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 India’s 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 world’s sixth largest, integrated watch manufacturer

and India’s largest 4 factories - main watch and jewellery plants in Hosur near

Bangalore ( India’s ‘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 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

Business

Financial

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 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

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The Watch Market in India(by value 06-07)

13%

33%43%

11%

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

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

3.70.0150.05

8-11

8-11

12.0

9.37.5

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

4.5-5.20.22

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

Titan Citizen

Timex

Watch Market Map

500 1000 2000 4000 5000 20,000 +

Formal/Classic

Fashion/Sporty

Sonata, HMT,Maxima

Espirit, Swatch Fossil Giordano, DKNY, CarreraTommy Hilfiger, Accent

Raymond WeilTissot

Omega, Rado, Longines

Tag Heuer, Hugo Boss,C Dior

Price

Fastrack

XYLYS

10000

Nebula

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The Emerging Trends

Demographic pattern

Effect

Enablers

Outcome Consumption of lifestyle items

Consumerizationof Urban India

Rising % of young

population

Increasein income

levels

Changingspendingpattern

More number

of workingwomen

Increase in spending

power

Risingaspiration

levels

Organized retail market at USD 21.5 billion by 2010 (CAGR 31%)

Increased size of urban

population

Effect

Enablers

OutcomeSignificant new opportunity fromyoung urban indian consumers

YULICS !

Two third of Indians are

below 30 yrs

Median ageis 24 (35 in US,

41 in Japan)

Urban growth at 3% vs 1%

overall

Youth growingfour times

faster

82 million at 20-34 age

in 2006

Liberalizedpopulation will be 56% in 2011(41% in 2001)

Demographic patterns

Urban Households

3%

11%

40%

46%

6%

14%

38%

43%

9%

18%

48%

26%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Inco

me G

roup in %

2001-02 2005-06E 2009-10EYear

Affluent Upper Middle Middle Lower

Increasing exposure of middle class creates new opportunities

The Flow of Money

4740

11

4

38

43

14

6

26

48

18

9

05

101520253035404550

Inco

me G

roup in %

2001-02 2005-06E 2009-10E

Year

Upto USD 2000 2000 to 4400 4000 to 11000 Above 11000

By 2009-10 lower income group falls; higher income doubles

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Watch Industry in India: Where is it heading?

Forces Transforming Indian Watch Industry

DramaticTransformation

of the Indianwatch market

1. Shift in structure of demand

• Volume growth driven by the low end

• Value growth driven by luxury segment

Brands ‘Titan’ and

‘Sonata’

3. Emergence of distinct consumer segments

• Sharply defined consumer segments around 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

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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.

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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

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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

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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

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Indian Watch Industry – Evolution

1960: Indian Watch Industry came into being. Govt. took the decision to set up the country’s first watch factory

1961: HMT set up India’s 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

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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

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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

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Indian Watch Industry – Price Segmentation

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

Segment Average Price Margin (estimated)

Mass Market Rs 450 11%

Popular Rs 750 15%

Premium Rs 1200 18%

Super-Premium

Rs 3000 22%

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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 people’s 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 customer’s mind

Availability in different segments and for different occasions makes the watch a suitable gift item

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Major Players

HMT Watches Ltd. (34%)

• Titan Industries Ltd. – (39%)

• Timex Watches Ltd. – (23%)

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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

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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

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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

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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

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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

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HMT Ltd. – Advertising

Huge early investments

Catchy slogan “If you have the inclination, we have the Time”

Portrayed nationalistic instincts

• “Timekeepers to the Nation”

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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”

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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

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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

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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

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Titan Industries Ltd. – Distribution Manufacturer – Retailer – Customer First to go for exclusive showrooms

• Did away with retailers

• Wholeseller’s 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

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Titan Industries Ltd. – Advertising

Targeted the typically price sensitive yet discerning Indian customer• “International watch you can pay for in rupees”• “You don’t 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 don’t 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

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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

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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

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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

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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

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Timex Watches Ltd.–Distribution

Initially followed the Titan distribution channel

Post ’97, set up their own showrooms

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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

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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)

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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

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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