A case study on Titan

By

Rekha Dahiya
Faculty, Marketing
DSPSR
Delhi

Introduction:-
The big question- should a company stay focused on its core competencies and competitive
advantages that made it great or should it diversify to keep up with, surpass its peers? Experts
say it is one of the trickier questions to answer. But answer lies in the gains that a company
reaps after diversification.
Corporate strategies expand the scope of operations through diversification into new businesse
Diversification into new business can reduce variations in corporate profits by expanding the
corporation's lines of business. Diversification is a form of growth strategy. Growth strategies
involve a significant increase in performance objectives (usually sales or market share) beyond
past levels of performance. Many organizations pursue one or more types of growth strategies.
Diversification leads to improved financial performance. Large firms generate cash that can be
invested in other ventures. That is, the core business sustains itself on its money making
ventures, and uses this cash flow to create new ventures that generate additional profits. One
the primary reasons is the view held by many investors and executives that "bigger is better."
Growth in sales is often used as a measure of performance. Even if profits remain stable or
decline, an increase in sales satisfies many people. The assumption is often made that if sales
increase, profits will eventually follow.
Titan industries, the watch and jewellery major is also changing its approach to its portfolio.
Titan, Rs. 3,000 crore industry is moving towards a new segment what we call the life space. T
strategy of Titan is discussed in the case study with an objective to find out and discuss its
success in enhancing shareholders' value over the years.
Case Body
The foundation of the Tata Group was laid in 1868 by Jamsetji Nusserwanji Tata He learned the
ropes of business while working in his father's banking firm and he established a trading
company in Bombay.
Tata helped pave the path to industrialization in India by seeding pioneering businesses in
sectors such as steel, energy, textiles and hospitality. The Tata Group expanded regularly into
new spheres of business. The more prominent of these ventures were Tata Chemicals (1939),
Tata Motors and Tata Industries (both 1945), Voltas (1954), Tata Tea (1962), Tata Consultancy
Services (1968) and Titan Industries (1984).
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. Titan
Company is the unquestioned leader in Indian Watch Industry. Titan is one of the most powerfu
brands in the Indian market, scoring very high on brand awareness, brand image and brand
preference.
The watch market in India recorded an approximate volume turnover of 23 million units (1998-
99). It is growing at 9% per annum. The organized sector contributes to half the volume turnov
of the industry and rest by the unorganized sector. Titan has 60% share in organized sector
Since its inception, Titan decided that it would be the shaper of the watch industry and not an
adapter. The Tatas took two decisions that paid them well as well and changed the face of Indi
watch market. They decided to manufacture only quartz (analog and digital) and not
mechanicals and they projected as fashion accessory. Titan was first in India to introduce the
style concept and was successful in projecting its watches as more than a time keeping machin
Titan initially pioneered the concept of "Gifting watches". The ads captured the essence of gifti
and along with the trendy music, easily caught the imagination of the market.
Customers who were fed up with ugly time machines welcomed the brand and Titan had a drea
run for many years.
Titan entered the watch market as a premium watch. But the unorganized sector and low price
options from HMT gave Titan serious competition. With the import duty reduced to 25% (earlie
50%) and with the import license for watch movement being easy to obtain, many smalltime
players cropped up. These small players offered competition to Titan on the price front.
Titan made a big mistake. It wanted to play the volume game. For that Titan launched another
brand Sonata. Sonata was a huge success because it was a cheap product but at the cost of th
mother brand Titan. Titan was perceived to be a premium brand but with Sonata (at that time
"Sonata from Titan") endorsed by Titan took away the premium image from the mother brand.
was a big costly mistake.
Another problem with Titan has been that it mainly operates in the mid-priced segment and
competitors accuse Titan of keeping the segment underdeveloped on account of its sheer
dominance.
Titan realizing that the market wanted something to be excited about watches and carefully
segmented the market and developed different sub brands for each segment. Sub brands like
Edge, Steel, Dash, Nebula, Classique, Royale, Fast Track, Raga, and the recently launched Wall
street . By having various products / models and sub brands, Titan was able to create freshnes
about the brand.
Titan launched Tanishq in 1995, India's largest, most desirable and fastest growing jewelry bra
in India.Diligent care and quality processes ensure that the Tanishq finish is unmatched by any
other jeweller in the country.
Tanishq challenged the age-old jeweller's word with TATA's guaranteed purity. It exploded the
market with facts about rampant impurity across India. It introduced technology-backed
challenge in a category completely governed by individual trust. Tanishq introduced innovation
like Karat meter, the only non destructive means to check the purity of gold.
Titan now is trying to be more contemporary and more relevant to the consumers by establishi
more firmly in the minds of the consumers. "Be more" the new concept of Titan is attempts to
build a larger life connect between the Titan brand and consumers.
Titan is changing its portfolio by shifting its focus from product attributes to the yearnings,
emotions, experiences and aspirations. The Titan aviator is inspired by word war IInd fighter
plane, Titan Octave by cockpit of formula one car, wwf collection by endangered species and
Titan Raga Diva by beauty and sensuousness.
The picture that is emerging with this kind of collection is of the organization that is gearing up
to leverage its strengths in manufacturing, design capability and retailing to grab a larger shar
in lifestyle market. With the success of Titan watches and jewellery segment and their recent
entry in eyewear they are more comfortable with developing lifestyle brands. Under the brand
Fastrack comprising watches and sunglasses Titan is now looking at the possibility of adding
accessories like bags and belts and so on. To make this segment more attractive, Titan is
planning to open exclusive Fastrack stores.
Eyewear is fast becoming a fashion statement and Titan is focusing on design and retail. Titan
has also entered in prescribed eyewear segment and has opened 30 stores across 12 cities. Ea
of them is positioned as a complete optical store where under one roof customer can have a
wide range of frames and lenses including some very famous global brands.
Tanshiq's makeover over the year as well is indicating the shift of Titan in life style segment.
From being a fashion brand for young people with its light weight jewellery Tanishq added
mainstream wedding jewellery to its portfolio. The association with Bollywood through movie li
Amol Palekar's Paheli and more recent Jodha Akbar has also brought the brand close to the
consumer.
The big factor that has been in Tanishq's favor is that it jewellery is now more of a lifestyle
product for urban consumers. It is no longer bought for investment purpose. The key drivers in
this sector are brand equity, design and retail experience. The Indian jewellery market is
estimated to be around Rs. 70,000 crore to Rs.80, 000 crore and organized sector a small local
players account only for 4,000 crore. So opportunity for a player like Tanshiq with strong brand
equity and first mover advantage is tremendous.
Tanshiq as a part of its expansion strategy has become global recently. It has opened a
showroom in Chicago, USA targeting the average American. US is the largest jewellery market
the world and Tanishq has an opportunity to position itself between expensive brand Tiffiny an
discounted brand Wal-Mart.
Titan is going strong on all fronts but is equally aware of changing market dynamics and its
competitors. Titan is very closely watching its closest competitor Reliance. Reliance is the only
corporate house after Titan that has entered both in the jewellery and eyewear markets.
For the year 2007-2008 of Titan's turnover of Rs 3041 crore, the jewellery business accounted
Rs. 2027 crore while watches accounted for Rs. 918 crore. This is one of the main reasons Titan
is leaning on its jewellery business.
Segment Sales (2008) Sales (2007)
Watches 918.69 783.77
Jewellery 2,028.00 1,291.96
Others 96.03 62.71
Total 3042.72 2138.44

