THE HMT - RELAUNCH

University of Mumbai

A Project on
THE HMT – RE LAUNCH

By
Amol R. Palshikar
(Marketing)
Masters of management Studies 2007-2009

Under Guidance of
Prof. Ravi Vaidee

Oriental Institute of Management Studies

Plot No-149,Sector-12,Vashi
Navi Mumbai-400703
Approved by AICTE and Government of India
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CERTIFICATE

This is to certify that, the project assigned on ‘’The HMT – Re Launch’’ has
been successfully completed by Mr.Amol R. Palshikar of Oriental Institute of
Management Studies, Vashi.

The project is being completed as a part of the syllabus and also in partial
fulfillment of the two year full time degree of master of management studies
conducted by University of Mumbai.

Prof. Ravi Vaidee

(Project Coordinator)

Prof. Rupali More

(Course Coordinator)

Dr. Shiridharan Menon

(Director)
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Acknowledgement

During the perseverance of this project I was support by different

people, whose names if not mentioned would be in considerate on my
part.

I would like to thank with affection and appreciation and acknowledge

my indebtness to Oriental of Institute of Management (Vashi) for
initiating in the preparation of a project on “The HMT – Re Launch”. The
learning and knowledge that I have gained in the process of preparation
of this project has been tremendous and I would like to thank Prof. Ravi
Vaidee for providing me with the opportunity to work on this project and
guiding me on the same.

I owe sincere gratitude towards each and everyone who have given a
helping hand in the completion of this project.
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Declaration

I hereby declare that this Project Report entitled “The HMT – Re Launch” is
submitted in the partial fulfillment of the requirement of Master of Management
Studies (MMS) of ORIENTAL INSTITUTE OF MANAGEMENT; VASHI is
based on primary & secondary data found by me in various departments,
books, magazines and websites & Collected by me in under guidance of Prof.
Ravi Vaidee.

DATE: Amol R. Palshikar

MMS (Two Years)
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Table of Contents
Page No.

List of Illustrations 3
List of Tables 4
Executive Summary 5

Chapter 1 – Introduction 7

1.1 Theory and concept 7

1.2 Literature Review
8

Chapter 2 -Research methodology 13

2.1 Objectives
2.2 Limitations 13
2.3 Sources of Data Collection 13
2.4 Sampling Procedure 14
2.5 Primary Data Collection 14

Chapter 3 –Indian Watch Industry Overview 15

3.1 History of watch market 15

3.2 Indian watch industry 15
3.3 Present situation of Indian watch market
17
3.4 Major brands in Indian watch market 18 3.5
Segmentation of Indian watch market 18

Chapter 4 - Company Profile 20

4.1 History 20
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4.2 HMT Watches 28

Chapter 5 – Consumer Survey 34

Chapter 6 – Situation Analysis 40

6.1 Internal Environment 40

6.2 External Environment 40
6.3 Consumer Environment
41
6.4 SWOT Analysis 41
6.5 Possible Opportunities for HMT
45

Chapter 7 – Finding From the Survey 46

Chapter 8 – HMT Revival Plan 47

8.1 Gap Found in Marketing Strategy of HMT 47

8.2 Recommendations 48
8.3 Strategy 50
8.4 Segmentation 51
8.5 Market 54
Chapter 9 – Suggestions 55

Chapter 10 – Conclusion 56

Chapter 11 - Appendix 58

11.1 Questionnaire (for consumer) 58

11.2 Questionnaire (for retailers) 60
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Chapter 12 - References 61

List of illustrations

Number Title Page No.

1 Stages in brand strategy development 10
2 The principle of repositioning 10
3 Porter’s Five Forces Model 16
4 The watch market in India 19
5 Period of Use 34
6 Reasons for brand loyalty
35
7 Recall of HMT’s tag line
36
8 HMT’s exclusive Showrooms 36
9 Consumer perception of sales personnel 38
10 Consumer perception about after sales service 38
11 Consumer perception of display of Watches 39
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List of Tables
Number Title Page No.
1 Reasons for brand preference
42
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Executive Summery

Many brands and companies are constantly reinvigorating their businesses and positioning
them for growth. There is a constant need to innovate, reinvigorate, update, recalibrate, or
just simply fend off the competition in an effort to better explain "why buy me."

Brand positioning creates a specific place in the market for the brand and product offerings.
It reaches a certain type of consumers and delivers benefits that meet the needs of several
key target groups and users.

The actual approach of a company or brand's positioning in the marketplace depends on

how it communicates the benefits and product attributes to consumers and users. As a
result, the brand positioning of a company and/or product seeks to further distance itself
from competitors based on a host of items, but most notably on five key issues: Price,
Quality, Product Attributes, Distribution, and Usage Occasions.

In recent times, consumerism has undergone a sea change. Consumers today are well
informed about the products, as compared to earlier times. Hence, the marketplace has
become customer centric. Recognizing the importance of the customers in the business
structure, companies have started effecting brand repositioning exercises on a regular
basis.

In the recent times, a major brand repositioning exercise has been planned by HMT
Watches in order to provide more to its customers. The company has first gone for change
in logo and tagline. Then the communication strategy has been revamped to convey its
new position. The present study consists of reviewing the positioning strategies of HMT
watches. An analysis of repositioning strategies of HMT also forms part of the study.
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The main objective of the study is to find out whether the loyal consumers of HMT watches
are aware of the new positioning strategies of the company and how they perceive them.

Primary and secondary sources of data have been made use of in the study. The first part
of the project, i.e. Indian watch industry overview, stages in brand building, company
history, and situation analysis has been completed on the basis of secondary data. For this
purpose, internet, journals, books, magazines and so on have been made use of.

The second part of the project comprises of conducting a survey with the help of
questionnaire. The survey is proposed to be conducted on a sample of 50 consumers who
are loyal to HMT Company, selected through convenience sampling technique. The
questionnaire consists of appropriate mix of open ended and closed ended questions. The
data is presented using pie charts and bar diagrams.

The conclusion part of the report would provide an insight of consumer awareness
regarding brand repositioning strategies and effectiveness of revival plan for HMT WATCH
brands.
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1. Introduction
1.1 Theory & Concept
"A business has two - and only two - basic functions: marketing and innovation."
- Peter Drucker
The rapid pace of change and intense competitive pressure in today's marketplace demand
that brands continuously innovate and reinvent themselves to maintain their relevance and
market position. In this context, brand repositioning and other revitalization strategies have
become a business imperative for battling brand erosion. The appeal of brand repositioning
is further heightened by the rising costs and high risk associated with launching a new
brand.

Brand repositioning has received little attention in the marketing literature and has mostly
been treated as a variation of brand positioning. Biel, for example, has defined brand
positioning as "building (or rebuilding) an image for a brand". The goal of positioning and
repositioning strategies relates to the management of consumers' perceptions. However,
positioning focuses on the creation of brand associations - consumers' perceptions of the
attributes that differentiate the brand from competitive offers – while repositioning also
implies managing existing brand associations. The unique challenge of a repositioning
strategy, thus, lies in rejuvenating the brand image to make it relevant in an evolving
environment, while honoring the brand equity heritage.

Repositioning can be required as the market changes and new opportunities occur. Through
repositioning the company can reach customers they not intended to reach in the first place.
If a brand has been established at the market for some time and wish to change their image
they can consider repositioning, although one of the hardest actions in marketing is to
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reposition a familiar brand.

