How did TATAs build TITAN into a $31 Billion company? : Titan Watches Case Study
Summary
TLDRThe video script narrates the remarkable journey of Titan Watches, a brand that has grown exponentially in the Indian market since the late 1970s. It highlights the strategic decisions, market research, and innovative approaches that laid the foundation for Titan's success. From overcoming regulatory hurdles to choosing the right technology and crafting a robust distribution network, the script underscores key business lessons, such as leveraging time, overcoming obstacles, and staying ahead of the curve, which contributed to Titan's legendary status and its impressive financial performance.
Takeaways
- 🚀 Titan Watches is one of India's greatest consumer brands, with its stock price increasing by 36,218% over 20 years.
- 💡 The idea for Titan Watches originated in the late 1970s when the Tata Group saw an untapped market for watches in India, dominated by unorganized players and a single significant player, HMT.
- 🛑 The Indian government initially rejected the Tata Group's proposal to enter the watch market due to socialistic policies favoring small-scale manufacturers and public sector companies.
- 🔍 Through strategic research, Titan identified a strong demand for foreign watch brands in India, despite import restrictions, indicating a potential for a premium watch brand.
- 🏭 Titan leveraged the expertise of HMT by setting up its base close to HMT's location and attracting their skilled workers, which helped in establishing a strong manufacturing foundation.
- ⏱ Titan chose to focus on quartz watches, recognizing them as the future of watchmaking due to their accuracy, lower production cost, and convenience compared to mechanical watches.
- 🛒 Titan revolutionized distribution by partnering with retailers directly, bypassing distributors, and providing extensive training to ensure high-quality sales and customer service.
- 📈 Titan's marketing strategy was innovative, focusing on the product design and brand identity rather than using celebrities or models, which resonated with consumers and boosted sales.
- 💼 Financially, Titan adopted a no-credit policy, requiring advance payments for supply, which contributed to its strong financial health and profitability from the outset.
- 📊 The success of Titan Watches laid the foundation for the Titan brand, which later expanded into other successful brands like Tanishq, Fast Track, Sonata, and Titan Eye Plus.
- 📚 Key business lessons from Titan include leveraging time advantages in developing nations, overcoming obstacles as a path to success, and staying ahead by adopting new technologies and market trends.
Q & A
What is the significance of the episode about Titan Watches in the history of consumer brands in India?
-The episode highlights Titan Watches as one of the greatest consumer brands in India, showcasing its remarkable growth in stock price over the past 20 years and its significant impact on the market.
What was the initial stock price of Titan, and how much did it increase to within 20 years?
-The initial stock price of Titan was 7.11 rupees, and it increased to 2,071 rupees within 20 years, reflecting a staggering growth of 36,218 percent.
What was the vision of Mr. Xerxes Desai when he started looking at the watch market in India in the late 1970s?
-Mr. Xerxes Desai, a project manager of Tata Hotels, saw the potential in the watch market in India, which was largely unorganized and dominated by a single player, HMT. He aimed to tap into this market with a new venture for the Tatas.
How did the Tatas overcome the regulatory challenges to enter the watchmaking industry in India?
-The Tatas overcame regulatory challenges by setting up a separate private company on paper called Questar Investments, which did not draw the attention of the government. They named the company Titan, and upon receiving government clearance, they bought Questar Investments.
What was the strategic location choice for Titan's base, and why was it significant?
-Titan chose to set up its base in Hosur, which was just one hour away from Bengaluru where HMT had its base. This strategic location allowed Titan to attract experts from HMT and use their expertise to improve operations.
Why did Titan decide to focus on quartz watches instead of mechanical watches?
-Titan decided to focus on quartz watches because they were easier and cheaper to manufacture, more accurate, lighter, slimmer, and required less maintenance compared to mechanical watches.
How did Titan approach the distribution and retail strategy to overcome the reluctance of distributors?
-Titan bypassed the distributors by partnering with reputed businessmen in different cities across the country, providing them with training and enabling them to make higher margins than industry standards.
What was Titan's unique approach to marketing their watches in the 1980s and 90s?
-Titan's marketing approach was unique in that they showcased their watches in half-page newspaper ads without models, focusing only on the brand identity and the price of the watch, which proved to be very successful.
