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IIM-I INTERNATIONAL WATCH BRANDS FREDERIQUE CONSTANT

FREDERIQUE CONSTANT CASE STUDY

Frederique Constant in India:
Aletta Stas-Bax, COO of watch manufacturer Frederique Constant, was sitting in her Geneva office in preparation of her visit to India. While Frederique Constant was active in the country, results were trailing those realized in other Asian countries. She asked herself, what should we do to realize a similar success for Frederique Constant in India compared with the success we are realizing in, for example, China? The potential in India is vast, but we seem not to have found the 'sweet spot' in our marketing mix to set the development on a steady long-term growth path.

The Swiss Watch Industry:

The watch and clock industry, Switzerland's third largest exporter after the machine and chemical industries, has only one market : The World. Swiss made timepieces are to be found in all the countries of the globe. And, what is no less surprising, to suit all pockets, or almost so : from quartz fashion watches for a modest price to mechanical masterpieces, made of gold and decorated with precious stones, costing several million francs. It is this wide variety and its worldwide vocation which together have ensured the survival of the industry over the course of centuries. Historically, the Swiss watch and clock industry has always had a specialized horizontal structure in which suppliers, craftsmen and sub-contractors supply movements and external parts to assemblers called 'tablisseurs', who put the final product together. However, to a lesser extent, the industry has also developed a vertically integrated structure in which watches and clocks are sometimes made entirely by the same company, in this case called a 'manufacture'. During the 1970s and early 1980s, technological upheavals (appearance of the quartz technology) and the difficult economic situation resulted in a reduction in the size of the industry : the number of employees fell from some 90,000 in 1970 to a little over 30,000 in 1984, a figure which has remained stable over the last thirteen years (40,000 employees in 2004) while the number of companies decreased from about 1,600 in 1970 to about 600 now. The average number of employees per company has remained constant, at just under 70 people per company in 2004, as in 1970. The great majority of watch companies are small sized companies (employing less than 100 people) while a very little number (less than 10) are each employing over 500 people. According to a number of economic analysts, the Swiss watch industry was moribund in the middle of the 1970s, having missed out the electronic revolution and being strongly affected by the economic crisis. But what is the situation now, thirty years later? Having successfully completed its structural reconversion, the watch industry is today, as it was yesterday, one of the brightest stars in the Swiss economic firmament. Better still, during the last five or six years, it has taken the leading position amongst the country's most successful industries, breaking its own records in exporting each year and going from 4.3 billion francs in 1986 to 19.3 billion in 2011. See tables in annex for detailed figures on the Swiss Watch Industry.

Background Frederique Constant:

Frederique Constant SA is a manufacture of luxury wrist watches based in Plan-les-Ouates, Geneva. The company was established in its current form in 1988 by Aletta Bax and Peter Stas. Frederique Constant has grown into one of the larger Swiss watch manufacturers. In 2012, production reached over 12,000 watches, sold in over 2,700 points of sale in 100+ countries around the globe. Frederique Constant positions itself in the Accessible Luxury segment, with most of its watches selling at CHF 1,000-5,000 retail. The company is expected to continue its annual 25% growth, doubling in size every three years.

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History of Frederique Constant:
Frederique Constant was created from the first names of the great-grandparents of the founders: Frederique Schreiner and Constant Stas. Incidentally, these first names were also the middle names of the founders: Aletta Francoise Frederique StasBax and Peter Constant Stas; it was a tradition in both families to name children after their great-grandparents. Constant Stas founded his own Lithography Company in 1904. This technology was primarily used to produce etched print plates. However, it was also used to produce clock dials for the burgeoning Friesche Klokken industry. Lastly, the Frederique Constant crest is inspired by the Stas family crest. Frederique Constant is still an independent family-owned watch manufacturer based in Plan-les-Ouates, Geneva. The company is now involved in all stages of watch production, from initial design to final assembly and quality control. Frederique Constant is associated with the core values and competences of passion, creativity, high quality, innovation and exceptional value.