According to Solomon, position strategy is an essential part in the marketing efforts because
companies have to use the elements in the marketing mix to influence the customers
understanding of the position. During the movement from something less attractive and
relevant towards a more attractive and relevant position several of strategic choices has to
be made. The ones responsible for the repositioning have to evaluate why a reposition is
necessary, and if the offer is the one who will change or just the brand name. There are
several risk factors that have to be taken into consideration when preparation for a
repositioning of the offering or the brand. During repositioning, the risk of losing the
credibility and reliability is high and the need for a thorough strategy is therefore necessary
to avoid this occurrence. Some analyst argue that to successfully reposition a establish
brand name is almost impossible because repositioning of a brand can make the most loyal
customer to switch brand. But, in some circumstances a repositioning is necessary to gain
credibility if the brand is eroded. Whenever a reposition is in question it has to be of
relevance from a customer perspective, is this achievable? Some brands will on no account
be thought on as a luxury brand and therefore an attempt to reposition will only damage the
brand image or the actual company.

Numerous failed attempts at brand repositioning testify to the difficulty of developing and
implementing such a tactic. For example, while the soft drink brand, Mountain Dew has
remained relevant to the youth market through continuous repositioning in its thirty years of
existence, Levis' Jeans has been losing market share to newcomers such as The Gap,
despite numerous campaigns designed to reposition the brand as trendy.

The strategic importance of brand repositioning in preserving and enhancing brand equity,
coupled with the mixed results of repositioning attempts, underscores the need to develop
a better understanding of the dynamics of brand repositioning. Specifically, questions of
whether, when and how brands should be repositioned need to be addressed.
Research into brand repositioning is relevant not only to the development of brand
management theory, but also extends to corporate strategy through an examination of
corporate brands.
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1.2 Literature Review

The repositioning strategy is rolled out in three stages: introductory, elaboration and
fortification stages. This involves the introduction of a new or a repositioned brand, seeking
to underline the brand’s value over others, and to broaden the brand proposition. It is truly
tough to change the customer’s perceived attitude towards a brand, and therefore the risk is
great that the attempt to repositioning might be unsuccessful.

After rolling out the strategy, it is time to modify the proposition through update of the
personality and through repositioning. There are benefits and risks with both of this
segments and it is of great significance that they are truly evaluated when deciding the next
step in the process. To further understand the stages stated above, figure.1 will guide you
through the different phases that follow after establish a brand proposition.

The implication with the term” repositioning” is that a company modifies something that is
already present in the market and in the consumer’s mind. The definition of repositioning
changes different individuals and professions. To view the different definitions and perceive
a greater understanding about this concept, three examples of repositioning given by
individuals in different professions is stated below:

“Repositioning is a change, principally about trigging the vision, mission and value in a new
direction that is more suited for the brand in the future”. (Brand manager consultant)

“Principally, reposition concerns change the consumer’s perception of the brand”

(PR- Consultant)

“Repositioning is built upon the change unique and differentiated associations with the
brand in some kind of direction, it is about having a balance between the category party and
differentiation when using reposition strategies” (Leading brand strategist)

From these definitions, it is obvious that reposition is about moving something to a newer
and hopefully to a more attractive and relevant position. The purpose of the movement
differs with regards to what the company wants to achieve. A company might want to reach
out to a larger target group, or be involved in several different positions at the market. There
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is also a visible
relation between
price and quantity
aspects. When a
company
perceives the
market as a
demand curve, the
purpose is to
down stretch or up
stretch in this
curve. When
moving down it is
often spoken of as
an expansion
Figure 1: Stages in brand strategy development down wards, and
when moving up
and there is a need for reaching the premium segment and expand up wards.

Figure 2: The principle of repositioning

New Position

Price

Previous Position
Experienced quality

When striving towards a new position in the market, it is important to understand that
consumer’s minds are limited. People’s minds select what to remember and it is therefore
significant to convince the consumers with great arguments. The market demand changes
 THE HMT - RELAUNCH

rapidly and therefore reposition can be necessary to meet these demands, newer and
stronger arguments have to be established to convince them to stay as loyal customers.
As stated in the literature, repositioning is a very complicated matter and therefore there are
no detailed theories or models. The aim with repositioning differ from person to person, and
the only connection between all the different theories is that repositioning is moving
something from somewhere towards a greater position at the market.

Corstjens and Doyle (1989) identified three types of repositioning strategies:

(1) zero repositioning, which is not a repositioning at all since the firm maintains its initial
strategy in the face of a changing environment;
(2) gradual repositioning, where the firm performs incremental, continuous adjustments to
its positioning strategy to reflect the evolution of its environment; and
(3) radical repositioning that corresponds to a discontinuous shift towards a new target
market and/or a new competitive advantage.

After examining the repositioning of several brands from the Indian market, the following 9
types of repositioning have been identified. These are:

1. Increasing relevance to the consumer

2. Increasing occasions for use
3. Making the brand serious
4. Falling sales
5. Bringing in new customers
6. Making the brand contemporary
7. Differentiate from other brands
8. Changed market conditions.

It is not always that these nine categories are mutually exclusive. Often one reason leads to
the other and a brand is repositioned sometimes for a multiplicity of reasons.

A four-phased brand repositioning approach can be followed to achieve the intended

benefits:

Phase I. Determining the Current Status of the Brand

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Phase II. What Does the Brand Stand for Today?

Phase III. Developing the Brand Positioning Platforms

Phase IV. Refining the Brand Positioning and Management Presentation

The benefits that can be derived from brand repositioning exercises can be summarized as:

• Value over others

• Updated personality
• Relevant position
• “Up to date” image

The risks associated with such strategies are:

• Loss of focus
• Neglecting original customers
• Losing credibility for the brand
• Confusing the brand

Therefore, brand repositioning is more difficult than initially positioning a brand because
one must first help the customer “unlearn” the current brand positioning (easier said than
done). Three actions can aid in this process: (1) carefully crafted communication, (2) new
products, packaging, etc. that emphasize the new positioning and (3) associations with
other brands (co-branding, co-marketing, ingredient branding, strategic alliances, etc.) that
reinforce the new brand positioning.

This exercise is so critical to an organization’s success that the organization’s leadership

team and its marketing/brand management leaders should develop it, preferably with the
help and facilitation of an outside brand-positioning expert.
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2. Research Methodology
2.1 Objectives
• To review the mistakes in marketing strategies of HMT watches.

• To analyze the brand repositioning strategies of HMT watches.

• To study consumer awareness and perception about the brand of HMT watches.

• To recommend suitable measures to be taken by the HMT watch company to further

improve its brand perception and loyalty among its customers.

This study would help HMT watch industry to understand the gaps in its communication
strategy regarding brand repositioning exercises and the further measures to be taken for
effective marketing communications.

2.2 Limitations
 The study is confined to NAVI MUMBAI area only.

 There is possibility of sampling errors in the study.

 The responses of the consumers may not be genuine.

 The questions included in the questionnaire may not be comprehensive.

2.3 Sources of Data Collection

The relevant data was collected from both primary sources and secondary sources. The
starting point of my information gathering has been the secondary sources such as internet,
books, and journals and so on.

First, I made a study of the brand positioning and repositioning strategies of Titan watches
through primary sources such as consumer survey as well as secondary sources have put
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some add on value to the information gathered. Then I found what the mistakes are done
by HMT watch marketing strategies. Then I conducted a consumer awareness survey on
brand repositioning strategies undertaken by HMT watches in recent times and made some
revival plan.
Basically, the most of the part of the project is done by the help of primary sources.

2.4 Sampling Procedure

A sample of 50 consumers who are brand loyal to HMT watches since more than a year
and in the age group of 20 – 30 years have been considered for this study. As the HMT has
come up with designs, consumers who have used the previous and new have been
targeted.

