HINDUSTAN MACHINE TOOLS

Watch Division
Presented by:

Nilamani Das
Pranab Pegu
Prashant Jain
Vineet Shankdher

HMT : A Snapshot
Incorporated in
1953 by the
Government of
India as a
Machine Tool
manufacturing
company.
Over the years
Successful
diversified into
technology absorption
Watches, Tractors,
in all product groups
Printing Machinery,
through collaborations
Metal Forming
with world renowned
Presses, Die Casting & manufacturers &
Plastic Processing
further strengthened
Machinery, CNC
by continuous in house

Today, HMT
comprises six
subsidiaries under
the ambit of a
Holding Company,
which also
manages the
Tractors Business

HMT Watches : Profile

The manufacture of wristwatches started as part of
diversification strategy of HMT in the year 1962,
under Technical collaboration with CITIZEN Watch
Company of Japan.
HMT Limited, the first company to start watch
manufacturing in India; has incorporated "HMT
WATCHES LIMITED" as its fully owned subsidiary on
9th August 1999.
It manufactures Mechanical and Quartz Analog
watches.
HMT WATCHES LIMITED comprises of three
manufacturing units at Bangalore, Tumkur and
Ranibagh

Question 1: Do a SWOT analysis for HMT watch

division
S
T
R
E
N
G
T
H
S

Strong government support.

Vision of Pt. Jawahar Lal Nehru in 1960s.
Collaboration with CITIZEN, Japan for formal training
and technological support.
Entry barriers were imposed on the foreign brands
entering into India through FERA.
Supported its expansion in 1976.

Good brand image and market leadership due

to high quality, low price and reliability.
HMT enjoyed 71 percent of the market share in the
sales of mechanical watches and 55.22 percent
market share of the total watch production in
organized sector (as of year 1991-92).

Contd.

S
T
R
E
N
G
T
H
S

Has an established marketing network.

Contd.
S
T
R
E

Companys liquidity position has been

quite comfortable. Adequate availability
of tangible assets such as land and
buildings.

Record of good industrial relations.

T
H
S

In 1991 HMT set up a product

development center for watch design.

Contd

Its prime product category (mechanical

watches) was in the decline stage of PLC.

Weak Organizational culture: It suffers from

bad

commitment

motivational strategies, lack of team spirit and

work

habits,
of

lack

of

discipline,

manpower,

low

inadequate

low utilization of human and machine capacities.

Inadequate cost control system.

Over reliance on the production concept of

marketing and hence ignoring the marketing

concept.
Insufficient emphasis on R&D and design

Contd

HMT didnt embrace new quartz technology

to a great extent & suffered because of their

W
E

adherence to mechanical watches.

Bureaucratic and centralized decision making

inhibited HMTs ability to respond quickly with

K
N

respect to market changes.

Virtually ignored to maintain good trade
relations with retail outlets vis a vis competition

(retail margin was lower than what was provided

by the competitor)
It restricted product development to quality

development only.
Aesthetics and packaging of watches have not

Contd

T
H

Worldwide decline in the production and

demand of mechanical watches due to growing

acceptance of Quartz watches.

Significant competition from Allwyn and Titan.
Competitors wooing HMTs top managers.

It has to the threat of misuse of its brand

name by spurious operators.

Competitors successfully

exploited

lifestyle segmentation which HMT failed to.

the

Contd

unconventional

jewellery shops.
The authorized service agents (ASAs) for

E
A
T
S

Titan had started marketing its watches in

outlets

like

boutiques

and

foreign smuggled watches in the country are

also offering competition to HMT.

Contd
O

The demand for Watches is growing rapidly

both in domestic and international market.

Capitalize on attractive segments.

O
R
T

In coming years Fashion brands, luxury

watches and watches with multiple functions are

considered as the product segment with the

biggest growth.

Leveraging brand equity of HMT to products

such as sports gear, personal accessories.

E
S

Question 2: What is wrong with HMTs watch

divisions marketing strategy? What kind of corrections
do you suggest?
M
I
S
T
A
K
E
S

Product

Few Designs as compared to competitors. HMT

has only 40 odd variants of four basic designs

compared to competitor line, Titan which has 70
watches in its ranges with better looks & designs
There is less emphasis on product research and
development
HMT has not been able to be a leader in Quartz
watches segment & underestimation of this
segment
Another flaw in its product strategy was scant

Question 2: What is wrong with HMTs watch

divisions marketing strategy? What kind of corrections
do you suggest?
M
I
S

Price
HMT positioned the quartz watches as the
space age generation watches & charged high
prices for this category which means that only

the affluent middle aged consumer could afford

it. In less than a year the company had to

reduce

E
S

the

price

and

followed

lifestyle

advertising to justify the still higher price of the

quartz,

however

consumers

were

even
not

this

backfired

convinced

of

as
the

differentiation between the quartz and other

Question 2: What is wrong with HMTs watch

divisions marketing strategy? What kind of corrections
do you suggest?
M

Place
Didnt strategize its established marketing network
according to growing competition and new market trend

like downtrend of mechanical watches & the growing

market for the quartz watches.

Since retailers have enough foreign brands they were

simply not interested in HMTs home grown products as a

result it had to sell through its 13 branch offices for

Machine tool equipment.

Even when FERA was introduced HMT could take the

advantage in a limited way by offering service agencies

to about 50 watch key retailers as a way of expanding its

selling reach.
In mid 80s HMTs selective retailer policy began going
against it.

Question 2: What is wrong with HMTs watch

divisions marketing strategy? What kind of corrections
do you suggest?
Place

Some of the authorized retailers started acting as

wholesalers

without

officially

being

appointed

so.