Passion:
Frederique Constant's slogan is Live your passion. Passion definitely shows through the company's craftsmanship, as well as the company's charitable donations. Frederique Constant creates beautiful watches with precision design that are assembled by hand, allowing for a high quality timepiece each and every time. Perceived value is important, so the company knows that quality must be consistent and is vital to it's success. Frederique Constant is equally as passionate about charity, with $50 from each watch sold in the Double Heart Beat Collection donated to various charities. These charities include those related to the heart and children.

Live Your Passion:

Live your passion, reflects the spirit of Frederique Constant's watchmakers, suppliers and customers. Initially, the slogan was 'Live life with passion', but changed in 2001 to the more direct 'Live your passion'. Passion means to the company: Passion for the creation of beautiful watch designs. Passion for latest technology to develop exciting watch calibres. Passion for smart component applications and processes to create watches at sensible prices. Passion for entrepreneurship and business innovations challenging conventional wisdom. Passion for the success of the company.

Passion Awards:
To emphasize the true passion behind Frederique Constant, the company created the 'Frederique Constant Passion Awards' to celebrate the passion that is fundamental to success. The winning companies or organizations are offered a Business Case Study by Professor Dominique Turpin of IMD Lausanne on a strategic issue of choice, as well as a solid gold Frederique Constant Manufacture wristwatch. The Financial Times is the official media partner. Winners were Mr. PeterFrans Pauwels, co-founder of TomTom, Dr. William Novick of the International Children's Heart Foundation, Mme. Laura Cotton, founder of the Paint-a-Smile Foundation, Pierre Marcolini, founder and CEO of Marcolini Chocolatier and Mme. Helaine Baruch of the American Heart Association.

Creativity:
A Frederique Constant watch is more than a luxurious timepiece. Behind it is an extensive creative process that involves an inspired design, smart development and unparalleled attention to detail. Please notice the fine engravings and printing on Frederique Constant dials. The company is also known for our delicate rounded cases that require many hours of hand polishing. Frederique Constant's signature is the Heart Beat.

Heart Beat:
In 1994, Frederique Constant developed its first Heart Beat watch. The purpose of the Heart Beat development was to show the mechanical nature of our watches. Heart Beat watches have an aperture at the position of the balance wheel to show that the movement of the watch is mechanical. Early in the 1990s, automatic mechanical watches were slowly making their

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comeback after the quartz crisis of the 1970-1980s. Typically, these mechanical watches looked similar to quartz watches, except that the second hand moved continuously. On quartz watches, the second hand makes 60 steps per minute. Frederique Constant considered it important to highlight the difference between mechanical and quartz watches visually. In a mechanical watch, the balance wheel beats 28,800 times per hour. The balance wheel rotates clockwise and counterclockwise on its axes in a large ruby jewel. Its rotation is controlled by the hairspring, which constantly coils and uncoils, as can be seen through the dial aperture of the Heart Beat watches. The Heart Beat has become the iconic signature of the Frederique Constant brand. In 1994, Frederique Constant as a company was growing fast but was still relatively small. Without an internal legal department and sufficient management attention, a beginner's mistake was made: The Heart Beat feature should have been deposited as a design registration. Possibly, a patent could have been secured. Instead, the first Frederique Constant Heart Beat watches were introduced in the market without any registration. It only took one year before the first Heart Beat copies started to appear. Some competitors plainly copied the Heart Beat dial aperture in their watches. Others changed the shape of the Heart Beat, but inherently still copied the Heart Beat design feature.

Care for Quality:

All Frederique Constant watches are assembled by hand, one-by-one. Watchmakers need extensive training and experience to be able to assemble the fine components that are required to manufacture a high quality watch. Watches are assembled in a dust-free and air-controlled atelier with various proprietary and custom-made machines. Each and every watch passes through the following quality control tests: A fast tumbler exposing the watch to a strong rotation force. A custom-made rotation device that simulates the movement of the wrist. After above machine exposures, a full manual functionality check. Timing accuracy test in three to five positions. Water resistance test with the revolutionary Deltarox testing device. Extensive visual inspection for miniscule scratches, particles and discoloration.

