You are on page 1of 11

Segmentation of the Indian Watch Market

Introduction
Mr. Shastri, General Manager (Marketing) of HMT, a leading manufacturer of watches in India,
was poring over the data on the watch market. Several things about the watch market bothered him.
First issue of concern was the indifferent performance of the watch division of his organization.
Second was the rapidly changing watch market itself. Conventional methods of understanding the
watch market were becoming less and less relevant. Are there any new attractive segments in the
watch market? Is it possible to think beyond what is being presently offered? What kind of new
watches will be successful in today's market? Mr. Shastri was seriously seeking to answer these
questions. He was looking at a report on the watch market that had the following details.
Overview of the Indian Market:
The watch market in India recorded an approximate value turnover of US $ 300 million (1 $ =
43.75 Indian rupees) and a volume turnover of 23 million units (1998-99). It is growing at 9% per
annum. The organized sector contributes to half the volume turnover of the industry. The unorganized
sector that contributes to the other half has two parts. The first consists of watches smuggled from
abroad. The second comprises assembled watches. The latter are made from cheap movements
smuggled from China and other South East Asian countries. Despite competition from these two
sources the market share of the organized sector is expected to grow steadily because of falling
excise duty levels. Tough competition is anticipated between the low priced variants introduced by the
organized sector and the unorganized sector. The unorganized and organized sectors are both in turn
threatened by direct import of watches facilitated by the lowering of import duties.
The watch market worldwide comprised 60% quartz, 27% digital and 13% mechanical watches.
By contrast in India the digital segment is almost non-existent. Quartz watches probably account for
75% of the Indian watch market the rest being mechanical watches. The mechanical segment is
declining at 10% per annum. Watch consumption in India is 20 units per thousand persons as
compared to 50 in China. The top 23 cities account for 80% of the watches sold in India which
therefore leaves a lot of scope for penetration in the hinterland. Multiple watch ownership is also
expected to contribute to market growth in near future. All these trends point to increasing
consumption.
Three players dominate the organized sector, namely HMT (34% market share), Titan (39%) and
Timex (23%). Details of the three organizations follow.
HMT
The watch market in the organized sector in India started with HMT (Hindustan Machine Tools)
taking up watch making in 1961. (HMT is a Government of India undertaking engaged in several
businesses like machine tools, lamps, bearings etc.). Till HMT entered, the Indian watch market was
dominated by smuggled watches of Japanese and Swiss origin. Today the watch market in India is
characterized by variety and color. But it was not always like this. There was a time when private

entrepreneurs were reluctant to enter the watch market because it was saturated with smuggled
watches.
The Government of India, through HMT, set up India's first ever factory to manufacture
mechanical watches in Bangalore in technical collaboration with Citizen, Japan. HMT has since
progressed rapidly. It pioneered day and date watches (1974) and quartz watches (1981) in India. It
made sturdy, affordable and reliable watches. For more than two decades it held a virtual monopoly
in the organized sector. It is famous in the Indian rural markets as "Chimti" watch. (Though Chimti
itself does not mean anything, it is the villager's short hand for the word HMT.) All this changed in the
1990s. HMT began to falter as several of its businesses including its watch division suffered due to
organizational problems and acute competition.
HMT's virtual monopoly of the watch market changed with the entry of Titan. Titan brought in an
immense variety of watches and changed the complexion of the watch market. Beset by
organizational problems HMT could not respond effectively to the Titan's aggressive marketing
initiatives. Several internal problems slowed down HMTs response. For instance it was unable to
close down unviable manufacturing units (eg: its Kashmir unit) because it was a public sector
organization. Besides HMTs core strength is in mechanical watches, a declining segment today.
Titan
Titan, a joint venture between Tamil Nadu Industrial Development Corporation (TIDCO) and the
renowned Indian business group Tatas, entered the watch market in 1984. Titan changed the watch
market in India completely by making quartz watch the centerpiece of its strategy. Thanks to Titan the
number of models available in the market expanded from 400 to 1250 between 1984 and 1988. Now
there were watches for men, women and children and watches for occasions like marriage, gift giving
and sport. In fact 46% of Titans sales are gift items. Thus Titan successfully opened up new
segments.
Oddly though, it was not Titan but HMT that introduced the quartz watch. But HMT's quartz watch
failed in the market due to its high price and did not sell even after the prices were slashed. This was
probably because the concept of an expensive quartz was new to India. This made Mr. Naidu,
Chairman of HMT in 1990 remark, "quartz is urban and mechanical is rural". HMT watches were
therefore value-for-money watches. Titan watches were lifestyle products and charged a premium.
Gradually, however, these distinctions blurred. Today HMT and Titan brands span all price segments.
For instance Titan is offering the Sonata range at as low a price as Rs.350 while HMT is offering the
Elegance range at Rs.8000 and above.
Timex
The third important player in the Indian watch market is Timex. Timex, the American watchmaking company, known the world over for its rugged, value-for-money watches, entered the Indian
market through a tie-up with Titan. Initially Titan operated in the high price segment while Timex at
the low price end. But later the two companies entered each others segments with Titan offering the
low priced Sonata brand and Timex offering the high priced Indiglo. Physically, however, the watches
from the three companies look different. HMTs watches are conventional and not very flashy in their
designs. Titan watches are sophisticated and dignified. Timex watches by contrast are sporty,
unconventional and youthful.