2.5 Primary Data Collection

Data was collected through an interview schedule, consisting of both open ended and
closed ended questions. The schedule covered parameters like reasons for consumers’
brand preference; recollection of earlier tagline and advertisement, brand ambassador of
HMT; awareness of new tagline, new designs and so on. The data was collected through e-
mails, telephone contacts and one-to-one personal interviews.
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3. Indian Watch Industry Overview

3.1 History of the watch market

The Indian watch industry began in the year 1961 with the commissioning of the watch
division of HMT. The first watch model manufactured by HMT was the Janata model in the
year 1962. HMT was the leader in the watch market till the Tatas formed Titan Watches in
association with Tamil Nadu Industrial Development Corporation in the year 1987. They
took a major strategy decision, which later changed the face of the Indian watch market- to
manufacture only quartz watches. Liberalization in 1992 and the removal of quantitative
restrictions due to WTO has opened the doors for many foreign brands in the Indian market
viz. Tissot, Swatch, Omega, Rado, TAG Heuer, Rolex and many others. The import duties
on watches are falling which makes the Indian market look attractive for the global majors
like Casio, Swatch and Citizen.

3.2Indian Watch industry:( Porter’s Five Forces Model)

1. Supplier Power:

HMT has its own fully integrated operation for production of its watches. Titan has its own
production facilities for which it has invested roughly 120 crore rupees over the years, the
manufacturing capacity of which is 6 million units. Also there has been a rise of low cost
producers in China & Taiwan which has provided an opportunity for watch makers to
outsource watches at low cost, just as Titan has done to outsource the components for
Dash. Due to the large supply of watch movements available, there is little supplier power
in the watch market.

2. Buyer Power:
 THE HMT - RELAUNCH

The Indian watch buyers are very price sensitive, especially in the lower end of the market.
There is still a huge untapped market in India with market penetration of only 20 units per
thousand people while the world average is more than 100. At the same time there are a
segment of people who are willing to pay a premium for watches with good performance
and with a recognized brand name. So understanding the buyers’ preferences is very
crucial in this industry in order to gain a substantial market share.

Figure 3: Porter’s Five Forces Model

SUPPLIER POWER
No strong suppliers
Lack bargaining power
Rise of China, Taiwan
as low cost suppliers

BARRIERS DEGREE OF RIVALRY THREAT OF

TO ENTRY Increased number of firms SUBSTITUTES
Cluttered Market Low switching costs No close
Lack of Differentiation Strategic stakes are high substitutes

BUYER POWER
Price sensitivity , Buyers’ Preferences

3. Entry Barriers:

The Indian watch market in the recent years has shown a dramatic increase in the number
of brands available in the market due to removal of quantitative restrictions. So the new
entrant has to have an offering, which can be positioned and differentiated from the other
players in the market. This could be either price or functional or emotional appeal. So the
prime barrier for entry, in the current context, for a new entrant is to build a brand image
and price competitively.

4. Threat of Substitutes:
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There are no such substitutes to watch as a product. However, in terms of the companies
offering various variations for watches such as pendant watches and jewellery watches,
some sort of substitution has developed. Rich consumers prefer to purchase watches more
as a fashion accessory rather than simply for its typical use.

5. Degree of Rivalry:

There are many companies in the Indian watch market, however, the product ranges
offered by them are manifold. This makes the competition very stiff. Also at the lower end
of the market it is basically the Value for Money, which differentiates the players. The
strategic stakes for the producers are very high. Titan Ltd., the largest company in terms of
market share in the organized sector has faced losses in the quarter ended June 2001
despite increase in the market share due to macroeconomic situation. HMT faced a similar
situation when Titan was introduced in the 1980s leading to a sharp fall in its market share.

3.3 Present Situation of the Indian Watch Market

The Indian watch market is today of 40 million units, out which 60% is in the unorganized
sector in which the maximum number of watches are sold are below Rs.300. Quartz
watches form two thirds of the organized sector and the rest is split between mechanical
and digital watches. Even in the organized sector, three fourth of the sales by volume
comes from watches that are priced below Rs.1000.

Plastic as such is not acceptable to average Indian consumers, especially those from the
small towns and rural areas who regard it as cheap and flimsy. They want toughness-
which translates into a good quality metal model at a reasonable price.

Watch is one of the consumer durables whose replacement rate is very high. The
replacement rate of watch is 33.8%(Source: India market demographics report, 1998).
This is also due to the fact that the estimated scrap rate of wrist watches is 7.8%, which is
applicable after 6 years (Source: India market demographics report, 1998). So due to high
scrap rate, outdated models, and the shift from the mechanical watches to the quartz
 THE HMT - RELAUNCH

watches is causing a very high replacement demand for watches. This along with the low
penetration levels represents the untapped market potential for watches in India.

3.4 Major brands in the Indian watch market

The major players in the Indian watch market include HMT, Titan and Timex. The other
players include Westar, Shivaki, Maxima, SITCO. Foreign brands such as Cartier, Piaget,
Omega, Tiffany’s and Corrum, Gucci, Longines, Casio, Citizen, Tag Heuer and Espirit are
also making an inroad into the Indian market.

Titan has been consolidating its market share over the past decade. Timex watches, which
entered in India with collaboration with Titan, now independently has also gained
substantial market share.

3.5 Segmentation of Indian Watch industry

Based on price

• Mass (Rs.350-600),
• Popular (Rs.600-900),
• Premium (Rs.900-1500),
• Super-premium (Rs.1500-8000)
• Connoisseur segments (above Rs.8000)

Based on user category

• Men’s watches
• Women’s watches
• Youth watches
• Kids watches
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• Sports watches
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Figure.4

The
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4. Company History – HMT

1953 - The Company was Incorporated in Bangalore. The Company was converted into a
Public Limited Company on May 13, 1977. The main objects of the Company is
Manufacturing of the Machine Tools, Metal forming presses and press brakes, pressure
die, casting machines and automatic plastic injection moulding machines, Automatic plastic
injection moulding machines, Paper cutting machines, Automatic plastic injection moulding
machines, Paper cutting machines, Tractors 25/35/55 HP, Lamps and Lamp making
machines, Printing Machinery, Printing Machinery, Watches. Some of the trade names of
the watches manufactured are Janata, Sona, Pilot, Tarun, Nutan, Jawhar, Automatic Day
and Date, Priya, Chinar, Nishat, Rakhee, Avinash and Kohinoor.

The Machine Tool Division at HMT Bangalore, was the oldest manufacturing unit of the
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Company and the product lines consist of 16 types of metal working machines. The Die
Casting Division was set up for the manufacture of Die Casting and Plastic Injection
Moulding machines in technical collaboration with Reifenhaeuser GmbH & Co. of West
Germany.

1961 - The Watch Factory at Bangalore had two operating divisions the Watch Factory
Division: set up during the year in technical collaboration with Citizen Watch Co., Ltd.,
Tokyo, this division started with manufacture of hand winding watches. A new plant was
set up to manufacture self-winding watches in collaboration with the same Japanese firm
and Horological Machinery Division was established for the manufacture of sliding
headstock automatics in technical collaboration with M/s. Jos Petermann,
Switzerland. The Watch Factory at Srinagar was set up for the manufacture of 3 lakh hand
winding watches.

1963 - The HMT, in Pinjore have two operating divisions attached to it, viz., Machine Tool
Division and Tractor Division. The Machine Tool Division was set up during the year. The
Tractor Divisions was set up in technical collaboration with Mototov Foreign Trade
Corporation, Prasha, Czechoslavakia.