Titan grew at 43% last year and crossed the sales of Rs. 3,000 crore. Net profit stood at Rs. 15
crore as compared to 94 crore last year. With these great figures, Titan is still going
strong………..
Sr. no. Year Net profit Net Sales*
1 2004 10.27 804.53
2 2005 24.95 1136.60
3 2006 73.62 1483.15
4 2007 94.13 2138.44
5 2008 150.27 3042.72
Net sales include watches, jewellery and others segments.
Questions
1. Titan has been a dominant player in mid price segment with its brands Titan and Sonata. Wh
were the reasons for the expansion strategy led by Titan to launch various brands in different
segments?

2. Titan diversified into jewellery business in the year 1995 as a part of its growth
strategy. Growth strategies involve a significant increase in performance objectives (usually
sales or market share) beyond past levels of performance. Did Titan's diversification into
jewellery business justify the above said statement?

3. How watches, jewellery and life space segment strategically fit in Titan's overall mission and
vision accomplishment?
Teaching Notes
Overview
Titan, a joint venture between Tamil Nadu Industrial Development Corporation (TIDCO) and
Tatas, entered the watch market in 1984. Titan changed the watch market completely by maki
quartz and projecting its watches as a fashion accessory. Titan Company is the unquestioned
leader in Indian Watch Industry. Titan felt the need of expansion and diversification due to
growing competition and launched various sub brands in watches and diversified in to jewellery
segment with its branded jewellery Tanishq in 1994.
Diversification in the jewellery segment has been a fruitful investment which has been reflecte
in the turnover of the company over the years. This is one of the reasons Titan is leaning on its
jewellery business. Recently Titan has shifted its focus from the core business to a new segmen
called life space. The company during the course of diversification and expansion managed
reorganization of brands, products improvement, heightened competition, reallocation of
resources according to the revised priorities of businesses.
Management issues covered:-
• Strategic planning

• Managing risk across industries

• Impact of diversification and expansion on financial performance

• Brand reorganization to exploit financial resources and managerial capabilities.

Application
The study covers various management issues as discussed above. The case is well suited for
management students who have some practical experience in handling some of the
management aspects in large organization.
Objectives of the case:-
• To develop strategic plan for the change and managing it to the desired conclusion.

• To make a student understand the issues related to diversification.

• To understand and for see a need of change in the business strategy.

• To study the impact of diversification on the financial performance of a company

Rekha Dahiya
Faculty, Marketing
DSPSR
Delhi

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