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

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

Hi everybody today's episode is a very very special episode because today we are going to learn about one of the greatest consumer brands in the history of india and that is titan watches in the past 20 years the stock price of titan has shot up by not 10 not twenty but thirty six thousand two hundred and eighteen percent going from just seven.

Point one one rupees to two thousand seven twenty one rupees and a mere ten thousand rupees invested in titan twenty years back would be worth a minimum of thirty eight lakh rupees in fact this is the biggest talk in mr rakesh involves portfolio which was valued at 11 0849 crores as of january 2022 but while most of us know that titan watches are great.

Very few of us know how did titan watches lay the foundations for the iconic titan brand in india which is why in this episode today let's try to understand what is the story of titan watches what were the business strategies that laid the foundations for titan to become such a legendary brand in india and most importantly what are.

The business lessons that we need to learn from the iconic rise of titan this video is brought to you by thefixedincom.com but more on this at the end of the video this is a story that dates back to late 1970s when a project manager of the tata hotels named mr xerxes desai was looking to start a new venture for the tatas and.

Generally the culture among the tatas is such that they constantly keep scouting and tracking for new industries to enter and in the 1970s mr desa and his quality made some critical observations about the watch market of india they saw that watch was such a fundamental accessory that every single person starting from a watchman to a student to an executive.

All of them were watches so obviously the watch market in india was very very huge but in spite of that most of this demand in india was being catered to by the unorganized players and in the premium space there was only one significant player which was a company called hindustan machine tools limited or hmt this company was a public sector.

Company run by the government itself on top of that in the 1970s and 80s since liberalization had not happened in india foreign watchmakers like the swiss and the japanese could not enter the indian market so practically hmt was a monopoly in the market but when mr desai and his team did some ground level research they found something very very interesting.

Number one they saw that although the swiss and the japanese watches were never sold in india surprisingly a lot of indians actually knew about these different watch brands all across the world secondly this fascination for watches was so much in india that people who had friends and relatives abroad actually smuggled swiss and japanese.

Watches into india now i don't know how many of you remember or have experienced this but back in 2009-10 after iphone launched in the us the craze of iphone in india was so much that even though iphone was not being sold in india a lot of indians actually smuggled iphone from the us through relatives and friends and because iphone did not support the.

Indian networks they did something called jailbreak by actually going to these small mobile shops just to make sure that they could use iphone in india and they do not care if it compromises security to the phone itself as long as they got to use an iphone so just like this iphone crazed in 2010 indians of the 70s and 80s were super fans of swiss.

And japanese watches and in a way a black market was formed for foreign watches in india and lastly since very few people had relatives abroad the only premium watchmaker they could opt for was hmt and out of 1.5 million watches produced in india 1 million watches were produced by hmd alone along with other small players contributing to the.

Remaining 0.5 million but the demand was so much that hmd itself was not able to keep up and this resulted into long wait times just to buy a watch and this is when mr desai and team realized that the watch market of india was a gold mine so finally they decided to start a watch company that could cater to this untapped demand in indian.

Market but you know what guys there was a slight problem since india was an extremely socialistic country watchmaking as an industry was open to either small-scale manufacturers or public sector companies so big private companies like the tatas were not at all welcome in this space so the tatas.

Approached the tamilnadu industrial development corporation and back then even they were looking to find an indian partner for french watch manufacturing and as expected the government of india rejected their proposal so you know what they came up with a sneaky strategy wherein they set up a separate private company on paper called questar.

Investments so that it would not draw the attention of the government and the project name of the company was derived from the two names of the organization tata industries and tamil nadu and when put together the name that came out was none other than titan and as luck would have it the government provided the clearance and the tatas.

Immediately bought questar investments this is how in 1984 the tatas and the tamilnadu industrial development corporation together started an iconic brand from india through jugaad which we all know today as titan this is where the second phase came in and that was market research now as soon as the titan team was formed a team was.

Sent abroad to study the watch market and to look for inspiration from watchmakers from france and switzerland and at the same time they very very cleverly set up a base in a place called hosuh why because hmd had its base in bengaluru and this place was just one hour away from bengaluru this way titan could easily draw in experts out of hmt.

And use their expertise to improve their operations and finally in 1987 titan officially started manufacturing watches secondly if you look at the watch revolution of the 1980s and 90s there were two types of watches on the rice mechanical watches and quads watches for those who don't know both these watch movements are literally engineering.

Marvels and it wouldn't be too poetic to say that mechanical and quartz watches are an engineer's artworks to tell you about it a mechanical watch is driven by a mainspring and when this main spring is wound by the user its force is transmitted through a series of gears that work in conjunction together and eventually they move the hands of.

The clock and that is how you get to see the time whereas quas watches are battery powered and this battery sends an electrical current through a small piece of crystal called the quad's crystal and this crystal is embedded in the circuit this action then causes the crystal to vibrate exactly at 32 768 times per second then the circuit.

Measures these vibrations and converts them into one pulse every second and this pulse drives the motor which then moves the watch hands eventually enabling the watch to keep time these were the two rival systems in the watch revolution of the world so when the titan team actually came back from market research they realized.

That quartz watches were the inevitable future of watchmaking this was because quads watches had three major advantages over mechanical watches firstly from the manufacturing standpoint quad's watches had 70-80 moving parts as compared to 100 to 120 moving parts in a mechanical watch this made it both easier and cheaper to manufacture a quads watch.

Secondly from the consumer standpoint while mechanical watches had an error of 6 to 12 seconds a day quad's watches had an error of just 5-100 seconds in the entire year and quad's watches were also lighter and slimmer for the customer to carry around and lastly while mechanical watches of those days needed to be wound manually.

