Product Plan
Prepared by
Vidya Dinesh Nair
PGP ‘05
Asian School 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
i. Industry
ii. Competitor Analysis
iii. Company
4.0 Raga – The Product
i. Product Specifications
ii. Value proposition to customers
iii. SWOT Analysis of ‘Raga’
iv. Competitors
5.0 Marketing Program
i. Entry Positioning
ii. Customer profile
iii. Market Potential
iv. Marketing Objectives
v. Sales Forecast
vi. Pricing Strategy
vii. Advertising Strategy
viii. Promotion Strategy
ix. Distribution Strategy
x. Supporting Activities
xi. 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 redefined strategy
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 Product Vision
“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 600 million pieces.
Switzerland, Japan and Hong Kong are the important watch manufacturing
countries. 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
million units and 5% in value terms, when compared to the previous year. The
growth rates of the Japanese giants Citizen and Seiko were single digit increases
in the spectrum of 3 – 4%. In comparison, the Swatch Group grew by over 8%
and has 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%
13%
11% - Mass (< Rs 500)
43% - Low-end (Rs 500- Rs 1000)
43%
33%
33% - Mid-Upper (Rs 1000 – Rs 5000)
13% - Premium ( > Rs 5000)
Source: Titan investors meet 2005
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
o Disposable Income, Spending pattern and other demographics
o Technology
o Lifestyle – Emergence of new customer segments (style conscious,
women )
o 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)
o Retailing innovation (experience selling)
Opportunities in Industry
o Increasing Middle class segment
Affluent
50%
40%
Upper Middle
46%
38%
INCOME
GROUP IN %
40%
Middle
Low er
48%
43%
26%
30%
20%
10%
11%
3%
14%
6%
18%
9%
Source: IRS 2005
0%
2001-02
2005-06E
2009-10E
YEAR
o Increasing urban population (Urban growth rate at 3% Vs 1% overall)
o Increasing spending on lifestyle products by households
o Increasing no. of youth population (82 million at 20 - 34 age in 2005, Two
third of Indians are Below 30 yrs, Median Age Is 24 (35 in US, 41 in
Japan))
o 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
India and 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
Titan is 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 with different brands catering to the Premium, Mid-upper
and low-end segment. Some of the strengths of the company are:
o Wide spread network of retail and customer service (9000 outlets)
o Brand Equity
o Manufacturing facility
o Technology and designing development (award winning design team)
o Wide range of product for different segments needs
Products
o Royale: Stylish dress watches in all gold and precious metals, in 40
different designs
o Fast Track: Casual watches with an accent on youth and the outdoors, in
25 different designs
o Sonata: For the low-end market
o Raga: Exclusively for women
o Etc..
4.0 ‘Raga’ - Product Strategy
i. Product Specifications
The new brand of watches is exquisitely designed for satisfying the needs of 21 st
century fashion conscious women in India taking into consideration the trends
around the world also. The product features are:
o
o
o
o
o
o
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:
o
o
o
o
o
o
o
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:
o
o
o
o
o
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
o Quality and design
o Emotional content with product
o Brand Equity
o Jewellery Characteristics of product
o Cheaper and of comparable value to the competitor products
Weakness
o Customer acquisition by own brands
o Niche market
Opportunities
o Low penetrated market
o Increase in multi ownership
o Increase in earning women
Threats
o Increase in domestic competition
o Reduction of brand from premium positioning to middle positioning due to
competitors entrance
o 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. Entry positioning
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 have a
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
Sales units
9,389,121
No. of units
10,000,000
8,000,000
6,344,001
6,000,000
4,000,000
4,436,364
2,417,110
3,214,757
2,000,000
0
Sales units
1
2
3
4
5
2,417,110
3,214,757
4,436,364
6,344,001
9,389,121
Years after introduction of strategy
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
Magazines (Outlook, Week etc;
Women’s Era, Femina, Art of
Jewellery and similar fashion
magazines)
Metro and brand Newspapers (
Brand Equity, Metro Plus etc)
Television (All Popular
viewed channels)
highly
o
o
o
o
o
Target Audience
Color print
Demographic
Reach
Attractiveness
Frequency needed
o Fashion fanatics
o Housewives
o Working women
o Coverage
o Impact
of
visual
presentation
o Short message
o Housewives
o College students
o Rural segment
o Frequency
o Appeal of music
o Music loving young
generation
o Professionals
o College Students
FM (Music Stations)
Publicity
Outdoor (Posters etc in public
locations)
Internet
o Constant
events
o Connection
identity
o Credibility
o
o
o
o
news
to
an
Frequency
Mass audience
Less Costly
Impulse buying in
case of point of
purchase promotion
o Interactivity
o Continuity
o News followers
o Credibility
conscious working
women
o Traveling women
o Shoppers
o Youngsters
o IT professionals
o 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
o 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.