How did Titan's financial strategy contribute to its early success?
-Titan's financial strategy involved not offering a credit system and taking advance payments for their supply, which contributed to a healthy balance sheet and allowed them to show profits from the very first year of operation.
What are some of the key business lessons that can be learned from the rise of Titan Watches?
-Key lessons include leveraging the advantage of time in a developing nation, treating obstacles as opportunities to eliminate competition, and jumping to the next curve to disrupt the dominance of established players.
Outlines
🚀 The Rise of Titan Watches: A Revolutionary Brand
The script introduces Titan Watches as one of India's greatest consumer brands, highlighting its phenomenal growth over the past 20 years. The stock price has increased by an astounding 36,218%, turning a small initial investment into a fortune. The episode aims to explore the story of Titan Watches, its business strategies, and the lessons to be learned from its success. It begins with the late 1970s when Mr. Xerxes Desai, a project manager at Tata Hotels, identified a gap in the Indian watch market dominated by unorganized players and a single premium player, HMT. Despite HMT's monopoly, there was a significant demand for foreign watch brands, which were smuggled into India due to their unavailability. This insight led to the establishment of Titan as a separate entity to tap into the untapped market potential.
🛠️ Market Research and Strategic Innovations at Titan
This paragraph delves into the market research conducted by Titan's team, which included studying watch markets abroad and setting up a base close to HMT's stronghold to attract their experts. Titan recognized the superiority of quartz watches over mechanical ones due to manufacturing ease, accuracy, and convenience. Leveraging this knowledge, Titan built its infrastructure around quartz technology. The company also innovated in distribution by partnering with retailers, providing extensive training, and understanding the broader gifting market, positioning Titan as more than just a watchmaker but a player in the competitive gifting segment.
📈 Titan's Marketing Mastery and Financial Prudence
The script describes Titan's marketing strategies, which included unconventional newspaper ads that focused on the product's design and quality rather than celebrity endorsements. This approach was highly successful, attracting customers who were drawn to the watches' aesthetics and value. Titan also emphasized exceptional after-sales service, treating customers with care and ensuring their satisfaction. Financially, Titan adopted a no-credit policy, ensuring a healthy cash flow and profitability from the outset. These strategies contributed to Titan's rapid market penetration and significant revenue within its first year.
🏆 Business Lessons from Titan's Success Story
The final paragraph reflects on the business lessons that can be learned from Titan's journey. It emphasizes the advantage of foresight in developing nations, where entrepreneurs can adapt successful models from developed markets. It also discusses the importance of overcoming obstacles as a means of eliminating competition, as demonstrated by Titan's persistence in entering the watch market despite regulatory hurdles. Lastly, it touches on the strategy of 'jumping to the next curve,' which allowed Titan to outpace competitors by embracing new technology. The script concludes by acknowledging the ongoing challenge of adapting to technological shifts, such as the rise of smartwatches, and invites viewers to engage with the channel for more insightful content.
Mindmap
Keywords
💡Titan Watches
💡Stock Price
💡Business Strategies
💡Quartz Watches
💡Market Research
💡Distributors
💡Retailers
💡After-Sales Service
💡Marketing
💡Financial Health
💡Jugaad
Highlights
Tata's Titan watches is one of India's greatest consumer brands, with a 36,218% stock price increase over 20 years.
A ₹10,000 investment in Titan 20 years ago would be worth at least ₹38 lakhs today.
The story of Titan began in the late 1970s with Xerxes Desai's vision for a new venture within the Tata Group.
Desai and his team identified a massive untapped market for watches in India, dominated by unorganized players and a single premium player, HMT.
Indians had a fascination with foreign watches, leading to a black market for smuggled Swiss and Japanese watches.
The Tata Group used a strategic approach to enter the watch market by forming a separate company, Questar Investments, to avoid government attention.
The name 'Titan' was derived from a combination of 'Tata Industries' and 'Tamil Nadu', reflecting the partnership between the Tata Group and the Tamil Nadu Industrial Development Corporation.
Titan's market research team studied international watch markets and identified quartz watches as the future of watchmaking due to their accuracy, affordability, and convenience.
Titan strategically set up its base in Hosur, close to HMT's base in Bengaluru, to attract expertise and talent from the competition.
