Wrist Watch

Industry Overview
 India is an under penetrated market for watches
27% of Indians own a watch

 Total estimated market as of 2005

Volume ~35 mn units Value: Rs 2328 crores (USD 530 Mn)

 Vast proportion of the Indian market is below Rs 500

~68% (85% by volume)

 Market has been split into low end, mass market, mid market, premium
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Major Players

HMT
 First major watch manufacturer in India and undisputed market leader till the entry of Titan  Offshoot of Indias self-reliance and import substitution concept  Main quality offered sturdiness and reliability  As a market leader very few aggressive advertisement campaign  No new advertisement drive in recent years  Still holds a small market share among the old faithful loyal  Lack of new and trendy design has led to erosion of value among the new generation

Titan
 A joint venture between the Tata group and the Tamil Nadu Industrial Development Corporation  Launched in 1984  Titan is today worlds sixth largest, integrated watch manufacturer and Indias largest  4 factories - main watch and jewellery plants in Hosur near Bangalore ( Indias Silicon valley), Watch Assembly plants at Dehradun and in Himachal Pradesh, with an ECB plant in Goa  Investment of over US$130 million. A 450,000 sq.ft. state-of-theart facility

Titan
 Leader in the watch and jewellery businesses in India
First and largest branded player in the jewellery (Tanishq) >50% share of the organized watch market Over 60 million watches sold across 30 countries

 Brands offered: Steel, Edge, Raga, Sonata, Fasttrack, Regalia, Bandhan, Sonata, Nebula, Flip  Recently Titan has taken a drive to improve its image as a maker of contemporary style and design in wrist watches  Titan is trying to offer international quality/style at an affordable price
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Time Products Division

 Market leader Business
Only profitable watch company in India 50% of volume, 65% of value of organized industry Most admired consumer durable company (A&M magazine), Superbrand 2003, Brand Equity Award (PHDCCI), Images Fashion Award Established two brands Titan and Sonata

 Enviable network
Widespread, visible and profitable retail and customer service chains (~7250 retail outlets in 1800 towns, 165 exclusive showrooms, 600 service centres) Distributed in 30 countries

Financial
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 Large customer base - more than 60 million consumers  Efficient support system - integrated manufacturing facilities, strong vendor base (~800 strong vendor base)

Timex
 The main focus is on reflecting a sporty and fashionable look for the men  In the ladies segment it is offering highly stylized bangle bracelet watch that are sleek and sophisticated  The advertising campaign aims at focusing on power, precision and timing  Used Brett Lee as brand ambassador
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Other Players
 Mainly Rado, Tommy Hilfiger and Evidenza from Longines  Tommy Hilfiger is positioned in the mid and premium segment while the other two players are in the luxury segment  Trying to catch the upmarket, urban, western-minded youth  Also offer a sense of exclusivity and style as their products are distributed through some selected outlets  Using high society and stylish brand ambassadors such as Shahrukh Khan, Aishwarya Rai, Yana Gupta, Lisa Ray
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Segmentation

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The Watch Market in India

(by value 06-07)
Mass (< Rs 400)
Valued at Rs 300 crores Grey market, Chinese, etc.

Premium (> Rs 5k)

Valued at Rs 370 crores Swiss brands: Tissot, Omega, Rolex Fashion brands: Fossil, Calvin Klein,

11%

13%

Giordano, Esprit

43%
Low-end (Rs 400-1000)
Valued at Rs 1200 crores

33%
Mid-upper (Rs 1k-5k)
Valued at Rs 938 crores

Sonata, HMT, Maxima

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Titan, Citizen, Timex,

Swatch, Espirit

Volumes Growth, Driven by Low End

~35-40 mn 2700 crs

CAGR, % BRANDS
8-10

Volume of watches sold

~25 mn ~21 mn

0.22 4.5-5.2

375 crs 850 crs

25-35 4-7

Tissot, Omega, Rolex Titan, Citizen, Timex, Swatch, Espirit

Luxury Mid-upper Low-end Mass

0.015 3.9 9.5 7.5

0.05 3.7 12.0

17.5-20 1200 crs 13.5-16 300 crs

2006-07 Value Rs crs

8-11 8-11

Sonata, HMT, Maxima Grey mkt, Chinese, etc.

