Dr. D.Y.PATILINSTITUTE OF MANAGEMENT STUDIES

PROJECT REPORT ON

MARKET SEGMENTATION AND TARGET

MARKETING

SUBMITTED TO

Prof. GAGANDEEP NAGRA

SUBJECTMARKETING MANAGEMENT

DATE: 31st OCTOBER 2007.

SUBMITTED BY

CLASS ROOM: MBA-CORE 4-A

Sr. No Name Roll number

1. DHAWAL SHETH 43

2. BINOD UPADHYAYA 36

3. ADITYA SINGH 10

4. AKSHAY JASANI

5. ANAND VED 03

6. DARSHAN THAKKAR 41

7. CHANDRESH CHANDRA 37

8. ABDUL KARIM 09

9. KAILASH PATEL 60

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ACKNOWLEDGEMENT

We wish to express our gratitude to all those who have helped to make this

project a success.

We would like to thank our Prof. Gagandeep Nagra, without her guidance

and support this project would not have been possible.

We also grateful to our friend without their co-operation and there guidance

this project cannot complete.

Market Segmentation and Market Targeting

The market for any product is normally made up of several segments. A ‘market’ all is the aggregate of consumers of a given product. And, consumers, who make a market, are seldom one homogeneous lot; they vary in their characteristics and buying behavior. It is thus natural that many differing segments occur within a market.

Marketers usually divide the heterogeneous market for any product into segments, with relatively more homogeneous characteristics, since this

helps in tapping it. And, this process of disaggregating a market into a number of sub-markets/segments is known as market segmentation.Recognition:(a) Any market is made up of several sub-markets, or sub-groups of consumers, distinguished from one another by their varying needs and buying behavior, and(b) It is feasible to disaggregate the consumers into segments in such a manner that in needs, characteristics and buying behavior, the members would vary significantly among/across segments, but would be homogeneous within each segment.

Need for segmenting the Market

1. Facilitates Proper Choice of Target Market: The segmentation helps the marketer to distinguish one customer group from another within a given market and thereby enables him to decide which segment should form his target market. 2. Facilitates Tapping of the Market, Adapting the Offer to the Target: Segmentation also enables the marketer to crystallize the needs of the target buyers. It also helps him to generate an accurate prediction of the likely responses from each segment of the target buyers. Moreover, when buyers are handled after careful segmentation, the responses from each segment will be homogeneous. He can achieve the specialization that is required in product, distribution, promotion and pricing for matching the particular customer group, and develop marketing offers and appeals that match the requirements of that particular group.3. Makes the Marketing Effort more Efficient and Economic: Segmentation also makes the marketing effort more efficient and economic. It ensures that the marketing effort is concentrated on well defined and carefully chosen segments. After all, the resources of any firm are limited and no firm can normally afford to attack and tap the entire market without any delimitation whatsoever. It would benefit the firm if the efforts were concentrated on segments that are the most productive and profitable ones.4. Benefits the Customer as well: Segmentation brings benefits not only to the marketer, but to the customer as well. When segmentation attains higher levels of sophistication and perfection, customers and companies can conveniently settle down with each other, as at such a stage, they can safely rely on each other’s discrimination. The firm can anticipate the wants of the customers and the customers can anticipate the capabilities of the firm.

Levels of Market Segmentation

Segment Marketing: A market segment consists of a group of customers who share a similar set of needs and wants. The marketer does not create the segments; the marketer’s task is to identify the segments and decide which one(s) to target. Segment marketing offers key benefits over mass marketing. The company can presumably better design, price, disclose and deliver than the mass marketing. Market segment can be defined in many different ways. One way is to identify the preference segments.

(1) Homogeneous Preferences: Where the consumers have roughly have the same preferences. The market shows no natural segments. Example: Salt

(2) Diffused Preferences: Where the consumer’s preferences may be scattered throughout the space. Examples: Branded Clothes

(3) Clustered Preferences: Where the consumer’s preferences are similar or restricted to some of the products only. Example: Coke and Pepsi.

