VP | 22 Nov 2004
"We consciously vacated some of the entry-level non-value segments, which just played up the price and there was no differentiation. We lost some volume there but we moved up the value chain.I guess this is one of the factors that has made us a leaner and faster organization."
For Salil Sadanandan, VP—Marketing, Timex Watches Ltd, a watch is much more than a time machine. It’s a fashion statement that defines your personality-- one of the reasons that also led to the turnaround of Timex in India. Sadanandan has over 14 years of experience in the marketing of FMCG and consumer durables. He has been credited with successfully launching new concepts in the Indian market and new projects and business development initiatives at both local and global levels. Sadanandan began his career with Lintas between 1991 and 1996 and worked on a diverse portfolio of clients including HLL. He joined Timex Watches ltd from Whirlpool of India Ltd where he held various positions in trade marketing, sales and marketing of the cooking category and the company’s initiatives in customer loyalty and business development. Sadanandan has also worked with Braun, a division of Gillette, as brand manager for four years. Sadanandan has pursued his management from IIM, Ahmedabad and graduation from IIT, Roorkee. He spoke to exchange4media’s Malini Menon on Timex and its vision for the coming year.
Q. This is your 150th year. Are you celebrating this year with new brand initiatives?
Our focus in India has been to launch a whole lot of products. We just launched a product in April-May this year and recently in October what we called the 2004 festive collection, which has 150 styles. This was primarily to commemorate the 150th anniversary. In all, this year we have launched 500 new styles of watches. Secondly, we have done a good promotion for the festival season where we introduced price discounts for every range. This has been a one-time offer that coincided with the festival season. We also have used our brand ambassador very effectively. Brett Lee has worked with us on road shows, trade events etc. So with Lee we have touched the consumer, we have touched the trade and we had a series of activities that happened this year.
Q. Can you tell me more about the 2154-designing contest that you came up with? Did any Indian designer do well in the competition?
This was more of an international competition wherein the designers were asked to design a watch for the year 2154. We were not really involved in this competition. We have been focusing on Indian needs and therefore the new range of watches that have been specifically designed in India keeping in mind the Indian taste. We have our own Indian design team, which has world-class expertise. This time, the Indian designers did not participate but in the future I am certain we will be looking at such contests. As of now we focused on delivering new styles and came up with more than 500 watches.
Q. How has Timex done this year?
It has been a good year financially. We just declared our Quarter results. In India Timex is seeing a turnaround and in Black Timex the topline growth this Q2 is 26 per cent. In fact, while the world market is showing stagnancy in growth with only 3-4 per cent YOY, Timex has reported profits and has grown to over 26 per cent. We are much ahead of the industry and have recorded good share gains and this year we have had Rs74 lakh cash profit. So we have established a very stable business model now.
Q. In between Timex went through a lean phase, so what led to the turnaround?
Two or three things have led to the turnaround. From the front-end perspective, we have looked at the value segments, the profitable segments. India was largely a gold watch market. Even now gold watch constitutes 70 per cent of Indian market. Over the last four years, when we entered here we realised that the market would shift gradually to fashion watches and steel is what would define fashion trends. So we invested behind that product line and we were the first to launch steel watches in the country.
Our competition has followed through so we turned things around there. We consciously vacated some of the entry-level non-value segments, which just played up the price and there was no differentiation. We lost some volume there but we moved up the value chain. Secondly, we have done some bit of restructuring in the back end as well in the manufacturing. We have outsourced our component manufacturing and we look at the value that we can add from India. I guess this is what has made us a leaner and faster organization. We also have dual manufacturing capabilities with one in Noida and the other in Himachal Pradesh. Thirdly, we also introduced some of the global product line-up, some of the highly featured highly valued products in the market. For instance the Data Link watch, which you can interface with your laptop, MP3, which is basically watch that can entertain you with music. So what we realised is that time is just a basic function. You cannot call a watch just a time machine. We are looking at features and in the next few years you will see even more highly featured watches. Lastly, from the brand perspective we have sharpened our brand focus. Instead of focusing on benefits that are generic, we have realised that watches today are a fashion product. Our core capabilities are in technology, fashion and sport—this is what are brand stands for. This is exactly the reason why came up with Brett Lee as our brand ambassador. So basically in a nutshell, we have increased the efficiency in the back-end, we are moving up the value chain and investing on highly featured brands.
Q. How far does competition from brands like Tag Heuer and Omega affect you?
The way I see it is that this is a large market, which will grow at the value-end. So there is room for everybody. Now the important thing is do you have a well-defined niche? And Timex has that well-defined niche. However, there are some segments where this brand cannot cater. Now we have some international portfolio brands that we are introducing to the Indian market that will cater the high-end segments like Nautica, Timberland and Versace. As we see opportunities coming in that segment, we will bring in more such brands. With more foreign brands coming in, faster the market will grow and you will see room for everybody.