1964 - The Two operating divisions attached to HMT, Kalamassery, were the Machine Tool
Division and the Printing Machine Division set up in collaboration with Societa Nebiolo,
Turin, Italy.

1965 - The HMT at Hyderabad had 3 operating divisions, the Machine Tool Division
primarily for the manufacture of special purpose machine tools. The Press Division was set
up in technical collaboration with M/s. Verson Allsteel Press Co., Chicago, U.S.A. The
Lamp Division was established for the manufacture of lamps and lamp components in
collaboration with United Incandescent Lamp and Electrical Co., Ltd. (Tungsram),
Budapest, Hungary.

1975 - The HMT at Ajmer was set up by the Govt. of India as the unit of Machine Tool
Corporation of India, Ltd. with effect from 1st April, the unit was merged with HMT.
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1976 - The manufacture of critical components like hair spring and main spring were also
taken up by setting up a new plant by the Watch Factory Division at Bangalore.
The following collaborations agreements were concluded during the year:
With the Cross Company, Fraser, Michigan, U.S.A. for the manufacture of special purpose
machines in Hyderabad.

With M/s. Creusot - Loire, Paris, for the manufacturing of rotary web offset printing
machines.

With M/s. Laeis - Werke AG, Trier, West Germany, for the manufacture of refractory
presses.

A MOU with M/s. Tesa SA, Renens, Switzerland, a subsidiary of Brown & Sharpe
Manufacturing Co., Rhode Inland, U.S.A., for the manufacture of precision measuring
instruments.

HMT (International), Ltd., with an issued capital of Rs 6 lakhs is a wholly owned subsidiary
of the Company. All shares held by the President of India and his nominees. Out of the
issued capital, 7,122 No. of Equity shares were issued as fully paid-up without payment in
cash and 40,000 fully paid Equity shares were allotted on amalgamation of the erstwhile
Machine Tool Corporation of India, Ltd., Ajmer.

1977 - All shares issued to Govt. of India.

1978 - The Company undertook a scheme to expand the capacity of Watch Factory to
4 lakh watches in 1979 and 5 lakh watches in 1980. The Govt. approved a total investment
of Rs 24.50 crores in the watch factory to be established at Tumkur in Karnataka State for
the manufacture of 2 million watch movements. The Company undertook to set up a project
for the manufacture of 4 million fluorescent tubes per annum in collaboration for assembly
line with Tungsram of Hungary at a capital outlay of Rs 3.19 crores.

The Company undertook to diversify into the field of precision meterological and measuring
instruments at Srinagar. Govt. approval was obtained during 1979-80 and negotiations
 THE HMT - RELAUNCH

were in progress for foreign collaboration. The Company undertook to set up a factory in
Aurangabad, a backward area in Maharashtra, for the manufacture of dairy machinery.
Industrial licence was obtained and a technical collaboration agreement was entered into
with Fortschritt Landmaschinen Export-Import of German Democratic Republic (FLM).

In order to increase the capacity of tractor manufacture from 12,000 to 15,000 per annum,
the Company undertook to set up a second line of assembly operations at Mohali, Punjab.
The Company submitted a feasibility report to Govt. for the manufacture of electronic
watches. The Company concluded a MOU with Hitachi and Citizen of Japan. The
Company offered technical collaboration to Industrial & Commercial Development
Corporation of Kenya (ICDC) to set up a plant for the manufacture of machine tools in
Kenya. The company entered into an agreement with the Federal Govt. of Nigeria to set up
a plant for the manufacture of machine tools in Nigeria. A new company under the name
Nigeria Machine Tools, Ltd. was incorporated in Lagos. With effect from 12th September,
the name of the Company was changed from Hindustan Machine Tools, Ltd. to HMT Ltd.

1979 - All shares issued to Govt. of India.

1980 - The Company entered into a collaboration agreement with Pegard S.A. of Belgium
for adding new models to the existing range of Horizontal boring machines.

1981 - The Company proposed to manufacture silver oxide miniature batteries in

collaboration with Hitachi-Moxcell Ltd., Japan. These would be used in electronic and
quartz watches. The Company received an industrial licence for the production of one
million stepper motors required for electronics watches. The subsidiary formerly known as
Indo Nippon Precision Bearings Ltd., changed its name to HMT Bearing Ltd. on 1st
December.

1993 - To capture the growing urban market for fashionable watches, two new brands viz.,
`Ramani' for gents and `Utsav' for ladies were launched. Equity shares subdivided.
504,19,400 shares issued to Government of India.

1995 - All shares issued to Govt. of India.

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1996 - The Company has decided to convert Lamp Division into a separate wholly owned
subsidiary. All shares issued to Govt. of India.

1997 - Production also suffered due to slowdown in the economy coupled with stiff
competition from imported machines. The Tractors Group launched a 45 HP Coastal
Special model tractor for application in coastal areas on Commercial basis. A 59 HP model
tractor with Power Steering was also launched during the year. Orchard Special model
tractor in 25 HP range was developed and was under test marketing. Modernization cum
Expansion plan for the Tractor division was chalked out for increasing the production
capacity of Tractor division to 30,000 tractors at a cost of Rs 110 crores in the next two
years.

The entire networth of this subsidiary was eroded and a reference was made to BIFR as a
sick company under the Sick Industrial Companies (Special Provisions) Act, 1985. All
shares issued to Govt. of India. The public sector HMT has indigenously manufactured
four-colour offset printing press for the first time in the country in its unit at Kalamassery.
The HMT has introduced three new models the HMT 3022, HMT 3522 and HMT 4511
coastal special have been fitted with fuel efficient engines and heavy duty transmission.

The machine tools division of HMT has entered a new area of manufacturing with press
tools and dies. The Machine tools division has also entered into a joint working
arrangement with MS Giana, Italy, for the manufacture heavy duty CNC lathes for the
defense sector. This range of products will be built for the first time in the country.

HMT has signed a memorandum of understanding with the Union government under which
it is expected to increase its turnover to Rs.1,160 crore and post a net profit of Rs.10.45
crore for the year ended March 1998. HMT introduced ADD and dater watches priced at
Rs.750/900 in September. On August 15 the company launched Swarna series.

1998 - HMT International Ltd, a wholly-owned subsidiary of HMT, has bagged a Rs.13-
crore order for setting up an Entrepreneur Technical Development Centre (ETDC) at Dakar
in Senegal. HMT International has already set up successfully training Algeria and the
 THE HMT - RELAUNCH

Maldives. A batch of 17 Senegalese instructors has already undergone training at HMT's

international training centre in Bangalore.

The company is launching 15 new models in the automatic day/date range. HMT would
issue 41,25,000 ordinary shares of Rs.10 each to the government. The company board
has recently approved the allotment of these shares. The company had already
approached the Bangalore Stock Exchange for issuing these shares to the government. A
total of 10,06,45,165 equity shares of Rs.10 is listed with the bourse. Machine tools giant
HMT is in touch with world's number one HMT manufacturer Yamazaki Mazak to enter into
a possible alliance to manufacture the latter's machine cutting tools under a buy-back
arrangement.HMT Ltd has bagged the FIE award for the best quality, design and aesthetic
appearance of a product at IMTEX '98. HMT Ltd today announced a special voluntary
retirement scheme (VRS) for its lamp division employees under which those who opt for it
can remain at home with half their pay till such time that the public sector behemoth
receives its due from the National Renewal Fund.