o Sections dedicated for Raga in Titan and Tanishq showrooms.
o 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:
o The features of the showroom which attract women during shopping
o Attributes women feel important for a jewellery substitute product
o The media channel which have a high reach among women
o 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
o
o
o
o
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
o Ladies watches sales increases by 5% every year
o Operating and Non Operating expenses is increasing at 30% annually
and account for 25% of the sales revenue
o The prices are assumed to remain same i.e. Rs 1500 to Rs 5000
o Depreciation takes place at 1% of sales revenue
o Taxes increase at 44% over year and account for .5% of sales revenue
o Interest rates for discounting is 18%
o Investments amounts are based on data collected from various articles,
Titan industries annual report and assumptions.
Cash Flow Statement estimate (in crores except sales units)
Sales units
Sales Revenue
Op and Non-Op Expenses
Depreciation
Tax
Operating Profit
Discounted Cashflow
(@18%)
Total Discounted cash flow
2007
2,417,110
604.28
151.07
6.0428
3.0214
444.15
2008
3,214,757
803.69
196.39
8.0369
5.786568
593.48
2009
4,436,364
1,109.09
255.31
11.0909
7.985448
834.71
2010
6,344,001
1,586.00
331.90
15.86
11.4192
1226.82
2011
9,389,121
2,347.28
431.47
23.4728
16.900416
1875.44
376.39
2,763
426.22
508.03
632.78
819.77
NPV estimate
Investments to be made for next 5 years (in crores)
Market Research and R&D
Plant Capacity addition (in terms of Rs)
Advertising and Promotion
New showroom investments
Total capital investment
NPV
1
100
7
10
118
$2,881.20
Revenue (in crores)
Sales
2,347.28
2500
2000
1,586.00
1500
1000
1,109.09
604.28
803.69
500
0
1
2
3
4
5
Years after introduction of strategy
Profit growth
1875.44
Profit (in crores)
2000.00
1500.00
1226.82
834.71
1000.00
500.00
444.15
593.48
0.00
1
2
3
Years after introduction of strategy
4
5
Annexure 1
Market Potential And Sales Forecast
Data Available from Global Market Survey
Population growth rate - 1.47%
Target Market
1,228,536,000
Female Poulation in target segment assuming 50% ratio
Female Population already owning watches (28%)
Market Potential
No. of watches sold by Titan
No. of ladies watches sold by Titan
Market Share of Raga
614,268,000
171,995,040
442,272,960
8,210,293
1,888,367
1.10%
Population GR of UM
Population GR of M
Avg growth rate of segment
7%
15%
11%
Population estimate
Indian M Class
Female M pop
Female Pop owning watches
2007
2008
2009
2010
2011
1,363,674,960
681,837,480
190,914,494
1,513,679,206
756,839,603
211,915,089
1,680,183,918
840,091,959
235,225,749
1,865,004,149
932,502,075
261,100,581
2,070,154,606
1,035,077,303
289,821,645
2007
2008
2009
2010
2011
2,417,110
528,743
3,214,757
797,646
4,436,364
1,221,608
6,344,001
1,907,637
9,389,121
3,045,120
Objective
Penetrate by 5% more every year
Assuming 23% of Titan customers are
women
Additional units sold