A Case Study on Titan

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A case study on Titan

By

Rekha DahiyaFaculty, MarketingDSPSR

Delhi

Introduction:-

The big question- should a company stay focused on its core competencies and competitive

advantages that made it great or should it diversify to keep up with, surpass its peers?Experts say it is one of the trickier questions to answer. But answer lies in the gains that a

company reaps after diversification.

Corporate strategies expand the scope of operations through diversification into new

businesses. Diversification into new business can reduce variations in corporate profits by

expanding the corporation's lines of business. Diversification is a form of growth strategy.Growth strategies involve a significant increase in performance objectives (usually sales or

market share) beyond past levels of performance. Many organizations pursue one or more

types of growth strategies.

Diversification leads to improved financial performance. Large firms generate cash that can

be invested in other ventures. That is, the core business sustains itself on its money makingventures, and uses this cash flow to create new ventures that generate additional profits.

One of the primary reasons is the view held by many investors and executives that "biggeris better." Growth in sales is often used as a measure of performance. Even if profits remain

stable or decline, an increase in sales satisfies many people. The assumption is often madethat if sales increase, profits will eventually follow.

Titan industries, the watch and jewellery major is also changing its approach to its portfolio.Titan, Rs. 3,000 crore industry is moving towards a new segment what we call the life

space. The strategy of Titan is discussed in the case study with an objective to find out anddiscuss its success in enhancing shareholders' value over the years.

Case Body

The foundation of the Tata Group was laid in 1868 by Jamsetji Nusserwanji Tata He learned

the ropes of business while working in his father's banking firm and he established a tradingcompany in Bombay.

Tata helped pave the path to industrialization in India by seeding pioneering businesses insectors such as steel, energy, textiles and hospitality. The Tata Group expanded regularly

into new spheres of business. The more prominent of these ventures were Tata Chemicals(1939), Tata Motors and Tata Industries (both 1945), Voltas (1954), Tata Tea (1962), Tata

Consultancy Services (1968) and Titan Industries (1984).


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Titan, a joint venture between Tamil Nadu Industrial Development Corporation (TIDCO) andthe renowned Indian business group Tatas, entered the watch market in 1984. Titan

changed the watch market in India completely by making quartz watch the centerpiece ofits strategy. Titan Company is the unquestioned leader in Indian Watch Industry. Titan is

one of the most powerful brands in the Indian market, scoring very high on brandawareness, brand image and brand preference.

The watch market in India recorded an approximate volume turnover of 23 million units(1998-99). It is growing at 9% per annum. The organized sector contributes to half the

volume turnover of the industry and rest by the unorganized sector. Titan has 60% share inorganized sector

Since its inception, Titan decided that it would be the shaper of the watch industry and notan adapter. The Tatas took two decisions that paid them well as well and changed the face

of Indian watch market. They decided to manufacture only quartz (analog and digital) andnot mechanicals and they projected as fashion accessory. Titan was first in India to

introduce the style concept and was successful in projecting its watches as more than atime keeping machine.

Titan initially pioneered the concept of "Gifting watches". The ads captured the essence ofgifting and along with the trendy music, easily caught the imagination of the market.

Customers who were fed up with ugly time machines welcomed the brand and Titan had adream run for many years.

Titan entered the watch market as a premium watch. But the unorganized sector and lowpriced options from HMT gave Titan serious competition. With the import duty reduced to

25% (earlier 50%) and with the import license for watch movement being easy to obtain,many smalltime players cropped up. These small players offered competition to Titan on the

price front.

Titan made a big mistake. It wanted to play the volume game. For that Titan launched

another brand Sonata. Sonata was a huge success because it was a cheap product but atthe cost of the mother brand Titan. Titan was perceived to be a premium brand but with

Sonata (at that time "Sonata from Titan") endorsed by Titan took away the premium imagefrom the mother brand. It was a big costly mistake.

Another problem with Titan has been that it mainly operates in the mid-priced segment and

competitors accuse Titan of keeping the segment underdeveloped on account of its sheer

dominance.

Titan realizing that the market wanted something to be excited about watches and carefully

segmented the market and developed different sub brands for each segment. Sub brandslike Edge, Steel, Dash, Nebula, Classique, Royale, Fast Track, Raga, and the recently

launched Wall street . By having various products / models and sub brands, Titan was ableto create freshness about the brand.

