Market Environment Of Titan Watches
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Published: Fri, 12 May 2017
The chief producers of watches in India are the Titan Watches. Titan provides the customers quality products with superior technology and unique variety. There are different models for every market and price segment like Sonata, Fastrack, Dash, Nebula and many more. The three markets it deals with are high income, low income and middle income. The marketing mix helps the company to get an appropriate market share. Titan watches are easily available at affordable price s and this is their strongest selling point. They are trying to convert its threats into opportunities, weaknesses into strengths, and threats into strengths by changing its model, features, quality, price and style.
Titan Industries was established in 1984 with its Head Quarters located in Bangalore, India. It was formed as a joint venture between Tamil Nadu Industrial Development Corporation and Tata group. They are the world’s sixth largest manufacturing company and are best known for production of Watches, Sunglasses, Eyewear and Jewellery. Watches are sold at the “World of Titan” showrooms with a total of 12000 outlets. These watches are sold internationally in more than 30 countries and over 2500 cities in India. International countries primarily include Middle East and Asia Pacific. Titan is the holder of 60% market share in the organized market and holder of 70% market share in the domestic level. The watches produced by Titan Industries include Titan Raga, Titan Edge, Fastrack, Sonata, Nebula, Xylys, Hugo Boss and Tommy Hilfiger which are exported to 32 countries around the world. These watches are manufactured in Dehradun, Goa and Hosur. Titan Industries offer different varieties of Jewellery under the brand names Goldplus and Tanishq. In addition to this, the Titan Eye+ Brand provides its customers with a wide range of Eyewear products which includes frames, sunglasses, lenses and contact lenses.
THE MARKET ENVIRONMENT
Define the geographical market:
Titan Industries was established in 1984 with its Head Quarters located in Bangalore, India. Their products are manufactured and assembled at Dehradun, ECB plant in Goa, Hosur, Baddi in Himachal Pradesh and Roorkee.
What business are they in?
The company Titan Industries has a customer base of about 100 million and manufactures over 10 million watches per annum. They have one of the world’s best design studio for accessories and designing watches.
The main watch brands are:
-Titan which includes Titan Raga, Titan Edge and Nebula,
-Sonata which is produced for consumption in large numbers,
-Fastrack which is mainly focused on producing trendy and fashionable products for the younger generation and
-Xylys for the premium market.
The fastest and largest growing jewellery brand in India is Tanishq which includes different varieties in 22kt pure gold and platinum jewellery as well as a wide range of gold jewellery studded with coloured gems or diamonds. Both these brands have their own design studio. Goldplus was recently introduced to the market comprising of plain gold jewellery for larger consumption. Both these brands have their own design studio.
Titan Eye+ Brand provides its customers with a wide range of Eyewear products which includes frames, sunglasses, lenses and contact lenses.
Political: The political factors of the Titan watches among the big watch brands include the policy of price fixing which has negative impacts towards the industry, in particular Titan as it’s the forefront in this allegation.
Economic: The purchasing power of the customers might decrease because of credit crunch though they will still buy a few essential products. As a result of this they will spend very little on luxury products which have a greater profit margin for Titan.
Social-cultural: Titan repositioned itself in the fashion market because of the high impacts of fashion trends.
Technological: Special attention has been given to the areas like micromechanics and microelectronics as E-commerce is becoming prevalent.
On September 30, 2010 (second quarter), the net profit for Titan jumped 64% to Rs127.7 crore as compared to Rs77.6 crore in the second quarter of the previous year. The sales for titan were Rs358.36 crores in the second quarter of 2010 as compared to Rs295.52 crores in the last year. Hence we can see that there has been a growth of 21.3%. The performance of the company has been good as compared to the previous year because of the increase in retail sales growth.
Titan’s growth plan is to expand its market share in the next five years to 75 per cent. Harish Bhat, the chief operating officer of Titan said that over next five years the Titan watch market is expected to grow at an average rate of 15 per cent in India. A total of 15 million watches were sold in the year 2009. The shares held by Titan in the organized watch market accounts to 65 per cent. In India most of the people have either one or two watches because for them it is just a simple time keeping device, whereas in the US and Europe most people will have five to six watches because for them it is more of a lifestyle accessory and a fashion statement. India is also trying to adopt this concept. The company depends on theme based watch lines for men, women and children in order to attract the number of new customers. The watch market for women’s is growing faster by around 20 per cent per year as compared to the watch market for men. In India the organized watch market is Rs 2250 crore with Titan accounting for Rs1600 crore.