Other Companies:
Besides HMT, Titan and Timex several companies like Westar, Shivaki, Maxima, Bifora and SITCO
made a bid for the Indian watch market. None of them was very successful. Their failure was basically due to
lack of sustained marketing effort and commitment. Westar is now on the verge of closing down. It
assembles 3.6 lakh units a year and functions at 60% capacity utilization. Several reasons are offered
for Westar's failure. Some of them are Westar not having any brand equity in India, its entering the
upper segment where the market is already cluttered and its not having the requisite distribution
strength. Shivaki faces similar difficulties. Launched in 1996 it primarily concentrated in the Southern
and the Western markets in India. It positioned itself as a fashion accessory. Due to inadequate
marketing efforts it could not make its presence felt.
Maxima, an assembled watch made a strong bid for the lower end of the market. It advertised on
the television as a "water proof" watch. It is an inexpensive polyamide watch priced at Rs. 350 ($8).
However when Titan and HMT introduced their own low-priced versions with better marketing inputs
Maxima failed. SITCO (Sikkim Time Corporation), a Sikkim Government watch making company is
based in Bangalore. It offers analog as well as digital watches (branded "IQ"). Like other players it
failed because of lack of sustained promotion and marketing efforts. It now plans to cut prices to
improve sales. Allwyn entered the watch market in 1981 as HMT's competitor before Titan did. Its
superior watch movements were sourced from Seiko. It contributed to the boom in the polyamide
watch market and benefited from it as well. However it rapidly lost market share due to organizational
problems. Some of its problems could be traced back to the ills that often afflict public sector
organizations in India. Bifora, a German company (bought out by Non-Resident Indians) failed due to
lack of distinct positioning, inadequate marketing and brand building effort. Being a small company it
could not offer credit to retailers. This built up its inventory to unsustainable levels and rendered it a
failure. Sakura, a low priced digital watch met with the same fate. Firstly its digital technology did not
find acceptance in India. Secondly when Titan and HMT offered a good range at comparable prices
Sakura lost out.
Swiss Companies:
There are also well known Swiss companies like Rolex and Piaget that cater to a small ultra
premium segment. Post-economic liberalization, the import duty on premium Swiss watches came
down from 300% to 80%. Also watches priced above Rs.35000 ($800) could be imported directly.
This encouraged several super-premium Swiss brands to test the Indian market. Premium brands like
Cartier, Piaget, Omega, Rolex, Tiffany's and Corrum were already known in India through the gray
market. Other moderately priced brands such as Favre Leuba, Gucci, Longines, Tag Heuer and
Espirit are also familiar to the Indian customer. However the super premium Swiss watch segment
caters to a restricted audience.

Watch Retailing in India:


Watches manufactured by companies are channeled through distributors to the retail outlets
(watch shops) where they are finally bought by customers. The distributor's help is sought by
companies to gauge the needs of the local market. Watch selling was traditionally confined to watch
shops which sold watches, time pieces and clocks. Normally no other product is stocked in a watch
shop. Watch shops also act as service centers. HMT, as mentioned, was the first indigenous watch