Manufacture in Plan-les-Ouates:
In 2006, Frederique Constant opened a new manufacture in Plan-les-Ouates, Geneva. The manufacture measures 3200 square meters, divided over four floors, offering an attractive working environment for the company's watchmakers in the sectors of movement component production, caliber assembly, watch assembly, and extensive quality control. Numerically controlled machines of the latest generation are located in a large atelier in the basement, where all component manufacturing is concentrated. Caliber and watch assembly, as well as state-of-the-art quality control, are primarily organized on the first floor of the new Frederique Constant building.

Made in Genve:
Frederique Constant watches are Swiss Made, an important seal for quality watches. In addition, Frederique Constant timepieces are made in Genve, the most prestigious region for Swiss watch making. To have Genve on the dial, a watch must be assembled and inspected by the Canton of Geneva and at least 50% of its value must be added in the Canton. These are not just 'paper' rules; Swiss Customs regularly make random checks of export shipments.

Cooperation:
The creative process is a collective effort by Frederique Constant and its distributors. After the production of second and third round prototypes, the company's main customers are asked for their opinion, encouraging frank and open feedback. The culmination of decades of experience and ingenuity around the world ensures the success of the Frederique Constant collection. However, while extensive input from our customers is appreciated, the company reserves the right to make the final decision on many details in order to maintain the unique character and style of the Frederique Constant collections.

Innovation:
Since 2001, nine new Frederique Constant Manufacture calibers have been developed, produced and introduced in the market. With the introduction of the Heart Beat Manufacture, Frederique Constant has become a member of the small and

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exclusive group of Swiss watch manufacturers that produce their own calibers. A Manufacture caliber is the ultimate achievement in the Art of Horology. Frederique Constant secured various patents for its manufacture calibers.

Heart Beat Manufacture:

After three years of development, Frederique Constant proudly presented the new Heart Beat Manufacture Caliber at Baselworld 2004. The Heart Beat Movement was developed by a Frederique Constant team collaborating with eight specialists from the cole d'Horlogerie de Genve, the cole d'Ingnieurs de Genve and the Horloge Vakschool Zadkine. By working closely with these institutions, cost could be kept under control. Moreover, the company gained an enormous insight by working together with these experienced professionals. Upon completion of the development, Frederique Constant hired three additional full-time watchmakers. Since then, four new Frederique Constant Manufacture calibers have been developed, produced and introduced in the market. Learning from the company's previous mistake, all the designs for the Heart Beat Manufacture caliber were properly registered before going to market.

Heart Beat Silicium:

During two years, Frederique Constant worked passionately on the application of a silicium escapement wheel for the Heart Beat Manufacture caliber. In Basel 2007, the company proudly introduced this first implementation of new high-tech materials to create even better, more precise and more reliable mechanical watches. The benefits of a Silicium escapement wheel are: Lubricant-free running: Age-related thinning and drying of lubrication of the escapement wheel will no longer occur. An escapement wheel without oiling avoids the risk that oil spreads to other parts of the movement. Lower inertia, increasing energy efficiency: The escapement wheel is accelerated and stopped at each tick and tock of the watch. The lower weight silicium escapement wheel has lower inertia, increasing energy efficiency. Better friction properties: Lower friction increases accuracy. It also reduces loss of energy, hence the energy requirement for the caliber is lower.

Tourbillon:
In 2009, Frederique Constant introduced a World Premiere: a Tourbillon watch with Silicium Escapement Wheel and Lever moonphase Date 24. Based on its award-winning Heart Beat Manufacture Caliber, Frederique Constant developed its Tourbillon fully in-house with a number of unique features: Silicium Escapement Wheel and Lever Smart Weight Balancing Fast Oscillation at 28,800 BpH Tourbillon Cage individually numbered

Exceptional Value:
Frederique Constant watches are sold in the 'Accessible Luxury' price segment; the core collection ranges from 500 - 2500 Euro for a high-quality Swiss watch. The company's business model is designed to keep costs down; resulting efficiency gains are fully passed on to the final consumer. Frederique Constant has a no-nonsense open company culture emphasizing integrity, respect, imagination and passion. It is important to point out that Frederique Constant has not changed its concept and positioning. While other brands substantially increased their prices, Frederique Constant kept them largely the same. This confirms belief in the original concept, the foundation and conviction to deliver on a consumer-centric philosophy.

