Product Plan

Prepared by

Vidya Dinesh Nair

PGP ‘05

AsianSchool Of Business

Titan Corporate Vision

To be Innovative, World class, Contemporary and build India’s most desirable brands.

Contents

1.0 Executive Summary

2.0 Product Vision

3.0 Background Summary

  1. Industry
  2. Competitor Analysis
  3. Company

4.0 Raga – The Product

  1. Product Specifications
  2. Value proposition to customers
  3. SWOT Analysis of ‘Raga’
  4. Competitors

5.0 Marketing Program

  1. Entry Positioning
  2. Customer profile
  3. Market Potential
  4. Marketing Objectives
  5. Sales Forecast
  6. Pricing Strategy
  7. Advertising Strategy
  8. Promotion Strategy
  9. Distribution Strategy
  10. Supporting Activities
  11. Product extension strategy

6.0 Financial Summary

i. Assumptions

ii. Cash Flow Projection

iii. NPV Estimate

Annexure 1

1.0 Executive Summary

“Titan”- a brand which has succeeded in giving its customers, value and experience for the price paid, by its wide variety of products over the years, seems to be moving ahead more rapidly to meet customers changing needs with a rapidly expanding variety of innovative product offerings.

Recently, Titan has come up with a redefinition of its brand of watches exclusively for women, named “Raga”. The objective behind the product being, to give the successful contemporary Indian women a sense of elegance, style and identity, as they have moved from being ignorant housewives to the world acknowledged achievers in various fields of life.

This document contains a detailed plan for the launch of the redefinedstrategy for product, “Raga”. The strategic direction for the brand along with the marketing tactics which will be adopted and the supporting activities are included.

2.0 ProductVision

“Raga”

To be the style statement and most intimate treasure for the contemporary Indian women.

3.0 Background Summary

i. Industry

The total world demand of watches is estimated to be around 600million pieces. Switzerland,JapanandHong Kong are the important watchmanufacturingcountries. While Japan leads the world in terms of volumes,Switzerland has the largest share in value terms.The important markets for watches are Hong Kong, Western Europe,USA and Middle East countries. Japanese watch production (complete watches plus movements) decreased by about 2% in volume to 724 millionunits and 5% in value terms, when compared to the previous year. The growth rates of the Japanese giants Citizen andSeiko were single digit increases in the spectrum of 3 – 4%. In comparison, the Swatch Group grew by over 8% andhas confidently set its eyes in expanding and consolidating its operations in China and India.

Indian watch industry is a mix of organised as well as grey markets. Indian manufacturers currently make about 12 million watches. Chinese watches are flooding the market, along with the premium segment going for high quality Swiss watches. India is an under penetrated market for watches, i.e. 27 % of Indians only own a watch. Total estimated market as of 2005 Volume is around 35 million units and by value around 530 million. But in this around 85% of volume is in below Rs 500 segment. The market in India is split into Low end, Mass market, Mid market, and Premium. By value segmenting the division is as follows:

11% - Mass (< Rs 500)

43% - Low-end (Rs 500- Rs 1000)

33% - Mid-Upper (Rs 1000 – Rs 5000)

13% - Premium ( > Rs 5000)

It was noted from various surveys that the market have grown considerably over recent years mainly due to volume growth (8-11%) in lower end segment. It was also noted that the mid upper segment grows at 7%.

Factors affecting Industry

  • Disposable Income, Spending pattern and other demographics
  • Technology
  • Lifestyle – Emergence of new customer segments (style conscious, women )
  • Change in Regulations – increase in competition (Luxury end : Swiss brands, Mid to upper end : Global fashion/ Japanese brands, Low end : Local/regional IMFQs, Chinese imports)
  • Retailing innovation (experience selling)

Opportunities in Industry

  • Increasing Middle class segment

  • Increasing urban population (Urban growth rate at 3% Vs 1% overall)
  • Increasing spending on lifestyle products by households
  • Increasing no. of youth population (82 million at 20 - 34 age in 2005,Two third of Indians areBelow 30 yrs, Median AgeIs 24 (35 in US, 41 in Japan))
  • Increasing no. of working women (Present no. of women owning watches In India is around 28%)

ii. Competitor Analysis

The major competitors of titan are mostly International players in the industry like Swatch, Rolex, Omega, C Dior and Indian brands like HMT, Maxima,Egana Indiaand Timex Watches Ltd and the Chinese watches flooding the grey market.

