He had actually formulated several elements of marketing mix methods in the past to deal with varied kinds of obstacles. For Chakravarti, any difficulty in the watch industry, particularly in an emerging market such as India, was something he looked forward to, as it offered him tremendous satisfaction when he was able to discover some insights. Xylys was a premium watch brand name launched by Titan a few years ago; the brand was targeted at producing a special understanding among customers.
The challenge was to create and form a perception unique to the brand, since premium watches in India were associated with the Swiss brands Omega and Rolex, or Tag Heuer and other comparable brands, which were more modern in nature. There were a number of interesting possibilities for Chakravarti to think about. Would a conventional-positioning method be sufficient? Was it essential to acquire some insights relating to the application of the individuality element to the self-perception of consumers?
How were such aspects of individuality related to other recognized brands? How important was the “Swiss-made” label? Did the buyers and potential buyers of premium watches hold any particular stereotypical pictures of such watches? The case looked into a number of elements of the affective fields connected with customer behavior with the goal of discovering the most appropriate method to further the prospects of the Xylys brand.
The liberalization of markets, the rising disposable income, direct exposure to western lifestyles, and the need for the brand-new generation to develop an identity for itself were a few of the factors for the development of the high-end watch classification in India. Consumers were buying not only durable categories that worked to them and pleased functional elements, however also categories and brand names that showed their personality. India had 28 states and 7 union territories with a population of 77.42 million city families.
The income levels were categorized as follows: 62.7 million households earned up to INR 1,50,000 (Indian Rupees) per annum (1 USD was equivalent to about 45 INR), 11.6 million households earned between INR 1,50,000 to INR 3,00,000 per annum, and 3.1 million households earned 1
more than INR 3,00,000 per annum. With respect to the spending of households on top 10 necessities across all 2 classes of consumers, watches figured at the eighth position, on an average. The latest McKinsey report on India’s consumer market pegged spending on personal products and service necessities (watches were included as the eighth most required item, as described above) at 8% share-of-wallet (SOW) in 2005; this was expected to climb up to 9%
A significant decline in the global production of watches was witnessed in 2005–2009, with the volumes in 2009 at a fifth of the expected numbers. 4 This was attributed to the plummeting demand in the recession-hit markets of the United States, Japan, and Europe, among others.
The premium segment suffered the worst, with the exports of Swiss watches dropping by 22% in 2009, despite having risen to an unprecedented high the previous year. 5 However, what was inexplicable was that while the rest of the world found even regular watches unaffordable, the developing markets of China and India were experiencing growth in consumer demand for luxury and premium watch products.
In five years, the Indian watch market had grown at an average rate of 8% per annum. 6 The recession during 2008— 2009 hindered the sector’s growth, with a drop in the sales of luxury and premium watches, which was compensated by the growth of volume in the economy segment. 7 Thus, despite the global trends, the value and volume figures for 2009 stood at 40.6 billion units and INR 54.6 billion, with a growth of 8.5 and 15.4% in volume and value, respectively.
In terms of category sales, the highest share, as per value, involved watches priced between INR 500 and 3,000. The premium segment—retailed between INR 4,000 and 15,000—had been growing at an exponential rate of 20% annually. 9
Low per capita consumption on the one hand and the growing demand for luxury watches on the other constituted the factors that forecast the compounded annual growth rates of 7.3% and 13.7% in volume and value, respectively, for the period 2009–2014.
INDIAN WATCH INDUSTRY
The Indian watch industry had its origins in the 1960s, with HMT’s Janata being launched in 1962. Before HMT, watches were sourced exclusively from imports, and could be afforded by only a small number of consumers. HMT was the first major watch manufacturer in India, and the sole indigenous player, until Titan Industries Limited—a Tata and TIDCO joint venture—was formed in 1984, and started retailing watches in 1987.
Titan, with its focus on satisfying the customer’s unspoken needs, gradually wrested market power and shares from HMT and became the undisputed leader in the wristwatch segment over the last three decades. The only other major Indian player was P. A. Time, with its brand Maxima, which managed to survive despite fierce competition. Other indigenous brands such as Allwyn, Shivaki, and SITCO failed to keep up with Titan and languished, with marginal to negligible market shares.
In 1992, liberalization opened up the Indian market to foreign players, and Timex was the first on the scene. It was soon followed by Casio, Rolex, Citizen, Tissot, Omega, Rado, and TAG Heuer (the new export—import (EXIM) policy introduced in 1999 relaxed the hitherto stiff upper bar on imports of luxury wristwatch brands). After the foreign direct regulations were changed by the government to allow up to 51% of foreign direct investment in single-brand retail operations, global brands set up subsidiaries in India with apparel brands such as Esprit, Tommy Hilfiger, Benetton, and Levi’s, also launching brands of their own.
