titan - the real war

8/14/2019 Titan - The Real War

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A

Case Studyon

Presented byKajal Suthar Shah BhavinSanjay PatelParesh JadavDipak Vasvani


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Question 1Question 1

Describe the Key characteristics of Describe the Key characteristics of watch industry in India.watch industry in India.


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Socio-cultural characteristicSocio-cultural characteristicInitial time used as time keeping deviceInitial time used as time keeping deviceTrend changed and perceived as life style product.Trend changed and perceived as life style product.Turned as female and males daily accessory.Turned as female and males daily accessory.

OwnershipOwnershipDifferent watches for different occasionsDifferent watches for different occasions

Analog and digital watchesAnalog and digital watchesFormal and office purpose variantsFormal and office purpose variants

Political and Legal characteristicsPolitical and Legal characteristicsHeavy import duty restricts free trade of watchesHeavy import duty restricts free trade of watchesAfter WTO interference, it was liberalizedAfter WTO interference, it was liberalizedOpening of gates for MNCs to operate in india.Opening of gates for MNCs to operate in india.


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EconomicEconomicGlobalizationGlobalizationIncrease in the PPP of indian people.Increase in the PPP of indian people.Increase in the disposable incomeIncrease in the disposable income

Technological characteristicsTechnological characteristicsAnalog watchesAnalog watchesQuartz technologyQuartz technologyCAD/CAM is being usedCAD/CAM is being used


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The watch industry in IndiaThe watch industry in India

India is an under penetrated market for watchesIndia is an under penetrated market for watchesaround 27 % of Indians own a watcharound 27 % of Indians own a watch

Total estimated market as of 2005 Volume ~ 35 mnTotal estimated market as of 2005 Volume ~ 35 mnunits & Value: Rs 2328 Crs (USD 530 Mn)units & Value: Rs 2328 Crs (USD 530 Mn)

Vast proportion of the Indian market is below Rs 500.Vast proportion of the Indian market is below Rs 500.

Market has been split into: Low end, Mass market,Market has been split into: Low end, Mass market,Mid market, PremiumMid market, Premium


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CompetitorsCompetitorsTitan sells around 7 million watches annually, TimexTitan sells around 7 million watches annually, Timexsells under 1.2 million watches, Other Brands (all putsells under 1.2 million watches, Other Brands (all puttogether sell less than 0.5 million watches)together sell less than 0.5 million watches)

The Japanese Citizen, Casio, have been present, whileThe Japanese Citizen, Casio, have been present, whileSeiko has not made any significant moves in India.Seiko has not made any significant moves in India.

The Swiss Rolex, Omega, Rado, Tissot, Tag,The Swiss Rolex, Omega, Rado, Tissot, Tag,Longines, Cartier, Ebel and a host of othersLongines, Cartier, Ebel and a host of others

The fashion brands Esprit, Giordano, Tommy Hilfiger,The fashion brands Esprit, Giordano, Tommy Hilfiger,Calvin Klien, Fossil, Swatchand many more haveCalvin Klien, Fossil, Swatchand many more haverecently entered the Inidan marketrecently entered the Inidan market


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The watch market in IndiaThe watch market in India(Consumer segmentation on price basis)(Consumer segmentation on price basis)

13%

33%43%

11%

Mass (< Rs. 400)

Valued at Rs. 300 Crores

Grey market, Chinese, etc.

Premium (> Rs. 5k)

Valued at 370 Crores

Titans Insignia, Tanishq, nebula

Swiss brands: Tissot, Omega, Rolex

Fashion brands: Fossil, Calvin Klein,

Giordano, Esprit

Mid-upper (Rs. 1k - 5k)


Titan , Citizen, Timex,

Swatch, Espirit

Low-end (Rs. 400-1000)


Sonata , HMT, Maxima


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Apply five force analyses to Indian watchApply five force analyses to Indian watchIndustryIndustry


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Rivalry among competitors (high)Rivalry among competitors (high)

So many foreign player are inSo many foreign player are incompetitioncompetition

eg. Citizen, Casio Rolex, Omega, Rado,eg. Citizen, Casio Rolex, Omega, Rado,Tissot, Tag, LonginesTissot, Tag, LonginesSmuggled watches gives the strongSmuggled watches gives the strong

option to the buyers for the lower option to the buyers for the lower segment market for those who are pricesegment market for those who are pricesensitive.sensitive.

