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•Kajal Suthar •Shah Bhavin •Sanjay Patel •Paresh Jadav •Dipak Vasvani
Question 1 Describe the Key characteristics of watch industry in India.
Initial time used as time keeping device Trend changed and perceived as life style product. Turned as female and male’s daily accessory.
Different watches for different occasions Analog and digital watches Formal and office purpose variants
Political and Legal characteristics
Heavy import duty restricts free trade of watches After WTO interference, it was liberalized Opening of gates for MNCs to operate in india.
Globalization Increase in the PPP of indian people. Increase in the disposable income
Analog watches Quartz technology CAD/CAM is being used
The watch industry in India
India is an under penetrated market for watches around 27 % of Indians own a watch Total estimated market as of 2005 Volume ~ 35 mn units & Value: Rs 2328 Crs (USD 530 Mn) Vast proportion of the Indian market is below Rs 500. Market has been split into: Low end, Mass market, Mid market, Premium
Titan sells around 7 million watches annually, Timex sells under 1.2 million watches, Other Brands (all put together sell less than 0.5 million watches) The Japanese – Citizen, Casio, have been present, while Seiko has not made any significant moves in India. The Swiss – Rolex, Omega, Rado, Tissot, Tag, Longines, Cartier, Ebel ………and a host of others The fashion brands – Esprit, Giordano, Tommy Hilfiger, Calvin Klien, Fossil, Swatch………and many more have recently entered the Inidan market
The watch market in India (Consumer segmentation on price basis)
Mass (< Rs. 400) Valued at Rs. 300 Crores Grey market, Chinese, etc.
Premium (> Rs. 5k) Valued at 370 Crores Titan’s Insignia, Tanishq, nebula Swiss brands: Tissot, Omega, Rolex Fashion brands: Fossil, Calvin Klein, Giordano, Esprit
Low-end (Rs. 400-1000) Valued at 1200 Crores Sonata, HMT, Maxima
Mid-upper (Rs. 1k - 5k) Valued at 938 Crores Titan, Citizen, Timex, Swatch, Espirit
Apply five force analyses to Indian watch Industry
Rivalry among competitors (high)
So many foreign player are in competition eg. Citizen, Casio Rolex, Omega, Rado, Tissot, Tag, Longines Smuggled watches gives the strong option to the buyers for the lower segment market for those who are price sensitive. Local players also create obstacles
Threat from new entrants (low)
barriers of entry Deep Rooted Brand Appeal, Strong Government Regulation, Switching Costs,
Threat from substitute product (high)
phones (close substitute) Also positioned on the base of time keeping device (e.g. Nokia1600, 1110i etc) Handset market is growing 45% while in watch market is growing at 27% Wall clock & computer (far substitute)
Bargaining power of supplier (high)
High import duty backs titan to get cheaper raw material, which increases bargaining power of Ebauches (French Supplier) Price of gold is highly cyclical, so it increase bargaining power of supplier
Bargaining power of buyer (low)
Product Uniqueness Large Customers
Identifying The Strengths, Weakness, Opportunity, & Threats For T.I.L.
Titan retained it ranking as the 'No 1 Brand' in the Brand Equity Survey, (A&M magazine), Superbrand 2003, Brand Equity Award, Images Fashion Award Integrated manufacturing and World class design (collaborated with NID )skills Powerful distribution and customer service network Large and hi-quality retail network: WORLD OF TITAN Over the time successful positioning of their brands with suitable celebrity. Successfully identified changing consumer tastes about watches and positioned it as lifestyle and fashion product Branded chain outlets:- 6000 outlet across the country 680 service centers
Still waterproof watches are not in the portfolio of Titan. Non availability of cheaper raw material from domestic source. Titan weakness is that titan has not focused on lower end level in rural area which is contributing about @ 40 % share in Indian volume
• • • • • • • • • •
Branded jewellery is less than 2% of the overall market Importance of jewellery to Indian consumers Extend their brand name in feminine accessories Globalization and revamping of “Brand India” and “Indian Brands” Huge market in the exchange business Marketing of other brands under its roof with some guidelines. Perceptible shift in consumer attitudes Increasing penetration will drive growth of low end and mass marke segments Low penetration level (~27% own a watch) Higher multiple ownership will drive growth of Mid-upper segment
Expansion Opportunity for Titan
Asia's Watch Market
1800 1600 1400 1200 1000 800 600 400 200 0 1625 1175 436 200 500 230 Series1
watches are highly cyclical. Changing trends in fashion Liberalized import of watches in the exim policy allows major international players to enter in the high end segment Raw material costs are said to be high because of high import duties. Unorganized Players
Out of 28 million pieces ( 80% of these below Rs 1000 ) that are sold annually, 18 millions are sold in the unorganized sector
Critical Evaluation of Titan’s Strategy
The entire evaluation of the Strategies are being carried out on the basis of the 4P’s of marketing mix
Product Price Place Promotion
Entry Level Strategy - India
Provided the raw material (Quartz) and installed plant with capacity of 2M watches.
Introduced 70 models for different classes of the market against 40 of HMT. At initial period to attract the lower end segment, titan underpriced the replacement cost for repair and battery to break penetration of HMT in this segment.
Product and Price Strategy
Successfully identified the changing trends in the lifestyle of the Indian consumer and launched the relevant brands over the period of time. Through exclusive product quality and finishing titan used the Gold and stainless still. Strong brands for each segment of the market which suite their needs and traits.
