Sonata, the mass-market watch brand contributing to roughly half of Titan watch division’s turnover, has launched a watch priced at Rs 225. Targeted at the ‘bottom of the pyramid’, it is touted as the cheapest branded watch in the country. Designed with cost-effective polyurethane material, the watch has a youthful appeal and comes loaded with features like a stop watch, light, alarm, day-date among others.
The Tata Group’s focus on the ‘value’ segment doesn’t come as a surprise. Across its different businesses, it has tried to unlock value at the bottom of the pyramid, be it through the Nano, Swach water purifier or the Ginger budget hotels.
The watch will be retailed under the ‘Super-fibre’ sub-brand which Sonata introduced in 2008, and for the first time allowed the company to experiment with materials like polyurethane. Explains Titan Industries, managing director, Bhaskar Bhat, “Materials like polyurethane are more acceptable than in the past. We had launched a watch made with a similar material under the Timex brand in 1992. The product flopped as people associated such material with lesser quality. Today, youngsters prefer this material as it is good for the outdoors, since it is waterproof and will not fade in sunlight,” exclaims Bhat. As a senior official who heads marketing for Sonata explains, “Until two years ago, the ‘steel’ and ‘super-fibre’ range contributed to only 10 percent of sales with the bulk coming from the gold collection, but in the last two years this has gone up to 40 percent.
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But what’s the logic behind a low cost watch? The move is driven to contest the teeming unorganised watch market in India which sells watches in all shapes and sizes. As a Technopak 2010 report on the India time wear industry reveals, in the Rs 4200 crore industry, the organised sector makes up 40 per cent of volume sales. The balance 60 per cent is dominated by the unorganised market which consists of smuggled watches, cheap imported watches, watches assembled by small unorganised players and watch wholesalers. And, it is in the sub Rs 500 price point where the bulk of the unorganised market operates, selling their wares through small watch retailers and repairers. “The trade gets higher margins and discounts from the grey market and hence they encourage this for short term gain,” says Govind Mishra, senior manager (marketing), PA Time Industries which retails the Maxima brand, the second largest selling mass watch brand after Sonata.
Sonata sees enough opportunity in this segment. “There are 16 million watches sold below the Rs 250 price point, and with the new launch even if we capture 10 percent of the market, it is enough to keep us happy,” says Harish Bhat, chief operating officer, Titan Industries.
Bhat is proud that such pricing has been made possible even after paying multiple taxes which include excise duty, central sales tax, Octroi and VAT (value added tax), which the unorganised sector evades. “Typically, a European or Japanese watch with similar features would be priced upwards of Rs 2000, but Sonata has made this possible through efficient sourcing,” says Bhat. The ‘uni-sex’ watch is being manufactured according to the company specifications, by a contract manufacturer in China. The margins from the new range will be much lower than the 8 percent profit before tax margins from the Sonata brand, but that does not worry the company which is in hunt for volumes.
The new launch will piggyback on the brand’s existing distribution network. The 10 exclusive Sonata stores and the World of Titan stores will showcase the new range, but of larger importance are the small watch dealers where bulk of the watch sales in this price point takes place. “Sonata reaches 9000 outlets in the country, and in these outlets, we have 60 percent share of the business,” claims Bhat. Value driven multi-brand stores like Megamart and Big Bazaar will retail the new range as these stores feature on the list of aspirational buyers from small towns who visit such stores in the cities. The company is also exploring another unique channel: non-traditional stores like saree shops or gift shops. “Many of these stores do not have the capability of selling expensive watches. Also, through these stores we can reach out to consumers who come to the city to purchase gifts for occasions like weddings and festivals,” notes Bhat.
While Bhat hopes government intervention will help simplify the duties and taxation structure, to help curb sales in the grey market, the company is targeting one million units of sales for the new launch. This is in addition to the six million units of Sonata watches the company sells every year.
Will the new launch help the Titan Group become the third largest watch seller in the world?
