Você está na página 1de 16

This report critically analyses the wrist-watch market prevalent in India.

Due to the massive market data the report only focuses on the most important aspects of the industry.

1.0

Preface

In the modern world a wristwatch is considered as much of a status symbol as to a device to tell time. In an age when cell phones and digital pagers display tiny quartz clocks, the mechanical wristwatch has slowly become less of an object of function and more a piece of modern culture. The commissioning of the watch division of HMT in the year 1961 officially laid foundation to the Indian watch industry. The first watch model manufactured by HMT was the Janata model in the year 1962. HMT was the leader in the watch market till the Tatas formed Titan Watches in association with Tamil Nadu Industrial Development Corporation in the year 1987. Titan was the first company to launch quartz watches in India.

2.0

Executive Summary

Every brand and every company are constantly reinvigorating their business process, brand positioning and management, in order to aid them towards growth. This has created a necessity for constant need to innovate, reinvigorate, update and recalibrate. Brand positioning creates a specific place in the market for that particular brand. It reaches certain type of consumers and delivers benefits that meet the needs of several key target groups and users. A Company or brands positioning in the marketplace it operates in solely depends on how it communicates the benefits, product attributes and product offerings to its target consumers. A brand positioning strategy seeks to distance itself from competitors based on five key factors; Price Quality Product Attributes Distribution Usage occasions Recently consumerism has under gone a wide range of changes. Nowadays consumers are well informed about each product and they have a sea of information to refer to in times of need, this has paved way to a customer centric market place. This has resulted in companies under-taking brand repositioning on a regular basis as they have recognized the importance of the customers in their business structure. Recently Titan Industries Ltd. has revamped their marketing strategy incorporating a major brand positioning exercise; this has included a change in logo and tagline as well. The communication strategy has been revamped to convey its new position. This study consists of reviewing the marketing strategies of Titan watches.

A variety of data sources (both primary and secondary) have been made use in this study. The market strategy of Titan Company has been completed using a variety of webarticles, journals, books and magazines.

3.0

Why Brand Repositioning?

As marketing guru Peter Drucker once mentioned A business have two and only two basic functions: marketing and innovation. The intense competition and rivalry pressure together with the rapid environmental changes have demanded that brands continuously innovate and reinvent themselves, so that they could maintain their relevance and market position. Therefore, brand repositioning and other revitalization strategies have become a business imperative for battling brand erosion. The appeal of brand repositioning is further heightened by the rising costs and high risk associated with launching a new brand. Numerous failed attempts at brand repositioning testify to the difficulty of developing and implementing such a tactic. For example, while the soft drink brand, Mountain Dew has remained relevant to the youth market through continuous repositioning in its thirty years of existence, Levis' Jeans has been losing market share to newcomers such as The Gap, despite numerous campaigns designed to reposition the brand as trendy. The strategic importance of brand repositioning in preserving and enhancing brand equity, coupled with the mixed results of repositioning attempts, underscores the need to develop a better understanding of the dynamics of brand repositioning. Specifically, questions of whether, when and how brands should be repositioned need to be addressed.

Figure 1: Stages in Brand Strategy Development When striving towards a new position in the market, it is important to understand that consumers minds are limited. Peoples minds select what to remember and it is therefore significant to convince the consumers with great arguments. The market demand changes

rapidly and therefore repositioning can be necessary to meet these demands, newer and stronger arguments have to be established to convince them to stay as loyal customers. This validates the importance of a marketing strategy, where brand positioning is a component.

4.0

Wristwatch Industry in India


Power of Suppliers *No strong suppliers *Lack of bargaining power *Rise of Chinese and Taiwanese low-cost suppliers

Barriers to Entry *Cluttered market *Lack of differentiation

Industry Rivalry *Increased brands *Low switching costs *High strategic stakes

Threat of Substitutes *No close substitutes although mobile phones may cause a slight threat

Power of Buyers *Price sensitive *Differing preferences

Figure 2: Porters Five Forces Model 1. Supplier Power: HMT has its own fully integrated operation for production of its watches. Titan has its own production facilities for which it has invested roughly 1200 million rupees over the years, the manufacturing capacity of which is 6 million units. Also there has been a rise of low cost producers in China & Taiwan which has provided an opportunity for watch makers to outsource watches at low cost, just as Titan has done to outsource the components for Dash. Due to the large supply of watch movements available, there is little supplier power in the watch market. 2. Buyer Power

