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STRATEGY It's Payback TIME(X) Two years after it parted ways with Titan, the American watchmaker is beginning life anew with new plans and an even newer CEO. By Vinod Mahanta
If Kapoor needed a good omen ahead of his new job, this had to be it. As the American watchmaker's new man in India, Kapoor's biggest challenge is to re-build from scratch the marketing and distribution network that almost collapsed after Timex parted ways with Titan in March, 1998. In one stroke a quarter of its sales made through Titan showrooms was lost. That wasn't the only harm done, though. Under an eight-year-old non-compete agreement, Titan was not allowed to launch watches under Rs 1,000; that segment was to be left open for Timex. However, just before the break-up, Titan launched two new brands-Sonata (Rs 375 and above) and Dash (Rs 250 plus). That in itself was not a problem. The real damage, says Timex, came from its confinement in the sub-Rs 1,000 segment. A brand that had more than a third of the American market-and the US President Bill Clinton among its customers-was given a down-market image. Says Kapoor: ''My first challenge is to communicate to consumers what the Timex brand is really about.'' The Comeback
Fortunately for Kapoor, the sales graph is inching back up. Revenues last year were at Rs 90.48 crore, up by 36 per cent. Distribution is falling into place too. The number of distributors has grown to 19 from zero in 1998; the redistributors' rank has swelled to 61 (from nil); there are 31 exclusive showrooms and 6,100 points of sale. Says Anuj Sharma, 40, Vice-President (Marketing), pa Time Industries: ''Finally, the company is getting its act together.'' The market focus is also shifting. After the break-up, Timex was forced to focus on institutional sales such as corporates or defence canteens, simply because it did not have enough retail channels to pump its product through. There was a problem with this strategy though. Such customers leveraged volumes to buy cheaper, eating into Timex's profit margins. Besides, their orders were erratic. Says Amir Rosenthal, 31, the US-based chairman of Timex: ''We are not going to rely on institutional sales. The real market is in retail.'' Thanks to efforts of the past year, Timex now reaches more than a thousand towns. Yet, reach alone may not be enough. The 30-million-units per annum industry is dominated by the unorganised sector. As many as six out of every 10 watches come from hole-in-the-wall manufacturers. Last year, Titan-the biggest player-sold just 60 lakh watches, compared to HMT's 34.8 lakh, Timex's 19.16 lakh and pa Time Industries' (makers of Maxima brand) 13.5 lakh. The other small players account for less than a million. Price Warriors Worse, the unorganised competitors price their watches anywhere between Rs 25 and Rs 500. For somebody like Timex, it's virtually impossible to compete in the low-end without diluting their brand equity. Ergo, the watchmaker wants to focus on the quartz segment that makes up 80 per cent of the total market. Notes Rosenthal: ''This is a market with a high degree of preference for quartz analog watches.'' Over the next few months, the company plans to launch 300 new models in various price bands, ranging from Rs 355 to Rs 3,455. The rationale: since nearly 70 per cent of the market buys sub-Rs 500 watches, a lower price range will help rake in volumes. Says Sharma: ''The market for cheap watches is too big to be ignored.'' At the same, a top-end designer range starting at Rs 3,000 apiece is also planned. Kapoor is hoping that the new communication strategy-which will focus on Timex's American parentage-coupled with a wide price range, will catapult his company to the No. 2 slot, displacing HMT. ''Titan had wrongly positioned Timex as a cheap brand. It's actually a great value-for-money brand,'' claims Kapoor. Timex is also cutting the time to market. For instance, its new digital range, I-Control, was launched just two months after its debut in the US market. To speed up local launches, Timex has brought in a new 900-series movement. Its advantage is that it is cheaper and can be assembled in lesser time, since it does not have any complicated components. The goal? up marketshare from 20 to 35 per cent by 2003. Focusing On Profits One of the reasons why R.J. Masilamani-Kapoor's predecessor-had to quit, was because the company had been unable to claw its way out of the red in the last three years. But buying out of Titan's 28.79 per cent stake by Timex BV has brought $7.48 million, and an additional $7.5 million has come in by way of preferential allotment of shares. One of the key reasons behind the losses was the company's high debt burden. Last year, it paid Rs 11.04 crore in interest alone. Money from the parent will be used to pay off the expensive debt. Inventory is being slashed too. Compared to 1998-99's closing stock worth Rs 9.89 crore, the figure last year was just Rs 5.25 crore. Kapoor plans to follow up on these measures with further reductions in cost. By next year Timex plans to swing towards profitability. Says Rosenthal: ''We are here to make profits, not losses.'' 'Guess after all that licking, it's time to get ticking-again. |
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Having
dealers as friends, marketers will tell you, can help push sales. But find
you a CEO's job? Kapil Kapoor doesn't think it's all that odd. For good
reason. As Timex India's CEO of one month, Kapoor owes his new job in part
to a dealer friend. The story goes something like this: three months ago,
Kapoor-whose previous job was with Bausch & Lomb (B&L) in Hong
Kong-went to a dealer conference in Philippines. There he met Margarette
Taylor, Timex's chief (South-East Operations). But just what was Taylor
doing at a B&L do? It so happens that Timex and B&L share the same
outlets in Philippines. Therefore, the dealers had invited the top brass
from both companies. Taylor and Kapoor had a chat, and soon enough, the
man from Delhi was winging his way back to the capital.