Q. An Indian consumer has always looked at Timex as an economical brand. Does such a perception affect the brand?
Firstly, I would not use the phrase economical because that is probably more to do with our origin here. I would use the phrase value. One of the philosophies that Timex Worldwide has is that the technology we bring in to the watches is not technology for the heck of it. It is useful technology. Secondly, we make the technology acceptable with every consumer. So we are hardcore value brand and I wouldn’t associate it as economical. I think we are driving value. We are certainly not low-end or low-priced. In fact we have already introduced chronographs, MP3, Data Link and next year we are looking at three or four products in the same category, which will be athletic and feature driven.
Q. What is the level of indigenisation that is done in Timex watches?
What is unique about us is that we are the only international brand here today that has both manufacturing and designing capabilities in India. Today, frankly over 2/3 of the watches are being designed here. We have a very strong design team here and we use a lot of research and focus trends to understand the needs and fashion sense of the Indian consumer and incorporate it in our product.
Q. How much of it is imported?
By value about 20 per cent of our watches are imported. This will go up slowly. However, 80 per cent of the product is manufactured and designed in India.
Q. What is the core audience of the brand?
The core audience for us is 18 to 45 years, SEC A and B. We are looking at people who can sport fashion and technology on their wrists. Three elements that really define Timex as a brand are fashion, technology and sports. If you look at the advertising and brand promotion then we communicate through these angles.
Q. And therefore the association with Brett Lee…
Yes and therefore the natural association with Brett Lee. Lee stands for the brand values that we wish to communicate. We can’t take a celebrity for the sake of it. SO it had to be a celebrity that embodies the core values of the brand.
Q. Why not an Indian brand ambassador?
Firstly we wish to establish the fact that we are an international brand. Secondly, there are the universal pillars of the brand, which are sporty, fashionable and technology-driven. We want to position ourselves as contemporary global brand. We have a footprint that covers all the markets, including markets where cricket is a good vehicle, for example England, Australia. So we wanted a candidate who could fit what the brand stands for and at the same time help us in establishing the fact that we are an international player and also leverage the ambassador in other markets too. Brett is also the ambassador in Australia. I think Indian cricketer is by and large over exposed. Sachin is endorsing too many brands and moreover mostly all the advertisements are using the celebrity power rather than the brand power. We certainly had reservations and so we did a lot of research. The reservations we had were that Lee is famous only in big metros but that is not true. If you go down to small towns also and you will find Lee has been identified as the role model. Lee is also an all rounder and a lot of people are aware of that. The other reservation we had was that cricket is a masculine sport and Lee is an international cricketer, so would women like that? But what was encouraging was that women appreciated Lee too.
Q. What’s your plan for the next year?
A lot of product launches will happen. Nearly three to four models will be launched in the first quarter of 2005. The highly featured watches will be in the high-end segment. Other than this we will continue to design and innovate. This is a fast moving fashion category so we need to constantly innovate the products. The way we do product launches we call it drumbeat. Rapidly, there will be a lot of product launches happening and we will be coming up with new features like heart rate monitor, speed and distance collection, water resistant for 400 m used for scuba diving etc. This will be our approach.
Q. How much does the grey market affect the watch industry?
By and large the grey market operates at the lower-price end, unbranded area, so it does affect the organised segment only at the lower end. If you are looking at brands that are importing products I am sure they are looking at rationalising the prices so that they do not encourage grey market. By and large, the impact on the organised segment is not very significant. If you look at our overall market size of 30 million, roughly 50 per cent is unorganised. But that 50 per cent is at an average pricepoint of 300 and below. That’s not a segment where the organised segment is interested in. It’s a first time SEC C, D, E buyer and we are not interested in that segment. The idea really is that the first time buyer who is looking at this over a period of time will certainly move up to better brands offered by the organised sector. So that natural ladder is available through organised brands like Timex.
Q. Are your brand building initiatives different in India as compare to other countries?
Overall the positioning is pretty much similar to what we do worldwide. However, you have to realise that in US, which is our strongest market, the brand is 150 years old and is an established, heritage brand. It has consistently won fashion awards there. So definitely their level of investment and activities is far more elaborate than what we do here in India.
Q. What has been India’s contribution?
As of now it isn’t really significant but yes we will be making a large impact in the times to come. We are the largest Timex market in Pan-Asia and it is going to improve. We are from market share perspective around 22 per cent and over the next two years we are looking at reaching 33 per cent.
Q. What’s the status of Timex BV Netherland making Timex India its 100 per cent subsidiary?
Timex BV Netherland already has 83.5 per cent equity so that decision will take some time to happen. It’s a decision that will be taken by our worldwide board. It is obviously a measure of confidence they have in the Indian market and the fact that they look at India as a very strategic market, which is the reason why they have 83.5 per cent share and also the reason why we can leverage global technology and product line. I see no reason either which way why it should affect us.