9.3
2001-02

1997-98

Market implications from 01-02 to 06-07

Overall volume growth significantly driven by low-end and mass market Mid-upper category growing at 7%, largely driven by Titan

Source: IRS 95,99,01, NCAER 95,00; internal data; press clippings; interviews; market visits; annual reports

Watch Market Map

Formal/Classic
Omega, Rado, Longines Raymond Weil Tissot Titan
1000 2000

Nebula XYLYS Price

Sonata, HMT, Maxima

500

Citizen
4000 5000 10000

20,000 +

Timex

Fastrack

Espirit, Swatch Fossil Giordano, DKNY, Carrera Tommy Hilfiger, Accent

Tag Heuer, Hugo Boss, C Dior

Fashion/Sporty

The Emerging Trends

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Demographic pattern

Rising % of young population

Increase in income levels

Changing spending pattern

Effect
Increased size of urban population

Consumerization of Urban India

Enablers

More number of working women

Increase in spending power

Rising aspiration levels

Outcome

Consumption of lifestyle items

Organized retail market at USD 21.5 billion by 2010 (CAGR 31%)

Demographic patterns

Two third of Indians are below 30 yrs

Median age is 24 (35 in US, 41 in Japan)

Urban growth at 3% vs 1% overall

Effect

YULICS !

Enablers

Youth growing four times faster

82 million at 20-34 age in 2006

Liberalized population will be 56% in 2011 (41% in 2001)

Outcome

Significant new opportunity from young urban indian consumers

Urban Households
Affluent
50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0%

Upper Middle
46% 43% 40% 38%

Middle

Lower
48%

Income Group in %

26% 18% 14% 11% 6% 3% 9%

2001-02

2005-06E
Year

2009-10E

Increasing exposure of middle class creates new opportunities

The Flow of Money

Upto USD 2000 2000 to 4400 4000 to 11000 Above 11000

50 45 40 35 30 25 20 15 10 5 0

47 40 38 43

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Income Group in %

26 18 14 11 9 4 6

2001-02

2005-06E
Year

2009-10E

By 2009-10 lower income group falls; higher income doubles

Watch Industry in India: Where is it heading?

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Forces Transforming Indian Watch Industry

Brands Titan and Sonata
2. More global and local players
Significant increase in competition in all segments
Luxury end : Swiss brands Mid to upper end : Global fashion/ Japanese brands Low end : Local/regional IMFQs, Chinese imports

Exploring new brand for luxury segment Licensing: Tommy Hilfiger watches
3. Emergence of distinct consumer segments

1. Shift in structure of demand

Volume growth driven by the low end Value growth driven by luxury segment

Dramatic Transformation of the Indian watch market

Sharply defined consumer segments around distinct buying factors More awareness of brands and global trends among affluent urban consumers

Dominant retail presence: World of Titan Showrooms, TimeZones

4. Emergence of new channels

New retail outlets emerging (Dept. stores/malls) Existing outlets (MBOs) getting smarter looking Unorganised retail at low-end

Sub-branding strategy: Raga, Fastrack, Nebula

The Road Ahead

 Incorporating new functionalities in the wrist watch with the help of new technology
Spot watches which offer advanced features such as automatic time adjustment based on location, access to continually updated content such as news, traffic alerts, weather reports, stock quotes, sports scores and instant messaging. The Times Data Link watch utilizes a revolutionary new communications technology that literally zaps information from personal computer (PC) to watch. IBM Linux-based wrist watch.
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The Road Ahead

 Tapping the rural market
Huge size of the rural market. As tele-density and infrastructure of the rural India improves, it offers scope for sophisticated form of advertising and method of sales. Launch of Sonata range of watches by Titan in the rural market has met with great response from the buyers in rural and semi-urban India. Indian rural bazaar is displaying a market trend towards consumerism and demand for durable products.

