www.iaeme.com/ijm/issues.asp?JType=IJM&VType=7&IType=7 Journal Impact Factor (2016): 8.1920 (Calculated by GISI) www.jifactor.com ISSN Print: 0976-6502 and ISSN Online: 0976-6510 © IAEME Publication STUDY ON IMPACT OF AKSHAYA TRITIYA ON CONSUMER BUYING BEHAVIOUR OF GOLD Hanna Joseph B.Tech, MBA, Research Scholar at School of Management, Hindustan University, Chennai, India Dr. David T Easow Deputy Director, School of Management, Hindustan University, Chennai, India ABSTRACT Gold is the most precious and invaluable metal ever discovered by man. Gold is respected throughout the world for its value and rich history, which has been interwoven into cultures for thousands of years .People used to see gold as a way to pass on and preserve their wealth from one generation to the next. Gold is also used as an excellent hedge against inflation, as its price tends to rise when the cost of living increases. Gold has always been a go-to investment during times of fear and uncertainty. Periods of fear and uncertainty go hand in hand with economic recessions and depressions. With the discovery of metals like gold, a revolutionary change in ornaments took place. Gold ornaments became an unavoidable factor in the racial and cultural life of people. They considered gold as a good way to plan for the future and a manifestation of their social position and dignity. The same sentiment is much prevalent nowadays also. The Research paper studies the impact of the auspicious day called Akshaya Tritiya on consumer’s buying of gold. Key words: Akshaya Tritiya, demand, gold, offers, purchase Cite this Article: Hanna Joseph and Dr. David T Easow, Study on Impact of Akshaya Tritiya on Consumer Buying Behaviour of Gold. International Journal of Management, 7(7), 2016, pp. 128– 133. http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=7&IType=7 1. INTRODUCTION Akshaya Tritiya otherwise known as AkhaTeej is considered very auspicious for Hindus to buy gold. The word Akshaya means never diminishing. Therefore the advantage of doing any karma on this auspicious day never diminishes and stays with the person forever. It is believed that Akshaya Tritiya bring success and luck for the people for whatever activity they are engaged in. It is considered as one of the most important days for Hindu community as it is the day of the birth of the Lord Parasurama. Akshaya Tritiya is a very popular festival that the Hindus and Jains celebrate every year. It is considered as one of the most important days for Hindu community as it is the day of the birth of the Lord Parasurama. The people, especially the Hindus, considers this day as a lucky day and believes that any venture such as a business or the construction of a building started on this day will follow betterment and prosperity. Akshaya Tritiya is a one day event celebrated in late April or early May. According to the http://www.iaeme.com/IJM/index.asp 128 editor@iaeme.com
Study on Impact of Akshaya Tritiya on Consumer Buying Behaviour of Gold Hindus, Akshaya Tritiya is the day when God Ganesha, God of Wisdom, started writing the epic work called "Mahabharata". It is believed that when the Pandavas were in exile the Lord presented them a bowl which was named AkshayaPatram. That bowl was never empty and produces an unlimited amount of food on demand. Thus, the word Akshaya came into existence. Akshaya Tritiya is considered as the golden day of the year because the word Akshaya meaning the most "Eternal" refers to something which never diminishes. The most popular activity on this day is the buying of gold and it is believed it will be a sign of good fortune for the buyer. Usually in the Indian culture, people typically start a new business or begins a new venture on Akshaya Tritiya day. This is also one of the most popular days for wedding as the spirit of this day bids them for a very long and fulfilling life journey. 2. BACKGROUND OF THE STUDY Lord Krishna and Sudama were friends during their childhood. Sudama was poor and he went to Krishna to ask him for some financial help or to give him money as a gift being a friend. Sudama did not have anything else except the pouch of Poha and he felt ashamed when he gave it to Krishna. Krishna accepted it whole heartedly. He was overwhelmed by the hospitality shown by Lord Krishna that he could not ask his friend for financial assistance and went home empty-handed. When he reached home he was surprised to see that his run-down hut was converted into a palace and his family was wearing royal attire. Sudama understood that this was the blessing of his friend Krishna who blessed him with more wealth than he needed or could ever imagine. This is the reason why Akshaya Tritiya is associated with material gains. Akshaya Tritiya day is usually celebrated by Hindus and Jains. The word Akshaya stands for “never diminishing”. Hence the benefits of doing any Japa, Yajna, Pitra- Tarpan, Dan-Punya which means charity works, Svadhyaya which means studying of Vedas and Puja on this day never diminish and remain with the person forever. The most important ritual which is performed on the day of Akshaya Tritiya is buying gold. The demand of gold surges on the day of Akshaya Tritiya. It is believed that gold bought on the day of Akshaya Tritiya brings everlasting prosperity and stays in the family for generations to come. Therefore people wait for this auspicious day the whole year to buy gold and other precious metals. 