Local players also create obstaclesLocal players also create obstacles


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Threat from new entrantsThreat from new entrants(low)(low)

barriers of entrybarriers of entryDeep Rooted Brand Appeal,Deep Rooted Brand Appeal,Strong Government Regulation,Strong Government Regulation,Switching Costs,Switching Costs,


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Threat from substitute productThreat from substitute product(high)(high)

Mobile phones (close substitute)Mobile phones (close substitute)Also positioned on the base of Also positioned on the base of time keeping device (e.g.time keeping device (e.g.

Nokia1600, 1110i etc)Nokia1600, 1110i etc)Handset market is growing 45%Handset market is growing 45%while in watch market is growingwhile in watch market is growingat 27%at 27%Wall clock & computer (far Wall clock & computer (far

substitute)substitute)


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Bargaining power of supplier Bargaining power of supplier (high)(high)

High import duty backs titan toHigh import duty backs titan toget cheaper raw material,get cheaper raw material,

which increases bargainingwhich increases bargainingpower of Ebauches (Frenchpower of Ebauches (FrenchSupplier)Supplier)

Price of gold is highly cyclical,Price of gold is highly cyclical,so it increase bargaining power so it increase bargaining power of supplier of supplier


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Bargaining power of buyer Bargaining power of buyer (low)(low)

Product UniquenessProduct UniquenessLarge CustomersLarge Customers


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Identifying The Strengths,Identifying The Strengths,Weakness, Opportunity, &Weakness, Opportunity, &

Threats For T.I.L.Threats For T.I.L.


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StrengthsStren gths

Titan retained it ranking as the 'No 1 Brand' in theTitan retained it ranking as the 'No 1 Brand' in theBrand Equity Survey,Brand Equity Survey, (A&M magazine), Superbrand(A&M magazine), Superbrand2003, Brand Equity Award, Images Fashion Award2003, Brand Equity Award, Images Fashion AwardIntegrated manufacturing and World class designIntegrated manufacturing and World class design(collaborated with NID )skills(collaborated with NID )skills

Powerful distribution and customer service networkPowerful distribution and customer service networkLarge and hi-quality retail network: WORLD OFLarge and hi-quality retail network: WORLD OFTITANTITANOver the time successful positioning of their brandsOver the time successful positioning of their brands

with suitable celebrity.with suitable celebrity.Successfully identified changing consumer tastesSuccessfully identified changing consumer tastesabout watches and positioned it as lifestyle andabout watches and positioned it as lifestyle andfashion productfashion productBranded chain outlets:- 6000 outlet across the countryBranded chain outlets:- 6000 outlet across the country680 service centers680 service centers


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WeaknessesWeaknesses

Still waterproof watches are not in the portfolio of Still waterproof watches are not in the portfolio of Titan.Titan.Non availability of cheaper raw material fromNon availability of cheaper raw material fromdomestic source.domestic source.

Titan weakness is that titan has not focused onTitan weakness is that titan has not focused onlower end level in rural area which is contributinglower end level in rural area which is contributingabout @ 40 % share in Indian volumeabout @ 40 % share in Indian volume

Spurious watchesSpurious watches


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OpportunityOpportunity Branded jewellery is less than 2% of the overall marketBranded jewellery is less than 2% of the overall market Importance of jewellery to Indian consumersImportance of jewellery to Indian consumers Extend their brand name in feminine accessoriesExtend their brand name in feminine accessories Globalization and revamping of Brand India and Indian BrandsGlobalization and revamping of Brand India and Indian Brands

Huge market in the exchange businessHuge market in the exchange business Marketing of other brands under its roof with some guidelines.Marketing of other brands under its roof with some guidelines. Perceptible shift in consumer attitudesPerceptible shift in consumer attitudes Increasing penetration will drive growth of low end and mass markIncreasing penetration will drive growth of low end and mass mark

segmentssegments

Low penetration level (~27% own a watch)Low penetration level (~27% own a watch) Higher multiple ownership will drive growth of Mid-upper segmentHigher multiple ownership will drive growth of Mid-upper segment


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Expansion Opportunity for TitanExpansion Opportunity for Titan

Asia's Watch Market

1175

1625

436 200230

500

0200400600800

10001200140016001800

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Series1

Sources: www.asiamarketwatch.net
http://www.asiamarketwatch.net/http://www.asiamarketwatch.net/


