How did TATAs build TITAN into a $31 Billion company? : Titan Watches Case Study

Summary

The 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

00:00

🚀 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.

05:02

🛠️ 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.

10:03

📈 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.

15:05

🏆 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.

Keywords

💡Titan Watches

Titan Watches is a prominent consumer brand in India, known for its significant growth and iconic status. The brand's success is highlighted in the video through its remarkable stock price increase and its foundational role in establishing the Titan brand in India. The script discusses the business strategies that contributed to Titan Watches' legendary status, such as market research and innovative distribution methods.

💡Stock Price

The term 'stock price' refers to the cost at which shares of a company are traded in the stock market. In the context of the video, Titan's stock price increase from seven point one one rupees to two thousand, seven twenty one rupees signifies the company's financial success and growth over the past 20 years, which is a central theme of the video.

💡Business Strategies

Business strategies are plans and methods that a company uses to achieve its goals and objectives. The video emphasizes the importance of Titan's business strategies, such as identifying market gaps, choosing the right technology, and creating effective distribution and marketing plans, which were instrumental in building the Titan brand.

💡Quartz Watches

Quartz watches are timepieces that use a quartz crystal to keep time, offering accuracy, affordability, and convenience. The video discusses how Titan Watches capitalized on the technological advantages of quartz watches over mechanical ones, which was a strategic decision that contributed to their market dominance.

💡Market Research

Market research is the process of gathering, analyzing, and interpreting information about a market. In the script, Titan's market research team identified the potential of the watch market in India and the preference for quartz watches, which informed their business decisions and product development.

💡Distributors

Distributors are intermediaries that help in the supply chain, distributing products to retailers. The video describes how Titan Watches bypassed traditional distributors by partnering directly with retailers, a strategy that helped them establish a strong presence in the market.

💡Retailers

Retailers are businesses that sell goods or services directly to consumers. Titan Watches' approach to work directly with retailers, as mentioned in the script, allowed them to have more control over their sales channels and offer better margins to the retailers, which was a key part of their distribution strategy.

💡After-Sales Service

After-sales service refers to the support provided to customers after they have made a purchase. The video highlights Titan's commitment to excellent after-sales service, treating watch repairs with care and providing comfortable waiting areas, which contributed to their strong brand reputation.

💡Marketing

Marketing is the process of promoting and selling products or services. The video describes Titan's innovative marketing approach, such as using newspaper ads without models to focus on the product itself, which was a successful strategy that attracted customers to their stores.

💡Financial Health

Financial health refers to the stability and profitability of a business. Titan Watches' insistence on advance payment for their supply, as mentioned in the script, contributed to their strong financial health, allowing them to show profits from their first year of operation.

💡Jugaad

Jugaad is a Hindi term that refers to an innovative fix or workaround, often used in the context of limited resources. The video uses the term to describe how the Tata Group used a 'jugaad' strategy by setting up a separate company, Questar Investments, to enter the watch market when faced with government restrictions.

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

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channel thank you so much for watching i

will see you in the next one bye bye

[Music]