Growth of Industry
The Indian watch industry began in the 1960s with the public sector enterprise HMT, which was the government’s initiative to start the indigenous manufacture of watches. The import industry brought in the more fashionable watches, but the basic need for timekeeping was satisfied by the sturdy and reliable mechanical wristwatch models manufactured by HMT. In the absence of other brands, HMT could afford to retain goodwill despite offering limited styling and choices to its customers. A few decades earlier (when HMT held a monopoly in the category), a watch was a product that anyone who had taken up a job aspired for. Traditionally, the penetration levels were quite low during this time; the notion of a “watch for the masses” was diffused in the psyche of consumers only after the late eighties, when the country witnessed major lifestyle changes. The nineties enhanced this perception as many brands entered the market following the liberalization of governmental policies.
The Tata group introduced the quartz watch in the 1980s under the Titan brand, and differentiated themselves on the basis of accuracy, style, choice, presentation, and vigorous push-marketing. 11 Timex, in collaboration with Titan, launched its range in India in the nineties, with a mutual understanding that the former would keep to the low-price plastic segment, while the latter would manage the high-price metal segment.
Timex positioned itself with the tagline “You don’t have to be rich to afford a Timex,” and was well accepted by the market. After a few years, Timex became an independent brand and set up its own distribution channels, and emerged as a brand associated with the sports and casual wear segment.
Early in the twentieth century, many multinational players entered the market, which was made possible by the EXIM policies that raised the bar on the import of luxury watches in India.
AN OVERVIEW OF THE COMPETITION
The single largest player was Titan, with a brand share of 20.6% in 2009. 12 The next player worth mentioning was Swatch, with a relatively small share of 5.9%. 13 Timex was a relatively strong multinational brand in the market. Rolex, PA Time, Citizen, and Casio had small significant shares, and HMT was also present in the Indian market.
Despite the presence of many brands, the market was still primarily controlled by the unorganized sector (to the tune of 65%) even in 2009. The present competition arose from the increasing foray of multinational players into the lucrative luxury segment; however, the real challenge was to tackle the spurious imports being sold by the unorganized sector.
Watches transformed from time keeping instruments to fashion accessories during the eighties and nineties owing to significant lifestyle changes; this was reflected in some of Titan’s advertisements. Watches as fashion accessories were in competition with a variety of other products such as apparel and fashion handbags; hence, watches had to have a clearly differentiated element of perceived utility apart from fashion. 14
SEGMENTATION OF THE WATCH MARKET
The watch industry could be segmented according to various criteria: technology, benefit, and price.
Watches could be classified into three kinds based on technology: mechanical, quartz analog, and quartz digital. The first went out of vogue since the bulky mechanical format did not allow for elegant design; it dropped in volume shares from 7.2% in 2004 to 4.6% in 2009. The second kind was the largest in both value and volume, and was expected to remain the market driver for growth in 2009–2014.
Digital watches suffered from the consumer perception of being low cost and lacking in style, and hence, the market for them had not yet picked up. The sales figures by value for these sub-sectors for 2009 were INR 3,000, 46,000, and 6,000 million, respectively. The major market players in these three sectors were HMT, Titan, and Casio, respectively.
The second basis of classification was benefit, and the market could be divided based on use, namely, casual, formal, and sports. Many of the brands offered some options in all three segments, but most catered only to the first two segments; the sports segment remained a largely untapped segment. Nearly 35% of all watches retailed were casual, 60% were formal, and a mere 5% belonged to the sports segment.
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The watch market could be classified into economy, standard, premium, and luxury segments. 15 The mass market (i.e., the economy segment) accounted for nearly 67% of volume and 50% of value shares, and was catered to almost entirely by the unorganized sector. Popular (standard), with prices ranging from INR 500 to 1,200, was the lowest range offered by the organized sector (Titan and Timex, primarily).
The premium segment consisted of watches in the INR 1,500–5,000 range, offered by almost all the indigenous and multinational brands. The demand from the middle and upper income groups promised to be the growth driver for this segment in 2009–2014.
A better explanation in terms of consumer behavior was the third basis of segmentation as defined by Yankelovich (1964). 16 He presented a scheme for the non-demographic segmentation of various product categories, including watches. Segmentation by value was considered to be particularly apt for this market. Thus, the authors arrived at three distinct segments, each offering the customer a different benefit and value than the others.