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ThreatThreat

Luxury watches are highly cyclical.Luxury watches are highly cyclical.Changing trends in fashionChanging trends in fashionLiberalized import of watches in the eximLiberalized import of watches in the eximpolicy allows major international players topolicy allows major international players toenter in the high end segmententer in the high end segmentRaw material costs are said to be highRaw material costs are said to be highbecause of high import duties.because of high import duties.Unorganized PlayersUnorganized Players

Out of 28 million pieces ( 80% of these belowOut of 28 million pieces ( 80% of these belowRs 1000 ) that are sold annually, 18 millions areRs 1000 ) that are sold annually, 18 millions aresold in the unorganized sector sold in the unorganized sector


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Critical Evaluation of Titans StrategyCritical Evaluation of Titans Strategy


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The entire evaluation of the StrategiesThe entire evaluation of the Strategies

are being carried out on the basis of theare being carried out on the basis of the4Ps of marketing mix4Ps of marketing mixProductProductPricePricePlacePlacePromotionPromotion


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Entry Level Strategy - IndiaEnt ry Level Strategy - India

Technical collaboration with FrenchTechnical collaboration with FrenchEbeuchesEbeuches

Provided the raw material (Quartz) and installedProvided the raw material (Quartz) and installed

plant with capacity of 2M watches.plant with capacity of 2M watches.Introduced 70 models for different classes of Introduced 70 models for different classes of the market against 40 of HMT.the market against 40 of HMT.At initial period to attract the lower endAt initial period to attract the lower endsegment, titan underpriced the replacementsegment, titan underpriced the replacementcost for repair and battery to breakcost for repair and battery to breakpenetration of HMT in this segment.penetration of HMT in this segment.


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Product and Price StrategyProduct and Price Strate gy

Successfully identified the changing trends inSuccessfully identified the changing trends inthe lifestyle of the Indian consumer andthe lifestyle of the Indian consumer andlaunched the relevant brands over the periodlaunched the relevant brands over the periodof time.of time.Through exclusive product quality andThrough exclusive product quality andfinishing titan used the Gold and stainlessfinishing titan used the Gold and stainlessstill.still.Strong brands for each segment of theStrong brands for each segment of themarket which suite their needs and traits.market which suite their needs and traits.

For Various Age GroupFor Various Age GroupFor Various Type Of Access / OccasionsFor Various Type Of Access / OccasionsFor All Level Of Community PeopleFor All Level Of Community People


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TITAN PRODUCT PROFILE

Rs 2,475 8,375Pair watches forcouplesBandhan

Rs 5,750 8,000Super-richInsignia

Rs 6,800 7,500Sports watchespsi2000

Rs 1,800 4,300AffluentbusinessmenRegalia

Rs 1,550 4,000LadiesRaga

Rs 1,400 6,000Sophisticated multi-functional watchesTechnology

Rs 1,250 2,400Daily wearRoyale

Rs 1,100 1,450Corporate (Semi-formal)Spectra

Rs 950 2,495Corporate (Formal)Classique

Rs 700 1,550Daily wearExacta

Rs 600 1,500Corporate (Semi-formal)Fastrack

Rs 450 7,000ClocksTitan Synchrony

Rs 350 1,000Low-endSonata

Rs 295 425KidsDash!

Price Range (2002figures)SegmentBrand

Source: www.titanworld.com


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Distribution StrategyDistribution Strate gy

Titan successfully identified consumers psycheTitan successfully identified consumers psycheabout the outlets of watch as Watch Stores, titan byabout the outlets of watch as Watch Stores, titan bythe exclusive outlets for selling the brands of titanthe exclusive outlets for selling the brands of titancalled The World of Titan, changed the perceptioncalled The World of Titan, changed the perception

of consumer.of consumer.Delivery was done on day to day basis.Delivery was done on day to day basis.MIS used to intensify the distribution system sinceMIS used to intensify the distribution system since1999.1999.Titan watches are sold through over 9,000 outlets inTitan watches are sold through over 9,000 outlets inover 2,300 cities and internationally in over 30over 2,300 cities and internationally in over 30countries including the UK, Spain, Greece andcountries including the UK, Spain, Greece andcountries in the Middle East and Asia Pacificcountries in the Middle East and Asia Pacific


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Applied three level StrategyApplied three level Strategy

Product VisibleProduct VisibleAffordableAffordableAvailable at bookstores, boutiques, giftsAvailable at bookstores, boutiques, giftshopes.hopes.


