WRIST WATCH INDUSTRY

Titan & Timex

Part 1
 Présentation Outline
 History of Wrist Watch Industry / Scope of Industry

 Introduction of Titan & Timex (Background, Mission, Vision)

 Challenges (Trends) in the Industry

 PEST Analysis

 Porter’s Five Forces Analysis

 Key Success Factors (KSFs)

 Internel & External Profile Matrix (IFE & EFE)

 Critical Success Factors (CSFs)

 Strategic Group Mapping & CPM

 Financial Analysis (Exclude in Pptx, Excel Sheet Based)

 Strategies of Titan & Timex

 Introduction of Case
 Written by Professor Mohan Agrawal
 Published in Asian Journal of Management Cases 2004
 Explains the changes Indian watch industry has faced in last 30 years
 States how Tata Group launched Titan watch in 1984, Titan production
and promotion strategies, and its retailing strategy
 About Joint venture of Titan and Timex and how they Play in the Indian
industry
 Why this alliance could not live long because of difference in
positioning
 After the failure of this alliance, both Titan and Timex became
competitors and started to capture each other’s market shares
 What kind of generic, marketing and sales strategies were used by both
partners
 Watch Industry
 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 in
collaboration with Citizen (Japan)
 1981: Hyderabad Allwyn Limited entered in collaboration

with Seiko (Japan)

 1984: 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

 Watch Industry (1999)
 Indian watch industry is growing rapidly and total
market size is 40 million units
 Half of the market consist of watches costing less than
Rs. 450, those between Rs. 450 and Rs.1000
constituted another 30%, whereas only 20% market
consist of watches above Rs. 1000
 Major players of industry are Titan, Timex, HMT,
Japanese and Swiss watches
 Indian watch industry has excelled in manufacturing
and R & D but retailing and distribution is still a
question mark for industry performance
 Market has been split into low end, mass market, mid
market, premium segment
(Source: Course Pack, Page 429)
 Jewellery Market
 Size of market: Rs 75,000 crores ($19 billion)
 Urban market is about 38% of this base
 Branded jewellery is less than 5% of the overall market
 Importance of jewellery to Indian consumers
 Gold is seen as auspicious ….. an investment for
adornment
 Key players: Fragmented market (mainly retailer driven)
 Most retailers are unorganized and stand alone
 Tanishq - the first branded jewellery player (1996)
 Increased investment by industry bodies is encouraging
rapid growth of the branded jewellery market in India
 Scope of Industry
 The scope of the industry is in watch industry, personal adornment

category and in gift items

 An industry composed of in the manufacturing and retail of watches

(plastic, steel, silver and gold), jewellery, gift items and personal
accessories
 A global enterprise
 Indian watch industry is growing rapidly and total market size is 40 million
units
 Industry is moving towards high competition due to substitute products

and change in consumer lifestyles and behaviors

 Excelled in manufacturing and research and development but retailing

and distribution is still a question mark for industry performance

 Titan Industries Limited
(TIL)
 Founded in 1984 and is based in Bangalore, India

 A joint venture between the Tata group and the Tamil Nadu

Industrial Development Corporation

 Engages in the manufacture and retail of watches, jewelry, and

eyewear in India and internationally

 Investment of over US$130 million

 A 450,000 square feet state-of-the-art facility

 Today world’s sixth largest integrated watch manufacturer

 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 (Year:2010)

 Over 60 million watches sold across 30 countries

 Titan Industries Limited
(TIL)
 Provides watches under the brands of Titan Edge, Titan Raga, Nebula, Sonata,

Xylys, Fastrack, Tommy Hilfiger and Hugo Boss, Steel, Edge, Regalia, Bandhan, Flip

 Offer international quality/style at an affordable price

 Large customer base - more than 60 million consumers

 Efficient support system, integrated manufacturing facilities, strong vendor

base

 The company operates a network of approximately 560 retail stores, including

 300 World of Titan showrooms

 740 after-sales-service centers
 110 Tanishq boutiques and Zoya stores
 25 Gold Plus stores, and
 85 Titan Eye+ stores
 Titan Industries Limited
(TIL)
Vision:
To be a world class, innovative and progressive organization and to build
India‘s most desirable brands.

Mission:
To create wealth for all our stakeholders by building highly successful
businesses based on a customer-centric approach, and to contribute to
the community.

