HINDUSTAN MACHINE TOOLS

WATCH DIVISION
 HMT : A SNAPSHOT

Incorporated in 1953
by the Government of
India as a Machine
Tool manufacturing
company.

 Over the years  Successful technology  Today, HMT

diversified into Watches, absorption in all product comprises six
Tractors, Printing groups through subsidiaries under the
Machinery, Metal Forming collaborations with world ambit of a Holding
Presses, Die Casting & renowned manufacturers & Company, which also
Plastic Processing further strengthened by manages the Tractors
Machinery, CNC Systems continuous in house R&D. Business directly
 HMT WATCHES : PROFILE

 The manufacture of wristwatches started as part of

diversification strategy of HMT in the year 1962, under Technical
collaboration with CITIZEN Watch Company of Japan.
 HMT Limited, the first company to start watch manufacturing in
India; has incorporated "HMT WATCHES LIMITED" as its fully
owned subsidiary on 9th August 1999.
 It manufactures Mechanical and Quartz Analog watches.
 HMT WATCHES LIMITED comprises of three manufacturing
units at Bangalore, Tumkur and Ranibagh
All its manufacturing units have obtained the ISO 9001
certification
 HMT LTD. -
BRANDS
MECHANICAL WATCHES -
ENVIRONMENT FRIENDLY  SPECIAL
4
 Automatic WATCHES
 Hand wound: Ladies, Gents • Freedom
• Braille
 Shakti: Ladies, Gents
• Nurse Watches
 QUARTZ ANALOG • Fragrance Watch
WATCHES
 Roman
 Alarm Watches
 EL Night Watches
 Multi Dial Watches
 Dater Watches
 Plain Watches
 Elegance
 Gold Line
 Bracelet
 Slim Line
 Tennmax
 Utsav
 Utsav Gem
 Lalit: Ladies, Gents, Pairs
 Sangam
 Swarna: Ladies, Gents
 SWOT ANALYSIS FOR HMT WATCH
DIVISION

 Strong government support.

S
 Vision of Pt. Jawahar Lal Nehru in 1960’s.
T  Collaboration with CITIZEN, Japan for formal
training and technological support.
R
 Entry barriers were imposed on the foreign brands
E entering into India through FERA.
 Supported its expansion in 1976.
N
G  Good brand image and market leadership due to high
quality, low price and reliability.
T  HMT enjoyed 71 percent of the market share in the
H sales of mechanical watches and 55.22 percent market
share of the total watch production in organized sector
S
(as of year 1991-92).
CONTD….

 Has an established marketing network.

S
T
R
E
N
G
T
H
S
CONTD….

S
T  Company’s liquidity position has been quite
comfortable. Adequate availability of tangible assets
R
such as land and buildings.
E
 Record of good industrial relations.
N
G  In 1991 HMT set up a product development center
for watch design.
T
H
S
CONTD…

 Its prime product category (mechanical watches) was in

W
the decline stage of PLC.
E
 Weak Organizational culture: It suffers from bad work
A habits, lack of discipline, low commitment of manpower,
K inadequate motivational strategies, lack of team spirit and
N low utilization of human and machine capacities. Inadequate
E cost control system.
 Over reliance on the production concept of marketing and
S
hence ignoring the marketing concept.
S
 Insufficient emphasis on R&D and design engineering.
CONTD…

 HMT didn’t embrace new quartz technology to a great

W extent & suffered because of their adherence to mechanical
E watches.
 Bureaucratic and centralized decision making inhibited
A
HMT’s ability to respond quickly with respect to market
K
changes.
N  Virtually ignored to maintain good trade relations with
E retail outlets vis a vis competition (retail margin was lower
S than what was provided by the competitor)
S  It restricted product development to quality development
only.
CONTD…

 Worldwide decline in the production and demand of

T
mechanical watches due to growing acceptance of Quartz
H watches.
R  Significant competition from Allwyn and Titan.
E  Competitors wooing HMT’s top managers.