As was stated earlier, the watch had always been a product that appealed to people, but the nature of the appeal and the associations related to watches changed with the changing environment. A watch or a specific brand in particular became a symbol of several associations that were in tune with the changing environment. These associations were generally glamour, fashion, sports, and fun, and the intensity of these associations became pronounced depending on the respective segment toward which a brand was positioned.
Lifecycle stages also mattered—a school student would celebrate his/her first watch with neighbors and friends, a college student would garner attention among his/her friends with a recently bought watch, and an young executive who had been successful in his job might reward himself with a premium watch after a few years of hard work, and also “announce his arrival into a world of success” to the outside world.
Value for money: Low/regular-priced watches that were accurate and sturdy. Owners tended to replace these when they failed. Premium watches: High-priced watches, with assured longevity, excellent workmanship, and good styling. Owners were ready to pay a premium for the benefits that accompanied these brands. Special watches: Extra benefits such as fine styling, brand name, and accessories (such as gold casings) were desired by potential customers. The watch, apart from being a fashion accessory, was part of a ritual gifting ceremony, and needed to encapsulate the emotional benefits required to succeed.
Symbolic and lifestyle categories that were created in the last 20 years or so included apparel, watches, mobile phones, portable music players such as iPods, cars, televisions, two-wheelers, and spectacles, to name a few socially conspicuous product categories; brands made use of such psychological needs of consumers to position themselves, with one category often competing with another.
For example, a typical middle class household in India that had bought a TV (it is a well-observed fact that a TV is generally high on the purchase agenda of a middle class family) on installment basis (the installment plan allows a consumer to pay for the purchased product over a period of time through monthly payments to the seller/retailer) might postpone buying a new watch for a student in the family who was entering college, owing to financial pressures.
Such instances would be rare in a developed market, especially with regard to the purchase of a watch. It was interesting to note that the lower end offerings (relatively lower end to be precise, when compared to the price of luxury watch brands) from brands such as Titan also used glamour, romance, and celebrity orientation for the positioning strategies of several of its brands (such as Titan, Fastrack, Sonata, and Ragaa). Titan was a leader in the organized quartz analog watch segment, and millions of pieces had been sold over the years.
It was interesting to note that regardless of the price range or the benefit, watches held a symbolic appeal in the Indian context—an appeal that could be associated with the self-perception or the personality/style a consumer would like to project to the outside world. Luxury watches had a special appeal with regard to such an orientation among consumers.
The watch market in India was divided into three broad segments: mass market
(price below INR 1,000), midmarket (price between INR 1,000 and INR 10,000), and premium market (price starting at INR 10,000). Luxury watches in turn, were categorized into three sub-segments:
Premium watches: INR 10,000–50,000. This was the space where Xylys operated. The other prominent brands in this space were Tissot, Seiko, and Citizen, in addition to fashion brands such as Emporio Armani and Hugo Boss.
Accessible Luxury: INR 50,000–3,00,000. The biggest Swiss brands such as Rolex, Omega, Longines, and Tag Heuer operated in this space.
Exclusive Luxury: INR 3,00,000 and above. Very high-end brands such as Breguet, Patek Philippe, Audemars Piguet, Breitling, and Hublot populated this segment.
From the point of view of look, there were four philosophies from which brands tended to choose and occupy, namely, dress, classical, fashion, and sport. For example, among sporty watches, Tissot, Tag Heuer, and Breitling were the brands in the premium, accessible, and exclusive luxury sub-segments, respectively.
The market for luxury watches was estimated to be 3% of watch retail, and was growing at almost 20% annually, which was more than twice the growth rate of the entire market. 17 Luxury brands were priced above INR 15,000, and primarily included imported brands offered by multinational players, such as Omega, Rado, Longines, Tag Heuer, and Tissot. Titan was the only Indian brand in this sector currently, with Xylys at the luxury end of its portfolio. Personal interviews with some managers at retail outlets suggested that the competition to the Xylys brand was from established brands such as Seiko and Tissot. 18
The main consumer of luxury brands was the new generation executive, who was set to move toward the prime of his/her career, and who had a keen sense of brand consciousness. These included an increasing number of young and middle-aged professionals in the upper strata of management in corporate houses, and also Indians who belonged to the higher socio-economic strata and had a penchant for luxury products. The major consumers of watches in the luxury segment included CEOs and senior professionals in their thirties and forties, new generation entrepreneurs, and young working professionals.
Successful brands sold because they positioned themselves based on the benefits they offered to those who possessed them; such benefits could be functional, symbolic, or experiential. 19 Brand concept management 20 stated that for long-term success, the brand image needed to be based on a brand-specific abstract concept. The authors felt that such an orientation would help the long-term plans of luxury watch brands.