Forces of competition

a)Threat of New entrants : Low

There is very low power for new entrants as high investment is needed and also as the market is already captured with high brand value products which have a wide variety catering to various segments. The threat which may come from new entrants may be from lower end segment which is flooded by Chinese watches.

b)Bargaining power of buyers : High

Some of the factors which have led to the higher bargaining power of buyers are the increased disposable income, changing needs due to change in technology, young population, increased women buyers etc.

c)Bargaining power of suppliers : Low

India is one of the countries where it has a huge supplier base for the various components required for the manufacturer and also the company is having its own various manufacturing facilities hence making the supplier power very low.

d)Threat of substitutes : Moderate

Due to the advent of the new technologies, like mobile phones, there is a threat that watches may be substituted with these technology products, unless the use of watches are redefined according to the changing needs and added value is provided by technology innovation.

e)Threat of rivalry : High

Due to change in regulations by WTO it has enabled many foreign players to enter the Indian market more freely which will cause a higher competition in the domestic market. Also the competition of flooding of grey market with Chinese manufactured products of low price and low quality will cause a high competition in the mass market segment.

iii. Company

Titanis the leader in Indian watch industry with over 50% share in volume sales and over 65% value share. It is the 6th largest integrated watch manufacturer in world. It has customer base in over 30 countries and is one of the top 3 brands in many Asian countries withdifferent brands catering to the Premium, Mid-upper and low-end segment. Some of the strengths of the company are:

  • Wide spread network of retail and customer service (9000 outlets)
  • Brand Equity
  • Manufacturing facility
  • Technology and designing development (award winning design team)
  • Wide range of product for different segments needs

Products

  • Royale: Stylish dress watches in all gold and precious metals, in 40 different designs
  • Fast Track: Casual watches with an accent on youth and the outdoors, in 25 different designs
  • Sonata: For the low-end market
  • Raga: Exclusively for women
  • Etc..

4.0 ‘Raga’ - Product Strategy

i. Product Specifications

The new brand of watches is exquisitely designed for satisfying the needs of 21st century fashion conscious women in India taking into consideration the trends around the world also. The product features are:

  • Contemporary and ethnic mix designed products
  • Slim fit
  • Jewelry accessory substitute ( designed like kadas, bracelets etc)
  • Studded with stones and pearls
  • Flexible design for different uses (workplace use, functions use etc)
  • Use of gold, steel and leather mix (bring in feeling of ethnicity along with contemporary style)

ii. Value Proposition

There has been a considerable change in need for the Indian women over the past decade. A present age woman needs her accessories to be fashionable in addition to the basic needs it satisfies. She is a blend of tradition and modernity.Watches for women in past were only downsized versions of gent’s watches. But access of the new generation to knowledge, western world and technology has enabled them to look for more contemporary items to fit their needs.

Some of needs arisen are:

  • Multi purpose usage
  • Stylish designs
  • Fit with work atmosphere as more women have begun to work
  • Sense of intimateness to brand
  • Shopping experience
  • Customer service of high quality
  • Status Signature

Raga brand value proposition is to:

  • Make women feel stylish , as well as ethnic and belonging to a high status
  • Have a treasured jewel accessory
  • Experience the titan service and community belonging
  • Accessory for various occasions
  • Premium value for economic price

iii. SWOT Analysis of ‘Raga’

Strength

  • Quality and design
  • Emotional content with product
  • Brand Equity
  • Jewellery Characteristics of product
  • Cheaper and of comparable value to the competitor products

