Wrist Watch

1
Wrist Watch
2
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

3
Major Players
4
HMT

• First major watch manufacturer in India and
  undisputed market leader till the entry of Titan
• Offshoot of Indias self-reliance and import
  substitution concept
• Main quality offered sturdiness and reliability
• As a market leader very few aggressive
  advertisement campaign
• No new advertisement drive in recent years
• Still holds a small market share among the old
  faithful loyal
• Lack of new and trendy design has led to erosion
  of value among the new generation

5
Titan

• A joint venture between the Tata group and the
  Tamil Nadu Industrial Development Corporation
• Launched in 1984
• Titan is today worlds sixth largest, integrated
  watch manufacturer and Indias largest
• 4 factories - main watch and jewellery plants in
  Hosur near Bangalore ( Indias Silicon valley),
  Watch Assembly plants at Dehradun and in Himachal
  Pradesh, with an ECB plant in Goa
• Investment of over US130 million. A 450,000
  sq.ft. state-of-the-art facility

6
Titan

• Leader in the watch and jewellery businesses in
  India
• First and largest branded player in the jewellery
  (Tanishq)
• gt50 share of the organized watch market
• Over 60 million watches sold across 30 countries
• Brands offered Steel, Edge, Raga, Sonata,
  Fasttrack, Regalia, Bandhan, Sonata, Nebula, Flip
• Recently Titan has taken a drive to improve its
  image as a maker of contemporary style and design
  in wrist watches
• Titan is trying to offer international
  quality/style at an affordable price

7
Time Products Division

• Market leader
• Only profitable watch company in India
• 50 of volume, 65 of value of organized industry
• Most admired consumer durable company (AM
  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
• Efficient support system - integrated
  manufacturing facilities, strong vendor base
  (800 strong vendor base)

Business
Financial
8
Timex

• The main focus is on reflecting a sporty and
  fashionable look for the men
• In the ladies segment it is offering highly
  stylized bangle bracelet watch that are sleek and
  sophisticated
• The advertising campaign aims at focusing on
  power, precision and timing
• Used Brett Lee as brand ambassador

9
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

10
Segmentation
11
The Watch Market in India(by value 06-07)
Premium (gt Rs 5k) Valued at Rs 370 crores Swiss
brands Tissot, Omega, Rolex Fashion brands
Fossil, Calvin Klein, Giordano, Esprit
Mass (lt Rs 400) Valued at Rs 300 crores Grey
market, Chinese, etc.
Mid-upper (Rs 1k-5k) Valued at Rs 938
crores Titan, Citizen, Timex, Swatch, Espirit
Low-end (Rs 400-1000) Valued at Rs 1200
crores Sonata, HMT, Maxima
12
Volumes Growth, Driven by Low End
CAGR,
BRANDS
35-40 mn
2700 crs
8-10

Volume of watches sold
0.22
Tissot, Omega, Rolex
25-35
375 crs
4.5-5.2
25 mn
Titan, Citizen, Timex, Swatch, Espirit
21 mn
4-7
850 crs
0.05
Luxury
0.015
3.7
17.5-20
3.9
Mid-upper
12.0
Sonata, HMT, Maxima
8-11
1200 crs
Low-end
9.5
13.5-16
9.3
7.5
Mass
8-11
300 crs
Grey mkt, Chinese, etc.

• Market implications from 01-02 to 06-07
• Overall volume growth significantly driven by
  low-end and mass market
• Mid-upper category growing at 7, largely driven
  by Titan

Source IRS 95,99,01, NCAER 95,00 internal
data press clippings interviews market visits
annual reports
13
Watch Market Map
Formal/Classic
Omega, Rado, Longines
Raymond Weil Tissot
Nebula
Titan Citizen Timex
Sonata, HMT, Maxima
XYLYS
Price
500
1000
2000
4000
5000
10000
20,000
Espirit, Swatch Fossil Giordano, DKNY,
Carrera Tommy Hilfiger, Accent
Fastrack
Tag Heuer, Hugo Boss, C Dior
Fashion/Sporty
14
The Emerging Trends
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Rising of young population
Increase in income levels
Changing spending pattern
Demographic pattern
Consumerization of Urban India
Effect
Increased size of urban population
Increase in spending power
Rising aspiration levels
More number of working women
Enablers
Consumption of lifestyle items
Organized retail market at USD 21.5 billion by
2010 (CAGR 31)
Outcome
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Two third of Indians are below 30 yrs
Median age is 24 (35 in US, 41 in Japan)
Urban growth at 3 vs 1 overall
Demographic patterns
YULICS !
Effect
Youth growing four times faster
Liberalized population will be 56 in 2011 (41
in 2001)
82 million at 20-34 age in 2006
Enablers
Significant new opportunity from young urban
indian consumers
Outcome
17
Urban Households
Increasing exposure of middle class creates new
opportunities
18
The Flow of Money
By 2009-10 lower income group falls higher
income doubles
19
Watch Industry in India Where is it heading?
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Forces Transforming Indian Watch Industry
2. More global and local players

• Exploring new brand for luxury segment
• Licensing Tommy Hilfiger watches

• 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

Brands Titan and Sonata

1. Shift in structure of demand

1. Emergence of distinct consumer segments

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

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

Dramatic Transformation of the Indian watch market
Dominant retail presence World of Titan
Showrooms, TimeZones

• 4. Emergence of new channels

Sub-branding strategy Raga, Fastrack, Nebula
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The Road Ahead

• Incorporating new functionalities in the wrist
  watch with the help of new technology
• Spot watches which offer advanced features such
  as automatic time adjustment based on location,
  access to continually updated content such as
  news, traffic alerts, weather reports, stock
  quotes, sports scores and instant messaging.
• The Times Data Link watch utilizes a
  revolutionary new communications technology that
  literally zaps information from personal computer
  (PC) to watch.
• IBM Linux-based wrist watch.