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Promotional StrategyPromotion al Strategycelebrity endorsements.celebrity endorsements.

Amir Khan Titan Rising and othersAmir Khan Titan Rising and othersRani Mukharji - Titan RagaRani Mukharji - Titan Raga

Making The Product Visible (Shifted A CommodityMaking The Product Visible (Shifted A Commodity

Product To Fashionable & Impulsive Choice),Product To Fashionable & Impulsive Choice),Affordable & Available At Unconventional LocationsAffordable & Available At Unconventional LocationsHighly emphasized on the brand building activity.Highly emphasized on the brand building activity.Changed the buying behavior of consumer for aChanged the buying behavior of consumer for awatch from consumer durable mentality to impulsivewatch from consumer durable mentality to impulsive

buying by campaigns.buying by campaigns.Employed pull strategy for promotion rather thanEmployed pull strategy for promotion rather thanpush it to customer as in the case of HMT.push it to customer as in the case of HMT.


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Result of the StrategyResult of the Strate gy


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Against the Gray marketAgainst the Gray market

Tied with Timex and introducedTied with Timex and introduced250 variants under the brand250 variants under the brandname of Timex with economicalname of Timex with economicalprices.prices.Got cheaper raw material toGot cheaper raw material tofight against gray market onfight against gray market on

price factor price factor Extensive advertising,Extensive advertising,marketing and at the same timemarketing and at the same timeprovided low-priced products toprovided low-priced products to

the extent practically feasible.the extent practically feasible.


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International Strategy of TitanInternation al Strategy of Titan

EuropeEuropeEntered in Europe under its own brand nameEntered in Europe under its own brand namerather than collaborating with any local player andrather than collaborating with any local player andintroduced 4 modals in UK in 1993.introduced 4 modals in UK in 1993.Contracted with French Fashion designers toContracted with French Fashion designers todesign the watch architecture.design the watch architecture.Sold 3.5 lakh watches in UK since its entry inSold 3.5 lakh watches in UK since its entry in

Entire Europe.Entire Europe.Integrated marketing strategy employed to buildIntegrated marketing strategy employed to buildthe brand image.the brand image.


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Middle EastMiddle EastStarted export to Bahrain in 1991 just on demandStarted export to Bahrain in 1991 just on demandbasis.basis.Extended it to other middle east countriesExtended it to other middle east countriesEmployed the traditional distribution systemEmployed the traditional distribution systemConducted detailed research on the consumer Conducted detailed research on the consumer behavior behavior Used promotional schemes to make agree theUsed promotional schemes to make agree theretailers to sell Titan and Indian brandretailers to sell Titan and Indian brandAdvertising carried out considering local taste, andAdvertising carried out considering local taste, andculture.culture.


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What are the Burning issues in the case?What are the Burning issues in the case?


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WTO guidelinesWTO guidelinesIt opened flood gates of completely finishedIt opened flood gates of completely finishedwatches in indiawatches in indiaAs per report of indian commerce ministry, wristAs per report of indian commerce ministry, wristwatches in millions increased from 0.23m in 1999watches in millions increased from 0.23m in 1999

to 2.1 million in 2003-2004.to 2.1 million in 2003-2004.Due to this the average unit price decreased fromDue to this the average unit price decreased fromRs 523 to 294 indicating a steep decline in theRs 523 to 294 indicating a steep decline in theinternational prices.international prices.Increased proliferation of international brands.Increased proliferation of international brands.

Most of the brands like sonata and FastrackMost of the brands like sonata and Fastrackwatches are made from outsourced componentswatches are made from outsourced components


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Titan refuses to enter in the rural where aTitan refuses to enter in the rural where athe market exists for good quality, ruggedthe market exists for good quality, ruggedand reasonably priced watch. This isand reasonably priced watch. This isclaimed on the basis of increase in the PPPclaimed on the basis of increase in the PPPof rural India.of rural India.threat from foreign labels (threat from foreign labels ( Swiss AuthoritiesSwiss Authorities ))following the removal of quantitativefollowing the removal of quantitativerestrictions on the import of watches.restrictions on the import of watches.