HMT International Ltd., a wholly owned subsidiary of HMT Ltd., which has recently
diversified into software exports has entered into a strategic alliance with A1- pha data LLC
of Abu Dhabi, a part of 0 million US group. The two companies would jointly develop
software business for HMT's Erp Solutions Vikas. An MoU (memorandum of
understanding) signed between the Government and HMT has delegated power to HMT to
sanction schemes for incentives cum rewards. The Government is making a fresh bid to
privatise HMT Tractors, a profit-making unit under the fold of public sector major HMT Ltd.
HMT has two fully-owned subsidiaries now - HMT (International) Ltd, which is a trading
company and HMT (Bearings) Ltd, which manufactures ball and roller bearings. It also has
a partly-owned subsidiary - Praga Tools Ltd - based in Secunderabad. The union minister
of state for industry released a new HMT automatic day date watch Ranjit incorporating
euro-style dial, and a new ladies watch Preeti. The HMT division has a capacity of
manufacturing 18,000 tractors. The company has introduced 350 range of Citizen watches
in Mumbai along with its latest Eco-Drive models, which absorb power thorough any source
of light.

The company has entered into a manufacturing and marketing lliance with Tennmax
 THE HMT - RELAUNCH

Industrial Ltd. of Hong Kong. HMT Ltd has been named as one of the top ten brands in
India by a recent survey conducted by A&M-ORG-MARG. HMT has been ranked as the
top seventh brand among the main brands in the annual survey that covers 60 brands from
all over the country. HMT is also the only public sector company whose brand has features
among the top ten in the survey. The brand has emerged as seventh from the 22nd
position held last year.

The company also proposes to convert 30% of the loan component into equity. Citizen
Watches (India) Limited, is a joint venture between the Citizen Watch Company, Japan
which holds a 51 per cent stake and Doshi Time Industries holding 49 per cent stake. It has
a total paid up capital of Rs eight crores. An MoU (memorandum of understanding) signed
between the Government and HMT has delegated power to HMT to sanction schemes for
incentives cum rewards.

1999 - The Industry Ministry has directed the state-owned Hindustan Machine Tools to
explore possibilities of joint venture formation for its watch division. The company has tied
up with Tennmax of Hong Kong and is currently marketing the HMT-Tennmax brand in
India. After Kenya and Nigeria, HMT had signed a MoU for setting up a watch assembly
unit Zimbabwe. The shareholders of Hindustan Machine Tools Ltd (HMT) approved a
proposal to increase the company's authorised share capital to Rs 200 crores from the
present Rs 135 crores.
2000 - Icra has assigned an LAAA (SO) rating and an MAAA (SO) rating to the Hindustan
Machine Tools (HMT) bonds of Rs 469 crore 10-year tenure and Rs 40.43 two-year tenure.
HMT (International) Ltd., a wholly owned subsidiary of HMT Ltd., has been awarded the
EEPC trophy for its achievements in export of technical services during the year 1998-99.

2001- Mr Manohar Joshi, Union Minister for Heavy Industries and Public Enterprises, has
unveiled the HMT 4922 tractor at a launch ceremony organised at Pinjore, Chandigarh.
With the introduction of the new actor.

2002 - HMT Ltd has informed that consequent upon relinquishing of the charge of
Chairman & Managing Director, Tractor, upon resignation by Mr R A Sharma on July 04,
2002 Mr M S Zahed, Director, Organisation & Management has taken additional charge of
 THE HMT - RELAUNCH

the post of Chairman & Managing Director, Tractor of the Company.

2003 - HMT Ltd has informed BSE that pursuant to Order dated January 9, 2003 from the
Department of Heavy Industry, Ministry of Heavy Industries & Public Enterprises,
Government of India, New Delhi, Shri M.S. Zahed, Chairman & Managing Director (Acting)
and Director (Organisation & Management) has been appointed as Chairman & Managing
Director of the Company for a period of 5 years from the date he assumes charge of the
post or till the date of his superannuation or until further orders, whichever is earlier.
Shri.M.S Zahed assumed charge of the post of January 09, 2003. HMT enters into
Memorandum of Understanding with PNB, UCO Bank and State Bank of Mysore and has
launched SBM-HMTAgri Farm Scheme to promote Agriculture mechanisation in south
India.

Pinjore Unit of HMT at Chandigarh is facing a financial crisis and turnover has dropped to
50-60cr. Shri Naresh Chaturvedi has been appointed as a part time official Director on the
Board of Directors. Shri Navin Kumar, Joint Secretary to GOI has been appointed as Part
Time Official Director on the Board of Directors of the company.

2004 - HMT Ltd. has informed that the equity shares of the Company have been delisted
from the Bangalore Stock Exchange Limited, the Regional Exchange for HMT Limited, with
effect from January 3, 2004. HMT signs agreement with UK-based Trantor for high power
tractors. HMT bags CMTI-PMT Trust Award. HMT enters into a Technology Collaboration
Agreement with M/s Trantor Vehicles Ltd. HMT Ltd. enters into a Technology Collaboration
Agreement with Trantor Vehicles Ltd. U.K. Signs MoU with State Bank of India (SBI) for
tractor finance.

2005 - HMT inks agreement with ONGC, MRPL.

2006 - HMT Ltd has Shri. R Asokan, Director (Finance), Department of Heavy Industry,
New Delhi has been appointed as Part-time Official Director on the Board of the Company
vide Presidential Order dated October 30, 2006, with effect from October 30, 2006.

2007 - HMT Ltd has appointed Shri. N Gokulram, Additional Secretary & Financial Adviser,
 THE HMT - RELAUNCH

Ministry of Heavy Industries & Public Enterprises, as Part-time Official Director on the
Board of the Company vide Presidential Order dated January 22, 2007, with effect from
January 22, 2007 and until further orders vice Shri. R Asokan, Director (Finance),
Department of Heavy Industry, New Delhi. Dr. Surajit Mitra has been appointed as Part-
time Official Director on the Board of the Company vide Presidential Order F.No.5
(35)/1995 - PE.X (Vol.II) dated March 06, 2007, until further orders with effect from March
06, 2007.

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 THE HMT - RELAUNCH

5. Consumer Survey
5.1 Period of Use:
The respondents were asked to mention since how long they have been brand loyal
to HMT. This was an open ended question and hence various responses were
received. The minimum period of use was set as one year, as mentioned earlier,
while the maximum period of use was determined. For convenience, the different
responses are categorized into three: 1year – 4years, 4years – 7years and 7years –
10years.

64% of the respondents fall into first category, i.e., they are using HMT watch in the
range of one to four years. 24% respondents are in second category and the rest 12
% are using it for more than seven years.

Figure 5: Period of HMT’s watch’s use

 THE HMT - RELAUNCH

5.2 Reasons for brand loyalty

The respondents were asked to select the reasons from the options given for their
preference for HMT watches. For this question, multi-responses were received from
the respondents.

Table 1: Reasons for brand preference

Reasons No. of respondents ( out of total
50)
Attractive designs 39
Reasonable Price 7
Brand image 22
Good quality 25

Figure 6: Reasons for brand preference

 THE HMT - RELAUNCH

5.3 Recall of HMT’s tagline

The respondents were asked to indicate whether they remember the tagline in
dichotomous way, i.e., as “yes” or “no”. It was found that only 22% of the
respondents were able to recall the tagline and the remaining 78% answered in
negative.

