Professional Documents
Culture Documents
1
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
2
Major Players
3
HMT
A joint venture between the Tata group and the Tamil Nadu
Industrial Development Corporation
Launched in 1984
Titan is today world’s sixth largest, integrated watch manufacturer
and India’s largest
4 factories - main watch and jewellery plants in Hosur near
Bangalore ( India’s ‘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-the-
art facility
5
Titan
6
Time Products Division
Market leader
• Only profitable watch company in India
• 50% of volume, 65% of value of organized industry
Business • 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
Large customer base - more than 60 million consumers
Financial Efficient support system - integrated manufacturing
facilities, strong vendor base (~800 strong vendor base)
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Timex
8
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
9
Segmentation
10
The Watch Market in India
(by value 06-07) Premium (> Rs 5k)
Valued at Rs 370 crores
Swiss brands: Tissot, Omega, Rolex
Mass (< Rs 400)
Fashion brands: Fossil, Calvin Klein,
Valued at Rs 300 crores 11% 13% Giordano, Esprit
Grey market, Chinese, etc.
33%
43%
Low-end (Rs 400-1000) Mid-upper (Rs 1k-5k)
Valued at Rs 938 crores
Valued at Rs 1200 crores
Titan, Citizen, Timex,
Sonata, HMT, Maxima
Swatch, Espirit
11
Volumes Growth, Driven by Low End
CAGR, % BRANDS
~35-40 mn 2700 crs
8-10
Volume of watches sold 0.22
375 crs 25-35 Tissot, Omega,
~25 mn 4.5-5.2 Rolex
~21 mn 4-7 Titan, Citizen,
850 crs
0.05 Timex, Swatch,
Luxury0.015 Espirit
3.7 17.5-20
Mid-upper 3.9
12.0 1200 crs 8-11 Sonata, HMT,
Low-end9.5 Maxima
13.5-16
Mass 7.5 9.3
300 crs 8-11 Grey mkt,
Chinese, etc.
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
Nebula
Sonata,
HMT, Titan Citizen
Maxima XYLYS
Price
500 1000 2000 4000 5000 10000 20,000 +
Timex
Espirit, Swatch Fossil
Giordano, DKNY,
Fastrack Carrera Tag Heuer,
Tommy Hilfiger, Accent Hugo Boss,
C Dior
Fashion/Sporty
The Emerging Trends
14
Rising % of Increase
Demographic Changing
young in income spending
pattern population levels pattern
Consumerization
Effect
of Urban India
Increased
size of urban
population
More Increase in Rising
Enablers number spending aspiration
of working power levels
women
Organized retail market
Consumption of lifestyle items
Outcome at USD 21.5 billion by
2010 (CAGR 31%)
Two third of Median age Urban growth
Demographic Indians are is 24 (35 in US, at 3% vs 1%
patterns below 30 yrs 41 in Japan) overall
Effect YULICS !
Liberalized
Youth growing 82 million at
Enablers population will
four times 20-34 age be 56% in 2011
faster in 2006 (41% in 2001)
48%
50% 46%
43%
45% 40%
In com e G roup in %
38%
40%
35%
30% 26%
25%
18%
20%
14%
15% 11%
9%
10% 6%
3%
5%
0%
2001-02 2005-06E 2009-10E
Year
48
50 47
40 43
45
38
40
Income G ro up in %
35
30 26
25
18
20 14
15 11
9
10 4
6
5
0
2001-02 2005-06E 2009-10E
Year
By 2009-10 lower income group falls; higher income doubles
Watch Industry in India: Where is it
heading?