Collector's Value:
Frederique Constant timepieces are in increasing demand by collectors. International auction houses now successfully sell Frederique Constant timepieces, confirming not just their aesthetic appeal, their high quality, but also their value as a longterm investment.

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Concept & Positioning:
From the beginning, Frederique Constant decided to create Swiss classical watches at attractive prices. Aletta and Peter Stas were in their early 30's, just married and practically without any assets. No complaints about their salaries, but there was no way they could afford a 15'000 CHF watch. Still, they were very interested in beautiful and high quality Swiss timepieces. Hence, Aletta and Peter Stas were their own target consumer. It is important to note that Frederique Constant still has exactly the same concept and positioning. It confirms the company's belief in the original concept and business model.

Frederique Constant Key Collections:

Manufacture The Manufacture Collection is built entirely around the proprietary movements developed in-house by Frederique Constant. With a team of highly skilled watch making specialists, the brand started this development back in 2001. Now, more than ten years later, Frederique Constant has eleven calibers. Runabout Frederique Constant celebrates the legendary Runabout gentlemen's sports boats -first introduced during the Roaring Twenties- by offering an attractive series of limited edition timepieces named 'Runabout'. These beautiful wooden boats can still be found today, gracing the waters of places such as Lake Geneva, Lake Tahoe and Lake Como. The Runabout Collection is designed to express the classical elegance of the Runabout boats through rounded, hand-polished shapes, and beautiful detailing. At the same time, this collection represents Frederique Constant's passionate involvement in Runabout events such as Helice Classique on Lake Geneva (Switzerland) and the Concours d'Elegance on Lake Tahoe (USA). Vintage Rally Frederique Constant is involved in various classic car events around the world in past years. In recent years Frederique Constant was the Official Timekeeper of 'Peking to Paris', various 'Healey' Challenges and La Carrera Panamericana. For each of these events, an exciting limited edition Vintage Rally time pieces was introduced. Pure style for pure passion! Ladies Automatic The Frederique Constant Ladies Automatic Collections have been designed by women for women. Classic and elegant, feminine and sophisticated, sexy in every detail, these fine mechanical timepieces have been developed with passion to reflect the values and aspirations of today's women. Classic Frederique Constant is known for its classical and refined timepieces of exceptional value. This collection has various watches with classical designs.

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Frederique Constant Focus:
Key Focus Manufacture Uniqueness Since 2001 own caliber development, patent HBM, patent smart balancing TB, CIM anker, Freebeat Advertising Visual, Helice Nautique, Lake Tahoe, Venice Healey, Peking 2 Paris, Panamericana Double Heart Beat, Love, Amour Beautiful Swiss classical models at accessible prices, value for money Product Heart Beat Manufacture Maxime Manufacture, Tourbillon, Other Complications Index case, Chrono, Small Complication Chrono and Automatic with rally logo Chocolate Double Heart Beat Automatic, Index, Slimline, Business Timer Visual Car Driver

Runabout Vintage Racing Ladies Automatic Classics

Runabout Car Driver Nicole Faria Car Driver

Charities:
Frederique Constant donates US$50 from each watch sold in its Double Heart Beat Collection to various charities, including those related to the heart and children. The company donated a US$50,000 cheque to the American Heart Association during its 2010 Passion Awards for Charity in New York. Frederique Constant has donated two cheques in the value of US$50,000 (in 2008) and US$75,000 (in 2011) to the International Children's Heart Foundation, a passionate organization that brings skills, technology and knowledge to diagnose and care for children with congenital heart disease to developing countries. The company partners with the World Heart Federation on the 'Hearts of Children' campaign as well as a multi-national survey conducted in Brazil, India, UK and the USA by the World Heart Federation confirming Half of people incorrectly believe we should wait until age 30 or older before taking action to prevent heart disease and stroke. Frederique Constant is partner of the Only Watch activity to create truly exceptional and one-off pieces to raise funds for scientific and medical research on neuromuscular diseases in general and Duchenne muscular dystrophy in particular.

