Wrist Watch

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
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Major Players

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

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-theart facility
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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
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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 (A&M magazine), Superbrand 2003, Brand Equity Award (PHDCCI), Images Fashion Award Established two brands Titan and Sonata

Business

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

Financial
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Large customer base - more than 60 million consumers Efficient support system - integrated manufacturing facilities, strong vendor base (~800 strong vendor base)

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
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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
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Segmentation

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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,

11%

13%

Giordano, Esprit

43%
Low-end (Rs 400-1000)
Valued at Rs 1200 crores

33%
Mid-upper (Rs 1k-5k)
Valued at Rs 938 crores

Sonata, HMT, Maxima

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Titan, Citizen, Timex,

Swatch, Espirit

Volumes Growth, Driven by Low End

~35-40 mn 2700 crs

CAGR, % BRANDS
8-10

Volume of watches sold

~25 mn

0.22 4.5-5.2

375 crs 850 crs

25-35 4-7

Tissot, Omega, Rolex Titan, Citizen, Timex, Swatch, Espirit

~21 mn

Luxury Mid-upper

0.015 3.9 9.5 7.5

0.05 3.7 12.0

17.5-20

Low-end
Mass

1200 crs
13.5-16 300 crs
2006-07 Value Rs crs

8-11

Sonata, HMT, Maxima Grey mkt, Chinese, etc.

9.3
2001-02

8-11

1997-98

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

Watch Market Map

Formal/Classic
Raymond Weil Tissot Titan
1000 2000

Omega, Rado, Longines

Sonata, HMT, Maxima

500

Nebula

Citizen
4000 5000 10000

XYLYS
Price
20,000 +

Timex

Fastrack

Espirit, Swatch Fossil Giordano, DKNY, Carrera Tommy Hilfiger, Accent

Tag Heuer, Hugo Boss, C Dior

Fashion/Sporty

The Emerging Trends

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Demographic pattern

Rising % of young population

Increase in income levels

Changing spending pattern

Effect
Increased size of urban population

Consumerization of Urban India

Increase in spending power Rising aspiration levels

Enablers

More number of working women

Outcome

Consumption of lifestyle items

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

Demographic patterns

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

Effect

YULICS !

Enablers

Youth growing four times faster

82 million at 20-34 age in 2006

Liberalized population will be 56% in 2011 (41% in 2001)

Outcome

Significant new opportunity from young urban indian consumers

Urban Households
Affluent
50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0%

Upper Middle
46% 40% 43% 38%

Middle

Lower
48%

Income Group in %

26% 18% 11% 3% 6% 14% 9%

2001-02

2005-06E
Year

2009-10E

Increasing exposure of middle class creates new opportunities

The Flow of Money

Upto USD 2000 2000 to 4400 4000 to 11000
48 40 38 43

Above 11000

50 45 40 35 30 25 20 15 10 5 0

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Income Group in %

26 18 9 4 6

14 11

2001-02

2005-06E
Year

2009-10E

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

Watch Industry in India: Where is it heading?

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Forces Transforming Indian Watch Industry

Brands Titan and Sonata
2. More global and local players
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

Exploring new brand for luxury segment Licensing: Tommy Hilfiger watches
3. Emergence of distinct consumer segments

1. Shift in structure of demand

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

Dramatic Transformation of the Indian watch market

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

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

Sub-branding strategy: Raga, Fastrack, Nebula

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

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Positioning Advertising Distribution Branding

Future Trends

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 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
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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

Segment Mass Market Popular Premium Average Price Rs 450 Rs 750 Rs 1200 Margin (estimated) 11% 15% 18%

SuperPremium
30

Rs 3000

22%

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

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
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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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HMT Ltd. - Brands

Mechanical Watches Environment friendly
Automatic Hand wound: Ladies, Gents Shakti: Ladies, Gents Roman
Alarm Watches EL Night Watches Multi Dial Watches Dater Watches Plain Watches

Special Watches
Freedom Braille Nurse Watches Fragrance Watch

Quartz Analog Watches

Elegance
- Gold Line - Bracelet - Slim Line

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Tennmax Utsav Utsav Gem Lalit: Ladies, Gents, Pairs Sangam Swarna: Ladies, Gents

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

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6th largest globally in the category of manufacturer brands

Titan Industries Ltd. Brands

Insignia
Made with high-grade anti-allergenic steel, scratch-resistant sapphire crystal and special hard gold plating Sports & Multi-functional watches Magic in gold and unique futuristic material Elegant corporate wear

Psi2000, Technology

Regalia, Royale

Classique Spectra

Combines the sturdiness of steel with the richness of gold

The Everyday Watch Exclusive watches for women Contemporary styles for the young For young boys and girls

Exacta Raga

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Fastrack

Dash! Bandhan
Watches for him and her

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
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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 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

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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 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
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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

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

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
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Technologically superior multifunctional brands like Datalink, Indiglo

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 Launched in 1996 Southern and Western markets Fashion accessory In problem Assembled watch Water proof watch Rs 350 Failed with the launch of lower priced Titan and HMT products Analog and digital watches (branded IQ) Failed due to lack of sustained promotion and marketing Now planning to cut prices Launched in 1981 Sourced watch movements from Seiko Lost out due to Organizational problems (PSUs)

Shivaki

Maxima

SITCO

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Hyderabad Allwyn Ltd.

The Road Ahead

More and more focus on new technology and multifunctional 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 52 brands

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/IndiaWatchMa rket.pdf)

http://www.indiainfoline.com http://www.titanworld.com http://www.timex.com

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Thank you

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