Niche Marketing: A niche is a more narrowly defined customer group seeking a distinctive mix of benefits. Marketers usually identify niches by dividing a segment into sub segments.

An attractive niche is characterized as follows: The customers in the niche have a distinct set of needs; they will pay a premium to the firm that best satisfies their needs; the niche is not likely to attract other competitors; the niche gains certain economies through specialization and the niche has size, profit, and growth potential. Whereas segments are fairly large and normally attract several competitors, niches are fairly mal and normally attract only one or two. Example: Ezee the liquid detergent from Godrej is a fabric-washing product for woolen clothes, Crack Cream by Paras Pharmaceuticals, local language TV channels.

Local Marketing: Target marketing is leading to marketing programs tailored to the needs and wants of local customers groups. Example: Local courier companies in many cities that specialize in delivering mail and packets on the same day within a specified geographical area, usually within the same city.

Customerization: The ultimate level of segmentation leads to segment of one, customized marketing or one-to-one marketing. Example: Maentel which produces Barbie dolls go for this type of marketing.

TYPES OF SEGMENTATION

There are many ways in which a market can be segmented. A marketer will need to decide which strategy is best for a given product or service. The major segmented variables are:i) Geographic segmentation.ii) Demographic segmentation.iii) Psychographic segmentation.iv) Behavioral segmentation.

Geographic Segmentation: It is the division of market according to the different geographical units. That is, segmentation of consumers based on geographical factors, such as, country, climatic zone, region, district, state, city, town, population density etc.

Geographic segmentation can be a useful strategy to segment markets because it:

Provides a quick overview of differences and similarities between consumers according to geographical unit;

Can identify cultural differences between geographical units;

Takes into consideration climatic differences between geographical units;

Recognizes language differences between geographical units.

Different geographic segments have different consumption patterns. Introducing different products for different geographic segments can bring more sales.

Demographic Segmentation:

In demographic segmentation, the market is divided into groups on the basis of variables such as age, gender, income, occupation, education, religion and social class. Demographic variables are most popular bases for distinguishing customer groups.

Figure 7.3 Demographic segmentation

Age Life-cycleStage

IncomeSocialClass

E.g.under6, 6-11,12-19, 29-34, 35-49,50-64, 65+

E.g.Bachelor State,Newly Wed: No kidsFull Nest 1: w/child under 6Full nest 2: Youngestchild over 6Full nest 3: Older married couples withdependent childrenEmpty nest 1: Oldercouples no children at home

E.g.Under 5,000; 5,000-20,000; 20,000-50,000;50,000-100,00,100,000-250,000etc

E.g. A = Upper, upperB = Upper lowerC1= middle classC2= Working class (skilled workers)D= upper lowersE= Lower, lower

Age: Consumer needs and wants change with age. So the marketers design and promote their products differently to meet the wants of the different age groups.Gender: Gender segmentation is widely used in consumer marketing. The best examples include clothing, hairdressing, magazines, cosmetics etc.Income: The market is also segmented on the basis of the consumer’s income level.Social class: Many companies design products and services for special social classes.

Psychographic Segmentation.

In psychographic segmentation, buyers are divided into different groups on the basis of customer’s life style or personality or attitude or values. People with the same demographic group can exhibit very different psychographic profiles.The company makes their product with a brand personality that corresponds to a target consumer personality.For Example: A significant number of consumers in India are strictly vegetarians. Even among those, who consume non-vegetarian food, many avoid beef. Mc. Donald’s changed their menu in India to adapt to consumer preference. Beef was stuck off the menu and the company introduced vegetarian burgers and other products based on the preference for vegetarian food.

