How does a Jewelry Manufacturer make its products stand out from other brands in an already saturated market?
This is one of the greatest challenges faced by everyone in the jewelry industry.
Jewelry is a very lucrative industry, but it is also highly competitive.
One way to pull ahead of competitors is to have a laser-like focus on designing and building products targeted toward people with specific needs and wants. In other words, conducting precise segmentation.
By understanding different segments of the market and what drives the consumer in each segment, jewelry companies can strategically market products to satisfy the needs of each segment.
Let’s see why Jewelry Market Segmentation is important and what are the variables a business can use to segment its market.
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The importance of Segmentation of the Jewelry Market
The Segmentation of the Jewelry Market is necessary because of the wide range of buyers, product choices, income levels, and needs that are seen in this industry.
Without market segmentation, everyone would be wearing the same types of rings, necklaces, and earrings – an unimaginable thought!
Competition is fierce in the jewelry market and jewelers need to find a way to stand out from the crowd by finding their target market, understanding the segments in the market, and going after each segment with a different marketing strategy.
Some segments of customers will only care about having the best products from the best brands and won’t care about price. For other segments, the price will be a key decision factor. Segmenting based on price is one of the best ways a jewelry manufacturer or reseller can maximize profits because they can get more money from those who are willing to pay.
Similarly, some segments will have the need to buy a certain type of jewelry. This could be to match a piece of jewelry with another or with a dress. Or it could be jewelry needed for an occasion.
For example, someone may want a pair of amethyst earrings to go with an amethyst necklace they already have.
Or someone may wish to purchase an engagement ring that must have a diamond in it.
All these are needs. And all consumers have needs. So, using Needs-based segmentation, jewelers can offer products to different segments that actually meet the needs of that segment.
Similarly, people make purchases – including jewelry – for different occasions, usually special occasions. This could be a peridot necklace for Valentine’s Day or pearl earrings for a birthday or an emerald ring for a wedding.
Consumers are very picky as to the type of product they will purchase for such special occasions, but they are also willing to spend a lot on such products. So, segmenting the market based on occasions can be a perfect way to market jewelry products to a highly receptive audience.
It is becoming increasingly common to purchase jewelry with precious and semi-precious stones based on their perceived benefits. For instance, some believe that the amethyst reduces stress and anxiety. Or that Lapis Lazuli strengthens the immune system. Whether jewelers and jewelry manufacturers themselves believe this or not, it would be in their interest to market based on the perceived benefits of the gemstones in their products.
By understanding the different needs of each segment, jewelry manufacturers can exploit these differences and build products that appeal to the needs and wants of each segment.
Variables for Jewelry Market Segmentation
The Jewelry Market can be segmented along the following axes:
- Type of Jewelry – Luxury, Fashion, Costume, Accessories
- Price Point – inexpensive to outrageously expensive
- Type of manufacturing – hand-made, machine-made, semi-industrialized
- Type of materials used – precious stones, semi-precious stones, gold, silver, etc.
- Planned Use – everyday use, for special occasions, as gifts
Across each axis, a piece of jewelry can be classified as “high-end” or “low-end”.
A Jewelry Manufacturer must choose whether they want to focus on the higher-end or the lower-end. Some products can suit both markets, but most jewelers will find that they have a more distinct target market at either end of the spectrum.
Segmentation based on Type of Jewelry
There are 4 types of Jewelry:
- Luxury Jewelry
- Fashion Jewelry
- Costume Jewelry
- Jewelry Accessories
Luxury Jewelry
High-end Jewellers in major cities like London, New York and Paris have always catered to the luxury segment.
This is the most profitable Jewelry Market Segment because people who can afford it are willing to pay more for better quality products.
Luxury Jewelry brands often use precious metals and gems in their designs, which gives them a high perceived value.
They also use unique designs and often have a very exclusive clientele.
Fashion Jewelry
The Fashion Jewelry Segment includes all types of Jewelry that are not considered luxury items.
This is the largest and most competitive Jewelry Market Segment, but it also has the highest potential for growth.
Fashion Jewelry brands often use less expensive materials than Luxury Jewellers, so they can offer their products at a lower price point.
They also use more contemporary designs that are popular with younger consumers.
However, fashion Jewelry is often seen as less prestigious than luxury Jewelry, so companies in this segment need to market their products carefully.