Figure 7: Recall of HMT’s original tagline

5.4 HMT’s exclusive showrooms:

The respondents were asked to rate HMT’s exclusive showrooms on 5 point rating
scale – Poor, Average, Above Average, Good and Excellent. The factors related to
showrooms that were provided to the respondents for rating are – store ambience,
sales personnel, after sales service and display of watches.
 THE HMT - RELAUNCH

Figure 8: Consumer perception of store ambience

36 of the 50 respondents have rated store ambience as “Good” and 7 each rated as
“Above Average” and “Excellent”. This proves that store ambience plays an
important role in consumer perception of service quality.

5.5 Consumer perception of sales personnel:

With respect to sales personnel, 35 respondents rated them as “Good”, while 4 each
rated as “Poor” and “Average”, 7 respondents gave rating of “Above Average”.
 THE HMT - RELAUNCH

Figure 9: Consumer perception of sales personnel

5.6 Consumer perception about after sales service

Figure 10: Consumer Perception about after sales service

 THE HMT - RELAUNCH

In the survey, 31 out of 50 respondents rated after sales service as” Good”, 4 each
as “Average”, “Above Average”, “Excellent” while 7 respondents rated as “Poor”.

5.7 Consumer perception of display of watches

Figure 11: Consumer perception of Display of watches

Most of the respondents have given high ratings to the display of watches in Titan
showroom. 22 respondents rated it as “Excellent”, 24 respondents as “Good” and
only 4 respondents gave rating of “Average”.
 THE HMT - RELAUNCH

6. SITUATION ANALYSIS

“Time and tide wait for none.” The proverb is aptly applicable in the present case.HMT
watches a household name in the yester years have come to a stage where no one is even
aware of the brand name itself barring few of our elders. What actually happened? What
made HMT lose its sheen? HMT is known for high quality and reliability. But somewhere
along the line HMT has forgotten to tighten its bolts. Let us discuss about some of the key
issues regarding HMT.

6.1 Internal environment: Company has a record of good industrial relations and it
has never had any labor or industrial relations problem. Company’s liquidity position has
been quite comfortable and it has adequate land and buildings available. Apart from all
these company has an established production technology, which is flexible enough to adapt
to new technology. But there are some downsides too. The company seems to suffer from
bad work habits. There is a lack of team spirit and discipline. Its selective retailer policy did
not do very well. Some of the authorized retailers started acting as whole sellers. Because
of this HMT completely lost control over final consumer price and the trade. One major
downside of HMT was that its production was not market driven. They were producing
whatever they wanted. They did not take any cue from the market. Hence they paid very
little attention to the design, aesthetics and packaging.

6.2 External environment: HMT has very strong competitors. Titan and Timex. Both
these companies are highly market driven and have the greatest market shares, titan being
the market leader. Both these brands have excellent products in their armor which appeals
to the people.

They have whole range of watches for different segments of the society. Titan has a
commendable sales and repair service. There are attractive titan showrooms, franchise
shops and titan have distribution stockiest for reaching out to retail outlets. The other
competitors for HMT could be: CITIZEN, CASIO, SEIKO, SWATCH, RADO, MAXIMA
QUARTZ FASHION HOUSES: DKNY, GUCCI, ADIDAS, BVLGARY etc.
 THE HMT - RELAUNCH

6.3 Customer environment: HMT has a very strong brand image due to its high
quality and reliability. Loyalty does exist for HMT. But HMT is not using the leverage of its
brand equity.

Customers preferences have changed over time, and HMT failed to read the same. While
others made hay while the sun shone, HMT did not. It did conduct market studies but made
no use of that. HMT did have an idea of its customer segmentation but positioned it wrong.
There are customers in the market who associate themselves with the brand(HMT)
emotionally. HMT needs to come up with a strategy to cater the needs of prevailing market
and make a niche of its own. HMT dominates the base with quality and low price as its
weapons. But titan has hijacked the upper end using design as its edge. But the toughest
battle which HMT faces is that of titan – timex and they are ready to swoop the middle and
lower segments of the watch market.

6.4 SWOT analysis of HMT:

Strengths:
 Mechanical watches: HMT is the market leader in mechanical watches which serves
to the lower segment of the society. HMT has a strong hold in this segment but to make
sure that players like titan and timex do not occupy the stance HMT needs to do its
homework.

 Brand equity: HMT has a very strong brand image. People know HMT because of its
quality and reliability.

 Strong government support.

 Vision of Pt. Jawahar Lal Nehru in 1960’s.

 Collaboration with CITIZEN, Japan for formal training and

technological support.

 Entry barriers were imposed on the foreign brands entering into India through
FERA.
 THE HMT - RELAUNCH

 Supported its expansion in 1976.

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 THE HMT - RELAUNCH

 Has an established market.

 Good brand image and market leadership due to high quality, low price and
reliability.

 HMT enjoyed 71 percent of the market share in the sales of

mechanical watches and 55.22 percent market share of the total watch production in
organized sector (as of year 1991-92).

 Company’s liquidity position has been quite comfortable. Adequate availability of

tangible assets such as land and buildings.

 Record of good industrial relations.

 In 1991 HMT set up a product development center for watch design.

 Production and training facility: production facility is flexible enough to adapt to new
technologies. Training program is one of the best in the country.

 Industrial relations: company has very good industrial relations. Till today company
did not encounter any kind of labor or industrial relations problem which can put
company in to jeopardy.

 Adequate assets: company has commensurate amount of land, building and

machinery available.

Weaknesses:
 THE HMT - RELAUNCH

 No emphasis on R&D and design: HMT did not pay much attention to aesthetics and
design. While its competitor titan kept innovating its products with latest technology,
features and design, HMT was still grappling with its basic design models.

 Retailer policy: HMT did not have control measures over its retailers; hence they lost
control over prices and the trade.

 Lack of team spirit and awareness: HMT’s motivational strategies-

punishment/reward have been inadequate, resulting in low utilization of human and
machine capacities.

 Trade audits: No regular trade audit was being carried out by the company to check
what was actually happening in the market.

 Management levels: The ground level HMT staff has nearly six rungs of bureaucracy
to go through before a general manager in sales or marketing could take a field
decision.

Opportunities:
 Diversification of products: there are good diversification possibilities in products.
Apart from mechanical watches HMT can also focus on anadigi, digiana,
multifunction, digital, stopwatch, alarm, thin etc.

 Exports: export market can be tapped.

 Market segmentation: company can expand the market launching products suitable
for different customer profiles e.g.: youth, gift fashion, sports, novelty etc.

 Enlarge network of sale outlets: An effective distribution system is mandatory for

company’s success.
 THE HMT - RELAUNCH

 Product improvement: Company can manufacture product based on current

customer preferences, combining technology and aesthetic appeal together to
enhance the experience.

Threats:
 From competitors: titan, timex, citizen, swatch etc.

 Spurious operators: People who indulge in fraudulent activities. Misusing the brand
name.

 Authorized service agents: For foreign smuggled watches.

 Regional players: With their cheap prices and availability. Unorganized

manufacturing.

The above mentioned analysis gives us a fair idea of the industry and the HMT watch
company as such. Situation analysis and swot helps us to understand the pillars on which a
company stands as well as the vulnerabilities. Both these helps in formulating a strategy
catering to company’s needs in the near future.

6.5 The possible opportunities for HMT could be (based on SWOT and
SA):
 Make its mechanical niche stronger, by improvising designs and smart pricing.

 Company has good manufacturing and production units; it is possible to go for a joint
venture with an established partner which is capable of providing good leadership
and direction to the company.

 Since titan and other competitors are catering to the upper segment of the market,
HMT can continue to focus on the lower strata with attractive plans and offers.
 THE HMT - RELAUNCH

 Company can also go for diversification of products as titan has done but this looks
little risky because titan already has a strong hold there.

