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 US$130 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)

• >50% share of the organized watch market

• Over 60million 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 anaffordable price

7. Time Products Division BusinessFinancial

• Market leader

• • Only profitable watch company in India

• • 50% of volume, 65% of value of organized industry

• • 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

• Efficient support system - integrated manufacturing facilities, strong vendor base ( ~800 strong vendor base)

8. Timex

The main focus is on reflecting asportyand fashionablelook for the men

In theladies segment it is offeringhighly stylized bangle bracelet watch that are sleek and sophisticated

The advertising campaign aims at focusing onpower, 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 tocatch 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) Mass (< Rs 400) Valued at Rs 300 crores Grey market, Chinese, etc. Premium (> Rs 5k) Valued at Rs 370 crores Swiss brands: Tissot, Omega, Rolex Fashion brands: Fossil, Calvin Klein,Giordano, Esprit 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 Volume of watches sold CAGR, % 4-7 Source:IRS 95,99,01, NCAER 95,00; internal data; press clippings; interviews; market visits; annual reports 25-35 3.7 0.015 0.05 8-11 8-11 12.0 9.3 7.5 Mid-upper Luxury Low-end Mass

• 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

9.5 3.9 13.5-16 17.5-20 4.5-5.2 0.22 8-10 ~21 mn ~25 mn ~35-40 mn 300 crs 1200 crs 850 crs 375 crs 2700 crs Tissot, Omega, Rolex Titan, Citizen, Timex, Swatch, Espirit Sonata, HMT, Maxima Grey mkt,Chinese, etc. BRANDS 13. Titan Citizen Timex Watch Market Map 500 1000 2000 4000 5000 20,000 + Formal/Classic Fashion/Sporty Sonata,HMT, Maxima Espirit, SwatchFossilGiordano,DKNY,Carrera Tommy Hilfiger, Accent Raymond Weil Tissot Omega, Rado, Longines Tag Heuer, Hugo Boss, C Dior Price Fastrack XYLYS 10000 Nebula 14. The Emerging Trends 15. Demographic patternEffect Enablers Outcome Consumption of lifestyle items Consumerization of Urban India Rising % of youngpopulation Increase in income levels Changing spending pattern Morenumberof working women Increase inspending power Rising aspiration levels Organized retail market at USD 21.5 billion by 2010 (CAGR 31%) Increasedsize ofurban population 16. Effect Enablers Outcome Significant new opportunity from young urban indian consumers YULICS ! Two third ofIndians are below 30 yrs Median age is 24 (35 in US,41 in Japan) Urban growthat 3% vs 1% overall Youth growing four times faster82 million at20-34 age in 2006 Liberalized population willbe 56% in 2011 (41% in 2001) Demographic patterns 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? 20. Forces Transforming Indian Watch Industry Dramatic Transformation of the Indian watch market

Shift in structure of demand

• Volume growth driven by the low end

• Value growth driven by luxury segment

Brands Titan and Sonata

Emergence of distinct consumer segments

• Sharply defined consumer segmentsaround distinct buying factors

• More awareness of brands and global trends among affluent urban consumers

Sub-branding strategy: Raga, Fastrack, Nebula

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

2. More global and local players Dominant retail presence: World of Titan Showrooms, TimeZones

4.Emergence of new channels

• New retail outlets emerging (Dept. stores/malls)

• Existing outlets (MBOs) getting smarter looking

• Unorganised retail at low-end

21. 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.

23. 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

24. 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

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

22% Rs 3000 Super-Premium 18% Rs 1200 Premium 15% Rs 750 Popular 11% Rs 450 Mass Market Margin (estimated) Average Price Segment 31. 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.

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

• Sangam

• Swarna: Ladies, Gents

HMT Ltd. - Brands

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 C&F 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

• Watches for him and her

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 crme 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 C&F 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.

• Launched in 1981

• Sourced watch movements from Seiko

• Lost out due to Organizational problems (PSUs)

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, 2 ndEd.

• 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

54. Thank you