Weakness

  • Customer acquisition by own brands
  • Niche market

Opportunities

  • Low penetrated market
  • Increase in multi ownership
  • Increase in earning women

Threats

  • Increase in domestic competition
  • Reduction of brand from premium positioning to middle positioning due to competitors entrance
  • Substitution by technology products like mobile phones

iv. Competitors

Egana Watches India – Company with three leading brands Espirit, Pierre Cardin and Carrera has recently ventured into the branded jewellery industry also. The brand Pierre Cardin is a direct competition for Raga. The watches belong to range Rs 3000 to Rs 11000. A mix of steel, gold and leather is used to bring in the elegant sophisticated look. The ladies watches are slim and sophisticated looking and range from Rs 3000 to Rs 9000.

Citizen Watches India–Fashion collection of citizen watches of price range Rs 5000 to 13000 targeted especially at women is a competitor for Raga. The collection has trendy as well as elegant designs.

Chinese watches – Chinese watches are flooding the market attracting the fashion conscious youth with trendy design and very cheap pricing. The watches look costly and aesthetic but are of lower quality. The Chinese watches also attract the multi owners more as they are cheap.

5.0 Marketing Program

i. Entrypositioning

Exclusive Ladies watches with Ethnic-chic designs for contemporary Indian middle class women (strategy for next 5 yrs)

Raga had the first mover advantage thus gaining a good share of ladies watches segment. Raga was also able to receive a higher degree of customer satisfaction. The increase in competition need to be addressed by bringing in more emotional content and contemporary style with ethnic touch, which is the theme for the redefining of the product. The brand promotion strategy will be maintained with no connection to its price tagging such that the brand can be leveraged later. Different collection for different uses like working class, antique look etc. will be sub branded so that the umbrella brand Raga does not havea differentiated positioning among different class of women.

ii. Customer profile

Target customer group: Mid and Upper-mid segment women of age group 15 and above.

Profile: Urban women need style, elegance in her lifestyle. She wants to show her status of belonging to an affluent group of society. Also there is a need for upper class working women to show her success to the society. Most of urban women belong to the working group and hence the need for contemporary designs in her accessories for her work atmosphere, which also have become sophisticated over the years. Another of the increasing trend in fashion is the use of ethnic Indian designs with the modern designs. Rural women use watches more as a necessary accessory and prefer the simple and elegant style rather than the funky and hip styles compared to the urban women. They also use it as jewellery and hence prefer the ethnic style more than the chic style.

iii. Potential of market

The market for ladies watches is very less penetrated. Only about 28% of women in India own a watch and the multiple owning or rebuy percent is as low as 3%. Hence the potential for the market is very high. The population of the segment catered by Titan Raga is around 614,268,000. As per a survey, only 28% in this market owns watches the number targeted for new product sales can come around 442,272,960(Annexure 1). The no. of ladies watches sold by titan is only 23% of its total sales which is around 1,888,367.

Hence the market potential without even expansion of market by acquiring other already present customers is high. Also by initiating activities of rebuying and multi ownership the numbers can be increased.

iv. Marketing Objectives

Penetrate ladies watches market by 5% every year (present ladies watches market share is 28%)

v. Sales Forecast

vi. Pricing Strategy

The pricing will be from Rs 1500 to Rs 5000. A price willing to be paid for the value proposition given by the product ranges from Rs 2000 to Rs 8000 as per a general survey. The pricing adopted is a competitive type, to attract more middle class women and to enable multi ownership.

vii. Advertising Strategy

The main differentiation of the product which will be conveyed to the customers is the ethnic contemporary mix of the design and the image it gives.

The media mix chosen is based on the objective of obtaining the high reach and frequency and continuation needed to penetrate the market. A wide coverage along with higher frequency and continuity is required. Messages will be more emotionally oriented to enable high recognition of the product along with increasing the present customer loyalty. The concept of different watches for different occasions will be conveyed to the customers to enable multi ownership.