Titan's sales strategy involved partnering with retailers and providing comprehensive training to ensure high-quality sales and market understanding.
Titan's marketing approach was innovative, focusing on the watch design itself rather than using celebrities or models in advertisements.
Titan emphasized exceptional after-sales service, treating watch repairs with the importance of mending a damaged relationship.
Titan's financial strategy included no credit system and advance payments for supply, contributing to a healthy balance sheet and immediate profitability.
Within a year of operation, Titan achieved a profit of ₹19 crore and sold 3.44 lakh quartz watches, capturing 55% of the market.
Titan's success led to the creation of other iconic brands like Tanishq, Fast Track, Sonata, and Titan Eye Plus, all leading in their respective markets.
Business lessons from Titan include leveraging the advantage of time in a developing nation, overcoming obstacles as competition eliminators, and jumping to the next curve to disrupt market dominance.
TheFixedIncome.com is highlighted as an investment opportunity for high-quality bonds, providing a fixed income and low-risk returns.
Transcripts
hi everybody today's episode is a very
very special episode because today we
are going to learn about one of the
greatest consumer brands in the history
of india and that is titan watches
in the past 20 years the stock price of
titan has shot up by not 10 not twenty
but thirty six thousand two hundred and
eighteen percent going from just seven
point one one rupees to two thousand
seven twenty one rupees and a mere ten
thousand rupees invested in titan twenty
years back would be worth a minimum of
thirty eight lakh rupees in fact this is
the biggest talk in mr rakesh involves
portfolio which was valued at 11 0849
crores as of january 2022 but while most
of us know that titan watches are great
very few of us know how did titan
watches lay the foundations for the
iconic titan brand in india which is why
in this episode today let's try to
understand what is the story of titan
watches what were the business
strategies that laid the foundations for
titan to become such a legendary brand
in india and most importantly what are
the business lessons that we need to
learn from the iconic rise of titan this
video is brought to you by
thefixedincom.com but more on this at
the end of the video
this is a story that dates back to late
1970s when a project manager of the tata
hotels named mr xerxes desai was looking
to start a new venture for the tatas and
generally the culture among the tatas is
such that they constantly keep scouting
and tracking for new industries to enter
and in the 1970s mr desa and his quality
made some critical observations about
the watch market of india they saw that
watch was such a fundamental accessory
that every single person starting from a
watchman to a student to an executive
all of them were watches so obviously
the watch market in india was very very
huge but in spite of that most of this
demand in india was being catered to by
the unorganized players and in the
premium space there was only one
significant player which was a company
called hindustan machine tools limited
or hmt this company was a public sector
company run by the government itself on
top of that in the 1970s and 80s since
liberalization had not happened in india
foreign watchmakers like the swiss and
the japanese could not enter the indian
market so practically hmt was a monopoly
in the market but when mr desai and his
team did some ground level research they
found something very very interesting
number one they saw that although the
swiss and the japanese watches were
never sold in india surprisingly a lot
of indians actually knew about these
different watch brands all across the
world secondly this fascination for
watches was so much in india that people
who had friends and relatives abroad
actually smuggled swiss and japanese
watches into india now i don't know how
many of you remember or have experienced
this but back in 2009-10 after iphone
launched in the us the craze of iphone
in india was so much that even though
iphone was not being sold in india a lot
of indians actually smuggled iphone from
the us through relatives and friends and
because iphone did not support the
indian networks they did something
called jailbreak by actually going to
these small mobile shops just to make
sure that they could use iphone in india
and they do not care if it compromises
security to the phone itself as long as
they got to use an iphone so just like
this iphone crazed in 2010 indians of
the 70s and 80s were super fans of swiss
and japanese watches and in a way a
black market was formed for foreign
watches in india and lastly since very
few people had relatives abroad the only
premium watchmaker they could opt for
was hmt and out of 1.5 million watches
produced in india 1 million watches were
produced by hmd alone along with other
small players contributing to the
remaining 0.5 million but the demand was
so much that hmd itself was not able to
keep up and this resulted into long wait
times just to buy a watch
and this is when mr desai and team
realized that the watch market of india
was a gold mine so finally they decided
to start a watch company that could
cater to this untapped demand in indian
market
but you know what guys there was a
slight problem since india was an
extremely socialistic country