The Indian watch buyers are very price sensitive, especially in the lower end of the market. There is still a huge untapped market in India with market penetration of only 20 units per thousand people while the world average is more than 100. At the same time here are a segment of people who are willing to pay a premium for watches with good performance and with a recognized brand name. So understanding the buyers preferences is very crucial in this industry in order to gain a substantial market share. 3. Entry Barriers The Indian watch market in the recent years has shown a dramatic increase in the number of brands available in the market due to removal of quantitative restrictions. So the new entrant has to have an offering, which can be positioned and differentiated from the other players in the market. This could be either price or functional or emotional appeal. So the prime barrier for entry, in the current context, for a new entrant is to build a brand image and price competitively. 4. Threat of Substitutes There are no such substitutes to watch as a product. However, in terms of the companies offering various variations for watches such as pendant watches and jeweler watches, some sort of substitution has developed. Rich consumers prefer to purchase watches more as a fashion accessory rather than simply for its typical use. 5. Degree of Rivalry There are many companies in the Indian watch market; however, the product ranges offered by them are manifold. This makes the competition very stiff. Also at the lower end of the market it is basically the Value for Money, which differentiates the players. The strategic stakes for the producers are very high. 4.1 Major Competitors The major players in the Indian watch market include HMT, Titan and Timex. The other players include Westar, Shivaki, Maxima, SITCO. Foreign brands such as Cartier, Piaget, Omega, Tiffanys and Corrum, Gucci, Longines, Casio, Citizen, Tag Heuer and Espirit are also making an inroad into the Indian market. Titan has been consolidating its market share over the past decade. Timex watches, which entered in India with collaboration with Titan, has now independently gained substantial market share.

5.0

Company Profile---Titan

Titan Industries was established in 1984 as a joint venture between the Tata Group and the Tamil Nadu Industrial Development Corporation. The company brought about a paradigm shift in the Indian watch market, offering quartz technology with international styling, manufactured in a state-of-the-art factory at Hosur, Tamil Nadu. Leveraging its understanding of different segments in the watch market, the company launched a second independent watch brand-Sonata, as a value brand to those seeking to buy functionally styled watches at affordable prices. In addition it focused on the youth with its third brand Fastrack. It has also premium fashion watches by acquiring a license for global brands such as Tommy Hilfiger and Hugo Boss, while. It has also in its portfolio its first Swiss Made watch brand Xylys. Today, Titan Industries is India's leading manufacturer of

watches and jewellery employing 3,800 people. Titan and Tanishq are among the most admired brands in their categories. Titans watch segment is the Indias chief producer of watches and ranks fifth in the world in production of watches. Company really understands the psyche of consumer and they offered quality products in classical design with superior technology. Today the company has model for every prices segment and every market. Basically it deals with three target markets: High income group Middle income group, and Lower income group Titan alone holds 70% market share in domestic level whereas 60% in organized market. As our Marketing Objectives is to increases Market Share of the company by 5% in the coming year as well as to increase the profitability of the company by 10%. 5.1 Titan Product Portfolio---Wristwatches

Figure 3: Titan Industries-Watches The companys watch sales grew by 18.8 per cent and its income increasing from Rs2553.4 million during the second quarter of last year to Rs3034.5 million during the second quarter of this year.

5.2 SWOT Analysis Strengths *Exclusive Products Catering to local as well as the global wrist-watch market. One of worlds slimmest wrist-watch Edge. *Watch Models 14 different models with 1000+ varieties (a watch for literally everyone). *Style Titan is the pioneer in depicting the watch as a fashion accessory in India. *Exclusive guarantee/warranty deals. *Watches with multi-functional features *Distribution through wholly owned outlets in addition to other retailers. Opportunities *Seasonality India being a multi-racial, multiethnical country has a wide number of festivals, which helps boost sales. *Perception Creation Titan is in the process of creating a perception towards its Gold watches targeting them towards wedding occasions. *Exchange offer Titan offers a unique exchange offer to its loyal customers whereby, by returning the old watch the customer gets a 25% discount on his new watch. Weaknesses *Price In the mid-price segment targeted at the middle-class section of India Titan is considered expensive compared to other big competitors. *Mid-segment market share Titans market share in the mid-segment only accounts for 18%20%.

Threats *Competitors with intense local competition and the increased participation of global brands. *Premium segment erosion In the premium segment Titans market share is being eroded by global brands such as Espirit, Swatch and Citizen.