The centerpiece of Titans strategy was Quartz which changed the Indian watch market. Titan watches without any doubt are the market leader in this segment. The first that projected the watches as something more than a normal time keeping machine and to introduce the concept of style in India was Titan. Another sub brand launched by Titan was Sonata which was a huge success because of the fact that it was a cheaper product and also it is a premium brand. Sub brands like Steel, Dash, Edge, Nebula, Fastrack, Raga and Royale were introduced to the market when Titan realized that the customers were looking for something new and exciting. Titan is trying to bring larger connection between the customers and the Titan Brand with the new concept of titan “Be More”. By shifting its focus from product attributes to emotions, yearnings, aspirations and experiences they are trying to change its portfolio.
There is high demand for stylish and fancy wristwatches by the youth and therefore titan makes sure to satisfy their customer’s needs by providing them with a wide range of impressive quality products along with good after sales service. Most of these watches are available at easily affordable prices for all target markets. Titan Edge under the brand Titan is one of the worlds slimmest watch models and Sonata is India’s largest selling watch brand currently. These watches also include functions like chronographic, multifunction, date and day settings. Titan Watches have tied up with international brands like Hugo Boss and Tommy Hilfiger.
Titan watches are not able to utilize all its resources efficiently and they lack a proper distribution channel. The other weakness faced by titan is that the company is not sufficiently globalised. The average price of Titan is Rs 1100 as compared to Rs 550 for HMT. Market share of Titan is between 18-20% which is very low as compared to its competitors HMT and Maxima. Another main disadvantage is that kids are more fascinated by mobile phones rather than wristwatches due to which kids prefer buying mobiles which also shows time.
During festive times like Diwali Titan promotes brands like Nebula and Bandhan as there is a huge demand for these watches and most people have the habit of wearing different watches for different occasions. Titan watches have an opportunity of introducing water proof watches into the market. Fastrack watches are promoted during those months when school and colleges reopen. Titan was started as a brand associated with gift concept for occasions like weddings, festivals and birthday parties. All Titan stores provide it s customers with an advantage of exchanging their old watch for a new one. By doing this they receive a discount of 25% on their new technologically advanced and stylish watches. Around 34 million watches are sold through various grey market channels.
The importance of buying a wristwatch is decreasing as people can get the time, date and other features in their mobile phones also. Another threat is that some people might prefer buying low priced Chinese watches available in the market. As the fashion trend keeps changing customers may tend to shift to other watch brands like Swatch, Espirit, Seiko, Tissot, Rado and Omega which have entered in India.
THE COMPANY’S MARKETING STRATEGY
Segmentation based on Lifestyle
Segmentation based on Income
Segmentation based on Age
Segmentation based on Gender
1. For Professionals and Elders: Titan has launched Sonata watches and Steel watches for these groups.
2. For Students: Titan launched a very popular brand “Fastrack” for students.
Titan has segmented watches based on different income level:
1. Upper-Middle Segment: For the upper-middle segment Titan introduced watches like aurum, Royale and Nebula with their price ranging between Rs20000 and Rs100000.
2. Middle Segment: For the middle segment Titan introduced watches like Exacta with price range between Rs 500 to Rs 700 and 100 different types of models. Titan also introduced the brand Raga for women in this segment.
3. Lower Segment: For the lower segment Titan introduced watches like Sonata with price range between Rs 350 to Rs 500 and 200 different types of models. Titan also introduced the brand Dash for children in this segment.