3. REVIEW OF LITERATURE A literature review is the critical analysis of a segment of a published body of knowledge through summary, classification and comparison of prior research studies, and theoretical articles. The aim of literature review is to show that "the writer has studied existing work in the field of insight". A good literature review presents a clear case and context for the study that makes up the rest of the thesis. It raises questions and identifies areas to be explored. Previous studies and articles written are reviewed in order to gain insights for the research done in the particular topic. It also analyzes, what impact the study will have on the selected topic. The following information have been collected from various articles and journals related to the topic. In a study, Anu Singh Lather and Kaur (2006) aimed at understanding the strategies adopted by retailers to keep pace with the changing moods of the shoppers. In this study they addressed how factors within and outside the stores affect store-level shopping decisions. They rightly emphasized the six main indicators on the basis which retailers decide to go for specific types of retail format are: price, quality of merchandise, assortment of merchandise, advertising, services and other convenience services. In an article co-authored by Gupta and Varma (2000), it was pointed out that marketers design promotional strategies to reach members of families. They suggested that marketers advertise their products in sunday newspapers, magazines or a special supplement of the product, which are read by a majority of the members of the families and the products be advertised on radio and television during or before the programmes, which are enjoyed by the whole family. http://www.iaeme.com/IJM/index.asp 129 editor@iaeme.com
Hanna Joseph and Dr. David T Easow They also suggested that while advertising in women magazines, the beauty and aesthetic aspects of the model should be given prominence, emphasizing at the same time the price cuts or any other sales promotion offers. Prasad and Nataraj (2006) in their article, “Why Exhibit at an Exhibition” observed that marketing and advertising today had become as important as manufacturing and production due to the increasing competition and awareness among consumers. Poul (2001) in his doctoral thesis opined that advertising is an important marketing communication strategy in marketing mix. He observed that advertising fills the “consumer information gap” but the specific meanings attributed to advertising should be viewed from different angles. This study provides more ‘tangible’ advertising. He believed that based on this study, advertisers could interpret how consumers form attitudes towards the advertisement and for their brands. In a study, Cramphorn (1996) emphasized the prevalent belief that successful advertising represents successful communication with consumers. 4. OBJECTIVES • To analyse the impact of Akshaya Tritiya on consumer buying behavior of gold. • To have an in- depth understanding of the effectiveness of Akshaya Tritiya on real sales of gold. • To identify the reason behind the emergence of Akshaya Tritiya day. 5. STATEMENT OF PROBLEM Lord Vishnu is worshipped on Akshaya Tritiya being the preserver of whole creation. It is considered very significant to worship Lakshminarayana form of Lord Vishnu on this auspicious day. Lakshminarayana is the manifestation of Lord Vishnu in which Lord Vishnu is worshipped along with Goddess Lakshmi. Ceremonies such as marriage, house warming, purchasing property, jewellery, buying new vehicle etc are considered auspicious on Akshaya Tritiya day. Jewellers of India are advertising freaks and one of the largest spenders in print and visual media. They have roped in most of the famous models and divas for their campaigns. In 2016 May 9th was celebrated as GOLD DAY or Akshaya Tritiya Day. In 2015, 500 crores of Gold transactions was done in Kerala during Gold day. The price of gold during 2015 was Rs. 20,120 for 8 grams. The experts in the field expected a rise in gold transactions during the year 2016. Around 300 crores of Gold transactions took place wherein 8grams of gold was priced around Rs. 22,480. The reason for this shortfall in gold transactions is due to the increase in gold rate and also the conduct of elections during the period. The advertisement and offers from Tanishq for the Akshaya Tritiya season was:-22 carrat 0.2 gm gold coin free for every 10 gm gold purchase; studded jewellery for 20% discount for purchases above 2 lakhs; wide range of collections in kundan, polki, platinum, gold studded ornaments; all the schemes available for online shopping too. The jewellers came up with different advertising strategiesto increase sales during Akshaya Tritiya. 