Brand Ambassadors:
Frederique Constant is represented in Greater China by brand ambassador Shu Qi. Eva Longoria and Frederique Constant teamed up for Par Coeur in 2010 in Paris. Miss Earth 2010 Nicole Faria is the global brand ambassador for Frederique Constant. Her role as global brand ambassador for the Swiss watch brought her to various countries. Supermodel Ins Sastre became global Frederique Constant Ambassador in 2013.

Future Developments:
Frederique Constant will continue to expand its main strategies: 1. Focus on beautiful designs and highest quality at sensible prices 2. Keep our strategy 'Accessible Luxury' and continue to push for growth 3. Keep proportion similar on movements used in our watches between Sellita (60%), Manufacture (15%) and Ronda (25%) 4. Experiment on new technologies like silicium or ceramic to learn and have a story to press

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Global Sales:
Frederique Constant intentionally aims to spread its sales worldwide. Below spread is based on turnover 2012.

9% 8% 36% 7% 5% 34%

Global Classic Media Plan 2013:

Frederique Constant deploys an international advertising in various media. The brand is potentially seen 1.37 times by each human living on earth. Spend in 2013 is estimated to be +36% compared to 2012. Please see an overview of media covered:

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Media Type Billboards Campaign Inflight Lifestyle Newspaper Online Watch Magazine Watch supplement # Media 43 5 45 15 20 35 12 175 # Ads 195 15 110 60 60 50 12 502 Reached Audience 36'800'000 1'114'500 10'986'000 9'225'255 9'000'000 1'230'000 5'303'333 Total Audience 7'176'000'000 16'717'500 1'208'460'000 553'515'300 540'000'000 61'500'000 63'639'996 9'619'832'796

Digital Media:
Social Media is becoming a powerful mainstream media that needs to be harnessed by professionals in-house. Frederique Constant has employed experienced managers in Geneva and Far East to strengthen its regional understanding, and expand its digital activities worldwide and in Asia Pacific markets in particular. Please see the Digital Strategy Framework in the annex.

Watches in India:
The watch industry is one of the oldest industries in India and has a rich heritage to boast about. Over the years the growth rate of the watch market has been modest and the penetration level at 27% is still very low. However the future prospects of the watch industry looks bright driven by favorable demographics and a gradual change from a functional or utilitarian product to a lifestyle one. Currently, around 60% of the market by value is controlled by organized players like Titan, Timex, Maxima, HMT and many Swiss, American and Japanese brands. Remaining 40% is where unorganized and grey market players operate. By Value around 60% of the market is controlled by organized players. The unorganized players usually operate in the sub 500 price range and distribute their goods through small watch retailer and repairers. Fake watches too form part of the unorganized market and are distributed through popular markets where imported goods are sold. Many organized players from India have introduced their own brands/sub-brands in low price segment to counter the challenges from the cheap watches in grey market. The structure of the market is that of a pyramid with mass segment having the largest contribution. However in the coming years, the market is expected to become like an inverted pyramid as the luxury and prestige watch segments are growing faster mirroring the trends in most international developed markets.

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Mass Segment: This segment caters to the sub 1,000 range of watches. National players, Titan and PA Time Industries from the organized market with their brands Sonata and Maxima respectively cater to sub 500 watches within the mass segment. Few regional brands such as Rochee, V.I.P also operate in this segment. There is a huge presence of unorganized players in this segment. Mid Segment: Brands such as Titan, Timex and Citizen that used to cater to the mass segment have increased their offering in the higher price range and thus moved to the mid-segment. This segment also includes fashion watches in 3,000-8,000 range, which appeals to the customer more on the aesthetics and brand association front rather than technology advancement. Few fashion brands, designer labels that operate in this segment are Diesel, Esprit, Fossil, Giordano, Tommy Hilfiger, Guess, Kenneth Cole, Police etc. Premium Segment: The segment caters to consumers who want to get associated with a brand name that signifies growth and prosperity. These consumers consider watch brands as a reflection of their own personality. Many of these high end watches are often gold plated, diamond studded and used as left arm jewellery. Brands here, range from premium, affordable luxury to prestige price bands, examples are, Guess Collection, Seiko, Tissot, Xylys, Dior, Longines, Frederique Constant, Rado, Tag Heuer, Harry Winston, IWC, JLC, Patek Philippe, Ulysse Nardin, Breitling, Cartier, Montblanc, Omega, Rolex etc. Although this segment is largely driven by brands, it does have a significant grey market in the luxury and prestige segment. In next 5-10 years, the market is expected to move towards an inverted pyramid as the value share of premium segment will be the highest. This structure will mirror most international developed watch markets Swiss watch exports to India were ~USD 35.6 million in 2009. India is still seen as a small market for Swiss watches, in 2009 sales grew at an annualized rate of 25% valued at around USD 250 million. Analysts expect Indian market to grow to USD 1 billion market over the next 10 years.