Behavioural Segmentation:

Some marketers regularly attempt to segment their markets on the basis of product-related behavior, they utilize behavioral segmentation. Behavioral segmentation divides buyers into groups based on their knowledge, attitudes, uses or responses to a product.Behavioral segments can group consumers in terms of:

a. Occasions: Buyers can be distinguished, according to the occasions. Occasion segmentation helps firm to expand the product to sales. For example, Greeting cards brand such as Archies and Hallmark make cards for different occasions, such as birthdays, weddings, marriage anniversary, friendship days, etc.

b. Usage: Some markets can be segmented into light, medium and heavy user groups. For example, in the mobile phone service provider market, heavy users are targeted by giving those special packages or offers and also for low tariff targeted at the entry level and light users of mobile phones.

c. Loyalty: Loyal consumers - those who buy one brand all or most of the time-are valuable customers. Many companies try to segment their market into those where loyal customers can be found.

Market segmentation variable for buisness markets

The major question that the company asks is which customer should I choose? At the heart of any sales and marketing program is market segmentation. Who are we selling to and how can we effectively and efficiently target them? Which companies will be "good" customers that can benefit most from what we have to offer, whose needs and buying practices fit with our abilities? Which companies will be "bad" customers that ask us to do things we cannot, or do not value our relationship and therefore are not willing to pay for the resources we commit to solving their problems?

Segmentation characteristics must relate to important differences in the customer and in how they will respond to your marketing efforts. As discussed by Frederick Webster, Jr., in "Industrial Marketing Strategy," segmentation variables must be measurable, such as age, size of company, or preferred method of buying. Segmentation variables must also be relevant to a sizeable group. The group must be large enough to warrant your attention and each group must be different enough to warrant distinctive marketing strategies. Finally, the segmentation variable must have operational relevance to your marketing strategy. In other words, each will require something different, whether it's a unique product, special messaging, different pricing, alternative distribution channels, or varied selling approaches. One way to view the segmentation challenge is to break out the key issues at both a macro and a micro level.

It is also called as Nested Approach to Segmentation. It was given by Bonoma and Shapiro. Bonoma and Shapiro suggested that the nested approach for segmentation should be applied in multi-process manner to allow flexibility to marketers in selecting or avoiding the criteria best suited to their businesses. “They proposed the use of the following five general segmentation criteria:

i) Demographics: industry, company size, customer location

ii) Operating variables: company technology, product/brand use status, customer capabilities

iii) Purchasing approaches: purchasing function, power structure, buyer-seller relationships, purchasing policies, purchasing criteria

iv) Situational factors: urgency of order, product application, size of order

v) Buyers’ personal characteristics: character, approach

Demographics are the usual variables we think of at the most macro level: SIC code, company size, and geographic location.

Operating variables are a look at how the company works. What technology do they employ, are they currently a user or non-user of your type of product, do they have the financial resources to make this purchase? Often, your sales force is the best resource for this level of information.

Purchasing approach focuses in on the purchasing department. How are they organized, is there a power structure within the group, what kind of relationships do they have with other vendors, how do they interact with your competitors, what are their purchasing policies?

Situational factors help you define particular segments within a given organization. What is the urgency of the purchase? This can vary dramatically among buying influencers within the company. How will the product be used? One person in the company may use a database package to create a small contact manager for their own personal use; another may develop an inventory management system for the entire company. Just be careful as situational factors can lead to an infinite number of market segments. Make sure you define segments that are big enough to warrant the distinction in marketing strategies.

Personal characteristics include individual buyer motivation, personal strategies for reducing risk, and individual perceptions. Within one company, the purchasing manager may prefer to handle all account matters face-to-face, whereas the engineering manager may prefer e-mail and the web.

