Lakshya 2012

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Product launch, promotion & market acquisition strategy of Lawrence & Mayo
Lawrence & Mayo, an India based 112 Cr turnover company, successfully completing its 135 years of passionate progress in eyewear and eye care products, operates with a significantly bigger band of loyal customers and deep-rooted brand sense. L&M has been a two Divisional company in the business of Ophthalmic Optics & Contact Lens Clinics and in the specialized technical field of Engineering, Scientific Vacuum Instruments. L & M have served Royalties, Viceroys to Visionaries like Mahatma Gandhi, Pandit Nehru, Rabindranath Tagore, J.R.D Tata in the past. Today it continues to serve eminent persons like K. Narayan Murthy, Azim Premji, Kiran Shaw Mazumdar to sport stars like Saurav Ganguly, Anil Kumble, V.V.S. Laxman to stars from the film industry like Amitab Bachchan, Celina Jaitly, Prabhudeva, Upendra to name a few. Its Instrumentation division has supported Indias large and important infrastructure development projects like the Konkan Railway and also numerous flyovers across cities, where its Total Solutions and Automatic Level expertise was deployed. L&Ms efforts in brand building: Today, L & M is a responsible corporate citizen contributing its might at the grass root level attempting to provide support for better eye sight to the underprivileged through its various Corporate Social Responsibility projects like: Initiated in 2002, L & M has donated over 9,000 spectacle frames and sunglasses to Sight Savers, the International N.G.O. in India through its Spectacles Donation Drive. L & Ms Vocational Guidance and Training Program helps young engineers gain exposure to world-class engineering and instrumentation equipment and technology. India being the worlds capital of preventable blindness, L & M has taken the lead to set up school and colleges of optometry by providing capital, equipment, computers, and libraries to enable them take off from the ground level. Recently on the occasion of its 130th year anniversary celebrations, for the first time ever, L & M introduced an Exchange Offer inviting its customers to donate their un-used spectacle frames and sunglasses to charity.

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 Through its new CSR initiative Art Sight on the occasion of Childrens Day in 2007, L & M sponsored and organized paintings exhibition of Art created by students from the Pune School and Home for the Blind. These paintings were auctioned and of the funds collected, 85% was given to the student artists with investment advice to enable them get long term support and balance 15% was given to the school. Perhaps this was the worlds first such initiative to recognize and promote Art Created by the visually challenged. Focus on Indian Market: L & M sensed tremendous growth opportunities in the Indian market. With 10% market share in the partially organized 900 crore-eyewear segment, L & M has about 89 showrooms in 32 cities out of top 200 cities across India with a strong total workforce of 1180. It has 13 engineering centers across India. It ambitiously targets to increase the reach to customers by opening 3 showrooms a month especially in tier II & tier III cities. Apart from established brands, the company also sells spectacles, sunglasses and contact lenses under its own brand name Lawrence & Mayo. The revenue from its own brands is 6-7 per cent and 8-10 per cent in volume. Many a First Cult: 1st to introduce computerized eye testing in India 1st to introduce contact lenses in India 1st to introduce Ray Ban in India L & M has always been remembered for its excellence in product, delivery and service differentiations among its customers, which sets them apart from the rest. Now, Lawrence & Mayo aims to venture into new business capitalizing the potential of the brand perception of the stakeholders. They foresee themselves present in fashion segment selling watches to mid & premium segments, where watches range from INR 3500 upwards. The new products will be marketed along with the core products in their company owned showrooms. However, this market is in a way different from the companys past trajectory. It is competed by tough, classical and heritage brands.

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Indian watch market: The total size of the Indian time wear industry is estimated at 4,000-4,200 Crore. The industry has witnessed a growth of 8-10% in the past few years. The market is expected to grow at a rate of 12-15% for next few years. A large part of this growth is expected to come from youth and premium segment of consumers. By volume the market is estimated at ~460 Lakh pieces annually. At 27%, penetration of watches in India, it is amongst the lowest in the world and it is estimated that just 3.5% of the population own multiple watches.

