product analysis watches

SMT. K.G MITTAL INSTITUTE OF MANAGEMENT, IT& RESEARCH

A

PROJECT REPORT

ON

“PRODUCT ANALYSIS OF WRISTWATCHES “

SUBMITTED BY:

NADEEM USMANI (54)

SUBMITTED TO:

PROF : SNEHA CHURY

Introduction

Indian watches market was for long dominated by public sector organizations like Hindustan

Machine Tools Ltd. (HMT) and Allwyn (also famous for its refrigerators once upon a time!), and

has now left the pioneers far behind or nowhere in market by private sector enterprises like

Titan, Sonata, Ajanta and Timex along with foreign entities jostling for display space in the

smallest of shops selling these products.

In post liberalization India, the market stood to witness intensive competition between foreign

and Indian manufacturers like Timex, Titan, Movado, Longines, Rado, Rolex, Fréderique

Constant, Mont Blanc, Swatch, and many others. Many watch makers have made significant

inroads in the industry and others are in the process of establishing themselves, currently.

Category/Competition definition

Levels of competitions

1. Product form competition: HMT, Timex, Citizen, Maxima, Tissot, Espirit, Swatch, Tag

Heur, Christian Dior, Omega, Rado, Longines.

2. Product category competition: Wall clocks, Desk clocks, Alarm clocks.

3. Generic competition: PDA’s, Digital Diaries, Smart Phones, Mobile Phones, PC’s.

4. Budget competition: - Bracelets, Jewellery, accessories, etc. can be anything which he

can afford to do.

Category Attractiveness Analysis

Aggregate Market Factors

Category Size:

The size of the watch market currently is estimated to be around 40 to 45 million pieces

annually. The organized sector alone contributes up to 30 percent of this figure, and the

rest of the demand is being met by the unorganized grey sector.

Indian watches market was for long dominated by public sector organizations like

Hindustan Machine Tools Ltd. (HMT) and Allwyn (also famous for its refrigerators once

upon a time!), and has now left the pioneers far behind or nowhere in market by private

sector enterprises like Titan, Maxima, Sonata, Ajanta and Timex along with foreign

entities jostling for display space in the smallest of shops selling these products.

In post liberalization India, the market stood to witness intensive competition between

foreign and Indian manufacturers like Timex, Movado, Longines, Rado, Rolex,

Fréderique Constant, Mont Blanc, Swatch, and many others. Many watch makers have

made significant inroads in the industry and others are in the process of establishing

themselves, currently.

Market size is big, so this market has high attractiveness, as we see 40 to 45million pieces are

annually sold.

Assessment Market Attractiveness: (++)

Category Growth:

The average growth in the size of the market is slated to be around 10 -15 percent per

year.

Looking into this fact and the long standing Indian tradition of comparing watches with

jewellery and other traditional items, many watch companies are interested in setting up

base in India.

According to a recent study, more than 90 percent of the watches were from the lower

price ranges with international costs being less than Rs 500. Moreover, around 20 to 25

watches are being sold for every 1000 citizens. Thus there is enormous potential for

growth of the industry in this untapped segment.

Market growth of 10 to 15 percent YoY is assumed to be good enough, so from growth

perspective the category have moderate attractiveness

Assessment Market Attractiveness: (+)

Sales Cyclicity:

Wrist watches for the medium income group are not premium prices & the prices are

such that they do not get impacted directly with the variations in GDP

When a product have no direct affect due to changes in GDP its more attractive

Assessment Market Attractiveness: (++)

Seasonality:

Year round Sales

Category overall may experience a sales increase in the Holy festival seasons specially

near Divali Festive season, as people tend to purchase wrist watches as gifts.

Normally, Watches have year round sales but festive seasons show an increasing trend, this is

also why gray market is attracted towards Watch industry.


Profits:

As the size of the watch market currently is estimated to be around 40 to 45 million

pieces annually. The organized sector alone contributes up to 30 percent of this figure,

and the rest of the demand is being met by the unorganised grey sector, so benchmarking

the profits would be difficult. Nevertheless recent acquisitions by TITAN of Sonata &

Timex reflects an expectation for stronger profit potential

But as told earlier many foreign companies are interested in setting up their base in India

may lead to lowering of pricing & profits.

Category Factors

Porter’s Five Forces Analysis

Threats of New Entrants:

o Cluttered Market & Lack of Differentiation, differentiation is largely through the

brand, Style, Fashion variety.

o High Capital required

Cluttered market does not attracts new investors to the industry

Assessment Market Attractiveness: [-]

Supplier Power:

o No strong suppliers. Lack of bargaining power. Rise of China & Taiwan as low

cost supplier is a threat.

