| Mr. S.
Ravi Kant |
|
Chief Operating Officer, International Business, Titan
Industries Ltd. |
|
|
|
| |
S.
Ravi Kant: Thanks Dharen, good morning friends, and welcome
aboard this globalization ship on a two day cruise which I’m
sure you will find very stimulating. I’m going to be as
Dharen said talking about titan overseas which is all about
a challenge of taking a Indian brand global. When you talk about
taking an Indian brand global it has to do with the image of
India and if you look at the image of India in the context of
image of Asia I think that the both the Asia and the Indian
image is changing that is the good news. The fact remains as
Dharen mentioned earlier we are talking about the subject is
it too late? Yes actually it is very late but we haven’t
yet missed the bus. So better late then never. If you look at
the challenge of taking an Indian brand global, as I said it’s
all about what India stands for in the overseas markets and
in the minds of the consumers in the overseas markets. India
stands for brain power and software but can you think of any
brand which belongs to the consumer products category or the
high technology sector, high precision sector which people think
has made a mark in the overseas market. That fact is no, china
we were talking about earlier has already taken this route long
time back, but few years back china used to a supplier of low
quality and low priced products. China is moving up the value
chain and creating a lot of brands. Certainly has an edge over
us but as I said we are never too late. So let me move on, as
I was saying Asian companies were known earlier as back end
work horses producing low quality products at a low price and
now their images are changing. Most of the companies are realizing
the benefits of going global and creating a brand overseas.
If you look at India ad china and look at the statements here
India is really the back end work horse while the china was
the low cost, low quality producer in the world, if you look
at the future and china currently as they said has already realized
the benefits of brand building. India is slowly catching up.
If you look at the Indian market, take a look at the consumer
electronics industry what happened to the leaders of yesterday?
Who are the leaders of today – Samsung, LG etc. Where
have the leaders of yesterday gone? If you look at the automobile
industry the whole landscape has changed and all the world brands
are here. So we all know about what is happening in the Indian
markets and the brands, who were set in our minds few years
back and are not here now. But let me give an example from china,
if you look at the car industry in china in the year 200 Volkswagen
had a market share of 60%, the market grew four fold in four
years and Volkswagen dropped to 20% in 2004 and last year it
had only 17% of the market share. What happened in the last
three four years is that apart from many other brands there
is the Hyundai that came in and set up a plant three years ago,
today sells three hundred thousand cars in that market and has
13% market share. It is planning a second plant and few weeks
back I had an opportunity of spending time at the Hyundai plant
in Beijing and it is an amazing plant. You should see it. We
were talking about low quality products being made in china
and what is Hyundai is planning to do, it is planning to set
up an R&D center in china, they are planning to set up…they
are planning to design and create a car in china that will be
sold in 2010 all over the world. So that is what china is all
about and it is moving up the value chain. As you can read it
here this Hyundai rolls out a car every fifty five seconds,
that is the kind of thing that is happening and I saw that happen
in front of my eyes. So what does this mean to us? The whole
world is looking at the one billion population in India and
china and coming to our home turf and we are now talking about
on the one hand protecting our home turf because as I said like
leaders of yesterday we cannot take things for granted but we
also have to look at the overseas markets to ensure and de-risk
our businesses and see that we get access to the markets. We
improve quality by setting up new bench marks, India as you
already know is a much protected country and the competition
has not been as intense in the over seas markets. By operating
in an extremely challenging environment we will be forced to
drive down our costs and one of the most important things is
developing a talent pool of operating in a challenging environment.
And in the future look at accessing global capital. So let me
move on to the titan story. It has been a quite an exciting
journey, we faced rough weather in some parts of the world but
in other parts of the world there was success and glory. The
journey started in 1991 and there were two models that we used.