A  It has to the threat of misuse of its brand name by spurious

operators.
T
 Competitors successfully exploited the lifestyle
S
segmentation which HMT failed to.
CONTD…

T
 Titan had started marketing its watches in unconventional
H
outlets like boutiques and jewellery shops.
R
E
 The authorized service agents (ASAs) for foreign
A smuggled watches in the country are also offering
T competition to HMT.
S
CONTD…

O
P
P
 The demand for Watches is growing rapidly both in
O domestic and international market.
R  Capitalize on attractive segments.
T  In coming years Fashion brands, luxury watches and
U watches with multiple functions are considered as the
N product segment with the biggest growth.
T
 Leveraging brand equity of HMT to products such as
I
sports gear, personal accessories.
E
S
MISTAKES OF HMT’S WATCH DIVISION’S MARKETING
STRATEGY

M PRODUCT
 Few Designs as compared to competitors. HMT has only 40
I
odd variants of four basic designs compared to competitor
S
line, Titan which has 70 watches in its ranges with better
T
looks & designs
A  There is less emphasis on product research and
K development
E  HMT has not been able to be a leader in Quartz watches

S segment & underestimation of this segment

 Another flaw in its product strategy was scant attention to
CONTD…

M PRICE
I  HMT positioned the quartz watches as the space age
S generation watches & charged high prices for this category

T which means that only the affluent middle aged consumer

could afford it. In less than a year the company had to
A
reduce the price and followed lifestyle advertising to justify
K
the still higher price of the quartz, however even this
E backfired as consumers were not convinced of the
S differentiation between the quartz and other HMT watches.
CONTD…

M PLACE
 Didn’t strategize its established marketing network according to
I
growing competition and new market trend like downtrend of
S mechanical watches & the growing market for the quartz watches.
 Since retailers have enough foreign brands they were simply not
T
interested in HMT’s home grown products as a result it had to sell
A through its 13 branch offices for Machine tool equipment.
K  Even when FERA was introduced HMT could take the advantage in
a limited way by offering service agencies to about 50 watch key
E
retailers as a way of expanding its selling reach.
S  In mid 80’s HMT’s selective retailer policy began going against it.
CONTD…

M
PLACE
I
 Some of the authorized retailers started acting as wholesalers
S
without officially being appointed so. Consequently HMT lost control
T
of the final consumer price and ultimately the trade.
A
K
 In addition, the retailer margins provided by HMT were 2% less than
E
what its most prominent competitor, Titan, was offering to the retailers.
S
CONTD…

M
PROMOTION
I
• Though HMT’s advertising was distinctive and did cater
S to the lifestyle segment, it failed to communicate the
T uniqueness of HMT’s quartz design vis-à-vis other HMT
A watches.

K
• Because of centralized decision making even the decisions
E
on the campaigns for specific products were delayed
S
leading to the time lag and responding to market changes.
 CORRECTIONS THAT WE
SUGGEST
C
O
PRODUCT:
R
 Create competitive advantage by differentiation through
R
technological leadership.
E
 The products should be developed to enhance quality and
C
T features matching customers tastes and preferences and there by

I increasing buyers value.

O  Mid & Premium segment: In this segment HMT should seek

N differentiation by providing better designs

S
CONTD…

C
O
CONDUCT MARKET SURVEY:
 Involve leading market research organization along with your sales
R
force.
R  Do it periodic every six month; Involve retail-shops, shopping
E centers, department stores, dealers, sales force.
C  Most popular brands, trend of consumers etc.
T COMPETITION:
I  Competition among brands has been also getting stronger, and a lot
of effort to keep sales has been required.
O
 Watches without an appeal, watches without clear marketing hardly
N
attract consumers in the market glutted with commodities.
S  Train agents to set forth clear brand vision and efficient campaign.
CONTD…

C
O
COMPETITION:
 Shift to quality with new added value..
R
 Provide consumers with a lot of information select their watch
R wisely and professionally according to their own taste..
E
C DISTRIBUTION:
T  Prepare retailer to meet the changing consumer’s trend. Watches just
I displayed in showcases cannot sell. It is absolutely necessary to present
them together with the background such as original story of the watch,
O
its functionality and benefits of after sales service.
N
S
CONTD…

C PRICING:
 In the lower end HMT should seek to achieve cost advantage by
O
exploiting the differences in cost behaviour.
R
 The pricing strategy can be to undercut main competitor by 10%,
R using market penetration strategy.
E PROMOTION:
C  Special focus on sales during festive time like Diwali, Christmas

T along with discount offer & finance schemes.