Top 10 Brands in India (as per retailer feedback):

Retail Price Range
Titan Tag Heuer Omega Longines Casio Seiko Citizen Rolex Audemars Piguet, Breitling and Breguet USD10 - USD 2000 USD 1000 to USD 4000 USD 2000 to USD 6000 USD 600 to USD 4000 USD 50 to USD 100 USD 300 to USD 600 USD 200 to USD 400 USD 4000 to USD 10000 USD 4000 and above 70% market share of the non Swiss watch segment 20% of Swiss watch market, 10% of international brands 20% of Swiss watch market, 10% of international brands 5% of Swiss watch market 30% of International watch brands market 10% of international watch brands market 20% of international watch brands market 20% of Swiss watch market and 10% of international watch market Collectively approx 10% of the Swiss watch market

Among the Swiss watches, the leading brands are Rolex, Omega and Tag Heuer. These brands have been in India for close to 20 years, and are now considered Indian. Omega and Tag Heuer have modified their advertising to the extent that they have almost no international messages. They use Indian brand ambassadors, and even have their messages in local languages. The attached annexure gives some details of the advertising budgets of various international brands in India. Obviously, Frederique Constant's publicity budget is limited and it is a challenge to stretch the budget. It is obvious that the Indian market is driven by advertising. Indian consumers have a great need to buy what their peers can recognize, and therefore the brands that advertise the most normally sell the most. One needs to understand that a large percentage of premium and luxury purchases in India are made as gifts for various occasions, and not for personal use. In this situation, the purchaser wants the gift to be recognized for its value, and this has a direct correlation to brand awareness.

Frederique Constant in India:

It is into this scenario that Frederique Constant entered India in Dec 2009 to try and convince the Indian watch trade to accept this new brand. Actually the brand was not new to the retailers, since it had been in the country earlier, but it had to be re-built since it had been away for a long time. After convincing Watches of Switzerland in Mumbai to accept the brand, the process of brand management started, and a few months later, Retail Interface Pvt. Ltd. was appointed as India Representatives for

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the brand. It was a slow process but with a lot of persistence, the brand is today on display at the best retailers in 23 POS (Points of Sale) in 8 metro cities. The attached annexure gives the names and locations of these POS. Talks are in progress for another 10 POS to be opened in the coming year.

POS in India:
Following shows current situation for Points of Sale in India: 8 Metro Cities - 45 POS 25 State capitals - 50 POS 100 other towns - 100 POS (unlikely to be selling Swiss watches) Frederique Constant is currently present in Metro Cities only in 23 POS with plans to grow to 30 POS in 2014 and 40 POS in 2015. Current POS are: MUMBAI Ethos Summit, CR2 Mall, Nariman Point The Collective, Palladium, Phoenix Mills Popley La Classique, Grand Hyatt, Sanatacruz Watches of Switzerland, Linking Rd, Bandra Swiss Boulevard, Atria Mall, Worli Helios, Linking Road, Khar DELHI Ethos Summit, Select Citywalk, Saket The Collective, Ambience Mall, Vasant Kunj Ethos, Ambience Mall, Gurgaon Ethos , Terminal 3, IG International Airport BANGALORE Ethos Summit, UB City Zimson Time, Mantri Mall Ethos, Orion Mall, Malleswaram Ethos, BIAL CHENNAI Zimson, Express Avenue Mall, Royapettah HYDERABAD Ethos, Inorbit Mall, Madhapur CHANDIGARH Ethos, Sector 8C KOCHI Swiss Watch Boutique, Lulu Mall Ahmedabad The Golden Time - CG Road The Golden Time - Satellite Chennai Helvetica - Phoenix Market City Ethos - The Forum Mall Surat The Golden Time