Market Structure by Volume

Market Structure by Value

40% 60%

Organized Unorganized

40% 60%

Organized Unorganized

Gender based segmentation of Indian watch market: The overall time wear market is split
40% 60%

60:40 amongst men and women. However

Men Woman

there are brands that have more focus on only one of them. For example, Dior, Esprit & Guess have a large share of their range and sales from women whereas Tag Heuer has

from men. The gender-wise split of sales in the fashion segment between men and women is estimated at 65:35. The market for womens watches is growing at a faster pace by around 20 per cent per year.

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Price based segmentation of Indian watch market:

Sale value in Rs - Crore
1800 1600 1400 1700 1600

1200
1000 800 600 400 200 0 Mass Mid Premium 900

Sale quantity in Lakhs

400 350 300 250 200 150 100 50 0 Mass Mid 86.5 370

2.1
Premium

Segment Mass (Less than INR 1000) Mid (INR 1000 to INR 10K) Premium (> 10K)

Growth Rate 5-7% 8-10% 15-20%

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Competition in the new business: Mid Segment: Brands such as Titan, Timex and Citizen that used to cater to the mass segment have increased their offering in the higher price range and thus moved to the midsegment. This segment also includes fashion watches in ` 3,000-8,000 range, which appeals to the customer more on the aesthetics and brand association front rather than technology advancement. Few fashion brands, designer labels that operate in this segment are Diesel, Esprit, Fossil, Giordano, Tommy Hilfiger, Guess, Kenneth Cole, and Police etc. Brand Titan + allied brands Timex + allied brands Citizen + allied brands Premium Segment: The segment caters to consumers who want to get associated with a brand name that signifies growth and prosperity. These consumers consider watch brands as a reflection of their own personality. Many of these high-end watches are often gold plated, diamond studded and used as left arm jewelry. Brands here, range from premium, affordable luxury to prestige price bands which includes Guess Collection, Seiko, Tissot, Xylys, Dior, Longines, Rado, Tag Heuer, Harry Winston, IWC, JLC, Patek Philippe, Ulysse Nardin, Breitling, Cartier, Montblanc, Omega, Rolex etc. Although this segment is largely driven by brands, it does have a significant grey market in the luxury and prestige segment. In next 5-10 years, the market is expected to move towards an inverted pyramid, as the value share of premium segment will be the highest. This structure will mirror most international developed time wear markets. Market Share 60% 21% 8% Customer Reach 331 exclusive stores 786 service points in 343 towns 100 exclusive stores 4000 multi-brand retails in 1100 towns 30 exclusive stores 500 retail points

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Favorable factors: Young population: 51% of Indian population is less than 25 years old. More than 20% of the Indian population lies in the youth segment, which is 15-24 years of age. There are ~ 20 million youth in the top 100 cities in India and 40% of these are in top 8 cities. Disposable income to spend on lifestyle products and brand consciousness are high. They are attracted by western lifestyle and are well aware of the international brands. Growing middle class: The growing middle class in India is an important growth driver for the watch industry. The aspirations of middle class consumers are growing and they are willing to spend their disposable incomes on products to improve their lifestyle. The Indian middle class today stands at more than 500 million consumers (~270 million consumers in rural India and ~230 million consumers in urban India) off which ~80 million are in top 100 cities and ~30 million are in top 30 cities including metros and mini metros

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Population in million
120 100 230 270 80 Rural Urban 60 40 20 0

Population in million
100

30

Top 30 Cities

Top 100 Cities

High disposable incomes and more spending power: High disposable incomes mainly amongst young middle class consumers have resulted in increased spend on lifestyle products like watches and mobiles. They are constantly looking at upgrading to bigger brands and higher price points.