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Agenda

 The Watch Industry

Evolution Global perspective

 Indian Watch Market

Evolution Trends Price segmentation

 Consumer Behaviour  Major Players

HMT Watches Ltd. Titan Industries Ltd. Timex Watches Ltd.

 Industry Analysis

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Positioning Advertising Distribution Branding

 Future Trends

The Watch Industry Evolution

 Conventional watches standard spring powered watch  Conventional watch evolved into electronic watch  Varieties:
Jewelled lever watches (complex and expensive) Pin lever watches (recent development)

 New generation watches evolved from electric watch to Tuning Fork watch and ultimately settle at Quartz Crystal electronic watch  Major players Switzerland, Japan and United States  60% Quartz, 27% Digital, 13% Mechanical
Source : Segmentation of the Indian Watch Market Y.L.R. Moorthi, IIMB
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The Watch Industry Global Perspective

 Swiss Watch Industry
Specialization in component manufacturing and watch assembling Competitive advantage mechanical watches Undisputed leaders till 70s (42% volume share and 78% value share) First electronic watch invented by Max Hetzel, a Swiss Engineer in 1954

 Japanese Watch Industry

Took advantage of the quartz and digital technology Carved out a strong position in the world watch industry Competitive Advantage:
- Brand image based on quartz technology and accuracy - Mass production which led to lower prices

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The Watch Industry Global Perspective (Contd.)

 US Watch Industry
Had some presence till 1970 Post 1970, some chip manufacturers entered as suppliers of components By 1980s most of them disappeared due to fierce competition from Japan and Hong Kong Major player is Timex

 Hong Kong Watch Industry

Entered the world watch scene in 1976 Assembly type production Japan biggest supplier of movements Competitive Advantage:
- Cheap Labour - Low Prices
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Indian Watch Industry Evolution

 1960: Indian Watch Industry came into being. Govt. took the decision to set up the countrys first watch factory  1961: HMT set up Indias first watch factory at Bangalore in collaboration with Citizen of Japan  1981: Hyderabad Allwyn Limited entered the watch industry in collaboration with Seiko of Japan  1984: The beginning of a new era - entry of Titan, the Tata TIDCO joint sector company  1990: Timex enters the Indian market in partnership with Titan, targeting the lower price segment  1997: Timex breaks away from Titan - increasing the already fierce competition
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Indian Watch Industry Evolution

(Contd.)
 Government Policies
Reserved the manufacture of straps and dials to the small scale industry Imposed restrictions on import & manufacture of ECBs

 Results
Until the mid 1980s the industry was predominantly producing mechanical watches. Total demand for watches greater than supply the gap in demand being met by smuggled watches unorganized sector
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Indian Watch Industry Trends

 Rapid increase in target audience  Rise of consumerism and purchasing power of the middle class  Bulk of the demand exists in lower and middle segments  Newer segments jewellery segment, etc.  Rise of demand of trendy watches

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Indian Watch Industry Price Segmentation

Segment Mass Market Popular Premium SuperPremium
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Average Price Rs 450 Rs 750 Rs 1200 Rs 3000

Margin (estimated) 11% 15% 18% 22%

Source : Segmentation of the Indian Watch Market Y.L.R. Moorthi, IIMB

Consumer Behaviour
 Transition from mere time keeping device with functional benefits like durability, toughness and economy to a personal wear reflecting peoples lifestyle and aspirations
Multiple ownership

 Price sensitive  Durability and utility are important aspects  Aesthetic appeal and trendy designs are very important  Brand Name continues to be an important driver in the customers mind  Availability in different segments and for different occasions makes the watch a suitable gift item
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Major Players

 HMT Watches Ltd. (34%)

Titan Industries Ltd. (39%)

Timex Watches Ltd. (23%)