maker and therefore took a lead in distribution. It was successful in establishing a strong distributor
network of 10,000 distributors and 50,000 retail outlets. However the credit for transforming a
wristwatch from a mere chronometer into a personality statement goes to Titan. Initially, since the
watch was priced premium, Titan restricted availability to its own showrooms. The showrooms were
well furnished and maintained. They made watch buying a pleasurable experience. Soon there was
so much demand that Titan had to stock its watches with other retailers as well. The Swiss watches
are sold in their own exclusive shops confined to big cities in India.
Other Details:
Exhibit A shows the price list of watches offered by the trio HMT, Timex and Titan. Exhibit B
shows the margins in each of these segments. The profitability of watches in the different segments is
different. As can be guessed premium watches earn a higher percentage of margin. It is known that a
sub-brand (eg: Royale, Lalit or Zap) that does not generate a sales turnover of Rs.300 million a year
will not be self-sustaining in the long run. However it is not clear as to how important a sub-brand is,
from the consumer's point of view. Whether the consumers are treating the company name itself as
the brand (e.g.: Titan) or whether the sub-brands are the things to watch out for in future is not clear.
Companies also seem to follow dual strategy. In some cases for instance Titan publicized the subbrand (e.g.: Sonata) and in others it promoted both the company name and sub-brand (e.g.: Titan's
Raga). Further it is also not known whether the consumer buys a brand or chooses a price range first
and then decides the features he wants in that price range.
Description of the Segments:
Based on price the Indian watch market can be divided into mass (Rs.350-600), popular (Rs.600900), premium (Rs.900-1500), super-premium (Rs.1500-8000) and connoisseur segments (above
Rs.8000) (1$ = Rs.43.75) The details of the price segments are given below. (The meaning of the
Indian watch names in English is mentioned alongside the respective name in brackets.)
Mass Market (Rs 350 - 600):
HMT's Astra a trendy, digital watch though priced low was withdrawn possibly because it did not
yield the margins or sell the units it was expected to. The Lalit ("soft") range did for HMT what Astra
could not. It sold an estimated one million units because it made the quartz watch affordable. Due to
its low price it scored in rural markets. It addresses the male segment and is available in stainless
steel as well as gold-plated formats. Chetan ("movement"), Chetak ("swift horse"), Rajat ("silver"),
Kedar ("sugarcane"), Ravi ("sun") and Kohinoor ("valuable diamond") are the other HMT brands in the
same price range as Lalit. HMT followed up Lalit with Shakti ("power"), a stainless mechanical watch
that again is reportedly successful. In a similar price range HMT's Swarna ("gold") targets rural
housewives through its mechanical watches and urban ones through quartz watches. Swarna as the
name indicates is a gold plated watch available at low price. Nutan ("new") is a low priced HMT
mechanical watch for ladies. Maitri ("friendship"), Jyoti ("light"), Sarita ("brook"), Aasha ("hope"),
Supriya ("beloved"), Pooja ("worship") etc. are the HMT mechanical watches targeted at women.
Timex's Basics is a low priced functional watch as the name suggests. It is a recruiting brand that
aims at converting non-watch users to watch users. Timex's Aqura (estimated sales of 0.2 million
units) is targeted at college going young men (age group 15-25) and slightly older women audience. It
targets urban youth halfway between traditional and modern. It has fibre body and trendy looks. Its
stable mate Lextra (estimated sales - 0.4 million units) is fibre bodied, sporty and rugged. It overtook
Aqura because it offers the same utility at 15% less price. It managed to attract old as well as young

customers with its sleek designs. It also stayed contemporary by introducing new features and
designs from time to time and stressing that it is 8 times as strong as steel.
Sonata from Titan aims at the mass market and advertises itself as "a Titan watch at low price".
Sonata sold an estimated 0.8 million pieces (1998-99) within four years of its launch. It is probably the
largest selling sub brand from Titan. Titan entered the watch market as a premium watch. But
competition from the unorganized sector and low priced options from HMT forced Titan to introduce
Sonata. Sonata was so successful that it cannibalized the sales of all Titan watches across the board.
Titan consequently is wary of Sonata diluting its premium image. Therefore in future Titan plans to
drop its name and leave the brand as Sonata thereby distancing the parent brand from the
extensions low price connotation. Titan's Exacta, a rugged steel watch starts at the low end of the
price spectrum but offers high price versions as well. It is reportedly selling 1.0 million pieces per year
because of the constant upgradation in its models.
Popular Watches (Rs.600-900):
Sowmya ("quiet") from HMT targets the college going, urban, middle class male. Its Tennax
targets college going men and women who see themselves as fashionable people. A similar offering,
Timex's Mariner addresses the same profile as HMTs Sowmya but a slightly older age group. It is
difficult to categorize Titan's Royale, Regalia and Classique as premium or popular. Though they
have a premium image they are available at prices less than Rs.1000. Regalia (estimated sales - 0.2
million units) is at the higher end with dress watches for special occasions. The Royale range
(estimated sales - 0.6 million watches) caters to the gift segment. There is also Royale Crown in the
upper end of the Royale range. Classique is an office wear accessory that is gold-plated and leather
strapped (estimated sales - 1 million units). Though there are very high priced watches in the above
three ranges it is the relatively low-priced ones that sell. They all target the upper middle class men
and women in their thirties. Royale, Classique and Regalia are the watches that gave Titan the
popularity and the prestige it enjoys. The Spectra range in this price band is a well designed bimetal
watch ("stylishness of gold and ruggedness of steel"). It sold just 70,000 units in 1997-98. The failure
has been attributed to the consumers not liking the gold and steel combination. Possibly they want
either a gold watch (like Royale, Regalia) or a steel watch (like Exacta).
Premium Watches (Rs.900-1500):
Vista (estimated sales - 0.6 million) from Timex is basically a premium watch with unconventional
looks though the range starts at Rs.445. It targets the age group 20-40. Timex that usually makes
polyamide watches entered the metal watch category to cater to an average Indian's preference for
steel. In its lower price ranges Vista aims at being a middle class daily wear watch. At higher price
ranges it targets the multiple watch owner. For women it aims being a party watch. It has been a
successful brand for Timex. HMT has innovative offerings in this range like Chandan, a sandalwood
watch. HMT's Sangam ("together") is a medium priced quartz watch.
Super Premium Watches (Rs.1500-8000):
Titans Insignia is a watch crafted by hand. Though it has international styling and quality it
contributes to only 0.3% of Titan's volume sales (about 10,000 units). This may be due to its high
price. It was launched initially in the European market with the slogan "It took six countries to make
this watch". After witnessing lukewarm reception in Europe Insignia is now making a bid for the Indian
market. Titans Slimline is a sleek, hi-tech watch and sells small units (estimated sales - 50,000) like