6. RECENT DEVELOPMENTS Chinnan Gold and Diamonds came up with offers like gold coins for jewellery purchase; availability of special Akshaya Tritiya collections and heavy wedding jewellery; wholesale rate for jewellery etc. Advance booking schemes were also offered to customers to avail price reductions. Advance booking schemes and 50% discount for making charges were offered from Malabar Gold and Diamonds. Lakshmi Jewellers offered latest trendy designs, advance booking schemes and diamond collections starting from Rs.21,900. They also provided the facility of an astrologist for guiding the customers in choosing which jewellery to be bought and whether it is the right time to buy the same. Josco Jewellers gained the attention of the customers by introducing festival collections, light weight ornaments, Goddess Lakshmi designs and budget priced ornaments. Free gold coin was offered for purchases above Rs. 25,000. A discount of Rs.5000 per carrat was given for diamonds. They also gave advance booking scheme facilities for their customers. Kalyan Jewellers offered Rs.50 discount for total grams of cash gold purchase; Rs.500 discount http://www.iaeme.com/IJM/index.asp 130 editor@iaeme.com
Study on Impact of Akshaya Tritiya on Consumer Buying Behaviour of Gold for every purchase worth Rs. 25,000. They also gave facilities like exchange of old gold for new one.5% discount was given for purchase of diamonds. The following days were observed as Akshaya Tritiya day during the period from year 2012 – 2016. Table 1.1 Year Day, Date and Month 2012 Tuesday, April 24 2013 Monday, May 13 2014 Friday, May 02 2015 Tuesday, April 21 2016 Monday, May 09 7. SCOPE OF STUDY There are several factors that drive the price of gold. Investors use gold as a way to hedge against inflation. Gold retailing is heavily rooted in tradition. Gold is a high value- high involvement purchase. Consumers are risk averse in trying out a new retail. The price of gold reached new heights during 1970s when the inflation rate worldwide rose sharply. Consumer Price Index or CPI is a common measure of consumer inflation, which measures the price changes in a weighted average of prices of a basket of consumer goods and services. There appears to be a close correlation between the price of gold and the Consumer Price Index. Another primary factor that drives prices in the gold industry is the interest rates. Gold does not pay any interest to the investors unlike fixed income investments, such as bonds and term deposits. There is an opportunity cost for investors; an investor loses any money invested that could have earned interest if gold does not go up in value. Higher interest rates mean a higher opportunity cost of gold. When interest rates are high, investors are less likely to invest in gold. When interest rates are low, investors tend to invest in gold. The stock markets are another primary factor that drives prices in the gold industry. During times of economic instability, gold is seen as a safe haven where investors can park their cash. During the subprime mortgage market collapse, many investors turned to gold for its enduring value. When returns for bonds and equities are low, gold tends to be a hot commodity, driving its price up. The price of gold is driven by the laws of supply and demand, just like any other commodity. There are countries with large-scale gold mining operations which include China, South Africa, the United States, Australia, the Russian Federation, Peru etc. The gold price is affected by world’s supply of gold. Gold mine production has been on a downward trend. Miners have to spend more money and time digging deeper to access gold reserves. Mining gold is highly challenging and expensive. It costs more money to mine less gold, which has led to an increase in gold prices. The U.S. dollar is another primary factor that drives prices in the gold industry. There is generally an inverse relation between the price of gold and the value of the U.S. dollar. When the dollar is weak, the price of gold tends to be driven higher; when the dollar is strong, the price of gold tends to fall. Investors tend to trade in dollars when the U.S. currency is strong. During times of economic uncertainty, investors prefer to invest in gold which is of long lasting value. 8. GOLD PRICE MOVEMENTS The gold prices can be tracked in two different ways. The first one is to observe the spot price of gold. Spot price is defined as the price for which physical gold can be bought and sold. The gold price http://www.iaeme.com/IJM/index.asp 131 editor@iaeme.com
Hanna Joseph and Dr. David T Easow movements can also be tracked by keeping an eye on the price of gold futures. It is defined as the spot price of gold for a particular date in the future. Futures are more common in these days. 8.1. Spot Price The spot price is tracked if the person is interested in physical gold. It is affected by demand and supply, wars, conflicts and the global economy as a whole. It is very important to be aware of the price changes throughout the day. The size of transaction is also important in such transactions. The more gold is traded, the higher will be the price which can be demanded. 8.2. Futures Price Gold Futures are exchange traded contracts which focus on the price of gold in a certain amount that can be bought or sold at a particular time. Volatility is the most important feature of Gold Futures. It is also used to balance investment portfolios and also to hedge against currencies. 