Costume Jewelry
As the name suggests, Costume Jewelry is aimed at people who want to dress up and look glamorous.
This segment includes lower-quality Jewelry made with less expensive materials.
Designs in this segment can be very flashy and over-the-top, which is why it is popular with people who want to make a statement.
However, Costume Jewelry does not have the same perceived value as Luxury or Fashion Jewelry, so companies in this segment need to be careful not to undercut their competitors.
Jewelry Accessories
Jewelry Accessories are items like watches and bracelets, and they typically do not include stones.
Companies in this segment can focus on niche markets, such as luxury watch brands or designer bracelet brands.
Segmentation of Jewelry by Price Point
Prices for Jewelry can range from a few dollars to thousands of dollars.
This type of segmentation is important because it allows companies to appeal to different consumers with different budgets.
Low-priced Jewelry is often made with less expensive materials and is aimed at people who are looking for a bargain.
High-priced jewelry is often made with better quality materials and is aimed at people who are willing to pay more for luxury products.
Segmentation of Jewelry by Type of Manufacturing
There are three main types of Jewelry manufacturing: handmade, machine-made, and semi-industrialized.
Makers in the Handmade Jewelry Segment often have a family or guild tradition that has been passed down through generations.
They use traditional techniques and often work with precious metals and gems.
Machine-made jewelry is cheaper to produce than handmade Jewelry, so it is popular with companies that want to keep costs down.
However, machine-made Jewelry can often look cheap and tacky and so will not appeal to the more discerning consumer.
Semi-industrialized Jewelry is made using a combination of handmade and machine-made techniques.
This Jewelry has more value than machine-made Jewelry, but it is still less expensive than Handcrafted Jewelry.
Segmentation of Jewelry by Type of Materials
Jewelry can be made with different types of metal, the most common being gold, silver or platinum.
Gold is the most popular type of metal, followed by silver.
Platinum is more expensive than gold, but it has a higher perceived value.
Stones used can be precious stones like diamonds, rubies, emeralds and sapphires or semi-precious stones like garnets, amethysts, onyx, agate, opal, etc.
It is becoming increasingly common to use synthetic stones which are made in a lab.
In recent years jewelers have been using more semi-precious materials because they are more affordable for the customer.
Synthetic stones are much cheaper and don’t carry the same perceived value as precious or semi-precious stones.
By using different combinations of metal, stones and craftmanship, jewelers can build products targeted at different segments.
Segmentation of Jewelry based on Planned Use
Jewelry is purchased for everyday use, to wear on special occasions or as gifts for others. The way jewelry is used can dictate how it is marketed.
Jewelry for everyday use
When purchasing jewelry for everyday use, people often look for pieces that are versatile and can be worn with a variety of outfits. They may also seek out items that are affordable, so they can buy multiple pieces. As a result, the marketing for these products typically emphasizes affordability, versatility and quality. Jewelers also increasingly offer online stores to make it easier to buy everyday jewelry.
Jewelry as a gift
People purchasing jewelry as gifts typically look for items that are meaningful or sentimental in some way. They may want pieces with symbolic value such as a heart-shaped necklace because it represents love while an engraved pendant could represent a special memory.
The marketing of these products typically focuses on the emotional value of the jewelry and how it will make the recipient feel. Jewelers should emphasize the unique design and craftsmanship of their pieces to differentiate them from other gift options.
Jewelry for special occasions
People who purchase jewelry for special occasions often have a specific event in mind, such as an anniversary, wedding or graduation. Jewelers should focus their marketing efforts on the significance of the event and how it relates to jewelry. They can also emphasize special features such as diamonds in engagement rings that make them unique for the occasion.
Key Takeaways
- The Jewelry Market is highly lucrative and (therefore) competitive because of the range of stones, metals, craftsmanship and manufacturing options that are available to design and build a wide range of products.
- Jewelry Market Segmentation is important to ensure that jewelry manufacturers and resellers market the right products to the right segment of consumers at the right time.
- It is common to segment the jewelry market based on needs, benefits and occasions.
- The Jewelry Market can be further segmented based on these 5 variables:
– Type of Jewelry
– Price Point
– Type of Manufacturing
– Type of Materials
– Planned Use - By precisely segmenting the market and staying on top of changing demographics and consumer preferences, jewelry businesses will be able to bring out new products and execute marketing strategies to always meet the consumer’s needs and demands.