Analysis on Indian Watch Industry.

1. 1
Wrist Watch

2. 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. 3
Major Players

4. 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. 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. 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. 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. 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. 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. 10
Segmentation

11. 11
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

12. Volumes Growth, Driven by Low End
Volume of watches sold
1997-98 2001-02 2006-07 Value Rs
crs
CAGR, %
4-7
Source: IRS 95,99,01, NCAER 95,00; internal data; press clippings; interviews; market visits; annual reports
25-35
3.70.015
0.05
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
4.5-5.2
0.22
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

13. 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,
Carrera
Tommy Hilfiger, Accent
Raymond
Weil
Tissot
Omega, Rado,
Longines
Tag Heuer,
Hugo Boss,
C Dior
Price
Fastrack
XYLYS
10000
Nebula

14. 14
The Emerging Trends

15. Demographic
pattern
Effect
Enablers
Outcome Consumption of lifestyle items
Consumerization
of Urban India
Rising % of
young
population
Increase
in income
levels
Changing
spending
pattern
More
number
of working
women
Increase in
spending
power
Rising
aspiration
levels
Organized retail market
at USD 21.5 billion by
2010 (CAGR 31%)
Increased
size of urban
population

16. Effect
Enablers
Outcome
Significant new opportunity from
young urban indian consumers
YULICS !
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
Youth growing
four times
faster
82 million at
20-34 age
in 2006
Liberalized
population will
be 56% in 2011
(41% in 2001)
Demographic
patterns

17. 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%
IncomeGroupin%
2001-02 2005-06E 2009-10E
Year
Affluent Upper Middle Middle Lower
Increasing exposure of middle class creates new opportunities

18. The Flow of Money
47
40
11
4
38
43
14
6
26
48
18
9
0
5
10
15
20
25
30
35
40
45
50
IncomeGroupin%
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

19. 19
Watch Industry in India: Where is it
heading?

20. Forces Transforming Indian Watch Industry
Dramatic
Transformation
of the Indian
watch 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

21. 21
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.

22. 22
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.

23. 23
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

24. 24
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

25. 25
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

26. 26
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

27. 27
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

28. 28
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

29. 29
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

30. 30
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%

31. 31
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

32. 32
Major Players
 HMT Watches Ltd. (34%)
• Titan Industries Ltd. – (39%)
• Timex Watches Ltd. – (23%)

33. 33
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

34. 34
 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

35. 35
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

36. 36
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

37. 37
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

38. 38
HMT Ltd. – Advertising
 Huge early investments
 Catchy slogan “If you have the inclination, we
have the Time”
 Portrayed nationalistic instincts
• “Timekeepers to the Nation”

39. 39
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”

40. 40
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

41. 41
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

42. 42
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

43. 43
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

44. 44
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

45. 45
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

46. 46
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

47. 47
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

48. 48
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

49. 49
Timex Watches Ltd.–Distribution
 Initially followed the Titan distribution
channel
 Post ’97, set up their own showrooms

50. 50
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

51. 51
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)

52. 52
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

53. 53
Thank you