watchmaking as an industry was open to
either small-scale manufacturers or
public sector companies so big private
companies like the tatas were not at all
welcome in this space so the tatas
approached the tamilnadu industrial
development corporation and back then
even they were looking to find an indian
partner for french watch manufacturing
and as expected the government of india
rejected their proposal so you know what
they came up with a sneaky strategy
wherein they set up a separate private
company on paper called questar
investments so that it would not draw
the attention of the government and the
project name of the company was derived
from the two names of the organization
tata industries and tamil nadu and when
put together the name that came out was
none other than titan
and as luck would have it the government
provided the clearance and the tatas
immediately bought questar investments
this is how in 1984 the tatas and the
tamilnadu industrial development
corporation together started an iconic
brand from india through jugaad which we
all know today as titan
this is where the second phase came in
and that was market research now as soon
as the titan team was formed a team was
sent abroad to study the watch market
and to look for inspiration from
watchmakers from france and switzerland
and at the same time they very very
cleverly set up a base in a place called
hosuh why because hmd had its base in
bengaluru and this place was just one
hour away from bengaluru this way titan
could easily draw in experts out of hmt
and use their expertise to improve their
operations and finally in 1987 titan
officially started manufacturing watches
secondly if you look at the watch
revolution of the 1980s and 90s there
were two types of watches on the rice
mechanical watches and quads watches for
those who don't know both these watch
movements are literally engineering
marvels and it wouldn't be too poetic to
say that mechanical and quartz watches
are an engineer's artworks
to tell you about it a mechanical watch
is driven by a mainspring and when this
main spring is wound by the user its
force is transmitted through a series of
gears that work in conjunction together
and eventually they move the hands of
the clock and that is how you get to see
the time whereas quas watches are
battery powered and this battery sends
an electrical current through a small
piece of crystal called the quad's
crystal and this crystal is embedded in
the circuit this action then causes the
crystal to vibrate exactly at 32 768
times per second then the circuit
measures these vibrations and converts
them into one pulse every second and
this pulse drives the motor which then
moves the watch hands eventually
enabling the watch to keep time
these were the two rival systems in the
watch revolution of the world
so when the titan team actually came
back from market research they realized
that quartz watches were the inevitable
future of watchmaking this was because
quads watches had three major advantages
over mechanical watches firstly from the
manufacturing standpoint quad's watches
had 70-80 moving parts as compared to
100 to 120 moving parts in a mechanical
watch this made it both easier and
cheaper to manufacture a quads watch
secondly from the consumer standpoint
while mechanical watches had an error of
6 to 12 seconds a day quad's watches had
an error of just 5-100 seconds in the
entire year
and quad's watches were also lighter and
slimmer for the customer to carry around
and lastly while mechanical watches of
those days needed to be wound manually
almost every single day
quads watches just needed a battery
replacement that too in a year or two
this is a reason why quad's watches were
the inevitable future of watchmaking but
strangely in india until rajiv gandhi
came in the government of india had a
mandate that 80 of the watches
manufactured must be mechanical watches
which is why there were very less to
none quads manufacturers in india but
for titan this came at a very very
accurate time because titan was founded
in 1984 and all the base work they did
enabled them to build their entire
infrastructure around quads watches
straight away
this is how the titan team got the
second and perhaps the most critical
pillar right which was choosing the
right technology
and then came the third pillar which was
the post manufacturing process and this
included the store setup distribution
and finances
and here's how they carefully crafted
each one of these attributes
first of all for the distributors back
then all the distributors were extremely
reluctant to buy titan because like we
saw hmd had an 80 market share and these
distributors were extremely loyal to hmt
and skeptical about titan so the titan
team decided to directly tap into
retailers by partnering with reputed
businessmen in different cities all
across the country and even if they did
not have any experience in what selling
titan conditioned them with great
training and made them masters in what
selling in return they bypassed the
distributors and these retail
businessmen were able to make way higher
margins as compared to the industry
standards
and titan's training was so holistic
that while a normal watt salesman is
just taught to observe everything about
watches
a titan salesman was actually trained to
study the market so broadly that he was
expected to know the business of not
just watchmakers but also other stores
like a raymond store a premium sari