Functional brands provided tangible and practical benefits, and satisfied the real need for the product. Brands needed to necessarily satisfy functional needs, since these were the hygiene factors for acceptance in this category. Symbolic brands, on the other hand, catered to the consumers’ preference for brands that matched their own “selfconcept” 21 and their symbolic needs for self-expression, prestige, and the enhancement of self-image and sense of belonging. Experiential brands satisfied the owner’s need to experience sensory pleasure, variety, or cognitive simulation.
Luxury watches were bought for their symbolic and experiential benefits as opposed to their functional ones. The selling points were the status and sophistication that the brand denoted when worn by the owner; although aesthetic appeal and durability were important, precision and price were not.
Hence, the positioning diagrams for luxury watches would need to be based on factors such as status, prestige, and ego gratification. The methodology was derived from earlier studies on the positioning of brands. 22 Three sets of questionnaires were used to record the respondents’ opinions on brands, adjectives and phrases related to brand symbolism, and more indepth queries regarding the characteristics of brands and their users. 17
The objective of the study was to analyze and link several aspects of consumer behavior, and to compare users and non-users of premium watches. Three sets of questions were prepared. One set of questions dealt with the selfconcepts of consumers, another was about the brand personality aspects of their watches, and the last set of questions was related to the psychographics of individual respondents. Non-users were respondents who were potential buyers of premium watches in the near future. Scales were drawn from several resources available in the extant literature. 23
Forty current users of premium watches and forty potential users (prospective buyers) of premium watches were administered the questionnaire in April, 2011 in Bangalore, India.
Exhibits 1, 2, and 3 were associated with self-concept, brand preferences along with personality traits, and the activities, interests, and opinions (AIO) of potential users of premium watch brands. Exhibits 4, 5, and 6 dealt with the same factors of the present users of premium watch brands (self-concept, brand preferences along with personality traits, and AIO).
The description of the positioning strategies of the various brands presented below is based on the authors’ perception of the advertisements of the respective brands.
Xylys was a premium Swiss-made watch brand from the house of Titan in India. Priced between INR 10,000 and INR 33,000, the Xylys range of watches was available in three collections—Contemporary, Classic, and Sport—and offered over 60 distinctive models. Xylys was available at select World of Titan showrooms, key multi-brand outlets, and at exclusive flagship boutiques in select cities.
Xylys targeted the lower spectrum of the luxury watch segment. Titan, which was the market leader in the mid-price segment in India, felt that the upper end of their target customers was moving towards iconic global premium
The designs were created in collaboration with renowned Swiss designer Laurent Rufenacht, and Titan’s own design advisor, Michael Foley. It was manufactured in a state-of-the-art factory in Switzerland, which had a heritage of over 80 years in the art of watch-making. All Xylys watches were created with exquisite craftsmanship and impeccable detailing, were painstakingly made from carefully selected materials, and were crafted with a passion for detail.
While carefully analyzing the consumer behavior of customers of premium watch brands, Titan found that consumers were highly influenced by the “country of origin” association. Consumers loved the “Swiss-made” tag, and there was a huge association of quality, precision, premium, etc. with this tag. The insight was that it would be difficult for an “Indian-made” tag to impress the target segment.
The name Xylys was designed to have only two syllables, a distinctive name in itself. The brand charter aimed to convey style, attitude, and power. Xylys was created for new generation achievers who went beyond the obvious. Xylys reflected their values, attitudes, and unique personal identities. The brand was targeted at today’s people, both men and women, who were supremely confident and conscious of the image they projected.
These individuals actively sought new and unconventional experiences. Xylys, with its unique positioning of the “Power of X,” underlined the power of one’s attitude. This attitude stemmed from a person’s self-belief, which enabled one to achieve success through a passionate pursuit of one’s dreams. Xylys was launched as a contemporary brand targeting upwardly mobile, successful men and women. The brand segmented the market based on psychographic profiles. 23
Tian, K. T., Bearden, W. O., & Hunter, G. L., “Consumers’ Need for
Uniqueness: Scale Development and Validation,” Journal of Consumer Research, June 28, 2001, pp. 50–66; Netemeyer R. G., Burton, S., & Lichtenstein, D. R., “Trait aspects of Vanity: Measurement and Relevance to Consumer Behavior,” Journal of Consumer Research, 21, March 1995; Schiffman, L. G., Kanuk, L. L., & Ramesh Kumar, S., Consumer Behavior, 10th Ed, Pearson Education, p. 143.
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Xylys defined its customers as contemporary, dynamic, successful people who had attitude and confidence. The brand wanted to celebrate their success with them. The customers of Xylys were highly individualistic persons who did what they loved. These people would love to express themselves and show their success to the world.