Almost every single day quads watches just needed a battery replacement that too in a year or two this is a reason why quad's watches were the inevitable future of watchmaking but strangely in india until rajiv gandhi came in the government of india had a mandate that 80 of the watches manufactured must be mechanical watches.

Which is why there were very less to none quads manufacturers in india but for titan this came at a very very accurate time because titan was founded in 1984 and all the base work they did enabled them to build their entire infrastructure around quads watches straight away this is how the titan team got the.

Second and perhaps the most critical pillar right which was choosing the right technology and then came the third pillar which was the post manufacturing process and this included the store setup distribution and finances and here's how they carefully crafted each one of these attributes.

First of all for the distributors back then all the distributors were extremely reluctant to buy titan because like we saw hmd had an 80 market share and these distributors were extremely loyal to hmt and skeptical about titan so the titan team decided to directly tap into retailers by partnering with reputed businessmen in different cities all.

Across the country and even if they did not have any experience in what selling titan conditioned them with great training and made them masters in what selling in return they bypassed the distributors and these retail businessmen were able to make way higher margins as compared to the industry standards.

And titan's training was so holistic that while a normal watt salesman is just taught to observe everything about watches a titan salesman was actually trained to study the market so broadly that he was expected to know the business of not just watchmakers but also other stores like a raymond store a premium sari.

Store or even a jewelry store the question is why does a watch salesman have to know about raymond premium sorry stores and jewelry stores well that is because while most people thought watchmakers only compete with other watchmakers titan back then understood that a watch is also an instrument of love that could be bought.

With the intent of gifting like a wife would gift her husband a watch so titan understood that their competition was not just hmt but even other players in the gigantic gifting segment which included a jewelry store a sari store and many other stores that affluent customers would go and buy from and hence this proactive market research.

Was instilled in the frontline workers of titan and for the customers they duly complemented their sales with a stupendous after sales service in fact at titan the act of repairing a watch was considered like the act of repairing a damaged relationship like repairing the company's reputation so they treated their customers with.

Immense warmth and they even installed air conditioners in the waiting rooms in the 1980s just so that the customers would not feel inconvenienced while they come to the service centers secondly for marketing titan got hold of none other than the legendary marketers or gillian martha themselves and they helped them design such insane newspaper ads that.

Back then when watches were always endorsed or showcased by a celebrity or a model titan placed half a page ad of just the magnificent watch design without a model at all and all they mentioned was just the brand identity and the price of the watch that's it and this method of marketing although quite.

Counterintuitive it turned out to be such a big hit that people literally walked into a titan showroom with newspapers in their hands and said that i want this watch such was and still is the magnificence of their advertisement and lastly to keep their financials healthy titan just like pdlite did not offer a credit system at all and they.

Took advanced payment for their supply and although it was met with initial resistance it contributed to titan's financial success this way titan's balance sheet was so healthy that they were able to show profits on the very first hit of the operation itself and the result well in 1987 88 that is just one year into the.

Market titan earned a mammoth 19 crore rupees and sold 3.44 lac quads watches by 1989 titan had cornered nearly 55 percent of the quads watch market in the country and from here onwards the brand of titan only kept growing growing and growing and once they were able to build a brand identity and were able to showcase the results on their balance.

Sheet their stock price just keep going up up and up this is how through titan watches the foundations of the titan brand was laid and in the next 20 years titan went on to build incredible brands like tanishq fast track sonata and titan i plus and each one of these brands today are more or less in the leading positions in their respective market and.

Tanishq is actually a very very interesting story which i am not covering due to information overlord but if you want to know about it please drop a comment below and i'll try to release it in the next month's lineup and this brings me to the most important part of the episode and that are the business lessons that we need to learn.

From the iconic titan brand before we move on i want to thank our partners the fixed income dot com for supporting our content you see guys titan was a stock market gem that mr raki jinjinwala spotted but we as normal investors won't be able to spot such opportunities very often that is why we want to bring your attention to another.

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A guaranteed return on your investments so if you want to make low risk fixed return giving investment download the app from the link in the description moving on the first thing you need to understand is that when you are living in a developing or in an underdeveloped nation along with a lot of disadvantages as an entrepreneur you have the massive.

Advantage of time because you can actually see what is happening in the developed world right now and incorporate that in a developing nation in the future and this is because technology often evolves in a similar trajectory and if you remember from our jumpstage episode even he did the same by understanding the power of railways.

From the developed world and here we saw mr desai do that with titan watches lesson number two an obstacle in business is often treated as an obstacle by the losers but the same obstacle is treated as a competition eliminator by a winner because you see the same obstacles are going to be faced by all the entrepreneurs in the field but the.

Ones who choose to tackle it and overcome it will by default win against those who shrug their shoulders in this case the tatas tried for years to get an approval from the government and when they didn't they found a jugadoo way through quester investments to get into the business anyway and mind you this process took not one not two but almost.

10 years just to start manufacturing and lastly jumping to the next curve is the easiest and perhaps the most powerful way to kill the dominance of a giant player in this case titan killed the dominance of hmd by jumping to quads and ironically now apple is rapidly killing the market of both titan and swiss watches by.

Jumping to software-based watches and what remains to be seen now is how will titan watches tackle this mammoth challenge that lies ahead of them that's all from my side today guys if you learned something valuable please make sure to the like button you want to make youtube rubber happy and for more such insightful business and political.

Case studies please subscribe to our channel thank you so much for watching i will see you in the next one bye bye

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