7. Findings of the survey

The findings of the consumer awareness survey are listed below:

 Most of the consumers prefer HMT watches for their attractive designs and
good quality. However, there is a misconception about pricing of HMT products
among the consumers. They perceive them to be high priced.

 Logos and taglines are rarely noticed by the watch consumers. Hence, any
change in them also goes unnoticed.

 Advertisement in mass media such as television, newspapers, and magazines

are best means to spread awareness about brand. But there is not a single
advertisement seen by any customer.

 Celebrity endorsement of watches not only increases the visibility of the

product but also gives an assurance to the consumers that it is of high quality.
 THE HMT - RELAUNCH

 HMT watches’ designs are rated as “good” by 78% of the respondents. This
indicates that they are looking forward for more innovative designs to be introduced
by the company.

 There is no campaign launched by HMT watches.

 70% to 80% customers don’t remember the tagline of HMT watches.

 The after sales service and behavior of sales personnel have been given low
ratings compared to other variables mentioned in the questionnaire with respect to
HMT’s exclusive showrooms.

8. HMT WATCHES REVIVAL PLAN

8.1 Gap Found in HMT’S marketing strategy:

Product
 Few Designs as compared to competitors. HMT has only 40 odd variants of
four basic designs compared to competitor line, Titan which has 70 watches in its
ranges with better looks & designs.

 There is less emphasis on product research and development

 HMT has not been able to be a leader in Quartz watches segment &
underestimation of this segment

 Another flaw in its product strategy was scant attention to aesthetics and packaging
of its watches.

Price
 THE HMT - RELAUNCH

 HMT positioned the quartz watches as the space age generation watches &
charged high prices for this category which means that only the affluent middle aged
consumer could afford it. In less than a year the company had to reduce the price
and followed lifestyle advertising to justify the still higher price of the quartz, however
even this backfired as consumers were not convinced of the differentiation between
the quartz and other HMT watches.

Place
 Didn’t strategize its established marketing network according to growing competition
and new market trend like downtrend of mechanical watches & the growing market
for the quartz watches.

 Since retailers have enough foreign brands they were simply not interested in
HMT’s home grown products as a result it had to sell through its 13 branch offices
for Machine tool equipment.

 Even when FERA was introduced HMT could take the advantage in a limited way
by offering service agencies to about 50 watch key retailers as a way of expanding
its selling reach.

 In mid 80’s HMT’s selective retailer policy began going against it.

 Some of the authorized retailers started acting as wholesalers without officially

being appointed so. Consequently HMT lost control of the final consumer price and
ultimately the trade.

 In addition, the retailer margins provided by HMT were 2% less than what its most
prominent competitor, Titan, was offering to the retailers.

Promotion
 THE HMT - RELAUNCH

 Though HMT’s advertising was distinctive and did cater to the lifestyle segment, it
failed to communicate the uniqueness of HMT’s quartz design vis-à-vis other HMT
watches.

 Because of centralized decision making even the decisions on the campaigns for
specific products were delayed leading to the time lag and responding to market
changes.

8.2 Recommendation:

Product:
 Create competitive advantage by differentiation through technological leadership.

 The products should be developed to enhance quality and features matching

customers tastes and preferences and there by increasing buyers value.

 Mid & Premium segment: In this segment HMT should seek differentiation by
providing better designs

Conduct market survey:

 Involve leading market research organization along with your sales force.

 Do it periodic every six month; Involve retail-shops, shopping centers, department

stores, dealers, sales force.
 Most popular brands, trend of consumers etc.

Competition:
 Competition among brands has been also getting stronger, and a lot of effort to
keep sales has been required.

 Watches without an appeal, watches without clear marketing hardly attract

consumers in the market glutted with commodities.
 THE HMT - RELAUNCH

 Train agents to set forth clear brand vision and efficient campaign.

 Shift to quality with new added value..

 Provide consumers with a lot of information select their watch wisely and
professionally according to their own taste..

Distribution:
 Prepare retailer to meet the changing consumer’s trend. Watches just displayed in
showcases cannot sell. It is absolutely necessary to present them together with the
background such as original story of the watch, its functionality and benefits of after
sales service.

Pricing:
 In the lower end HMT should seek to achieve cost advantage by exploiting the
differences in cost behaviour.

 The pricing strategy can be to undercut main competitor by 10%, using market
penetration strategy.

Promotion:
 Special focus on sales during festive time like Diwali, Christmas along with discount
offer & finance schemes.

 Go for innovative and stylish ad campaign that reflects the aspirational, independent
and modern dimensions of the watch collection and its target market along with
effective press campaign.

8.3 Strategy:
 THE HMT - RELAUNCH

 Under the present difficult situation HMT will have to find out ways to activate the
market and try to to create new demands.

I would like to capitalize on the brand equity of HMT. It can continue to serve the lower
segments as it is, but to make its presence felt in the market, company has to use a
promotional and advertising strategy zeroing on the emotional attachment and bond with
the customers. It will be a strategy focused on the rejuvenation of the brand but at the same
time making customers realizes the trust and reliability about the brand. And based on this
leverage HMT does have an option to launch a new series of products in to the market.

Company will make handcrafted watches (first to do in India). It will have boutiques at
strategic points. Customers can choose the color and dial shape for the low end watches,
but for the high end ones customers can have choice of choosing functions(alarm,
chronometer, cosmographic.) at a little extra premium. The elite customer can also choose
metal of his strap(gold, silver, platinum etc.) the delivery time for these watches will be one
week. Company can enhance its image by providing excellent sales, service and
reparability centers.

This strategy is somewhat similar to what swatch had used. Apart from all this company
can also give watches for a trial period of two days with a little advance and proof of
residency to let customer feel the watch, whether it suits his/her style or personality and
status.

After the first advertising campaign, company can launch a second campaign for its new
product series with a tag line “WATCH YOURSELF”. This campaign would be targeted
towards urban and fashionable youth whose demands keep changing with the latest
fashion. Company will capitalize on the current fashion trend and make watches according
to the market demand.

For lower segment attractive pricing and discounts would be helpful. These watches must
be rugged and should work in extreme conditions.
Company can also improvise the website by providing features of online shopping,
exhibiting various designs, new products, store locations etc.
 THE HMT - RELAUNCH

8.4 SEGMENTATION:

Generic product class : watch

Generic need : to tell time
Product categories : clock, wrist watch, pocket watches, cell phone, pda’s , laptops, etc.
Variants : analog ,quartz
Customer segmentation : students,farmers,labour, aspirers, fashionable youth, achievers,
affluents.

Based on the response difference,different segments are as follows:

Students

Price range: 600-1500

Product: functional quartz, digital, attractive colors.
Average frequency of purchase &occasion: parents give them gifts may be every two
years.
%age of users: 20%
%age of margin: 10%
Promotion: through TV commercials, student products (school bags, health drinks,
stationery
etc.)
Demographic: educated
Psychographic: carefree, not money conscious, wants cool looks.

Labors

Price range: 200-800

Product: rugged, basic time function, can be mechanical or quartz, steel make.
Average frequency of purchase: once in 10 years.
%age of users: 20%
%age of margin: 10%
 THE HMT - RELAUNCH

Promotion: pos, cinemas, radio programs

Demographic: not educated barring few.
Psychographic: religious, money conscious, want value.

Farmers

Price range: 500-1500

Product: steel or gold make, quartz/analog, rich looks
Average frequency of purchase: every five years, big festivals when he has a good harvest.
%age of users: 8%
%age of margin: 10%
Promotion: village fairs, pos, newspapers, radio, TV.
Demographic: educated
Psychographic: traditional, believe in quality and word of mouth of their elders, religious.