Insignia. Despite Slimlines limited sales Titan will probably upgrade the range. Priced above Slimline
is Titan's Chronograph that is positioned as a collector's item. Bandhan from Titan targets the
wedding gift segment. (The word "Bandhan" in Hindi means 'bond' or 'tie').
HMT's answer to Titan's super-premium varieties is its Elegance range. Elegance is a gold plated
watch and targets both men and women. HMT's Misuni is a mechanical automatic day and date
watch in the same price range. Timex's Indiglo is an electroluminiscent (night-light) watch.
Internationally it is an extremely popular model but not in India, probably owing to its unconventional
looks and high price. It is however expected to do well in future owing to greater awareness and
preference for global brands in the Indian market. Timexs Datalink is a special watch with a memory
and timer built in it. The memory allows downloading of data from a computer.
Connoiseur's Watches (Above Rs.8000) :
Titan's Tanishq and HMT's Gem range fall into this category. So do most of the Swiss watches
like Omega, Piaget, Longines, etc. These are bought more as status symbols and jewelry rather than
watches. Titan's Tanishq range initially targeted the European market with limited success. In India
also Tanishq faced resistance because Indian women do not treat watches as jewelry. Besides the
watches were made of 18 carat gold while Indians prefer 22 carat gold.
Women's Watches:
Titan's Raga is an interesting product concept that offered to give dials that match with designs on
sarees. This promise was unrealistic and Raga flopped (estimated sales - 20,000 units). Raga is now
being launched in more mellow colors and its positioning changed. Raga silver watch range also did
not fare well because Indian women find it difficult to identify jewelry with watches. HMT's Utsav
("festival") was introduced as a reply to Raga and sees itself as jewelry for self-expression. This also
did not fare well in the market. Reasons attributed to its failure are weak straps, inadequate variety in
designs and supply problems in the market. A part of HMT's Elegance range also targets women but
is priced higher. Gem range from HMT is connoisseur watches targeted as premium jewelry for
sophisticated women.
Men's Watches:
HMT's Roman is probably the only watch that addresses the men's segment. Market research
indicated that HMT was seen as a masculine brand while Titan was seen as a feminine brand. In
keeping with its masculine image HMT introduced the Roman range. This watch aimed at men who
have arrived in life. Mens watch is a unique positioning and therefore holds scope. But it failed in
the market reportedly because it lacked organizational support, adequate supplies, and innovative
designs.

Youth Watches:
Timexs Basics is aimed at age group between 15 and 20. It is priced low so as to stake claim as
the first watch. It incorporates the core values of the Timex i.e. ruggedness and durability at
affordable prices. It is probably the largest selling watch among Timex brands (estimated sales - 0.6
million units). Pace, a digital watch from HMT targets the same audience but is reportedly not faring
well. This is because digital watches though globally popular have not found favor in India.