Titan has developed watches for all different age groups:
1. For Youth: Titans sub brand “Fastrack” has been created for the young generation mainly comprising of sporty watches.
2. For Elders: As elders generally prefer steel designed watches Titan has created steel series and Sonata watches.
Titan has segmented its watches for Men & Women also:
1. For Men: Watches launched for men by Titan are Sonata, Steel, Nebula, Fastrack and Titan.
2. For Women: Watches launched for women are Raga and Octane.
Rs 550 – Rs 1,430
Lower middle class, mostly office/daily wear
Rs 595 – Rs 1,140
Common class or corporate
Rs 650 – Rs 1830
Daily class for upper middle class
Rs 960 – Rs 2,830
Upper class, mainly for ladies
Rs 1,420 – Rs 4,000
Pair watches for couples
Rs 1,675 – Rs 8,085.
Upper class and affluent businessmen
Rs 1725 – Rs 7770
Rs 4,500 – Rs 5,200
Rs 10,000 – Rs 45,000
Supplier Power: No strong supplier in the watch market. Lack of bargaining power.
Differentiation/Low Cost Leadership/Focus (porters Genetic Strategy)
Threat of Substitutes: No close substitute for watches except for watches in the form of jewellery and pendant watches.
Barriers to Entry: Due to lack of differentiation and cluttered market.
Degree of Rivalry: Increased number of firms which makes the competition very stiff and high strategic stakes for producers.
Buyer Power: Watch buyers in India are very price sensitive. In this industry, buyer’s preference is very crucial
The watch sales are expected to rise by 25% in the year 2010-2011 as compared to a growth of 17% in the previous year 2009-2010. The expected revenue from watches amounts to a total of Rs 1100 crore which is higher than the previous year due to the reason that the company is introducing a lot of new product in the premium segment. The latest sub brand launched by Titan is the Purple Range and it price is double of the current Titan watches. They have plans to export its products to South Africa in the near future. Titan sells watches to Singapore, Thailand, Vietnam and Middle East.
THE MARKETING MIX
In order to increase the total sales, the differences in prices of the watches are justified by its unique features. The Titan Company seeks to achieve both quality and leadership with the help of products compared to its prices. When Titan was established its main focus was premium segment of the watch market and gradually the company widened its base by creating new segments like the mass market.
Survival: Some of the Titan watch brands are priced according to its different and unique features. For example: Fastrack which are for the youths are priced between Rs 550 – Rs 1,430, Edge which are normally worn by business class people are priced between Rs 4,500 – Rs 5,200, Royal for the upper middle class people are priced between Rs 960 – Rs 2,830.
Market share: Sonata watches under the brand Titan are priced at Rs 350 and above which is most commonly used or worn by the elders as a result of which 70% of sales comes from the lower segment.
Market Skimming: Titan is the only brand that provides its customers with pure gold watches, jewellery watches and watches in pair in the Indian watch industry.
Titan brings together all the leading brands of the country under one roof. They provide its customers with different variety of brands, efficient after sales service, looks and price ranges. Titan sells there surplus stock at reduced prices in Value Mart. But these shops do not work as normal shops and also they are not placed in the main locations. As the price for Sonata watches are cheaper, it attracts a larger number of customers and hence there is an increase in demand of these watches. Sonata stores are an authorized service centre for Titan and Sonata brands. These shops can afford to maintain full stocks of watches in demand as compared to the others.
Marketing pricing: The opening of more and more new stores like the world of Titan eliminates the element of middlemen as customers can directly purchase the watches from the dealer. In such cases the retailer gets 17% profit margin on sales as they buy watches for 17-18% lesser than the marked retail price. This increases trust worthiness, differentiation, innovation and value for the product. Every year Titan provides discount on watches to its customers which attracts more customers.
Creative advertising: Titan products reach its customers through advertisements on Television and Internet. A contest is organized by Titan on cartoon network for children to use their creative skills and design a watch. The design that wins the first prize is then launched as its new collection. Titan believes in producing well made and clean ads. The brand ambassador of Titan watches is Amir Khan and for its sub brands , brand ambassadors are Mahindra Singh Dhoni for Sonata, Gul Panag – Rani Mukherjee for Raga and Rahul Bose for Xylys. The Titan tagline is “Be More” and the tagline for its sub brand Fastrack is “How Many You Have”.
Promotion on occasion: Titan believes in the policy of promoting its products based on the various occasions.
