Business Today Net Special

Titan's Tough Turnaround

The watch major ended its 2001-02 first quarter with a loss. The quarters to follow could bring even more bad news for Titan. Reason: although it controls half the Indian watch market, Titan is facing stiff competition from Swiss brands. Tomorrow, the Chinese will be here too. Just how will Titan strike back?

By Vinod Mahanta

Titan's Managing Director, Xerxes Desai

Does a company with more than 50 per cent share of the market go into losses? Yes that's what has happened with Titan. The company lost Rs 14.61 crore in the first quarter. For, Titan the reason was a dip in primary sales due to downstocking by dealers in the first quarter. Titan sold one-third of its sales (nearly 2 million) in the last quarter of 2000. The upstocking in the last quarter was mainly due to lucrative schemes offered by Titan. Secondly, dealers indulged in large scale purchasing because Titan had announced a price hike from April, and additionally dealers also stocked up for the coming wedding season. To make things worse, watch industry is witnessing a slump in demand, and sales volume will be just on par with last years' sales. Also the corresponding quarter last year had an additional income of Rs 9 crore by sale of shares, so the results were financially vitiated. "Though there was growth in the retail sales, but primary sales slump hit Titan." Says Bijou Kurein, Vice President, (sales and marketing), Titan. Traditionally, the following quarters have seen an increase in Titan sales.

With growth prospects not looking rosy, Titan plans to wean market share from other players. In the upper segment other major players like Swiss are beginning to define the price, and as a consequence these companies are taking the cream of the market in terms of higher value sales. Titan is countering the threat by focussing on Fastrack, its fashion brand to counter Swiss brands like Esprit, Swatch irony. This range targets the younger crowd. And to beat other Swiss brands like Tissot, Rado steel, Longines that targets the mature and stylish crowd, Titan has launched Titan Steel. Both the ranges have the 'white look' which is the rage currently. With a contemporary look, they offer prices to match ones pocket, ranging from Rs 1000-6000. "We are bringing in International styling that is comparable to the Swiss brand" asserts Kurien. This would also help in tackling the resurgent American brand Timex, which has recently launched its International Cognoscenti collection and is bringing more brands from its International stable.

Since it is catering to a market, which is a mixture of rural and urban and totally different in nature, Titan has split its marketing team for Sonata (for the rural and semiurban strata) and Titan (for the urban populi). They have created two separate independent sales and marketing teams. Because they were catering to different marketing segments it made sense to split the team for getting focus on the market. Since customer service levels are critical in the watch industry, Titan is beefing up to attract more customers. For instance, it is launching watch care centers in the metros and larger cities. Currently there are about 60 centers done up like showrooms with 400-500 sq. ft area for each. "When customers buys a relationship, it has to be nurtured," says Kurein.

Since the watch market continues to give dull returns, diversification is another option that Titan is looking at seriously. Titan has already ventured into Jewellery with its Tanishq range that has grown into a 209 crore brand last year. It is now seriously planning to delve into the production of leather accessories, sunglasses, and writing instruments. Titan is currently conducting research into these new categories and is yet to finalise a plan. The mega watchmaker is all set to move towards a lifestyle brand than just a watch brand. Most probably most of the action in these categories will be in 2002. The next year for sure could test some of Titans Steel.

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