Titans market share in the mass market,Titans market share in the mass market,through its Sonata brand, is only betweenthrough its Sonata brand, is only between18 to 20 per cent18 to 20 per cent


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Established Distribution channel was one bigger Established Distribution channel was one bigger issue for titan in abroad since many of them didntissue for titan in abroad since many of them didntwant to keep Indian brand and demanded six monthwant to keep Indian brand and demanded six month

creditcredit

To do international business under its own brandTo do international business under its own brandnamename

Saudi Arabia & other Golf countries, Middle EastSaudi Arabia & other Golf countries, Middle Eastcountries market demand are for costlier watch &countries market demand are for costlier watch &presently Titan has gold finished sub-brand Classic &presently Titan has gold finished sub-brand Classic &Royal (golden dial & strap watches) but having limitedRoyal (golden dial & strap watches) but having limitedrange and model collection was one important issuerange and model collection was one important issue

in international business for fulfilling the missionin international business for fulfilling the missionobjectives at short term.objectives at short term.

Government exim policy for foreign players to set upGovernment exim policy for foreign players to set upthe manufacturing plant in India, it will increase thethe manufacturing plant in India, it will increase the

dumping of finished watches.dumping of finished watches.Forex will be reet awa b forei n la ers b notForex will be reet awa b forei n la ers b not


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What Strategies T.I.L. Should Follow ToWhat Strategies T.I.L. Should Follow ToGrow Further In FutureGrow Further In Future


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Improved feedback systems online / offlineImproved feedback systems online / offline

Identifying the consumer needs / perceptions by wellIdentifying the consumer needs / perceptions by welltrained front line executive at the consumer meettrained front line executive at the consumer meetpoint i.e. trade fair point i.e. trade fair Increase the availability of economic rage of sub-Increase the availability of economic rage of sub-brand watches to selective value chainbrand watches to selective value chain

operator i.e. Aarchies, big retail outlets after closeoperator i.e. Aarchies, big retail outlets after closemarket survey & executed perfect strategy for market survey & executed perfect strategy for acquiring the new middle / law / student segment &acquiring the new middle / law / student segment &retaining the existing of them.retaining the existing of them.

Control over working capital i.e. material usage &Control over working capital i.e. material usage &store operation cost because the revenue is goingstore operation cost because the revenue is goingup but this cost is rising more then 1.5 times of rise of up but this cost is rising more then 1.5 times of rise of revenue % over each year.revenue % over each year.


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High level control on over marketing & advertisementHigh level control on over marketing & advertisementexpanse & go for optimized & innovative advtexpanse & go for optimized & innovative advtprogrammes because of averagely doubled theprogrammes because of averagely doubled theexpanse then % rise in revenue over the year 99 expanse then % rise in revenue over the year 99 04 on the base to data of 99.04 on the base to data of 99.

Company should control over higher % of dividendCompany should control over higher % of dividendpayout to shareholder in spite to reinvesting inpayout to shareholder in spite to reinvesting indesigning of new models, acquiring the newdesigning of new models, acquiring the newcustomer, reducing the financial charge @ PBITcustomer, reducing the financial charge @ PBITwhich will bring the PAT figure attractive & a strongwhich will bring the PAT figure attractive & a strongreason to retain the shareholder for a long termreason to retain the shareholder for a long termgrowth prospect.growth prospect.

Titan stores should go for lifestyle product portfolio atTitan stores should go for lifestyle product portfolio attheir store i.e. lather wallet, perfumes, selectivetheir store i.e. lather wallet, perfumes, selectivebooks & valued collection of various cultural classicalbooks & valued collection of various cultural classicalmusic collection and serving light impulsive hot drinkmusic collection and serving light impulsive hot drink

to experience the customer the leisure etcto experience the customer the leisure etc


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New Initiative by the Brand ExtensionNew Initiative by the Brand Extension

THE EYE WEAR BUSINESSTHE EYE WEAR BUSINESSStarted in 2004-05 by marketing SunglassesStarted in 2004-05 by marketing Sunglassesunder the Fastrack brandunder the Fastrack brand

Targeted the youth segmentTargeted the youth segment

Achieved a sales turnover of over Rs 12 crores inAchieved a sales turnover of over Rs 12 crores in2005-062005-06

Pilot project for Prescription Eyewear plannedPilot project for Prescription Eyewear plannedduring this year with outlets to open in Q4during this year with outlets to open in Q4


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titan - the real war

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