Growth in High Net Worth Individual population: The population of high net worth individuals (HNWIs those who hold at least USD 1 million in financial assets) has seen a rapid growth. Currently there are ~ 126,700 HNWIs in India. This has brought a sale upsurge of affordable luxury, luxury & prestige watches. HNWIs consider luxury and prestige segment time wear buying as a lifestyle investment.

Shift from functional utility to fashion accessory and aspiration: Wristwatch has made the shift from mere timekeeping device/instrument to a fashion accessory. A watch is seen by its wearer as a reflection of his/ her personality, a style statement. Watches play an important role for men too equivalent to jewelry item. New age consumers aspire to buy different brands and upgrade to higher price segments. From mere gifting occasions trend has shifted to self-indulgence.

Increased awareness and brand consciousness: Emergence of the IT sector in India has spearheaded a new revolution where Indians are getting high global exposure and aspire to adopt western culture.

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Todays new age consumers are well travelled and due to exposure to internet they have increased fashion consciousness and are more aware of branded products, be it Indian or international Growing trend of multiple watch ownership and replacement: Earlier watches were bought or gifted only on festive occasions or certain milestones of life like graduation, birthdays, weddings etc. Today watches are no longer just a onetime buy and consumers are increasingly buying multiple watches to suit their lifestyle demands. Multiple watch ownership has been one of the key drivers for growth of watch industry in India. Replacement demand for watches is another growth driver and brands often use exchange schemes and discounts to promote the same. Foray into Writing Instruments market: The story doesnt end here; L&M is also planning to launch luxury pens with a starting price of Rs 1600/-. Other than unisex series, it is the first brand to launch womens range of pens; since 24% percentage of women constitute Indias workforce117 million out of 478 million people and in particularly, income of urban women rose by 111% between 2000 to 2011. This reveals L&Ms continuous interest in market watch and to build products accordingly. It plans to unveil both of its product ranges together. Now, as a systematic approach, Lawrence & Mayo plans to sense the market niche and design products to the customer expectation. Manufacturing is planned through outsourcing. Once the product is ready, the firm should be equipped enough to quickly test, refine and inject itself into the market and find a grip into it. As we discussed enough on the SWOT of the market-firm combination, now the question is how to do it.

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Questions: 1. 2. 3. 4. 5. 6. Bring out the SWOT. Develop the marketing strategy for L&M. Make competitor analysis and define the competitive strategy for Lawrence & Bring out a unique tagline for L&M watches. How to proceed with sales targets & marketing expenditure targets? What will be the optimistic & pessimistic estimation on time to reach breakeven

Mayo with special reference to cost pressures and number of stores.

(assume a healthy investment based on the case)?

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Rules and Guidelines It is mandatory for all the teams to perform registration process on Lakshya website (http://lakshya.nitie.in) The team size should be of maximum 2 people from the same institute A participant cannot be a part of more than one team participating for the same case. However one can participate in more than one Case The participants are allowed to form different teams for different modules The solution should not exceed 2000 words inclusive of all exhibits and appendices As mentioned earlier, clearly indicate assumptions and support them with suitable reasons under separate headings Solution format: Font Size 12, Font Type Times New Roman, 1.5 line spacing The file should be a Microsoft Word Document/PDF The front page should carry only Name of your Institute Team Name Details of the team members (Name, Email IDs, Phone Numbers) The details of the participants SHOULD NOT appear anywhere else in the case solution Please attach your excel sheets/calculations to the mail if any Send your entries to lakshwiz@gmail.com with the document name & email subject as Bazaar_InstituteName_Team Name The entries must reach us positively by Monday, September 23rd , 2012 23:59:59 hrs. Shortlisted candidates of Round I will be informed via e-mail. The results of Round I will also be available on official website of Lakshya on or before Tuesday, 2nd October 2012. The decision of the organizers of the contest and the panel of judges will be final and binding on all contestants.

Incase of any queries, please write to us at lakshwiz@gmail.com All the Best

Lakshya 2012