Consequently HMT lost control of the final consumer

price and ultimately the trade.

A
K

In addition, the retailer margins provided by HMT were

2% less than what its most prominent competitor, Titan,

was offering to the retailers.

Question 2: What is wrong with HMTs watch

divisions marketing strategy? What kind of corrections
do you suggest?
Promotion

M
I
S

Though HMTs advertising was distinctive and

did cater to the lifestyle segment, it failed to
communicate the uniqueness of HMTs quartz
design vis--vis other HMT watches.

T
A

Because of centralized decision making even

the decisions on the campaigns for specific

E
S

products were delayed leading to the time lag

and responding to market changes.

Question 2: What is wrong with HMTs watch

divisions marketing strategy? What kind of corrections
do you suggest?
C
O
R
R
E
C
T
I
O
N
S

Product:
Create competitive advantage by differentiation
through technological leadership.
The products should be developed to enhance
quality and features matching customers tastes and
preferences and there by increasing buyers value.
Mid & Premium segment: In this segment HMT
should seek differentiation by providing better
designs

Question 2: What is wrong with HMTs watch

divisions marketing strategy? What kind of corrections
do you suggest?
Conduct market survey:
C
O

Involve leading market research organization along

with your sales force.

Do it periodic every six month; Involve retail-shops,

shopping centers, department stores, dealers, sales

E
C

force.
Most popular brands, trend of consumers etc.

Competition:

Competition among brands has been also getting

O
N
S

stronger, and a lot of effort to keep sales has been

required.
Watches without an appeal, watches without clear
marketing hardly attract consumers in the market
glutted with commodities.

Contd
C

Competition:

Shift to quality with new added value..

Provide consumers with a lot of information select

R
R

their watch wisely and professionally according to their

own taste..

E
C

Distribution:

Prepare retailer to meet the changing consumers

trend. Watches just displayed in showcases cannot sell. It

O
N
S

is absolutely necessary to present them together with

the background such as original story of the watch, its
functionality and benefits of after sales service.

Contd
C
O
R

Pricing:
In the lower end HMT should seek to achieve cost
advantage

by

exploiting

the

differences

in

cost

behaviour.

The pricing strategy can be to undercut main

competitor by 10%, using market penetration strategy.

C
T

Promotion:

Special focus on sales during festive time like Diwali,

Christmas along with discount offer & finance schemes.

Go for innovative and stylish ad campaign that reflects

O
N
S

the aspirational, independent and modern dimensions of

the watch collection and its target market along with
effective press campaign.

Contd
C
O
R
R
E
C
T
I
I
O
N
S

Strategy:
Under the present difficult situation HMT will have to
find out ways to activate the market and try to to create
new demands.

Question 3: In the present competitive watch market, how do you

visualize the future of HMT watch division five years from now?

TheIndian Watch Market

India is an under penetrated market for watches

27% of Indian owns a watch.

Total estimated market as of 2005 : volume 35
million units & value Rs. 2328 Crs
Market has been split into:
Mass Market ( < Rs400)
Low end (Rs 400 Rs 1000)
Mid- Upper Market ( Rs 1000 Rs 5000)
Premium (> Rs 5000)

The watch market in India (by value 200607)

Premium (> Rs. 5k)
Valued at 370 Crores

Mass (< Rs. 400)

Valued at Rs. 300 Crores
Grey market, Chinese, etc.

Swiss brands: Tissot, Omega, Role

11%

13%Fashion brands: Fossil, Calvin Klein

Giordano, Esprit

43%

33%

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

Low-end (Rs. 400-1000)

Valued at 938 Crores

Valued at 1200 Crores

Titan, Citizen, Timex,

Sonata, HMT, Maxima

Swatch, Espirit

The Competition in India

Titan sells around 7 million watches annually
Timex sells under 1.2 million watches
Other Brands (all put together sell less than 0.5
million watches)
The Japanese Citizen, Casio, have been present,
while Seiko has not made any significant moves in
India.
The Swiss Rolex, Omega, Rado, Tissot, Tag,
Longiness, Cartier, Ebel and a host of others
The fashion brands Esprit, Giordano, Tommy
Hilfiger, Calvin Klein, Fossil, Swatchand many
more have recently entered the Indian market

SEVERAL FORCES ARE TRANSFORMING THE INDIAN WATCH

INDUSTRY
2. More global and local players

1.

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
3.

Shift in structure
of demand

Emergence of
distinct consumer
segments

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

Dramatic transformation
of the Indian watch market

4. Emergence of new channels

New retail outlets emerging (Dept.

stores/malls)
Existing outlets (MBOs) getting
smarter looking
Unorganized retail at low-end

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

Contd
Poor Watch Penetration In India Is Likely To Drive
Further Growth In Volumes. Increasing penetration
will drive growth of low end and mass market
segments.
With removal of Quantitative Restriction a lot of
International brand watches entering into the Indian
market and in five year time they will only grow their
market share. It will be even more difficult for HMT
to match competition unless until HMT changes its
strategy which should match global competition.

Contd
To make it visible in the market we think the HMT
watches can be targeted in the villages of India more
aggressively where the brand awareness of HMT is
more visible.
With increasing level of income and purchasing
power people are more concerned about the looks
and beautiful designs with jewel studded watches
rather than going for simple watches as of HMTs.

Suggestions
Faster production of new models of watches for
catering to the changing needs of the customer.
Adoption of innovative and aggressive marketing
policies.
Strengthening infrastructure for R&D.
Reduce man power by adopting new technologies
and processes.
Institutional sales and sales through canteen stores
department (CSD) and e - commerce.
Enhancing customer services.
To seek collaboration with reputed international

THANK YOU