Business Head | 16 Feb 2004
“I think a customer today is ready to pay a certain premium for a certain value he believes he will get. So he is marginally flexible on the budget. This is also the reason why Sonata is selling such large volumes.”
A management graduate from IIMA, C Srinivasan has an experience of over 26 years in sales and marketing. Having spent over a decade with Berger Paints, he is in his sixteenth year with Titan. Currently, Business Head of Sonata, he has played a major role in setting up and nurturing the sales infrastructure in Titan. Besides playing the captain’s role at Sonata, he is also responsible for Titan’s sales to corporates and the Armed forces. In this conversation with Shubha Kumble of exchange4media.com, he speaks on the history behind Sonata’s creation, its objectives and the targets it is pursuing. Excerpts:
Q. Why did Titan decide to create a separate business unit in the form of Sonata?
The organised watch industry is divided into two markets: the mid-premium or premium and the budget or economy markets. Price is the differentiating factor. The two markets cater to two different types of customers. Then there are other intricacies that differentiate them, like distribution and product portfolios. These differences justified the need for a separate division for the economy market. Sonata as a division has operated full-fledged from this year. The past nine months have shown that it’s a good move. Both the brands (Titan and Sonata) have grown substantially. So, it is a move in the right direction.
Q. But aren’t the two brands eating into each other’s sales?
There will be to an extent some cannibalization. Our job is to keep this cannibalization low and get the most out of our respective markets. I don’t think this is a problem as long as both brands can grow and the company continues to make profits.
Q. What is Sonata’s contribution to Titan’s revenues?
In terms of value, Sonata makes up around one-third of the watch division.
Q. Are there any plans of converting Sonata into an independent brand with a complete product portfolio?
It is an independent brand today though coming from the house of Titan. The idea is to move more and more into the economy market which is big and take away more and more of the share of the other players. To that extent the thrust would be on expanding distribution and on getting an increasing number of new customers to invest in watches. So, essentially Sonata will be a large volume brand while Titan will be a value brand.
Q. What is Sonata’s USP?
Two things. First, that it is a smart choice as it is a smart brand. Second, it is a durable watch coming at an affordable price with a modern look. If I had to put it in one crisp sentence, it would be a modern, durable watch coming at an affordable price. This is Sonata’s main selling point.
Q. Which is your target segment?
We are mainly going after the guy who is market conscious. I would not like to use the term ‘value for money’ as at every price point there is a value for money. But certainly we look at someone who believes that there is a certain amount he is ready to spend which is not very big. At the same time there are certain points he looks out for. One is the look of the watch as a watch says something about the person. Two, it has to be fairly durable and fairly tough. Our strategy is to promote Sonata as a product that satisfies all these needs. As I had earlier mentioned, it is a watch that is attractive, affordable and durable. While we can’t get a first time buyer to jump into the Rs 2,000 plus segment, we can get him to explore the Rs 500–600 segment.
Q. It is generally said that consumers today are more value conscious than price.
Yes. That seems to be the trend. I think a customer today is ready to pay a certain premium for a certain value he believes he will get. So they are marginally flexible on their budget. Essentially, he is ready to pay a little more if he believes he will get added value for it. This is also the reason why Sonata is selling such large volumes. The guys we are competing with are priced lower than us. But Sonata demands a premium and the customer is ready to pay since he is assured of greater value. To that extent, yes, they are not as price conscious as they were some six years ago.
Q. What percentage of Sonata’s sales do first-time owners make up?
I don’t know as it’s difficult to put a figure to it, but it’s not very high. A large percentage of our sales is from replacers and our focus is to get more first-time buyers.
Q. Tell us more about your advertising/marketing strategy.
The bulk of our advertising uses television, which is combined to an extent with print campaigns. In terms of distribution, we believe that if we want more first-time buyers we have to make ourselves more accessible. So we are moving increasingly into smaller towns. Today, we are targeting towns with as small a population as 10,000. We have also launched some small initiatives to make the guy in a small town aware of the products we have to offer. The bulk of our initiatives is in the small towns as metros and larger towns consist of replacers or multiple owners.
Q. What kind of promotional activities have you designed specifically for the rural masses?
We are trying out a few things like the age-old van selling operations. We are also trying to tie up with some agencies that are into rural marketing. To that extent it is different from what we usually do.
Q. What is Sonata’s ad budget? How much is it expected to grow this year?
Our total spend on ads and promotion is about Rs 10 crore. There will be some increase but we are yet to settle on a figure.
Q. Who are your competitors? How are you different from them?
Our competitors are essentially local players. The local manufacturers sell more with the margins they give dealers. We, on the other hand, are working at creating a pull for the brand rather than just a push. There will be a combination of pull and push, but we will be focusing more on a pull.
Q. Is Sonata concentrating on winning market share or creating a new market?
As of the now the focus is on eating into competitor share. But in the future there will have to be creation of new market, especially in the first-time buyer segment.
Q. How big is the Indian watch industry?
There are plenty of estimates so quoting a figure will be difficult. The organised economy market is very small. It is the unorganized sector that is big. One could say it is around Rs 20 million.
Q. Which segment of the watch industry do you think is set for maximum growth?
I would certainly say the economy market. There are a huge number of people who don’t own a watch and if you can drive that market there is bound to be immense growth.
Q. What share of this does Sonata hold?
We currently hold a market share of around Rs 3 million. We are looking at growth of around 20-30%, but I don’t know how many years we will manage to sustain this.
Q. Are there any launches waiting in the pipeline?
We don’t have any new launches. We bring out new products time to time. Product-wise, there are certain gaps in the market that need to be filled up. But there is nothing happening in terms of launches.
Q. Festivals and holiday seasons have a huge impact on the watch industry. Do you use schemes and offers to boost sales in the lull periods?
We have found that putting a lot of money into offers and schemes during the lull period does not pay off. It’s difficult to block the trend. So to that extent we do not engage ourselves in these schemes.
Q. Are there any plans of adding on a series catering to a specific audience?
There are some thoughts but no specific plans have been formed regarding this. For instance, the youth section is big and we have been looking at how we can put together an offering for the youth. But, like I said, no final plans have been chalked out.