Download - re positioning of HMT
HINDUSTAN MACHINE TOOLS Watch Division
Presented by:
Nilamani DasPranab PeguPrashant Jain
Vineet Shankdher
HMT : A Snapshot
Incorporated in 1953 by the Government of India as a Machine Tool manufacturing company.
Over the years diversified into Watches, Tractors, Printing Machinery, Metal Forming Presses, Die Casting & Plastic Processing Machinery, CNC Systems & Bearings.
Successful technology absorption in all product groups through collaborations with world renowned manufacturers & further strengthened by continuous in house R&D.
Today, HMT comprises six subsidiaries under the ambit of a Holding Company, which also manages the Tractors Business directly
HMT Watches : Profile
The manufacture of wristwatches started as part of diversification strategy of HMT in the year 1962, under Technical collaboration with CITIZEN Watch Company of Japan.
HMT Limited, the first company to start watch manufacturing in India; has incorporated "HMT WATCHES LIMITED" as its fully owned subsidiary on 9th August 1999.
It manufactures Mechanical and Quartz Analog watches.
HMT WATCHES LIMITED comprises of three manufacturing units at Bangalore, Tumkur and Ranibagh
All its manufacturing units have obtained the ISO 9001 certification
Question 1: Do a SWOT analysis for HMT watch division
Strong government support. Vision of Pt. Jawahar Lal Nehru in 1960’s. Collaboration with CITIZEN, Japan for formal training
and technological support. Entry barriers were imposed on the foreign brands
entering into India through FERA. Supported its expansion in 1976.
Good brand image and market leadership due to high quality, low price and reliability. HMT enjoyed 71 percent of the market share in the
sales of mechanical watches and 55.22 percent market share of the total watch production in organized sector (as of year 1991-92).
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Has an established marketing network. S
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Company’s liquidity position has been quite comfortable. Adequate availability of tangible assets such as land and buildings.
Record of good industrial relations.
In 1991 HMT set up a product development center for watch design.
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Its prime product category (mechanical
watches) was in the decline stage of PLC. Weak Organizational culture: It suffers from
bad work habits, lack of discipline, low
commitment of manpower, inadequate
motivational strategies, lack of team spirit and
low utilization of human and machine
capacities. Inadequate cost control system. Over reliance on the production concept of
marketing and hence ignoring the marketing
concept. Insufficient emphasis on R&D and design
engineering.
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to a great extent & suffered because of their
adherence to mechanical watches. Bureaucratic and centralized decision making
inhibited HMT’s ability to respond quickly with
respect to market changes. Virtually ignored to maintain good trade
relations with retail outlets vis a vis
competition (retail margin was lower than what
was provided by the competitor) It restricted product development to quality
development only. Aesthetics and packaging of watches have not
been duly attended to.
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Worldwide decline in the production and
demand of mechanical watches due to growing
acceptance of Quartz watches. Significant competition from Allwyn and Titan.
Competitors wooing HMT’s top managers. It has to the threat of misuse of its brand
name by spurious operators. Competitors successfully exploited the
lifestyle segmentation which HMT failed to.
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Titan had started marketing its watches in
unconventional outlets like boutiques and
jewellery shops. The authorized service agents (ASAs) for
foreign smuggled watches in the country are
also offering competition to HMT.
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The demand for Watches is growing rapidly
both in domestic and international market.
Capitalize on attractive segments.
In coming years Fashion brands, luxury
watches and watches with multiple functions
are considered as the product segment with
the biggest growth.
Leveraging brand equity of HMT to products
such as sports gear, personal accessories.
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Question 2: What is wrong with HMT’s watch division’s marketing strategy? What kind of corrections do you suggest?
Product Few Designs as compared to competitors. HMT
has only 40 odd variants of four basic designs
compared to competitor line, Titan which has 70
watches in its ranges with better looks &
designs There is less emphasis on product research and
development HMT has not been able to be a leader in Quartz
watches segment & underestimation of this
segment Another flaw in its product strategy was scant
attention to aesthetics and packaging of its
watches.
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Question 2: What is wrong with HMT’s watch division’s marketing strategy? What kind of corrections do you suggest?
Price HMT positioned the quartz watches as the
space age generation watches & charged high
prices for this category which means that only
the affluent middle aged consumer could
afford it. In less than a year the company had
to reduce the price and followed lifestyle
advertising to justify the still higher price of
the quartz, however even this backfired as
consumers were not convinced of the
differentiation between the quartz and other
HMT watches.
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Question 2: What is wrong with HMT’s watch division’s marketing strategy? What kind of corrections do you suggest?
Place Didn’t strategize its established marketing network
according to growing competition and new market
trend like downtrend of mechanical watches & the
growing market for the quartz watches. Since retailers have enough foreign brands they were
simply not interested in HMT’s home grown products as
a result it had to sell through its 13 branch offices for
Machine tool equipment. Even when FERA was introduced HMT could take the
advantage in a limited way by offering service agencies
to about 50 watch key retailers as a way of expanding
its selling reach. In mid 80’s HMT’s selective retailer policy began going
against it.
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Question 2: What is wrong with HMT’s watch division’s marketing strategy? What kind of corrections do you suggest?
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Some of the authorized retailers started acting as
wholesalers without officially being appointed so.
Consequently HMT lost control of the final consumer
price and ultimately the trade.