19
Forces Transforming Indian Watch Industry
2. More global and local players •Exploring new
Brands ‘Titan’
• Significant increase in competition in all brand for luxury
and segments segment
‘Sonata’ Luxury end : Swiss brands
•Licensing: Tommy
Mid to upper end : Global fashion/
Japanese brands Hilfiger watches
Low end : Local/regional IMFQs, Chinese
imports
1. Shift in structure 3. Emergence of distinct
of demand consumer segments
• Volume growth • Sharply defined
driven by the consumer segments
Dramatic
low end around distinct
Transformation
• Value growth buying factors
of the Indian
driven by • More awareness of
watch market
luxury segment brands and global
trends among
affluent urban
consumers
Dominant retail 4. Emergence of new channels
presence: ‘World • New retail outlets emerging (Dept.
of Titan’ stores/malls) Sub-branding
Showrooms, • Existing outlets (MBOs) getting strategy: Raga,
smarter looking Fastrack, Nebula
TimeZones • Unorganised retail at low-end
The Road Ahead
21
The Road Ahead
22
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
• Positioning
• Advertising
• Distribution
• Branding
Future Trends
23
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
24
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
25
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
26
Indian Watch Industry – Evolution
1960: Indian Watch Industry came into being. Govt. took the decision
to set up the country’s first watch factory
1961: HMT set up India’s 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
27
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
28
Indian Watch Industry – Trends
29
Indian Watch Industry – Price
Segmentation
Segment Average Price Margin
(estimated)
Mass Market Rs 450 11%
Source: http://www.indiainfoline.com
33
HMT Ltd. - Brands
Mechanical Watches - Special Watches
Environment friendly • Freedom
• Automatic • Braille
• Hand wound: Ladies, Gents • Nurse Watches
• Shakti: Ladies, Gents • Fragrance Watch
Quartz Analog Watches
• Roman
Alarm Watches
EL Night Watches
Multi Dial Watches
Dater Watches
Plain Watches
• Elegance
Gold Line
Bracelet
Slim Line
• Tennmax
• Utsav
• Utsav Gem
• Lalit: Ladies, Gents, Pairs
• Sangam
34 • Swarna: Ladies, Gents
HMT Ltd. – Strategies
35
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
36
HMT Ltd. – Distribution
37
HMT Ltd. – Advertising
38
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
• 6th largest globally in the category of
39
“manufacturer brands”
Titan Industries Ltd. – Brands
Insignia
• Made with high-grade anti-allergenic steel, scratch-resistant
sapphire crystal and special hard gold plating
Psi2000, Technology
• Sports & Multi-functional watches
Regalia, Royale
• Magic in gold and unique futuristic material
Classique
• Elegant corporate wear
Spectra
• Combines the sturdiness of steel with the richness of gold
Exacta
• The “Everyday Watch”
Raga
• Exclusive watches for women
Fastrack
• Contemporary styles for the young
Dash!
• For young boys and girls
40
Bandhan
• Watches for him and her
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 crème 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
41
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
42
Titan Industries Ltd. – Distribution
Manufacturer – Retailer – Customer
First to go for exclusive showrooms
• Did away with retailers
• Wholeseller’s 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
43
Titan Industries Ltd. – Advertising
Targeted the typically price sensitive yet discerning Indian
customer
• “International watch you can pay for in rupees”
• “You don’t 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 don’t 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
44
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
45
Timex Watches Ltd. –
Brands
Aqura
Indiglo
Basics
Datalink
Timex Sportz
Lextra
Vista
Mariner
Gimmix
47
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
• Technologically superior multifunctional brands like
48
Datalink, Indiglo
Timex Watches Ltd.–Distribution
49
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
50
Other Players
Westar
• Almost closed down
• No Brand Equity
• Upper segment cluttered
• Lack of distribution strength
Shivaki
• Launched in 1996
• Southern and Western markets
• Fashion accessory
• In problem
Maxima
• Assembled watch
• Water proof watch – Rs 350
• Failed with the launch of lower priced Titan and HMT products
SITCO
• Analog and digital watches (branded “IQ”)
• Failed due to lack of sustained promotion and marketing
• Now planning to cut prices
Hyderabad Allwyn Ltd.
• Launched in 1981
• Sourced watch movements from Seiko
51 • Lost out due to Organizational problems (PSUs)
The Road Ahead …
More and more focus on new technology and multi-
functional 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
53
Thank you
54