Rise of China as a major player in Watch industry has made this industry as not so

Attractive

Assessment Market Attractiveness: [ - ]

Threat of Substitutes:

o There are no close substitutes for wrist watches except for use of mobile phones

to check the time.

Since there are no close substitutes, this makes a category more attractive.

Assessment Market Attractiveness: [ ++ ]

Buying Power:

o Buyers are extremely choosy about the brand and type of wrist watches they

wear.

o Being extremely brand conscious, their tastes have evolved over the years and

have gone beyond the realms of durability to choose in terms of aesthetics and

elegance.

o Thus it is a buyer’s market with multitude of designs that have entered and

flooded the market place.

A buyer market is not attractive, because this leads to reduction in prices & ultimately lower

profits.

Assessment Market Attractiveness: [ - ]

Degree of Rivalry:

o Increased no. of firms resulted to low switching cost & the strategic stakes & take

over are high these days. For e.g. first TITAN took over SONATA, then

FASTTRACK & now recently they took over TIMEX also.

Environmental Factors

Economical:

The retail sector has just begun to boom in India. Since the early 1990’s, Indian customers are

relying more on departmental stores and shopping malls to purchase their wants and needs. This

has come as a boon for watch manufacturers and dealers, who are now looking forward to utilize

these new outlets to reach out to the Indian masses. Watch manufacturers are looking at a

suitable mix to market their products ranging from exclusive retail outlets to display sections in

malls and large departmental stores.

From the economic factors perspective category is attractive


Political Factors / Regulatory:

The industry can be directly affected by the certain rules such as change in Taxation rates etc.

Political factors does not have much impact on the attractiveness of the category, they play

a neutral role

Assessment Market Attractiveness: (0)

Technological factors:

Changing technology always play a great role in target market. As there is too much

competition, if Titan Watches does not accepts the changes in technology then they can’t sustain

in the market. In Mid-priced segment, other companies will give tough competition to Titan.

Technology could play a significant role with respect to manufacturing efficiencies & design

profiles.

For e.g. many customers prefer mechanical and automatic watches, while others prefer quartz

watches. Newer segments are also on rise such as ladies watches, children’s watches and gent’s

watches. Customers usually base their preferences and buying decisions on a variety of factors

like price, durability, utility, aesthetic appeal and brand name. A combination of all these points

ultimately forms the customer’s buying decision that translates into the purchase of a watch.

Changing technology is a factor which also reduces the attractiveness of category, so in our

case as the technology keeps on changing so it would be right to say from technological

perspective category is moderately attractive.


Competitor Analysis

Price Segmentation

On a price basis, the watch market is split into four segments and popularly referred to as low-end (400-1000), mass market (<400), mid-market (1k-5k) and premium (>5k).

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)


Swiss brands: Tissot, Omega, Rolex

Fashion brands: Fossil, Calvin Klein,

Giordano, Esprit

Mid-upper (Rs 1k-5k)


Titan, Citizen, Timex,

Swatch, Espirit

Low-end (Rs 400-1000)


Sonata, HMT, Maxima

Volumes Growth, Driven by Low End

Watch Market Map

Volume of watches sold

1997-98 2001-02 2006-07 Value Rscrs

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-upperLuxury

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, RolexTitan, Citizen, Timex, Swatch, EspiritSonata, HMT, MaximaGrey mkt, Chinese, etc.

BRANDS

Major Players:

HMT Ltd (34% market share)

HMT was a market leader in India before the entry of Titan. It is widely accepted that HMT

failed to match the changing aspirations of the Indian watch market. It failed to bring out elegant

designs or low prices electronic watch ahead of competition. Thus, HMT who had a very robust

distribution network and a strong loyal customer base could not leverage on its strengths.

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. It has 4 integrated manufacturing units. More than 7 million high quality

watches/watch movements per annum. Mechanical and Quartz watches.

Brands:

Mechanical Watches - Environment friendly

• Automatic

TitanCitizen

Timex

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

XYLYS10000

Nebula

• 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

Special Watches

• Freedom

• Braille

• Nurse Watches

• Fragrance Watch

Strategies

Targeted at the global market

State-of-the-art technologies – IT Infrastructure

Collaboration with ISA Quartz, France and Fraporlux, France apart from Citizen, Japan

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

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

Advertising

Huge early investments

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

Portrayed nationalistic instincts - “Timekeepers to the Nation”

Titan Industries Ltd:

Titan Industries Ltd. set up in 1987 as a Joint venture of the Tata Group and TIDCO (Tamil

Nadu Industrial Development Centre). 1st factory at Hosur manufactured quartz analog

electronic watches. It had financial and technical collaboration with Ebauches, France. In 1988:

Estd. a component manufacturing facility. In 1990: Estd. a case manufacturing plant. In 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”.