Figure 4: Titan Watches SWOT Analysis 5.3 Marketing Objectives Titan holds 70% in Domestic level and 60% share in organized sector market. The marketing objectives is to increase market share by 5% . Titan industries has registered an income of Rs.11,048.5 million compared to previous year which was Rs. 7,251.1 million.

6.0

Recommendations

6.1 Recommended Marketing Mix 6.1.1 Price To achieve the marketing objectives a change in pricing is inevitable. The main consideration in changing prices are the following. Survival o Titan prices the watches according to the features .The Exacta is a simple steel watch priced at Rs.900-1,100. However, whereas HMT prices its basic range at Rs. 550, the price of Titan is comparatively higher. Market Share

o 70% of watch sales come from the low-income segment in India. Therefore the pricing of the Sonata at Rs. 350 looks apt. At the same time Titan has priced its premium watch range at a much lower price compared to other international brands. This can be a dual edged sword for Titan. Market Skimming o Titan has introduced the premium Gold watch which none of the competitors provide. And these come in pairs which is an added advantage and also matches the Indian traditional and cultural levels where Gold is given a prominent status.

6.1.2 Product Product line: o To increase the sales, the difference in the prices of the watches should be justified by the features. Product pyramid o Portfolio of Titans product is of 3 distinct price-range that can be defined in general as Popular, Mid and Premium. At the popular segment, the emphasis is on volume sold but not on margins. At the premium segment, the emphasis is on profit margin and image but not on volume. The company should give more emphasis at the top of the pyramid as profits at the top of the pyramid is very high. This pyramid will guide the strategy of Titan.

6.1.3 Promotion Promotional pricing o Titan is in the process of opening wholly owned retail shops which ensures that the middleman inflation in prices wont affect price conscious buyers. The retailer (middlemen) buy watches for 17-18% lesser than MRP and hence they are able to get the 17% profit margin on sales. Price discount and allowances o Every year Titan comes with a price discount sale on the MRP of the watches. The allowances varies from one segment to another. Creative advertising o Titan introduces a contest on cartoon network in india.com which invites children to use their creativity and design a watch. The prize winning design will be launched as a new watch in summer 2011 collection . Type of advertising o Titan known for its precise quality has contracted Aamir Khan the Bollywood superstar known for his precise and perfect thinking to be its

brand ambassador. As for the female brand ambassador it is in talks with Katrina Kaif the latest craze among teenagers. Promotion on occasion o Titan is one of the companies which formally believe in the policy of promotion the product based on the occasions.

6.1.4 Place Keeping in mind about the young trendy and fashionable consumers, Titan distribute its product and set up world of titan in different region. The consumers life style in India, especially in urban area plays a significant role in the success of Titan. Time Zone o Titan Industries brings together the countrys leading watch brands under one roof, providing the customer with variety in brands, looks and price ranges and also efficient after-sales service. There are 1142 Time Zone stores located across 89 towns which offer its customers the complete watch shopping experience. Value Mart o These outlets sell surplus stocks of Titan watches at reduced prices Sonata Stores o Sonata stores is also an Authorized Service Centre for Sonata & Titan brands. Sonata store meet the large scale demand for the watch and also to attract customers in more. These shops had full stocks of the watch in demand whereas the others could afford to maintain only limited stock. 6.2 Recommended Brand Positioning Since its introduction, Titan has been positioned as a premium brand, providing high quality products. With its numerous sub-brands catering to different segments, the challenge that Titan faces is to create a strong brand image. It should follow different positioning strategies; these strategies can also be analyzed as given below: Attribute Positioning When the company launched its products, it was the first to bring quartz watches to the Indian market. The company successfully leveraged this to penetrate the market and gain a market share. Raga, Classique and Regalia should come under this strategy. Classique has to be positioned as elegant corporate wear that leaves a quiet, but definite impression and fusion of function and sophistication. Power dressing now has a new weapon! As Magic in gold and bicolor look, the 'Regalia' range should be communicated to represent the essence of dress-wear. Raga has to be differentiated and positioned as exclusive watches for women. The Raga and Silver Raga collection are elegant, delicate and feminine with each piece being truly unique. User Positioning Titan caters to several user groups- children (the Dash), sportspersons and adventurers (PSI4000 and Fastrack range). The Fastrack range is seen as being contemporary, sturdy and reliable. The advertising, packaging and merchandising of this range is young,