Who are the main competitors:
Swatch: The swatch group is a Swiss company which was founded in 1983. Its headquarters is located in Biel, Switzerland. They are the world’s second largest watchmaker and comprises of around 20 brands ranging from low priced to premium priced watches and a total of 23, 560 employees in the company. There are more than 500 swatch stores, 15000 retailers worldwide and 140 kiosks. Along with watches the swatch group also makes its matching jewellery.
Citizen Holdings: The Company Citizen Holdings was founded in 1918 as Shokosha Watch Research Institute and is now known as the manufacturer of Citizen Watches as well as the manufacturer of Cincom precision lathe machine tools. Citizen Holdings are the global leader in watch making. There collection of watches include watches for sailors, pilots, drivers and eco drive light powered watches for women and men. They also have a wide collection of clocks and jewellery.
Sales and Profit Trend:
Swatch: The total sales or revenue of Swatch for the year 2009 was CHF5.142 billion. There operating income was CHF 903 million and the profit was CHF763 million for the year 2009.
Citizen Holdings: The revenue of Citizen Holdings for the year 2010 is $2.72 billion. Its operating income is $77.7 billion and there profit is $37.9 million for the year 2010.
The group gross sales of Swatch for the 1st quarter of 2010 was CHF 5.421 million which is celebrated as the third best year in company’s history. There was an increase in demand for swatch watches in several markets. The operating profit margin of swatch is expected to improve from 14.7% in the first half in the watch segment. As omega was the official timekeeper at the winter Olympics held in Vancouver there was a positive impact on sales. Swatch controls 30 % of the luxury watch market.
Citizen Holdings are the leading producers of watches in India. There domestic share market is more than 50%.Citizen holdings is trying to increase its share of global market from 5% to 7% for the watch segment. In the range of wristwatches priced between Rs 3000-vRs 25000 the company has a market share of 40%.Their global sales is around $1.5 billion, where 15% is contributed by Japan and 20% is contributed by US.
After market segmentation the next step is to identify its target market. The main target market of Swatch is working women between the age group 0f 24-35. Women are more likely to be influenced by the latest trends and lifestyle as a result of which they spend more on themselves as compared to men.
The main target market focus of Citizen Holdings is on the premium and middle range watches. The price range here ranges between $200 to $1000.
Question marks: Titan like most of the other companies started off as question mark as they try to enter into a high growth market in which there is a market leader already. The main problem here is that this requires a lot of cash as the company has just been started and has to overtake the leader in this industry. A good amount of money is being spent for the Titan sub brands Edge and Xylys as they were launched recently. We can conclude be saying that it is too early to predict the future now.
Star: It is not necessary that a star will not always produce a positive cash flow for Titan watches but they are the market leaders in this segment. To keep up with the high market growth Titan watches spend substantial amount of funds. The most successful sub brand under Titan Watches is Fastrack as it gives the company high revenue and is the most promoted brand. Hence we can say that the star is Fastrack.
Dogs: Company or products that come under dog usually generate low profits or losses and need to be phased down as they consume more management time than the actual time needed. At present Titan has no brand as dog but Flora and Heritage generate comparatively less sales as compared to the rest.
Cash Cows: Sonata was a star of yesterday. It is a cash cow today because the annual growth rate of Titan watches fell to less than 10%. This is only possible if they have the largest relative market. As the markets growth rate has slowed down, the company is getting high profits without spending much on Sonata. The most selling watch in India is Sonata. Titan watches use cash cows to support other businesses and to pay their bills.
Porters genetic strategy:
EVALUATION OF THE COMPANY’S STRATEGIES AND TACTICS:
The world’s sixth largest watch producer in India is Titan as a result of its strong marketing strategies. They are the market leaders in this segment. It gives a tough competition not only to various Indian brands but to various International brands also. The few main competitors of Titan watches are Swatch, Citizen, Timex and Espirit. The customer base of Titan is 65 million and manufactures 7 million watches per annum. Their largest showroom is the “World of Titan”. They have a network of 616 service centers. The consumers are being exposed to various global brands, price levels and styles due to the arrival of Swiss brands. Hence we can conclude by saying that as the prices of Swiss watches are very high, it has helped the Indian consumers realize the value of Indian brands with its unique designs.
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