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!
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