9. FIXING THE PRICE The price of gold is fixed by members of London Gold Market Fixing Limited, which is used as a benchmark to price gold products and their derivatives. The price is usually fixed two times a day and in three currencies namely the Euros, British pounds and U.S. dollars. 9.1. Gold Standard It was established during the period 1876- 1913. The exchange rates were dictated by gold standard. Each currency was convertible into gold at a specified rate. Exchange rate means relative convertibility rates per ounce of gold. But it was suspended in 1914. 9.2. Fixed Exchange Rates In 1944, Bretton Woods Agreement was signed. It is defined as a fixed exchange rate between currencies. It lasted till the year 1971.The Government intervention was to prevent exchange rates from moving more than 1% above or below the initially established levels. The US dollar was overvalued and the foreign demand was less than supply. The Gold Reserve Act of 1934 gave the government the power to peg the value of the dollar to gold and adjust it. The dollar was devalued the following day. Devaluing the currency prompted an influx of gold from other nations because the purchasing power of the U.S. dollar was still relatively high. Normally the nationalization of a commodity would have been a huge controversy, but the Gold Reserve Act was seen as a necessary step to end the Great Depression. Its shock value was also moderated by the fact that an executive order had already made the private ownership or trading of gold a criminal offense. The Gold Reserve Act stripped the Fed of its gold reserves in return for "Gold Certificates," and gave the title for the gold to the U.S. Treasury. They were more like a paper trail saying that the gold had been taken rather than a certificate that could be redeemed to get the gold back, as these certificates didn't actually represent a given value of gold. Nationalizing the Fed's holdings technically should have been outside the government's abilities because the Fed is independent by design. The Gold Reserve Act arguably met the short-term goals of the government but at the cost of compromising the Fed, violating citizen’s property rights and also setting the stage for the stagflation of the 1970s. 10. CONCLUSION Starting up a new activity or buying valuables on Akshaya Tritiya day is considered to bring luck and success. There is inexhaustible merit which is acquired by giving away gifts on this special day. People consider buying gold on this special day as sacred. Most jewellery stores stock in new models for this occasion with "Lakshmi-inscribed" gold coins, diamond jewellery etc. There are vigorous campaigns conducted by banks, jewellery retailers and financial institutions, to promote buying of gold, thus Akshay http://www.iaeme.com/IJM/index.asp 132 editor@iaeme.com
Study on Impact of Akshaya Tritiya on Consumer Buying Behaviour of Gold Tritiya has gained prominence. Although modern retailers are exploiting the materialistic urge in people, the awareness level among people is increasing day by day regarding Akshaya Tritiya. The All India Gems & Jewellery Trade Federation (GJF) expects a growth in sales across India on Akshaya Tritiya. The demand for gold increases if the wedding season also falls during this period. In some years because of the pent up demand, the gold products become non-available for the customers leading to their demand being unfulfilled. Many jewellers undertake aggressive promotional campaigns and lucrative offers to stimulate demand, customer queries and walk-ins. Akshaya Tritiya will herald a boom for the jewellery sector. An online retailer such as Amazon and Bluestone expects a huge increase in gold and diamond sales and hence expect a big boost to their business on 'Akshaya Tritiya'. Thus, from the study, the researcher analyzed that there is a positive impact created by Akshaya Tritiya on consumer buying behavior of gold. It also boost up the real sales of gold. Akshaya Tritiya is a special festival for every Indian who values his/her traditions and believes in preserving the Indian cultural ethos. REFERENCE [1] Fam, Kim Shyan (2000) Differing Views And Use Of Integrated Marketing Communications, Findings From A Survey Of New Zealand Small Businesses, Journal Of Small Business And Enterprise Development, Vol. 8, No. 3: 205214. [2] Fill, C. (2002) Marketing Communications: Contexts, Strategies and Applications, 3rd edition, Harlow: Pearson Education. [3] Isobel, D. and Robin, L. (2005) Strategic Marketing Decisions, Elsevier Butterworth – Heinemann, Oxford . [4] GJEPC (2008), “Ideal Cut the Newsletter of the Gem and Jewellery Export Promotion Council”, Vol. No.19, 20 and 21, May-October. [5] Mital, Amita (2008), “Cases in Strategic Management” Tata McGraw-Hill Publishing Company Limited, New Delhi. [6] Dr. Mehal Pandya, Consumer Buying Behaviour for Children Apparel: A Critical Review. International Journal of Management (IJM), 7(5), 2016, pp. 188–199 [7] G. Rathika . A n Outlook on Investing in Gold ETFS with Special Reference to Small Investor’s . International Journal of Management (IJM) , 7 ( 2 ), 2016, pp. 291 - 297 http://www.iaeme.com/IJM/index.asp 133 editor@iaeme.com