Kid's Watches:
HMT launched Zap for kids at an attractive price of Rs.100. The brand nevertheless did not fare
well. This is probably because HMT did not promote it long enough to attract the attention. Besides
digital watches did not evoke much enthusiasm in India and Zap is a digital watch. Further in the
smuggled market digital watches are available for half the price. Timex's Gimmix targets upper middle
class kids aged between 7 and 10. Gimmix did not fare very well in the market despite sporting
cartoon characters from popular comics like Lion King and Aladdin on its dials. Dash is Titans reply
to Gimmix and Zap and its sales have reportedly overshot Titan's expectations. It is too early to judge
Dashs success because it has been launched less than a year ago. But Titan sees it as the next
winner in its stable. Further, if Titan were to successfully establish Dash it would mean a huge
clientele for repeat buying when the kids become adults.
Sports Watches:
Titans PSI 2000 is a tough sports watch with advanced features for the techno-savvy customer. It
sold rather poorly (estimated sales - 20,000 units). Initially sports watches were seen as the territory
of Timex and Titan probably did not concentrate on the segment. But given the growing consumer
interest Titan is likely to renew efforts in this segment. Titans Fastrack is a sporty watch in the
popular end stressing on trendy designs for casual wear. It sold only 700 units in 1997-98. Possible
reasons for failure are its aluminum case suspected of being fragile and aluminum itself being not
seen as very fashionable. Titan is planning a relaunch of Fastrack as a tough digital watch. Sportz is
Timex's offer in the same range. The emphasis in Sportz is on sporty looks but it is a multi-function
watch. Sportz also did not fare well because of its stiff price and probably its not too relevant features
(estimated sales - 40,000 units). For instance it was offered as a watch that could resist water
pressures upto 200 meters. Such features would be more in tune with countries with water sports
ethos.
Other Watches:
Titan's Worldtime targets export market and does not seem to have met with much success.
Vanguard's Eben watches have a Lord Ganesha (an elephant headed God who is first propitiated for
any auspicious ceremony in India) logo on the dial. They plan to have other gods and goddesses on
the dials like Durga ("Mother Goddess"). HMT has been somewhat successful in tapping the
corporate gifting segment. Typically watches are gifted by organizations to employees who have
served the company for a long period say 20 to 25 years. HMT gives special discounts and branding
facilities for such corporate buyers.
After looking at the report Mr. Shastri paused for a while. He now knew that the key to introducing
new models lay in finding novel ways of segmenting the market. He noted down the following
questions which addressed the issues he had at hand.

What are typically the methods used for segmenting markets? Which of these have already been
exploited in the watch market? Which are some of the typical segments left open?

How does one ensure that the segment chosen does not suffer from overlap with existing
segments?

How does one assess the viability of a segment?

Are there novel ways of segmenting the watch market? What are they?

Note:
Exhibit A gives the watch brands of different companies and their prices. Exhibit B gives the margins
in different price segments.

Exhibit A
The brands offered in different price segments by the three important companies namely Timex, Titan and HMT are given
below:
(Note1: Company names in the list below are mentioned in Italics.)
(Note2:
1$ = Rs 43.50)
(Note3: All brands belonging to a company listed in alphabetical order.)
BRAND

PRICE(Rs.)
(as in 1998)

HMT BRANDS
Astra

200-600

Chandan

1500

Gem

12700-19000

Elegance

2000-8000

Lalit

450-1000

Misuni

1750-2690

Nutan

660-1163

Pace

403-583

Roman

1200-3000

Sangam

1000-2000

Shakti

465

Swarna

550-600

Tennax

625-870

Utsav

900-15000

Zap

100

TIMEX BRANDS
Aqura

505-800

Basics

345-375

Datalink

2600

Gimmix

395-640

Lextra

445-740

Mariner

895

Sportz

1035

Vista

445-3990

TITAN BRANDS
Bandhan

2500-9850

Chronograph

2995

Classique

695-5000

EL(Indiglo)

2360

Exacta

495-3000

Fastrack

795-1350

Insignia

3750-12000

PSI 2000

1790-7770

Raga

1350-1990

Regalia

880-4500

Royale

880-4500

Slimline

1695-2200

Sonata

350-1400

Spectra

850-7995

Tanishq

30000-150000

MAXIMA

350

SHIVAKI

450-900

SITCO

250-600

WESTAR

525-6165

BIFORA

250-3500

BENTEX

2500-3500

FOREIGN BRANDS
OMEGA,
PIAGET,
LONGINES

10000-20 million

10

Exhibit B
SEGMENT

AVERAGE PRICE

MARGIN
(estimated)

Mass market

Rs.450

11%

Popular

Rs.750

15%

Premium

Rs.1200

18%

Super-Premium

Rs.3000

22%

Exhibit C (Figures for 1999)


Approximate population of India

960 million

Male

: Female

55 : 45

Adult

: Child (less than 16 years)

70 : 30

Urban: Rural

20 :80

Urban penetration of watches

60%

(Exhibit C adapted from Natarajan, I. (1998). Indian Market Demographics Report, Delhi: NCAER,
India.)

11