Titan launched Tanishq in 1995, India's largest, most desirable and fastest growing jewelrybrand in India. Diligent care and quality processes ensure that the Tanishq finish is

unmatched by any other jeweller in the country.


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Tanishq challenged the age-old jeweller's word with TATA's guaranteed purity. It explodedthe market with facts about rampant impurity across India. It introduced technology-backed

challenge in a category completely governed by individual trust. Tanishq introducedinnovations like Karat meter, the only non destructive means to check the purity of gold.

Titan now is trying to be more contemporary and more relevant to the consumers by

establishing more firmly in the minds of the consumers. "Be more" the new concept of Titanis attempts to build a larger life connect between the Titan brand and consumers.

Titan is changing its portfolio by shifting its focus from product attributes to the yearnings,

emotions, experiences and aspirations. The Titan aviator is inspired by word war IInd fighterplane, Titan Octave by cockpit of formula one car, wwf collection by endangered species and

Titan Raga Diva by beauty and sensuousness.

The picture that is emerging with this kind of collection is of the organization that is gearing

up to leverage its strengths in manufacturing, design capability and retailing to grab alarger share in lifestyle market. With the success of Titan watches and jewellery segment

and their recent entry in eyewear they are more comfortable with developing lifestyle

brands. Under the brand Fastrack comprising watches and sunglasses Titan is now lookingat the possibility of adding accessories like bags and belts and so on. To make this segmentmore attractive, Titan is planning to open exclusive Fastrack stores.

Eyewear is fast becoming a fashion statement and Titan is focusing on design and retail.Titan has also entered in prescribed eyewear segment and has opened 30 stores across 12

cities. Each of them is positioned as a complete optical store where under one roof customercan have a wide range of frames and lenses including some very famous global brands.

Tanshiq's makeover over the year as well is indicating the shift of Titan in life stylesegment. From being a fashion brand for young people with its light weight jewellery

Tanishq added mainstream wedding jewellery to its portfolio. The association withBollywood through movie like Amol Palekar's Paheli and more recent Jodha Akbar has also

brought the brand close to the consumer.

The big factor that has been in Tanishq's favor is that it jewellery is now more of a lifestyle

product for urban consumers. It is no longer bought for investment purpose. The keydrivers in this sector are brand equity, design and retail experience. The Indian jewellery

market is estimated to be around Rs. 70,000 crore to Rs.80, 000 crore and organized sectora small local players account only for 4,000 crore. So opportunity for a player like Tanshiq

with strong brand equity and first mover advantage is tremendous.

Tanshiq as a part of its expansion strategy has become global recently. It has opened a

showroom in Chicago, USA targeting the average American. US is the largest jewellerymarket in the world and Tanishq has an opportunity to position itself between expensive

brand Tiffiny and discounted brand Wal-Mart.

Titan is going strong on all fronts but is equally aware of changing market dynamics and its

competitors. Titan is very closely watching its closest competitor Reliance. Reliance is theonly corporate house after Titan that has entered both in the jewellery and eyewear

markets.


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For the year 2007-2008 of Titan's turnover of Rs 3041 crore, the jewellery businessaccounted for Rs. 2027 crore while watches accounted for Rs. 918 crore. This is one of the

main reasons Titan is leaning on its jewellery business.

Segment Sales (2008) Sales (2007)

Watches 918.69 783.77

Jewellery 2,028.00 1,291.96

Others 96.03 62.71

Total 3042.72 2138.44

Titan grew at 43% last year and crossed the sales of Rs. 3,000 crore. Net profit stood at Rs.

150 crore as compared to 94 crore last year. With these great figures, Titan is still goingstrong..

Sr. no. Year Net profit Net Sales*

1 2004 10.27 804.53

2 2005 24.95 1136.60

3 2006 73.62 1483.15

4 2007 94.13 2138.44

5 2008 150.27 3042.72

Net sales include watches, jewellery and others segments.

Questions

1. Titan has been a dominant player in mid price segment with its brands Titan and Sonata.

What were the reasons for the expansion strategy led by Titan to launch various brands indifferent segments?

2. Titan diversified into jewellery business in the year 1995 as a part of its growth strategy.Growth strategies involve a significant increase in performance objectives (usually sales or

market share) beyond past levels of performance. Did Titan's diversification into jewellerybusiness justify the above said statement?

3. How watches, jewellery and life space segment strategically fit in Titan's overall missionand vision accomplishment?

Documents

A Case Study on Titan