First is what I call the honor and glory model which we used
in Europe and other is the building clock model which we used
in places like Asia pacific, Middle East and Africa. (this seems
to have turned upside down) I don’t think that we can
turn it round now but basically this is the Opera Square in
Paris, we had prominent Titan neon when we launched in Europe
starting from there and we took great pride in the fact that
there were lots of people who traveled to Paris and came back
and said that I saw the Titan neon there. You guys are doing
a great job. (This one is right) this is our retail presence
and is very impactful in Spain. Our Titan positioning when we
launched in Europe was best of the world ahs come together to
create this brand. We tried to overcome this county origin thing
by saying that we have German machinery in our plant, we use
Swiss designers, and Indian laborers, and so it is best kind
of combination of putting together a product and brand. And
try to get over it by creating a campaign which is very striking.
We used personalities of mixed parentage, Italian father and
Indian mother kind of thing. And said that Titan, new world
watch. We didn’t believe in any compromise in this honor
and glory model. We hired the best of designers, who had worked
for removyle and ebel. We created an exclusive product which
we realized later it turned out to be too niche and ahead of
time. We also set up a new plant as an extension of our existing
plant which is catering to the domestic market to basically
manufacture intricate bracelets, ornate cases and that kind
of thing. There was no compromise on the brand building expenses
and our positioning was premium, we challenged the Swiss much
above the Japanese in the market the brand was positioned at
a very premium level. We faced or experienced lots of initial
success and got the Swiss worried. In fact some of you might
have read during those years that Swiss were preventing us from
participating in the bazel fair which is the most premium watch
and jewelry annual fair that happens in Switzerland. They, the
Swiss brands were talking to a lot of distributors for the European
markets to give up Titan if they wanted to retain their brands
because we had some common distributors and we had thought we
had arrive. Realization dawned slowly though a very difficult
market, bumpy road, we are talking about the image of the country
of the origin not being so relevant to the brand today but those
were the years and especially in the watch industry and the
watch business country origin still played a very key role.
The watches have to be either Swiss or if you have to compromise
it had to be Japanese in the developed markets and European
countries. So the country of origin proved to be a strong deterrent
moving forward in terms of acquiring retail acceptance and consumer
acceptance. So what really went wrong in addition to this country
of origin issue that we faced in Europe? Styling obsolescence
as we said we designed and created exclusive products in a new
plant, hired the best of designers and we had the best of consultants
and created nice ornate cases which were probably ahead of time
but the styling was changing very fast. Fashion labels were
coming like the CK Fossil with cleaner looks and we realized
that the consumer preferences were changing so the styling obsolescence
which is there in our industry not as much as the mobile industry
of course. Distributors and retailers are a different profile
in the European markets, they are not like in the Asian counter
parts, and they like to see immediate returns. Distributors
want to be partners in progress with you when you talk about
them in Asia. We did make a couple of mistakes in the distributors
we selected, the advertising that I showed you won us lot of
awards, did not get us enough consumers. It also showed us that
the speed to the market was slower then what it should have
been. So that was the Europe story that was built on the honor
and glory model, we said we will do everything the best, we
spent about ten million dollars in advertising in two and half
years, that’s a lot of money in Europe. Le me move on
to the other model that we were parallely used starting in 1992-93
in Middle East and Asia pacific. The building block model is
all about doing it step by step. In the year one we said let
us concentrate on distribution, let us concentrate on understanding
the retailer, concentrate on garnering some shelf space, concentrate
on response of the product on the consumer, understanding what
the consumers are responding in what way, to the product and
the brand. And then from there move on to the outdoor presence,
striking outdoor presence and then move on to brand building
so to say, see brand building – we always talk in the
context of mass media advertising. Brand building is not just
about mass media advertising or how creative your campaign looks
or how much money you spend on brand building. Brand building
starts from you contact with the retailer because you are the
face of the company, it starts from what the dealer board looks
like outside a store, brand building is about where your brand
is positioned at that store, is it in the front in the premium
counter or right at the back of the store. When you enter a
lot of markets…you know in India we used to be kings,
we used to tell the dealer jump and he would ask how high. But
if you go to these markets and try and sell in these markets
the retailer would take ten watches from you and keep it right
at the back of the store where the consumer would never see
and then it would take the years and years to move forward,
so that is the building model concept that I’m talking.