In addition, the retailer margins provided by HMT were
2% less than what its most prominent competitor,
Titan, was offering to the retailers.
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Question 2: What is wrong with HMT’s watch division’s marketing strategy? What kind of corrections do you suggest?
Promotion
• Though HMT’s advertising was distinctive and
did cater to the lifestyle segment, it failed to
communicate the uniqueness of HMT’s quartz
design vis-à-vis other HMT watches.
• Because of centralized decision making even
the decisions on the campaigns for specific
products were delayed leading to the time lag
and responding to market changes.
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Question 2: What is wrong with HMT’s watch division’s marketing strategy? What kind of corrections do you suggest?
Product:
Create competitive advantage by differentiation
through technological leadership.
The products should be developed to enhance
quality and features matching customers tastes
and preferences and there by increasing buyers
value.
Mid & Premium segment: In this segment HMT
should seek differentiation by providing better
designs
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Question 2: What is wrong with HMT’s watch division’s marketing strategy? What kind of corrections do you suggest?
Conduct market survey: Involve leading market research organization along
with your sales force. Do it periodic every six month; Involve retail-shops,
shopping centers, department stores, dealers, sales
force. Most popular brands, trend of consumers etc.
Competition: Competition among brands has been also getting
stronger, and a lot of effort to keep sales has been
required. Watches without an appeal, watches without clear
marketing hardly attract consumers in the market
glutted with commodities. Train agents to set forth clear brand vision and
efficient campaign.
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Competition: Shift to quality with new added value.. Provide consumers with a lot of information select
their watch wisely and professionally according to their
own taste..
Distribution: Prepare retailer to meet the changing consumer’s
trend. Watches just displayed in showcases cannot sell.
It is absolutely necessary to present them together
with the background such as original story of the
watch, its functionality and benefits of after sales
service.
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Pricing: In the lower end HMT should seek to achieve cost
advantage by exploiting the differences in cost
behaviour. The pricing strategy can be to undercut main
competitor by 10%, using market penetration strategy.
Promotion: Special focus on sales during festive time like Diwali,
Christmas along with discount offer & finance schemes. Go for innovative and stylish ad campaign that reflects
the aspirational, independent and modern dimensions
of the watch collection and its target market along with
effective press campaign.
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Strategy: Under the present difficult situation HMT will have to
find out ways to activate the market and try to to
create new demands.
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Question 3: In the present competitive watch market, how do you visualize the future of HMT watch division five years from now? The Indian Watch Market
India is an under penetrated market for watches
– 27% of Indian owns a watch. Total estimated market as of 2005 : volume – 35
million units & value Rs. 2328 CrsMarket has been split into:
Mass Market ( < Rs400)
Low end (Rs 400 –Rs 1000)
Mid- Upper Market ( Rs 1000 – Rs 5000)
Premium (> Rs 5000)
The watch market in India (by value 2006-07)
13%
33%43%
11%
Mass (< Rs. 400)
Valued at Rs. 300 Crores
Grey market, Chinese, etc.
Mid-upper (Rs. 1k - 5k)
Valued at 938 Crores
Titan, Citizen, Timex,
Swatch, Espirit
Low-end (Rs. 400-1000)
Valued at 1200 Crores
Sonata, HMT, Maxima
Premium (> Rs. 5k)
Valued at 370 Crores
Swiss brands: Tissot, Omega, Rolex
Fashion brands: Fossil, Calvin Klein,
Giordano, Esprit
The Competition in India
Titan sells around 7 million watches annually Timex sells under 1.2 million watches Other Brands (all put together sell less than 0.5
million watches) The Japanese – Citizen, Casio, have been present,
while Seiko has not made any significant moves in
India. The Swiss – Rolex, Omega, Rado, Tissot, Tag,
Longiness, Cartier, Ebel ………and a host of others The fashion brands – Esprit, Giordano, Tommy
Hilfiger, Calvin Klein, Fossil, Swatch………and many
more have recently entered the Indian market
SEVERAL FORCES ARE TRANSFORMING THE INDIAN WATCH INDUSTRY
Dramatic transformation of the Indian watch market
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
– 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
4. Emergence of new channels
– New retail outlets emerging (Dept. stores/malls)
– Existing outlets (MBOs) getting smarter looking
– Unorganized retail at low-end
1. Shift in structure of demand
– Volume growth driven by the low end
– Value growth driven by luxury segment
Poor Watch Penetration In India Is Likely To Drive
Further Growth In Volumes. Increasing penetration
will drive growth of low end and mass market
segments.
With removal of Quantitative Restriction a lot of
International brand watches entering into the
Indian market and in five year time they will only
grow their market share. It will be even more
difficult for HMT to match competition unless until
HMT changes its strategy which should match
global competition.
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To make it visible in the market we think the HMT
watches can be targeted in the villages of India
more aggressively where the brand awareness of
HMT is more visible.
With increasing level of income and purchasing
power people are more concerned about the looks
and beautiful designs with jewel studded watches
rather than going for simple watches as of HMT’s.
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Faster production of new models of watches for
catering to the changing needs of the customer. Adoption of innovative and aggressive marketing
policies. Strengthening infrastructure for R&D. Reduce man power by adopting new technologies
and processes. Institutional sales and sales through canteen stores
department (CSD) and e - commerce. Enhancing customer services. To seek collaboration with reputed international
watch manufacturer to make
Suggestions
THANK YOU