22
The Road Ahead

• Tapping the rural market
• Huge size of the rural market.
• As tele-density and infrastructure of the rural
  India improves, it offers scope for sophisticated
  form of advertising and method of sales.
• Launch of Sonata range of watches by Titan in the
  rural market has met with great response from the
  buyers in rural and semi-urban India.
• Indian rural bazaar is displaying a market trend
  towards consumerism and demand for durable
  products.

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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

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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

25
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

26
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

27
Indian Watch Industry Evolution

• 1960 Indian Watch Industry came into being.
  Govt. took the decision to set up the countrys
  first watch factory
• 1961 HMT set up Indias 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

28
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

29
Indian Watch Industry Trends

• Rapid increase in target audience
• Rise of consumerism and purchasing power of the
  middle class
• Bulk of the demand exists in lower and middle
  segments
• Newer segments jewellery segment, etc.
• Rise of demand of trendy watches

30
Indian Watch Industry Price Segmentation
Segment Average Price Margin (estimated)
Mass Market Rs 450 11
Popular Rs 750 15
Premium Rs 1200 18
Super-Premium Rs 3000 22

• Source Segmentation of the Indian Watch Market
  Y.L.R. Moorthi, IIMB

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Consumer Behaviour

• Transition from mere time keeping device with
  functional benefits like durability, toughness
  and economy to a personal wear reflecting
  peoples lifestyle and aspirations
• Multiple ownership
• Price sensitive
• Durability and utility are important aspects
• Aesthetic appeal and trendy designs are very
  important
• Brand Name continues to be an important driver in
  the customers mind
• Availability in different segments and for
  different occasions makes the watch a suitable
  gift item

32
Major Players

• HMT Watches Ltd. (34)

• Titan Industries Ltd. (39)

• Timex Watches Ltd. (23)

33
HMT Ltd.

• HMT Limited was established in 1953 in technical
  collaboration with M/s. Oerlikon of Switzerland
• Product range includes Machine Tools, Watches,
  Tractors, Printing Machines among others
• HMT started manufacturing Wrist Watches since
  1962
• Technical collaboration with Citizen, Japan
• 4 integrated manufacturing units
• More than 7 million high quality watches/watch
  movements per annum
• Mechanical and Quartz watches
• HMT Watch manufacturing units ISO-9001 certified
• Source http//www.indiainfoline.com

34
HMT Ltd. - Brands

• Mechanical Watches - Environment friendly
• Automatic
• Hand wound Ladies, Gents
• Shakti Ladies, Gents
• 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

• Special Watches
• Freedom
• Braille
• Nurse Watches
• Fragrance Watch

35
HMT Ltd. Strategies

• Targeted the global market
• State-of-the-art technologies IT Infrastructure
• Collaboration with ISA Quartz, France and
  Fraporlux, France apart from Citizen, Japan

36
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

37
HMT Ltd. Distribution

• Manufacturer Dealer Retailer Customer
• Established a strong distributor network of
  10,000 distributors and 50,000 retail outlets
• 1990 Followed Titan in introducing CF Agents

38
HMT Ltd. Advertising

• Huge early investments
• Catchy slogan If you have the inclination, we
  have the Time
• Portrayed nationalistic instincts
• Timekeepers to the Nation

39
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
  manufacturer brands

40
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
• Bandhan

41
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

42
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

43
Titan Industries Ltd. Distribution

• Manufacturer Retailer Customer
• First to go for exclusive showrooms
• Did away with retailers
• Wholesellers 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 CF agents to reduce
  distribution costs

44
Titan Industries Ltd. Advertising

• Targeted the typically price sensitive yet
  discerning Indian customer
• International watch you can pay for in rupees
• You dont 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 dont 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

45
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

46
Timex Watches Ltd. Brands

• Aqura
• Indiglo
• Basics
• Datalink
• Timex Sportz
• Lextra
• Vista
• Mariner
• Gimmix

Source Segmentation of the Indian Watch Market
Y.L.R. Moorthi, IIMB
47
Timex Watches Ltd. Strategies

• Delivering quality products at affordable prices
• Basic objective Change the mechanical watch user
  to a quartz watch user
• Tap the untapped
• Transition from plastic to metal
• To become market leader
• Launched Vista brand in Rs 475 Rs 900 range
• To appeal to small town customers

48
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 Datalink, Indiglo

49
Timex Watches Ltd.Distribution

• Initially followed the Titan distribution channel
• Post 97, set up their own showrooms

50
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

51
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.

52
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 brands

53
Sources and Bibliography

• Product Management in India, 2nd Ed.
• Ramanuj Majumdar
• Segmentation of the Indian Watch Market
• Y.L.R. Moorthi, IIMB (http//www.fba.nus.edu.sg/qm
  /journals/acrj/IndiaWatchMarket.pdf)
• http//www.indiainfoline.com
• http//www.titanworld.com
• http//www.timex.com

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Thank you