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HMT Ltd.
 HMT Limited was established in 1953 in technical collaboration with M/s. Oerlikon of Switzerland  Product range includes Machine Tools, Watches, Tractors, Printing Machines among others  HMT started manufacturing Wrist Watches since 1962  Technical collaboration with Citizen, Japan  4 integrated manufacturing units  More than 7 million high quality watches/watch movements per annum  Mechanical and Quartz watches  HMT Watch manufacturing units ISO-9001 certified Source: http://www.indiainfoline.com

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HMT Ltd. - Brands

 Mechanical Watches Environment friendly
Automatic Hand wound: Ladies, Gents Shakti: Ladies, Gents Roman
Alarm Watches EL Night Watches Multi Dial Watches Dater Watches Plain Watches

Special Watches
Freedom Braille Nurse Watches Fragrance Watch

Quartz Analog Watches

Elegance
- Gold Line - Bracelet - Slim Line

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Tennmax Utsav Utsav Gem Lalit: Ladies, Gents, Pairs Sangam Swarna: Ladies, Gents

HMT Ltd. Strategies

 Targeted the global market  State-of-the-art technologies IT Infrastructure  Collaboration with ISA Quartz, France and Fraporlux, France apart from Citizen, Japan

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HMT Ltd. Positioning

 Positioning based on age, sex, competition  Teenagers
Pace

 Older customers
Astra

 The male segment

Roman

 First watch company to launch watches for children

Zap

 Utsav to compete with Titan Raga

Bracelets, Jewellery and Bangles
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HMT Ltd. Distribution

 Manufacturer Dealer Retailer Customer  Established a strong distributor network of 10,000 distributors and 50,000 retail outlets  1990: Followed Titan in introducing C&F Agents

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HMT Ltd. Advertising

 Huge early investments  Catchy slogan If you have the inclination, we have the Time  Portrayed nationalistic instincts
Timekeepers to the Nation

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Titan Industries Ltd.

 Titan Industries Ltd. set up in 1987  Joint venture of the Tata Group and TIDCO  1st factory at Hosur
Manufactured quartz analog electronic watches

 Financial and technical collaboration with Ebauches, France  1988: Estd. a component manufacturing facility  1990: Estd. a case manufacturing plant  1992: Integrated backwards to manufacture step motors  JV with EDC2
To manufacture electronic circuit blocks

 Annually markets over 7 million watches

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6th largest globally in the category of manufacturer brands

Titan Industries Ltd. Brands

 Insignia
Made with high-grade anti-allergenic steel, scratch-resistant sapphire crystal and special hard gold plating Sports & Multi-functional watches Magic in gold and unique futuristic material Elegant corporate wear Combines the sturdiness of steel with the richness of gold The Everyday Watch Exclusive watches for women Contemporary styles for the young For young boys and girls Watches for him and her

       
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Psi2000, Technology

Regalia, Royale Classique Spectra Exacta Raga Fastrack Dash! Bandhan

Titan Industries Ltd. Strategies

 Early to manufacture watches targeted at US and European markets
The Insignia Collection Also makes watches for international labels

 Roping in the crme of designers

Pierre Ludwig (Cartier) Francis Humbertdiz (Omega)

 Diversification into jewellery Tanishq  Very wide range of products in terms of looks, function and price points  Noted for their workmanship and reliability
Reputation of being excellent value for money

 The Titan Signet Club

Customer loyalty programme
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Titan Industries Ltd. Positioning

 Market Segmentation
The young and teenagers, who are looking for their first watch The low ownership segment like women Middle and upper segments of society
- Price range of Rs 500 Rs 5000

 International watch at Indian prices  A watch that builds your image  A brand which represents style, status and technology
A Good Looking Watch

 First watch company to brand its showrooms

Titania Titan watch boutiques in Bangalore TimeZone The World of Titan
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Titan Industries Ltd. Distribution

 Manufacturer Retailer Customer  First to go for exclusive showrooms
Did away with retailers Wholesellers importance reduced