 Go for innovative and stylish ad campaign that reflects the
I
aspirational, independent and modern dimensions of the watch
I
collection and its target market along with effective press campaign.
O STRATEGY:
N  Under the present difficult situation HMT will have to find out ways
S to activate the market and try to to create new demands.
 THE COMPETITION IN INDIA

 Titan sells around 7 million watches annually

 Timex sells under 1.2 million watches
 Other Brands (all put together sell less than 0.5 million watches)
 The Japanese – Citizen, Casio, have been present, while Seiko
has not made any significant moves in India.
 The Swiss – Rolex, Omega, Rado, Tissot, Tag, Longiness,
Cartier, Ebel ………and a host of others
 The fashion brands – Esprit, Giordano, Tommy Hilfiger, Calvin
Klein, Fossil, Swatch………and many more have recently entered
the Indian market.
MAJOR PLAYERS
23

 HMT Watches Ltd. (34%)

• Titan Industries Ltd. – (39%)

• Timex Watches Ltd. – (23%)

 OTHER PLAYERS
24

 Westar
 Almost closed down
 No Brand Equity
 Upper segment cluttered
 Lack of distribution strength

 Shivaki
 Launched in 1996
 Southern and Western markets
 Fashion accessory
 In problem

 Maxima
 Assembled watch
 Water proof watch – Rs 350
 Failed with the launch of lower priced Titan and HMT products
CONTD…

 SITCO
 Analog and digital watches (branded “IQ”)
 Failed due to lack of sustained promotion and marketing
 Now planning to cut prices

 Hyderabad Allwyn Ltd.

 Launched in 1981
 Sourced watch movements from Seiko
 Lost out due to Organizational problems (PSUs)
 SEVERAL FORCES ARE TRANSFORMING THE INDIAN WATCH INDUSTRY

2. More global and local players

– Significant increase in competition in all

segments
 Luxury end : Swiss brands
 Mid to upper end : Global fashion/
Japanese brands
 Low end : Local/regional IMFQs, Chinese
imports
1. Shift in structure of 3. Emergence of distinct
demand consumer segments

– Volume growth – Sharply defined

driven by the consumer segments
low end Dramatic transformation
of the Indian watch around distinct
– Value growth buying factors
driven by luxury market
– More awareness of
segment
brands and global
trends among
affluent urban
consumers
 4. Emergence of new channels
– New retail outlets emerging (Dept.
stores/malls)
– Existing outlets (MBOs) getting smarter
looking
– Unorganized retail at low-end
CONTD…

 Poor Watch Penetration In India Is Likely To Drive Further

Growth In Volumes. Increasing penetration will drive growth of
low end and mass market segments.

With removal of Quantitative Restriction a lot of International

brand watches entering into the Indian market and in five year
time they will only grow their market share. It will be even more
difficult for HMT to match competition unless until HMT
changes its strategy which should match global competition.
CONTD…

 To make it visible in the market we think the HMT watches can

be targeted in the villages of India more aggressively where the
brand awareness of HMT is more visible.

 With increasing level of income and purchasing power people

are more concerned about the looks and beautiful designs with
jewel studded watches rather than going for simple watches as of
HMT’s.
 WATCH MARKET MAP
Formal/Classic
Omega, Rado,
Longines
Raymond
Weil
Tissot
Nebula
Sonata,
HMT, Titan Citizen
Maxima XYLYS
Price
500 1000 2000 4000 5000 10000 20,000 +

Timex
Espirit, Swatch Fossil
Giordano, DKNY,
Fastrack Carrera Tag Heuer,
Tommy Hilfiger, Accent Hugo Boss,
C Dior
Fashion/Sporty
 SUGGESTIONS
 Faster production of new models of watches for catering to the
changing needs of the customer.
 Adoption of innovative and aggressive marketing policies.
 Strengthening infrastructure for R&D.
 Reduce man power by adopting new technologies and processes.
 Institutional sales and sales through canteen stores department
(CSD) and e - commerce.
 Enhancing customer services.
 To seek collaboration with reputed international watch
manufacturer to make
31

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YOU