Values and Standards:

Total customer orientation, Employee appreciation, Performance culture
and teamwork, Creativity and Innovation, Passion for excellence and
Corporate Citizenship.

Competitive Advantages:
Extensive Retail outlets Network and integrating Jewelry with Wrist
watches.
(Source: http://www.titanworld.com)
 Hindustan Machine Tools
(HMT)
 Established in 1953 in technical collaboration with Citizen, Japan
 Product range includes Machine Tools, Watches, Tractors, Printing
Machines among others
 Started manufacturing Wrist Watches since 1962
 First major watch manufacturer in India and market leader till the
entry of Titan
 4 integrated manufacturing units
 More than 7 million high quality watches per annum
 Main quality offered durability and reliability
 As a market leader very few aggressive advertisement campaign
 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
 Established a strong distributor network of 10,000 distributors
and 50,000 retail outlets
(Source: http://www.indiainfoline.com)
 Timex Watches Limited
 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
 1997: Broke up with the Tata group
 Heart of the watches imported from America
 Assembled in Timex factories in Noida
 Initial understanding with Titan
 Titan keeps out of Plastic – Low Price Segment
 Timex keeps out of Metal – High Price Segment
 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
 Advertising campaign aims at focusing on power, precision
and timing
(Source:http://www.indiastudychannel.com/attachments/Projects/1764-121456-11-Watch.ppt)
 Timex Watches Limited
 Basic Objectives & Goals
 Change the mechanical watch user to a quartz watch user
 Tap the untapped
 Transition from plastic to metal
 To become market leader
 Timex Brands
 Lower price segments - Basics, Lextra, Vista
 Youthful and trendy - Aqura
 For the discerning Sportsman - Timex Sportz
 For the children - Gimmix
 Premium segment - Datalink, Indiglo
 Initially followed the Titan distribution channel
 Post 1997, set up their own showrooms
(Source: http://www.timex.com)
 Other Players – Local
Perspective
 Westar
 Almost closed down
 No Brand Equity
 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)
 Other Players– 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)

 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

 US Watch Industry
 Had some presence till 1980
 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
 Challenges (Trends) in the
Industry

 Rapid Increase in Target Audience (Increased size of urban

population/Rising percentage of young population)

 Rise of Purchasing Power (Increase in spending

power/Income levels)
 Demand Exists in Lower and Middle Segments

 Multiple Product Variations (Style, Size, Color, Material,

Trendy)
 Increase in the Quality and Use of Camera Mobile Phones

 More Number of Working Women

 Rising Aspiration Levels

 Consumption of Lifestyle Items

PEST Analysis
 Economical
 India is the 6th largest market of the world in this industry.

 As manpower is cheap in India which makes companies to minimize

cost of products.
 India economy is one of the largest economies in the world with

respect to its high growth in GDP.

 The low cost of manufacturing and base and cheap labor made an

increasing foreign investment, joint ventures, partnerships and

direct investment American, Japanese and European businesses.
 The Government was expanding ties with the US, Japan and Western

Europe; the government was promoting exports aggressively and

assisting its exporters through variety of incentives, finances and
tax concessions.
 Political
 Stability in political situation in India is encouraging the foreign

trade.

 Attracting the investors from all over the world.

 Government is providing special tax benefits to this industry and

providing the free competition environment.

 As jewelry items are being used in these products by some

companies are using it in the manufacturing of watches.

 The free atmosphere in the markets are also encourages the foreign

brands like Timex etc to operate and market their products in India.
 Social

 As mentioned in the case that India’s 65% population is living in rural areas.

 These people are have low buying power so they want durability in low cost.

 Indian consumers were not demanding in nature but they were highly price

sensitive.

 Prefer harmony and friendship over professionalism.

 There were more loyal to stores rather than brands.

 Price and familiarity were more preferred rather than qualities and services.

 They made small, frequent purchases.

 Technology
 Technology is growing at faster rate and these people are also adopting

these advancements for their betterment.

 The industry is highly technological oriented.

 A continuous and ever improving technology is the demand of the industry

 This advancement is providing the benefit to produce range of products so

that every person cannot be ignored.

 This also increases the loyalty in the consumers.

 The continuous threats form the cheap Chinese and IMFQ products has

made it more important for the companies to have more sophisticated

technology in order to make less costly and more attractive watches in the
highly price sensitive market.
 On the other hand, with the use of technology, many competitors are
getting in and competing hence benefits is going towards the end consumer.