This is a shopping shop in Dubai.
Let me quickly take you thru some of our places, this is our
roof top sign. This is to show you that in our building block
model we concentrated on store presence, we concentrated on
the outdoor visibility in each of these markets when we enter.
Store presence in Singapore and this is a part of department
store, again a store presence in the department store in Bangkok,
department stores incidentally are turning out to be …we
call them power retailers, consumer buying in the high street
is shifting even in India to malls and department stores and
today they contribute 30% of the our business world wide excluding
India. As part of the exercise of brand building thru this step
by step approach that I’m talking about, it’s also
about involving the consumer with your brand. So we do a lot
of road show and we do a lot of activity around the consumers
and get them involved with the brand. These are some of the
things that we did in Oman. Again the presence Kazakhstan department
store. So where are we today? We are in 31 countries and over
2000 stores, in Europe we are going slowly and containing our
losses now. We have taken on the task of becoming one of the
leading brands in the Asian markets, which is the middle East
and Africa on one side and the Asia pacific on the other. Very
briefly let me cover our watches business then I will cover
the jewelry business. What have we achieved? Let me take the
example of the Middle East, how many brands can you think of
in watches that we have seen ads off in India, we will probably
able to count seven or eight or maybe ten brands. Take a look
at this market, there are over three hundred brands in the market,
214 brands were advertised over last year. So that is the kind
of competition that we are talking about. If you get 3% to 4%
to 5% of market share then you have made it in life. In India
we are used to talking about 50% to 60 % of market share in
our business. So that’s the complexity of the market.
Titan is one of the leading brands in the mid market segment
in most of the Asian countries, Titan is number one is in Oman
and Bahrain, the number two brand in Qatar, and is among the
top five brands in all other Middle East countries, including
countries like Bangladesh and Sri Lanka. How did we achieve
this? It’s all about developing your product strategy
around the deep understanding of the consumer, these are the
things that we hear about but specifically in our case, and
like he said earlier we too started of being an export oriented
company. We said that these are the products in India and these
are the models that we sell in India and let’s pick up
a few from here and sell in these markets. We soon realized
that was not good enough although for India those designs were
at the cutting edge where as international as you can get so
we moved on to creating products exclusively for that market
and that is how this came about the building clock exercise,
to understanding the consumer in the first year and then moving
on to creating products for that market. The other most important
thing for the overseas market is if you have to survive is to
identifying the right partner if you are not operating there
your self. Typically the way most of the brands operate is that
they appoint a distributor for a country, so the distributor
is your face, the sales force and some of the marketing people
are on the payroll of the distributor so if you made a wrong
selection there you don’t stand chance at all. So we concentrated
a lot on identifying the right partner and building a strong
relationship including a retailer, watch buying in over seas
markets is very impulsive and the retailer places a key role
in converting the decision from one brand to another brand,
unlike in India where watch buying is a very considered decision
and this is changing here and it is an urban phenomena. But
in most cases when you set out to buy a watch in India you have
a brand in mind and you don’t just walk across the mall,
see a watch in the window and just pick it up. There it is very
impulsive and there the retailer plays a key role. It feels
good to share this award, award in the sense that a study which
was done by a British research agency for business today Oman,
I don’t know if you can read it here but it says Titan
was ranked number three watch brand among the top life styles
brands in Oman. As I told you earlier we are a number one brand
and we are right after Rado and Rolex. There was a survey done
amongst the senior executives in Oman who are Indians and lot
of other Omanis. So what went right and going forward I would
just like to share two brand building mantras, when you operate
in an extremely competitive environment I think it is all about
differentiation, it is all about focus and creating impact in
which ever market you are presented. Differentiation in product
– let me share a story with you. I was talking about our
Middle East experience. Middle East few years back was primarily
a very gold looking market, gold in the sense that the watches
had to be gold plated, we saw the trend in Europe where people
were moving to steel and the white look and we were the first
ones who took the bold step to launch, to create a collection,
this was about six years ago, to create a collection which was
steel collection and change the face of the market despite 200
other brands being there in the market. This is the collection
that you see here we called it B-steel collection, the whole
campaign was about be bold, be adventurous and therefore B-steel.