The three brand ambassadors of Xylys came from varied fields and represented the attitude of the new generation achievers. Actor Rahul Bose (ad), international supermodel Saira Mohan (ad), and tennis star Carlos Moya embodied the attitude of living life fearlessly on their own terms, with a passion to pursue their dreams.
Speaking at the launch, brand ambassador Rahul Bose said, “Like every movie I choose to be a part of, I have chosen to endorse this brand after careful thought. I can only support those products that I am fully convinced about. It is an exciting new brand from India’s leading watchmaker with an identity that reflects the attitude and values that I consider important—bold, unconventional, and distinctive.”
In 2010, the brand changed its positioning from “Symbol of Success” to “Feeling of Love.” The brand talked about falling in love with Xylys. Xylys ran a campaign reflecting the new positioning, which was a significant deviation from the core positioning of the brand. The entire brand personality of Xylys was changed in the current campaign.
The new identity reflected the attitude, lifestyle, and personality of the new generation consumer. “You don’t possess a Xylys, it possesses you”: this reflected irrational desirability of the brand. The new creative expression was carefully designed to reflect the effect Xylys watches had on their consumers. It was this aspect that created an “irrational” desire to own the watch, strongly backed by the “rational” reasons, namely, that Xylys came from the house of Titan and was Swiss-made.
After the launch in 2006, the brand saw the volume of sales doubling between 2006–2007 and 2007–2008, and sales grew at about 33% since then. In terms of value, Xylys grew at a compound annual growth rate) of 54%. Exhibit 7 displays an Xylys’ advertisement.
Tissot, with its signature “Innovators by Tradition,” pioneered craftsmanship and innovation since its foundation in 1853. Tissot was a member of the Swatch Group, the world’s largest watch producer and distributor. For over 155 years, the company had its home in the Swiss watch-making town of Le Locle in the Jura Mountains, and in 2011 had a presence in over 150 countries.
As official timekeeper and partner of the International Basketball
Federation, the Australian Football League, the Chinese Basketball Association, and MotoGP, and the World Championships of cycling, fencing, and ice hockey; Tissot was committed to respecting tradition, underlining its core values of performance, precision, and setting new standards.
The different collections of Tissot included Touch, Sport, Trend, Classic, Gold, Pocket, and Heritage; and the price spectrum was much wider than that of Xylys, covering both the affordable luxury and the premium luxury segment with ease.
The Indian brand ambassador for Tissot was movie star Deepika Padukone, daughter of a former badminton world champion. Her Tissot watch was projected as a symbol of luxury and glamour complementing her multi-faceted lifestyle. The similarities between her personality and the Tissot brand were captured in the brand’s advertisements: “We are both adventurous, sophisticated and classy, yet very approachable.”
Tissot’s subsequent advertising campaign revolved around the theme “In Touch with Your Time.” In its revolutionary new global campaign based on this theme, Tissot used a series of executions featuring brand ambassadors who presented luxury as being accessible rather than exclusive. The brand attributed its success to the trust customers all over the world had in the quality and pleasure offered by Tissot timepieces.
Millions of wearers evidently refused to compromise, and the campaign specifically congratulated them on their discerning selection of a stylish Swiss-made watch. The campaign’s approach focused on the idea of “substance” (the unquestionable quality attached to traditional Swiss craftsmanship) and “style” (a truly appealing watch design).
The new global Tissot campaign captured real moments in the lives of its ambassadors where reality seamlessly merged with glamour. A variety of locations that were local to the ambassadors (e.g., Deepika Padukone in Mumbai, India) were used for the shoots, which enhanced the campaign’s integral authenticity.
SEIKO Watch India Private Limited is a 100% subsidiary of SEIKO Watch Corporation, Japan set up in 2007; it is headquartered in Bangalore. Over the years, SEIKO has established its leadership position in a number of countries. Backed by such experiences and with India being one of the prioritized markets, the brand is expected to bring its “total SEIKO brand experience” through its “flagship stores” that will also provide good customer service.
24 The brand is available at several higher-end multi-branded watch outlets in the country. SEIKO’s technological development is focused on the creation of “emotional technologies” 25. While the brand may be positioned below Tissot or Xylys (based on the observation of price points at retail outlets by one of the authors), the brand is likely to be perceived as a brand with strong value given its heritage of technology and innovation.
Cite this essay
EXPLORING CONSUMER PERCEPTION ABOUT PREMIUM WATCHES IN INDIAN CONTEXT. (2016, Apr 20). Retrieved from https://studymoose.com/exploring-consumer-perception-about-premium-watches-in-indian-context-essay