Urban youth

Price range: 1000-5000

Product : flankier, trendy, attractive, must go with the style, colorful.
Average frequency of purchase: every year.
%age of users: 22%
%age of margin: 18%
Promotion: internet, magazines, events, sports, TV
Demographic: educated and style savvy.
Psychographic: fun loving, expressive, fad conscious.

Executives/achievers

Price range: 5000-30000

Product: automatic, multifunctional, quartz, digital
Average frequency of purchase: 5-7 years
%age of users: 12%
%age of margin: 25%
 THE HMT - RELAUNCH

Promotion: magazine( fortune,forbes etc.), TV, internet.

Demographic: highly educated
Psychographic: reminder of what he is, has achieved,wants good things always.

Affluent

price range: >50000

product: jeweled, automatic, gold, platinum classy and artistic looks
average frequency of purchase: every two years.
%age of users: 5%
%age of margin: 15
Promotion: jewellary shops, magazines
Demographic: educated, status conscious
Psychographic: hedonistic.

Ladies exclusive

Hmt can open an exclusive outlet only for ladies. This outlet will have watches for the urban
teenage girls, housewives, working women, as well as for affluent ladies. Ladies can come
and choose their colors, style, matching jewelry etc. They will have an option to customize
their needs. Special orders for marriages and engagements will be considered. Promotions
can be done through TV and ladies specific events like teej, raksha bandhan, karva choth,
etc.

8.5 MARKET:

Indian watch market is very heterogeneous and is estimated at 25 million watches a year,
with 50% being sold by the organized sector. Titan is the runaway market leader, with
domestic sales of 6 million watches a year.

There are 190 million watch-owning Indians; between them they own about 210 million
watches. Urban India accounts for 120 million of these watches and 90 millions are on rural
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wrists. More men than women own watches in India, and more working women than
housewives own watches.

HMT should focus first on tier 1 and tier two cities and then gradually penetrate towards tier
three towns and cities. Company has to position itself very carefully because other product
variants like mobi-watch (watch with a cell phone) and handheld devices may try to snatch
the market share. The whole idea of buying and wearing a watch must be an experience. If
HMT can deliver above mentioned offerings with a strong distribution chain, a controlled
retailer policy, with a wide market research, future is no longer beyond their control. HMT
will emerge as a winner.

9. Suggestions

 Focus on niche as well as lower segments markets. such as working men and
women, labors and farmers.

 Spread awareness about availability of watches in lower segments as there is huge

market is to be capture in lower segments.

 Take steps to change consumer perception that HMT watches are highly
mechanical.

 Improve after sales service.

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 Faster production of new models of watches for catering to the changing needs of
the customer.

 Adoption of innovative and aggressive marketing policies.

 Strengthening infrastructure for R&D.

 Reduce man power by adopting new technologies and processes.

 Institutional sales and sales through canteen stores department (CSD) and e -
commerce.

 Enhancing customer services.

 To seek collaboration with reputed international watch manufacturer to make

10. Conclusion

Through consumer survey, it is found that HMT still has it’s brand loyalty among the
customers and also it has great marketing strength all over the country with many
distribution channels. HMT has not been able to be a leader in Quartz watches segment &
underestimation of this segment.

HMT positioned the quartz watches as the space age generation watches & charged high
prices for this category which means that only the affluent middle aged consumer could
afford it. Since retailers have enough foreign brands they were simply not interested in
HMT’s home grown products as a result it had to sell through its 13 branch offices for
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Machine tool equipment. The retailer margins provided by HMT were 2% less than what its
most prominent competitor, Titan, was offering to the retailers.

Though HMT’s advertising was distinctive and did cater to the lifestyle segment, it failed to
communicate the uniqueness of HMT’s quartz design vis-à-vis other HMT watches.
Because of centralized decision making even the decisions on the campaigns for specific
products were delayed leading to the time lag and responding to market changes.

The conclusions to improve consumer awareness about brand repositioning strategy

(re -launch) of HMT are as follows:

• To increase its visibility, HMT Company can sponsor events similar to fashion
shows in which all latest designs launched are displayed. This would have multiplier
effect as the latest designs launched by the company get noticed by different
segments of the customers in varied ways.

• Tie –up with FM radio channels for reminder advertisements and informing
customers about various sales promotion offers from time-to-time.

• Invest more in R&D as customer expectations are changing rapidly. Though

HMT has got more product collections, it should focus on introducing more varieties
in already existing product collections. In other words, having a limited but more
depth in product collections would be more advantageous.

• Introduce exclusive collection for working women which is more contemporary

and complements both traditional and western wear.

• Majority of the population in India live in rural areas. So, showrooms should
be set up at places nearer to them. Introduce cheaper and rough use watches for
this segment.
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• After sales service has to be improved. That is, the process of servicing and
repairing of watches should be made faster. This can be done by ensuring the spare
parts availability and training all sales personnel in HMT showrooms to undertake
these tasks.

• Tie up with international watch brands and make them available locally.

• Make use of internet to spread awareness among consumers about the

brand.

11. Appendix

11.1 QUESTIONNAIRE (For Consumers):

1. Do you use wrist watch?

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If yes, then which brand,

a) Titan b) HMT c)any other, specify

If no, then what you use to see time,

a) Mobile

b) Pager

c) Ask others

d) Public wall clock

e) Others, please specify…………………………….

2. Since how many months / years have you been using HMT watch?

3. Why do you prefer HMT brand?

a) Attractive designs,

b) Reasonable price

c) Brand image

d) Good quality

4. Do you remember the original tagline of HMT watches? If yes, please mention.

5. Have you seen the advertisement of HMT watches?

a) Yes b) No
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6. If yes, In which media have you seen the advertisement?

a) TV

b) Newspaper

c) Magazines

d) Hoardings

e) Radio

7. Are you aware of the new tagline of HMT?

8. How do you rate the new designs of HMT?

a) Poor

b) Average

c) Above Average

d) Good

e) Excellent

9. Have you seen the any campaign of HMT?

a) Yes b) No

10. How do you rate HMT’s exclusive showrooms with respect to the following:

(1–Poor, 2-Average, 3-Above Average, 4-Good, 5-Excellent)

a) Ambience -
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b) Sales personnel -

c) After sales service -

d) Display of watches -

e) Overall showroom -

11. What suggestions would you like to give to improve HMT’s brand image among
customers?

11.2 QUESTIONNAIRE (For Retailers):

1. Do you sell HMT Watches?

Yes No

2. Which is the most purchased brand?

Titan HMT Any other, specify

3. How are the sales of HMT watches?

Good Average Poor

4. What is the consumer response towards HMT watches?

Good Average Poor
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5. How much is the demand for HMT?

Less Medium High

6. Are the customers satisfied with pricing of HMT watches?

Yes NO NA

7. What influence the customer buying decision?

Product Features Advertising

8. Do you apply any sales promotion scheme?

Yes No

12. Reference

• Sengupta Subroto(2006), “Brand Positioning: Strategies for Competitive Advantage”.

Second Edition, Tata McGraw Hill Publishing Company Limited, New Delhi.

• Gopalakrishnan PS (ed.) (2007),”Rebranding: An Introduction”. ICFAI University

Press, Hyderabad.

• ICFAI Journal of Marketing Management

• ICFAI Journal of Brand Management

• www.marketingprofs.com

• www.brandingstrategyinsider.com
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• www.scribd.com

• www.thehindubusinessline.com

• www.economictimes.com