News Analysis: Can Gold Regain Its Lustre?

Marketing, September 8, 2004 | Go to article overview

News Analysis: Can Gold Regain Its Lustre?


The precious metal is appealing to consumers' emotions to combat slowing sales. Robert Gray reports.

Everything that glitters is not gold. While other segments of the UK's luxury goods market have thrived, the precious metal has failed to shine.

The latest figures from the World Gold Council (WGC), the marketing body funded by the leading gold mining companies, show that in the second quarter of 2004, global consumer demand for gold rose 11% year on year In Europe, however, the trend remained 'generally negative'.

In the UK, gold has suffered at a time when the two other precious metals - silver and platinum - have enjoyed growing demand. According to the UK's Assay Offices, which check and hallmark precious metals, gold is still the most popular of the three, with about 24m units assayed in 2003 - but this has shrunk from 27m in 2001. In contrast, silver has grown by about 51% over that period to 11m units and platinum by 171% to 300,000 units.

To stimulate demand, the WGC is launching a pounds 10m 'Speak Gold' international print advertising campaign created by Bartle Bogle Hegarty (Marketing, 2 September). The agency used photographers from the National Geographic Image Collection to capture the emotional role of gold jewellery in the lives of women around the world.

The activity will initially target key markets such as the US, India, China, the Gulf states and Italy. Funding is not yet in place for 'Speak Gold' to be rolled out in the UK, which is seen as a second-tier market by the gold producers because most consumer demand here is for nine-carat gold. Other markets prefer 18- and even 22-carat products - although, interestingly, WGC figures show 13% year-on-year growth in 18-carat gold in the UK.

Language difficulty

The 'Speak Gold' executions, which have something of a 70s feel, use the headline 'There's one language everyone understands'. But consumers in the UK, notorious for their reluctance to master foreign tongues, seem to find the language of gold more of a struggle than their counterparts in other nations.

Jim Prior, managing partner of branding agency The Partners, which has worked with the UK's second-biggest jewellery chain, Goldsmiths, believes gold has lost out as luxury has become more 'democratised' due to the rising number of consumers with significant disposable incomes.

Whereas conspicuous consumption was once in vogue, Prior feels there is now a greater onus on value for money.

'More people are looking to do more with their money,' he says. 'Traditionally, jewellery and watches were people's biggest rewards, but they are now looking to exotic holidays, plasma TVs and gadgets such as iPods.'

This tallies with WGC research that asked consumers in the US, China and Italy how they would spend dollars 500 (pounds 280). The results showed a bias toward a weekend away over gold jewellery.

Philip Olden, WGC's managing director of international jewellery and marketing, denies that the outlook for gold is bleak. He claims that with annual retail sales of dollars 60bn (pounds 34bn) a year, gold is on a par with Coca-Cola - and a brand to which people have deep emotional attachments. …

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