vibrant and cool (the ad line says Cool watches by Titan). The new advertisements should clearly portray this. Benefit Positioning The Fastrack Digital range offers the customer a functional watch that is also attractive. The digital watch has a techno-geek image, but Titan should seek to differentiate its offering on the basis of superior style and attractiveness. Competitor Positioning With the entry of several foreign watchmakers into the market, Titan has to counter the threat. Most of the entrants are catering to the upper end of the market Omega, Tissot, Cartier etc. Titan already has the Tanishq brand in this segment. However, it has to try to reposition this brand by increasing the price range to encourage more customers. 6.3 Campaign Titan Industries decided to revamp its flagship watch brand, Titan, with the intention of making it more youthful and relevant to the changing times. The brand, launched more than 30 years ago, has undergone a major repositioning exercise only once before-13 years ago, the second repositioning will occur when Hindi film actor Aamir Khan has been appointed brand ambassador. What follows would be the Whats Your Style? campaign, which will try to increase watch consumption per person, by suggesting the use of different watches for different occasions.

7.0

Conclusion

The marketing strategy for Titan was to re-brand their watches and to increase their sales by at least 5%. The recommendations provided above are well sufficient to ensure that they are achieved.

8.0

Appendix
The Indian watch market is today of 40 million units, out of which 60% is in the unorganized sector in which the maximum number of watches are sold are below Rs.300. Quartz watches form two third of the organized sector and the rest is split between mechanical and digital watches. Even in the organized sector, three fourth of the sales by volume comes from watches that are priced below Rs.1000. Watch is one of the consumer durables whose replacement rate is very high. The replacement rate of watch is 33.8 %( Source: India market demographics report, 1998). This is also due to the fact that the estimated scrap rate of wrist watches is 7.8%, which is applicable after 6 years (Source: India market demographics report, 1998). So, due to high scrap rate, outdated models, and the shift from the mechanical watches to the quartz watches it is causing a very high replacement demand for watches. This along with the low penetration level represents the untapped market potential for watches in India. After liberalization of Indian economy in 1992 many international players have entered the Indian Watch market posing as competitive threat to the Indian companies. Top 3 Players (as per last year) o Titan = ~Rs.7300 million o Timex=~Rs.1240 million o HMT=~Rs.150 million o Total Market=~Rs.16,200 million The world of Titan has an approximately 45% market share

The Titan Story (source: http://www.titanworld.com/titan_stories) Early 2001, when Indian consumers rated Titan ahead of all other brands as the Most Admired Brand in India across all product categories (the first ever such survey done by Brand Equity), it did not surprise people that a 13 year-old had managed to upstage many older and more well-known brands: it was expected of Titan to achieve such things, it was so natural. It was also a fitting tribute to a brand, which had not only revolutionized the Indian watch industry, but also brought in world-class benchmarks in product design, quality and retailing into India. Back in the early eighties, the Tata Group had identified the watch category as a potential consumer market for the Tatas to enter. Xerxes Desai, a Tata veteran and the then MD of Tata Press, was chosen to lead that venture. In those days of pre-liberalisation the watch market, like most consumer markets in India, was way behind the rest of the world. The technology in vogue was the reliable, but outdated "Mechanical" technology, which used the unwinding of a mechanical spring to tell time. Not only was the accuracy of time-keeping not good enough, but the bulky mechanical movement did not permit the creation of sleek products. The industry was dominated by the public sector which had brought in watch manufacturing into India, enjoyed tremendous goodwill in the market, but had not really invested in evolving itself and its consumers: styling still remained basic, choice was limited. The watch shops were narrow, dingy and typically located in the older, traditional markets of the city. You went there only to buy a watch, never to browse, never to simply check out. Visual merchandising was very much at the stage of "decoration" if any, and neither the brands nor the retailers saw it as important. The companies