And subsequently this collection was launched in India and we
called the new world watch campaign. So differentiation in the
product; differentiation in the detail presence, in the mid
size segments in the overseas market there are no exclusive
showrooms. You will see only showrooms of Rolex, Cartier, Bulgari
etc you will not see a Seiko or a citizen showroom. Again we
have taken the steps for creating retail presence in exclusive
showrooms and shop in shop which has worked tremendously in
or favor and these showrooms are very different from the showrooms
that are there in India. And taking into account what the other
showrooms look like in those markets. Differentiation in communications,
communication is not just about as I said earlier advertising
and how creative it looks. Innovative ways of communication
in you initial years when you don’t have the money to
spend on mass media. The bus you see here is a bus in Singapore
we were the first ones to take on advertising on the buses and
today we have brands like Rado advertising on a bus in Singapore.
The clock that you see in the right is from malay and this again
is a high traffic crossing so lots of people see you. it is
a clock that we created specially for that market. Quickly moving
on to the jewelry business, it is the same story here. Jewelry
business for us is a new one and it is only four to five years
old. We launched tanishq just four five years ago. We are present
in six countries and in sixty stores. And here too we have taken
on the task of creating excusive mini boutiques or shops in
shop in shops. Let me tell you about how we launched jewelry
in the middle eat. As you know that anyone who goes to Dubai
has to buy gold because it is the cheapest in the world. It
is always on the shopping list and the making charges are the
lowest. So when we were entering the Middle East and Dubai market
with tanishq people said that you are planning to charge a premium
on this you are out of your mind. We said that we agree that
it is the lowest priced market in the world and people negotiate
till death but we will create an aura around the brand, create
a brand and charge a premium otherwise we can’t spend
that much on the brand and we went ahead with that and tanishq
is one of the …there is no statistics available in the
middle east on the jewelry market on the brand but we know that
we are among the leading brands in the plain gold segment till
now which I think is quite an achievement. Our growth in the
last year in retail sales in this segment is 45% and similarly
we created a differentiation in the product, we created differentiation
in the communication, our product that we sell has nothing to
do with the product that we sell in India, in fact there are
lots of people who go to overseas market and say that what they
see there is very different. 100% of the products that we sell
in these markets are created exclusively for those markets.
The second mantra for brand building is always focus. Te focus
is what I call a 3C focus – identify the country that
you want to make an impact in, figure out the customers that
you want to target, identify the competition that you want to
grab your share from. We have a fairly in depth complex model
for this but I would like to share briefly with you briefly
here is how we identify a market before entry and how do we
evaluate? We have a fairly complex model of identifying the
market attractiveness and what we do is we map that with our
ability to enter to give you an example US, it is a large market
and it is a very attractive market. We look at the market size
and say oh boy! Fifteen billion dollars and therefore let me
enter that market. But what’s your ability to enter that
market? You have to create an impact to enter that market; china
again is a very big market. So what we do is we say that this
is the market and this is the industry statistics in the market
and how attractive it is and give a score to that country and
then we say that our ability to enter that country which has
to do with product relevance, how relevant are your designs
for that market, what is the likely response to the country
of origin in that market and those kinds of things. So that
is how the countries are scored and ranked so that is how we
move forward. So it is all about developing the right country
strategy, developing the right communication package. It is
not just using one campaign and using it worldwide. We do have
core communication idea but what we intend to do is to adapt
it to each country or adapt it to the customers that we want
to get and then create our campaign for that market. Finally
friends I think to build a global brand you must have the passion
and most successful global brands owe their success to the vision
and the global passion that the founders and the leaders had.
I firmly believe that if you don’t shock the future the
future will shock you. The story about leaders of yesterday.
Thanks friends I think it is our collective responsibility to
build brand India overseas and the only way to do it is by building
our brand overseas. Thanks! |
|