 Set up a chain of service centres, with close proximity to the marketplace  Innovative planning of showrooms
Watch buying a pleasurable experience

 Extensive use of C&F agents to reduce distribution costs

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Titan Industries Ltd. Advertising

 Targeted the typically price sensitive yet discerning Indian customer
International watch you can pay for in rupees You dont need to pay in dollars, pounds or dirhams to buy a Titan watch

 Targeted the premium segment of look and fashion conscious customers

To find watches like these you dont have to go to Europe, Japan, America or a duty free shop

 Promoted the concept of a watch being the ideal gift

Next time your husband wants to buy you a saree, ask for a Titan watch instead

 The rationale behind their ads being constant bombardment if the Titan brand name  Ads are a blend of sophistication and simplicity
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Timex Watches Ltd.

 1854: Started as the Waterbury Company, in Connecticut's Naugatuck's Valley (the Switzerland of America)  1990: Tied up with Titan to launch in India  Broke up with the Tata group in '97  Heart of the watches imported from America  Assembled in Timex factories in Noida  Launched the Indiglo technology
First electroluminescent watch face in 1992

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Timex Watches Ltd. Brands

         Aqura Indiglo Basics Datalink Timex Sportz Lextra Vista Mariner Gimmix

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Source : Segmentation of the Indian Watch Market Y.L.R. Moorthi, IIMB

Timex Watches Ltd. Strategies

 Delivering quality products at affordable prices  Basic objective: Change the mechanical watch user to a quartz watch user
Tap the untapped

 Transition from plastic to metal

To become market leader

 Launched Vista brand in Rs 475 Rs 900 range

To appeal to small town customers

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Timex Watches Ltd. Positioning

 Initial understanding with Titan
Titan keeps out of Plastic High Price Segment Timex keeps out of Metal Low Price Segment

 You don't have to be rich to afford a Timex  Lower price segments

Basics, Lextra, Vista

 Youthful and trendy

Aqura

 For the discerning Sportsman

Timex Sportz

 For the children

Gimmix

 Premium segment
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Technologically superior multifunctional brands like Datalink, Indiglo

Timex Watches Ltd.Distribution

 Initially followed the Titan distribution channel  Post 97, set up their own showrooms

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Timex Watches Ltd.Advertising

 Featured sports and adventurous personalities
Rock climbing, Rafting etc.

 Exclusivity of the watch is presented by celebrity endorsements

President Bush declares his loyalty for Ironman

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Other Players
 Westar
Almost closed down No Brand Equity Upper segment cluttered Lack of distribution strength Launched in 1996 Southern and Western markets Fashion accessory In problem Assembled watch Water proof watch Rs 350 Failed with the launch of lower priced Titan and HMT products Analog and digital watches (branded IQ) Failed due to lack of sustained promotion and marketing Now planning to cut prices Launched in 1981 Sourced watch movements from Seiko Lost out due to Organizational problems (PSUs)

Shivaki

Maxima

SITCO


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Hyderabad Allwyn Ltd.

The Road Ahead

 More and more focus on new technology and multifunctional utility
Timex are the leaders in this area with watches like
- Internet Messenger - Digital Heart Rate Fitness System

 Watch consumption in India 20 units/1000 people as opposed to China 50/1000

Scope for increasing the demand of watches

 Top 23 cities: 80% of Watch market

The focus should increase on spreading the market to rural areas

 Greater price segmentation, sp. lower end

2 fold advantage: Demand, Market spread

 Greater competition from invisible sector and foreign 52 brands

Sources and Bibliography

 Product Management in India, 2nd Ed.
Ramanuj Majumdar

 Segmentation of the Indian Watch Market

Y.L.R. Moorthi, IIMB (http://www.fba.nus.edu.sg/qm/journals/acrj/IndiaWatchMa rket.pdf)

 http://www.indiainfoline.com  http://www.titanworld.com  http://www.timex.com

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Thank you

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