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Collection:
It is a challenge to collect money. Retailers in India keep holding money as their cash flow is mostly committed to the larger and stronger brands. This is also a function of Frederique Constant's limited marketing spend. With higher advertising spend, sales will improve, and retailers are more than willing to pay. Rolex for example collects money in advance.

Frederique Constant India Strategy:

It was a conscious decision to use influence and innovation rather than money to attract attention in the market. The overall strategy was to address the India Corporate Sector. This is a significant segment of the consumer base, and no other watch brand is specifically addressing this segment. Business executives in India have a high purchasing power, and are very brand conscious. The Frederique Constant ranges of classical timepieces are ideally suited for office and business situations. Following this, the tactical initiatives are: 1. To develop a Swiss watch for India - this was unprecedented, and for the first time there is a watch made in Switzerland with indexes written in the Hindi Devanagiri script. 2. To sponsor some high visibility events - these were the Chevrolet Golf Challenge which attracts participants for the Indian companies, and The Frederique Constant Polo Cup, which attracted a very exclusive segment of owners of large corporations, and even members of some of India's royal families. Polo in India is sponsored by JaegerLeCoultre, Longines, Omega and Tag Heuer. Very significantly, all these brands sponsor polo in Delhi and Mumbai. The India Polo Association has recently declared Bangalore as a center for polo, and has circulated an invitation to brands based in the city to become title sponsors for 5 years. 3. To make advertising conditional with PR - every newspaper and magazine was advised that Frederique Constant will advertise with them only if they first published a significant amount of PR content. This resulted in a dual visibility for the brand, and also gave the brand an exclusivity which attracted the discerning corporate customers. 4. Advertising in leading corporate magazines - The magazines chosen were Fortune, Outlook, Robb's Report, MensWorld, and Elle. All leading publications in India, read by corporate executives. 5. Retailer involvement in marketing- Retailers were advised of the publications in which the advertising would be done and their recommendations were also taken for local advertising. 6. POS promotions - Nicole Faria was taken to inaugurate new POS in Hyderabad and Mumbai and also for the finals of the polo tournament in Bangalore. 7. Advertising in leading newspapers - These were selected based on the rates offered and the coverage in the local markets. 8. Service Center - Frederique Constant has a service center located in Bangalore which is currently adequate for the volume of service needed. The plan is to have another service center in Delhi which will be operational in a few months.

The LIME Challenge:

1. Do a SWOT for Frederique Constant as an International Watch brand in the highly segmented Indian market and state its current positioning and brand equity.. 2. Is there merit in Frederique Constant's clear segmentation strategy to focus on the corporate sector? What attributes should Frederique Constant emphasise to build its brand equity in this sector? 3. The luxury watch industry is dependent on high budget advertising campaigns,promotions and personalities. What other options can you recommend to Frederique Constant? 4. Frederique Constant's objective was to develop a Swiss watch for India - this was unprecedented, and for the first time there is a watch made in Switzerland with indexes written in the Hindi Devanagiri script. How best could this initiative be leveraged.

Mentor:
Mr. Arun Dsilva, India Representative arun@relationshipsworld.com

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Annexure Section:
BRANDWISE ADVERTISING SPENDS IN 2012 (Rs 1 Cr = Chf 180000) Brand ROLEX Omega Tag Heur Hublot Breguet Breitling Raymond Weil Louis Vitton Harry Winston Ulysse Nardin Piaget Vacheron Constantin Blancpain Spends (Rs Cr) 30.0 27.5 16.5 6.5 5.0 4.4 3.8 2.0 2.0 15.0 2.0 2.0 1.0