store or even a jewelry store the
question is why does a watch salesman
have to know about raymond premium sorry
stores and jewelry stores
well that is because while most people
thought watchmakers only compete with
other watchmakers titan back then
understood that a watch is also an
instrument of love that could be bought
with the intent of gifting like a wife
would gift her husband a watch so titan
understood that their competition was
not just hmt but even other players in
the gigantic gifting segment which
included a jewelry store a sari store
and many other stores that affluent
customers would go and buy from
and hence this proactive market research
was instilled in the frontline workers
of titan and for the customers they duly
complemented their sales with a
stupendous after sales service in fact
at titan the act of repairing a watch
was considered like the act of repairing
a damaged relationship like repairing
the company's reputation
so they treated their customers with
immense warmth and they even installed
air conditioners in the waiting rooms in
the 1980s just so that the customers
would not feel inconvenienced while they
come to the service centers secondly for
marketing titan got hold of none other
than the legendary marketers or gillian
martha themselves and they helped them
design such insane newspaper ads that
back then when watches were always
endorsed or showcased by a celebrity or
a model
titan placed half a page ad of just the
magnificent watch design without a model
at all and all they mentioned was just
the brand identity and the price of the
watch that's it and this method of
marketing although quite
counterintuitive it turned out to be
such a big hit that people literally
walked into a titan showroom with
newspapers in their hands and said that
i want this watch such was and still is
the magnificence of their advertisement
and lastly to keep their financials
healthy titan just like pdlite did not
offer a credit system at all and they
took advanced payment for their supply
and although it was met with initial
resistance it contributed to titan's
financial success
this way titan's balance sheet was so
healthy that they were able to show
profits on the very first hit of the
operation itself and the result well in
1987 88 that is just one year into the
market titan earned a mammoth 19 crore
rupees and sold 3.44 lac quads watches
by 1989 titan had cornered nearly 55
percent of the quads watch market in the
country and from here onwards the brand
of titan only kept growing growing and
growing and once they were able to build
a brand identity and were able to
showcase the results on their balance
sheet their stock price just keep going
up up and up this is how through titan
watches the foundations of the titan
brand was laid and in the next 20 years
titan went on to build incredible brands
like tanishq fast track sonata and titan
i plus and each one of these brands
today are more or less in the leading
positions in their respective market and
tanishq is actually a very very
interesting story which i am not
covering due to information overlord but
if you want to know about it please drop
a comment below and i'll try to release
it in the next month's lineup
and this brings me to the most important
part of the episode and that are the
business lessons that we need to learn
from the iconic titan brand
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moving on the first thing you need to
understand is that when you are living
in a developing or in an underdeveloped
nation along with a lot of disadvantages
as an entrepreneur you have the massive
advantage of time because you can
actually see what is happening in the
developed world right now and
incorporate that in a developing nation
in the future and this is because
technology often evolves in a similar
trajectory and if you remember from our
jumpstage episode even he did the same
by understanding the power of railways
from the developed world and here we saw
mr desai do that with titan watches
lesson number two an obstacle in
business is often treated as an obstacle
by the losers but the same obstacle is
treated as a competition eliminator by a
winner because you see the same
obstacles are going to be faced by all
the entrepreneurs in the field but the
ones who choose to tackle it and
overcome it will by default win against
those who shrug their shoulders in this
case the tatas tried for years to get an
approval from the government and when
they didn't they found a jugadoo way
through quester investments to get into
the business anyway and mind you this
process took not one not two but almost
10 years just to start manufacturing and
lastly
jumping to the next curve is the easiest
and perhaps the most powerful way to
kill the dominance of a giant player in
this case titan killed the dominance of
hmd by jumping to quads and ironically
now apple is rapidly killing the market
of both titan and swiss watches by
jumping to software-based watches and
what remains to be seen now is how will
titan watches tackle this mammoth
challenge that lies ahead of them
that's all from my side today guys if
you learned something valuable please
make sure to the like button you want to
make youtube rubber happy and for more
such insightful business and political
case studies please subscribe to our
channel thank you so much for watching i
will see you in the next one bye bye
[Music]
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