themselves did not have much contact with retailers, preferring to sell through wholesalers, doing well that way. There was hardly any need for consumer contact or research. It was a sellers' market. All this affected the consumers. Watches remained a time-keeping device, so one watch was enough, thank you. Since the quality of the watch was quite good, it lasted quite a while, and the consumers did not change it for 10, 15, 20 years. And when they did change it, they did not pay a high price for the new piece because, what the hell, they were buying another time-keeping device. Xerxes Desai's vision was to dramatically alter this perception of consumers, and make Titan a fashion accessory. He knew that that was the only way that this new brand would explode the market and wrest control from the dominant HMT. So he and his team went about breaking all the rules in the category: Mechanical technology was the norm - Quartz had not really taken off in India. Titan would go against that and build its line based on quartz. Accuracy would become a selling-plank. Styling was basic - This was a constraint imposed by the technology as well the outlook of the manufacturers. Titan decided to make style a table-stake. Choice was limited - You had 200 models to pick from, that was it. Titan decided to inundate consumers with a wide choice in style, functions and price. The initial range was 350 models. Shops were dark, dingy and uninteresting - There was no importance given to presentation, and therefore no attempt made at it. Titan brought in the concept of retailing into the watch market, established a network of fine showrooms which would later become the world's largest network of exclusive watch stores. These stores not only helped Titan to gain leadership substantially, but also irrevocably altered the retail landscape of the watch market through a demonstration effect on the traditional dealers. Advertising was expenditure - Titan saw this as a vital investment. Right from Day 1, Titan invested significantly in advertising and in that process created a set of memorable and effective properties over the years. So Titan, backed by world-class quality created at a world-class plant located just off Bangalore, backed by the Tata name, was launched into the Indian market on the back of these new rules. It created waves right in the early days, mesmerized consumers, demolished competition and rode into the sunset with panache.

9.0

References

12manage. (2010). Root Cause Analysis.[Online]. Available from: http://www.12manage.com/methods_root_cause_analysis.html [Accessed on 21st November 2010] 12manage. (2010). Stages of team development.[Online]. Available from: http://www.12manage.com/methods_tuckman_stages_team_development.html [Accessed on 21st November 2010] Accounting Financial Taxation. (2009). Variance Analysis to Evaluate Marketing Effort. [Online]. Available from: http://accounting-financial-tax.com/2009/12/variance-analysisto-evaluate-marketing-effort/ [Accessed on 21st November 2010] Dillon, W.R., Madden, T. & Firtle, N. H. (1994). Marketing Research in a Research Environment. 3rd Edition. Homewood: Irwin. Elsevier. (2010). Information Systems. [Online]. Available from : http://www.elsevier.com/wps/find/journaldescription.cws_home/236/description#descript ion [Accessed on 21st November 2010] Goodale ,J.G. (1997). Improving Performance Management. [Online]. Available from: http://www.winstonbrill.com/bril001/html/article_index/articles/251300/article279_body.html [Accessed on 21st November 2010] Investopedia.(2010). Risk Management. [Online] available from: http://www.investopedia.com/terms/r/riskmanagement.asp [Accessed on 21st November 2010] Kotler, P. & Keller, K. L. (2006). Marketing Management. 12th Edition. Harlow: Prentice Hall. McNamara, C. (2010). Employee Performance Management. [Online]. Available from: http://managementhelp.org/emp_perf/emp_perf.htm [Accessed on 21st November 2010] Recklies, D (2001). The Value Chain. [Online]. Available from: http://www.themanager.org/pdf/ValueChain.PDF [Accessed on 21st November 2010] Sherratt, A., Nicholson, F., & Meek, R. (2009). CIM course book, Managing Marketing. 1st Edition. Elsevier: Oxford. Small Business Bible. (2008). Sales Team Structure. [Online]. Available from: http://www.smallbusinessbible.org/salesteamstructure.html [Accessed on 21st November 2010]

Stacey, R.D. (2003). Strategic Management and Organizational Dynamics. 4th Edition. Harlow: Prentice Hall. Survey Research Lank (2008). Average Monthly Household Income. [Online]. Available from: http://www.srl.lk/factfile/p33.php [Accessed on 21st November 2010] Value based Management.net (2010). Balance Scorecard method. [Online]. Available from: http://www.valuebasedmanagement.net/methods_balancedscorecard.html [Accessed on 21st November 2010] Value based Management.net (2010). Michael Porters Value Chain model framework. [Online]. Available from: http://www.valuebasedmanagement.net/methods_porter_value_chain.html [Accessed on 21st November 2010] Belton, V. 1986. A Comparison of the Analytic Hierarchy Process and a Simple MultiAttribute Value Function. European Journal of Operational Research 26 (1):7-21. Baldwin, C. Y. 1982. Optimal Sequential Investment When Capital is Not Readily Reversible. Journal of Finance 37 (3):763-782. http://www.titanworld.com/titan_stories [Accessed on 20th, 21st and 22nd November 2010] Note: The Harvard referencing has been created according to the Staffordshire university guidelines. Staffordshire University (2009). Harvard Referencing Examples. [Online]. Available from: http://www.staffs.ac.uk/uniservices/infoservices/library/find/references/harvard/index.ph p [Accessed on 21st November 2010]