The media mix selected is as follows:

Media / Selection Criteria / Target Audience
Magazines (Outlook, Week etc; Women’s Era, Femina, Art of Jewellery and similar fashion magazines)
Metro and brand Newspapers( Brand Equity, Metro Plus etc) /
  • Color print
  • Demographic
  • Reach
  • Attractiveness
  • Frequency needed
/
  • Fashion fanatics
  • Housewives
  • Working women

Television (All Popular highly viewed channels) /
  • Coverage
  • Impact of visual presentation
  • Short message
/
  • Housewives
  • College students
  • Rural segment

FM (Music Stations) /
  • Frequency
  • Appeal of music
/
  • Music loving young generation
  • Professionals
  • College Students

Publicity /
  • Constant news events
  • Connection to an identity
  • Credibility
/
  • News followers
  • Credibility conscious working women

Outdoor (Posters etc in public locations) /
  • Frequency
  • Mass audience
  • Less Costly
  • Impulse buying in case of point of purchase promotion
/
  • Traveling women
  • Shoppers
  • Youngsters

Internet /
  • Interactivity
  • Continuity
/
  • IT professionals
  • Internet savvy youth

viii. Promotions Strategy

Special offers for festive occasions will be given. The price discounts or added co product will be decided based on the occasion and expected sales due to the promotion.

Trade Promotions will be provided for the retail intermediaries to promote the sales by giving incentives like price reductions etc for higher sales of the products under the brand.

ix. Distribution Strategy

The customers will be provided a unique experience through the buying process. Hence

  • Exclusive Raga showrooms will be opened. The showroom will be designed in a different look to appeal to its customers. Staff will be trained to provide high customer satisfaction.
  • Sections dedicated for Raga in Titan and Tanishq showrooms.
  • Selective high end branded retail showrooms like Westside, Shoppers Stop, and Pantaloon.

x. Supporting Activity

All the activity will be supported by market research. Some topics(broad definition) of the studies which will be done are on:

  • The features of the showroom which attract women during shopping
  • Attributes women feel important for a jewellery substitute product
  • The media channel which have a high reach among women
  • Highly searched sites by women

xi. Brand Life extension strategy

Exclusive Ladies watches for all successful Indian women.

After acquiring the brand equity with the middle class women the leverage strategy will be to start moving into the premium segments increasing the price range available to choose from. This strategy is on the basis that the successful middle class women will move on to the premium segment and due to the brand emotional attachment created earlier, they may have a preference for the brand, and hence will opt for the brand if value products are provided. These products will again be sub branded and will be promoted with a mentioned association with the brand of Raga.

Product Features

  • Sophisticated designs in gold and steel
  • Lesser variety in leather
  • Classic international designs
  • Use of stones and pearls

Pricing Strategy

The pricing will range will be larger including access to the premium segment also under the brand.The pricing is arrived at based on the increase expected in the affordability of lifestyle products by Indian women and considering the value offered by the product and its competitors.

The Promotions and Distribution strategy will be adopted according to the trend and the changes in purchase behaviour of the customers which will be studied continuously by market research.

6.0 Financial Summary

The present sales of ladies watches account to 23% of Titan watches sales. The total ladies watches market penetrated to around 28% only. The objective of the plan is to increase the ladies watches sales by 5%.

Assumptions

  • Ladies watches sales increases by 5% every year
  • Operating and Non Operating expenses is increasing at 30% annually and account for 25% of the sales revenue
  • The prices are assumed to remain same i.e. Rs 1500 to Rs 5000
  • Depreciation takes place at1% of sales revenue
  • Taxes increase at 44% over year and account for .5% of sales revenue
  • Interest rates for discounting is 18%
  • Investments amountsare based on data collected from various articles, Titan industries annual report and assumptions.

Cash Flow Statement estimate (in crores except sales units)