For Various Age Group For Various Type Of Access / Occasions For All Level Of Community People
TITAN – PRODUCT PROFILE
Brand Dash! Sonata Titan Synchrony Fastrack Exacta Classique Spectra Royale Technology Raga Regalia psi2000 Insignia Bandhan Segment Kids Low-end Clocks Corporate (Semiformal) Daily wear Corporate (Formal) Corporate (Semiformal) Daily wear Sophisticated multifunctional watches Ladies Affluent businessmen Sports watches Super-rich Pair watches for couples Price Range (2002 figures) Rs 295 – 425 Rs 350 – 1,000 Rs 450 – 7,000 Rs 600 – 1,500 Rs 700 – 1,550 Rs 950 – 2,495 Rs 1,100 – 1,450 Rs 1,250 – 2,400 Rs 1,400 – 6,000 Rs 1,550 – 4,000 Rs 1,800 – 4,300 Rs 6,800 – 7,500 Rs 5,750 – 8,000 Rs 2,475 – 8,375
Titan successfully identified consumers’ psyche about the outlets of watch as “Watch Stores”, titan by the exclusive outlets for selling the brands of titan called “The World of Titan”, changed the perception of consumer. Delivery was done on day to day basis. MIS used to intensify the distribution system since 1999. Titan watches are sold through over 9,000 outlets in over 2,300 cities and internationally in over 30 countries including the UK, Spain, Greece and countries in the Middle East and Asia Pacific
Applied three level Strategy
Visible Affordable Available at bookstores, boutiques, gifts hopes.
celebrity endorsements. Amir Khan – Titan Rising and others Rani Mukharji - Titan Raga Making The Product Visible (Shifted A Commodity Product To Fashionable & Impulsive Choice), Affordable & Available At Unconventional Locations Highly emphasized on the brand building activity. Changed the buying behavior of consumer for a watch from consumer durable mentality to impulsive buying by campaigns. Employed pull strategy for promotion rather than push it to customer as in the case of HMT.
Result of the Strategy
Against the Gray market
with Timex and introduced 250 variants under the brand name of Timex with economical prices. Got cheaper raw material to fight against gray market on price factor Extensive advertising, marketing and at the same time provided low-priced products to the extent practically feasible.
International Strategy of Titan
Entered in Europe under its own brand name rather than collaborating with any local player and introduced 4 modals in UK in 1993. Contracted with French Fashion designers to design the watch architecture. Sold 3.5 lakh watches in UK since its entry in Entire Europe. Integrated marketing strategy employed to build the brand image.
Started export to Bahrain in 1991 just on demand basis. Extended it to other middle east countries Employed the traditional distribution system Conducted detailed research on the consumer behavior Used promotional schemes to make agree the retailers to sell Titan and “Indian brand” Advertising carried out considering local taste, and culture.
What are the Burning issues in the case?
It opened flood gates of completely finished watches in india As per report of indian commerce ministry, wrist watches in millions increased from 0.23m in 1999 to 2.1 million in 2003-2004. Due to this the average unit price decreased from Rs 523 to 294 indicating a steep decline in the international prices. Increased proliferation of international brands. Most of the brands like sonata and Fastrack watches are made from outsourced components
Titan refuses to enter in the rural where a the market exists for good quality, rugged and reasonably priced watch. This is claimed on the basis of increase in the PPP of rural India. threat from foreign labels (Swiss Authorities ) following the removal of quantitative restrictions on the import of watches. Titans market share in the mass market, through its Sonata brand, is only between 18 to 20 per cent
Established Distribution channel was one bigger issue for titan in abroad since many of them didn’t want to keep Indian brand and demanded six month credit To do international business under it’s own brand name Saudi Arabia & other Golf countries, Middle East countries market demand are for costlier watch & presently Titan has gold finished sub-brand Classic & Royal (golden dial & strap watches) but having limited range and model collection was one important issue in international business for fulfilling the mission objectives at short term. Government exim policy for foreign players to set up the manufacturing plant in India, it will increase the dumping of finished watches. Forex will be preet away by foreign players by not
What Strategies T.I.L. Should Follow To Grow Further In Future
Improved feedback systems online / offline Identifying the consumer needs / perceptions by well trained front line executive at the consumer meet point i.e. trade fair Increase the availability of economic rage of subbrand watches to selective value chain operator i.e. Aarchies, big retail outlets after close market survey & executed perfect strategy for acquiring the new middle / law / student segment & retaining the existing of them. Control over working capital i.e. material usage & store operation cost… because the revenue is going up but this cost is rising more then 1.5 times of rise of revenue % over each year.
High level control on over marketing & advertisement expanse & go for optimized & innovative advt programmes because of averagely doubled the expanse then % rise in revenue over the year ’99 – ’04 on the base to data of ’99. Company should control over higher % of dividend payout to shareholder in spite to reinvesting in designing of new models, acquiring the new customer, reducing the financial charge @ PBIT which will bring the PAT figure attractive & a strong reason to retain the shareholder for a long term growth prospect. Titan stores should go for lifestyle product portfolio at their store i.e. lather wallet, perfumes, selective books & valued collection of various cultural classical music collection and serving light impulsive hot drink to experience the customer the leisure etc…
New Initiative by the Brand Extension
THE EYE WEAR BUSINESS
in 2004-05 by marketing Sunglasses under the Fastrack brand the youth segment a sales turnover of over Rs 12 crores in
project for Prescription Eyewear planned during this year with outlets to open in Q4
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