Brands:

Insignia - Made with high-grade anti-allergenic steel, scratch-resistant sapphire crystal and special hard gold plating

Nebula – In 18-carat solid gold and precious stones.

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, for the woman achiever.

Fastrack - Contemporary styles for the young

Dash! - For young boys and girls

Bandhan - Watches for him and her

Sonata – Priced at Rs 495 – Rs 1200

Slim and Edge – World’s slimmest watch targeted at Indian travelling abroad.

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

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

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

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”

Ads are a blend of sophistication and simplicity

Timex Watches Ltd

It started in 1854 as the Waterbury Company, in Connecticut's Naugatuck's Valley (the

Switzerland of America). In 1990: Tied up with Titan to launch in India. It broke up with the

Tata group in '97. The heart of the watches imported from America and assembled in Timex

factories in Noida. It was first to launch the Indiglo technology in India, the first

electroluminescent watch face in 1992.

Brands

Aqura

Indiglo

Basics

Datalink

Timex Sportz

Lextra

Vista

Mariner

Gimmix

Strategies

Delivering quality products at affordable prices

Basic objective: Change the mechanical watch user to a quartz watch user to 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

Positioning

Initial understanding with Titan

• Timex 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

Distribution

Initially followed the Titan distribution channel

Post ’97, set up their own showrooms

Advertising

Featured sports and adventurous personalities - Rock climbing, Rafting etc, cricketers Kapil Dev and Brett Lee as brand ambassadors.

Exclusivity of the watch is presented by celebrity endorsements - President Bush declares his loyalty for Ironman

New Players:

Following the WTO agreement since 1996 Indian government partially lifted the ban on import

of finished watches, At that time the govt allowed import of watch below $1000 in the country,

but watched above $US 1000 were still banned. Later in 1999, quantity restrictions were

withdrawn and thus import of watches was allowed irrespective of their price.

Rado:

Rado has opened an exclusive showroom in Mala, Mumbai to widen its network across country.

It caters to the luxury segment.

Tommy Hilfiger:

It has entered into an exclusive sub-licensing agreement with Titan, for marketing and

distribution of its watches in India. These fashionable watches are priced between Rs 3500 and

Rs 8000. It caters to the premium segment.

Longines:

It is currently marketed through 36 select showrooms across the country and are prices at Rs

45000 and above. It caters to the luxury segment.

Other players are Movado, Tag Heuer, Omega and Christian Dior.

Their main idea is target the up market youth offering a sense of exclusivity, style and

achievement.

Customer Analysis

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

Grou

p in

%

2001-02 2005-06E 2009-10EYear

Affluent Upper Middle Middle Lower

Increasing exposure of middle class creates new opportunities

The Flow of Money

Factors such as increase in the number of working women and young population, higher income

level and spending power have combine to make a set of new aspirations. In particular, it has led

to increased consumption of lifestyle products.

Why Customers prefer: Customer ValueSome behavioral trends which can be seen in case of wristwatch purchase are as follows:

In premium segment, there are watch collectors and the watch is purchased more as a fashion.

Of late more consumers watch is purchased mostly for making a gift.

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

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

4740

11

4

3843

14

6

26

48

18

9

05

101520253035404550

Inco

me G

roup

in %

2001-02 2005-06E 2009-10EYear

Upto USD 2000 2000 to 4400 4000 to 11000 Above 11000

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

When Customers Buy?Generally, a customer buys watch either to gift somebody or for self or for a member of his

family. Keeping in view of this trend, watch companies are trying to design and position

different brands for different occasions and festivals like success in exam, marriage, Rakhi,

Onam, Id, X’mas, Durga Puja, Diwali, etc.

Where do Customers Buy?Earlier urban buyers used to go to any shop dealing with wrist watch, specify a price rang to the

shopkeeper and pick up the brand and/or design among the pieces shown.

Now with growing fashion consciousness watch buying patterns are also changing very fast.

Customers nowadays go to a shopping mall or company showrooms and ask for a particular

brand/make of watch.

Conclusion

To meet changing lifestyles wrist watch market in India has added element of fashion in it. Also

withdrawal of import restrictions has attracted a large number of foreign watch companies to

enter the Indian market. Generally upper middle class people in India are reported to own more

than one watch which matches one’s attire and occasions. Like in apparel, new styles/models are

introduced every season. Large chunky cases with colorful dials are in vogue. The grey market

selling imitations of popular styles and leading brands at half the price continues to be a menace

for the organized sector. The growing popularity of mobile phones is likely to erode the

functional importance of a wrist watch.

ReferencesBooks

Lehman, Donald R., Product Management 2005, Tata McGraw-Hill

Ramanuj Majumdar, Product Management in India, 3rd Ed

product analysis watches

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