EFFECTIVE SEGMENTATION

Not all segmentation is useful. For examples, salt buyers could be divided into blond and brunette customers, but hair color is not is not relevant to purchase of salt. Furthermore, if all salt buyers buy the same amount of salt each month, believe all salt is the same, and would ay only one price for salt, this market would be minimally segmentable from a marketing point of view. To be useful, segment must be:

Measurable: The size, purchasing power, and characteristics of the segments can be measured.Substantial: The segments are large and profitable enough to serve. A segment should be the largest possible homogenous group worth going after with a tailored marketing program. It would not pay, for examples, for an automobile manufacturer to develop cars for people who are less than four feet tall.Accessible: The segments can be effectively reached and served.Differentiable: The segments are conceptually distinguished and respond differently to different marketing-mix elements and programs. If married and unmarried women respond similarly to a sale on perfume, they do not constitute separate segments.

Actionable : effective programs can be formulated for attracting and segments.

MARKET TARGET

Once the firm has identified its market segment opportunities, it has to decide how many and which ones to target. Marketers are increasingly combining several variables in an effort to identify smaller, better-defined target groups. Thus, a bank may not identify a group of wealthy retire adult, but within that group distinguished several segments depending on current income, assets, savings, and risk preferences. This has led some market researches to advocate a need-based market segmentation approach.

Evaluating and selecting the market segments

In evaluating different market segment, the firm must look at factors: the segments overall attractiveness and the company’s objectives and resources. Does a potential segment have characteristics that make it generally attractive, such as size, growth, profitability scale economy & low risk? Does investing in the segment sense given a firm objective, competencies, and resources? Some attractive segment may mesh with company long run objective, or the company may lack one or more necessary competencies to offer superior value.

Single – segment concentration: The farm equipment division of Mahindra & Mahindra concentrates on tractors primarily targeted at agricultural market. The Zodiac brand concentrates on formal shirts for executives and professionals. Specialty hospitals focus on specific therapeutic areas such as cancer care, heart care, neonatal care, and gynecology. Through concentrated marketing, the firm gains a strong knowledge of the segments need and achieves a strong presence. Furthermore, the firm enjoys operating economies through specializing its production, distribution, and promotion, if it captures segment leadership, the firm can earn a high return on its investment.However, there are risks. A particular market segment can sour or a competitor may invade the segment .if selecting more than one segment to serve, a company should pay attention to segment interrelation on the cost, performance, and technology side. A company carries fixed cost can add product to absorb and share some costs. The sales force will sell additional products, and a fast food outlet will offer additional menu items. Economies of scope can be just as important as economies of scale.

Selective specialization: the firm selects a numbers of segments, each objectively attractive and appropriate. There may be little on no synergy among the segments, but each promises to be a moneymaker. This multisegment strategy has the advantages of diversifying the firm risk.

Consider a radio broadcaster that wants to appeal to both younger and older listeners.

Product specialization: The firm makes a certain product that it sells to several segments. An example would be a microscope manufacturer who sells to university, government, and commercial laborites. The firm makes different microscope for the different customers groups and built a strong reputation in specific product area. The downside risk is that the product may be supplanted by an entirely new technology.

Market specialization: The firm concentrates on serving many needs of a particular customer group. An example would be a firm that sells en assortment of products only to university laboratories. The firm gains a

strong reputation in serving this customer groups can use. The download risk is that customer group may suffer budget cuts.

Full market coverage: The firm attempts to serve all customers groups with all the products they might need. Only very large firm like IBM (computer market), General motors (vehicle market), and Coca – cola (drink market) can undertake a full market coverage strategy .Large firms can cover a whole market in two broad ways: through undiffertiated marketing or differtianted marketing. In differtiated marketing, the firm operates in several market segment and designs different product for each segment .General motors does this when it says that it produces a car for every “purse, purpose, and, personality.” IBM offers many hardware and software packages for different segment in the computer market.

MARKETING STRATEGY OF TITAN WATCHES

TITAN-AN INTRODUCTIONTitan Industries Limited, Formerly Titan Watches, is a joint venture of the Tata Group and the Tamilnadu Industrial Development Corporation [TIDCO]. It was promoted in 1984. And, in 1987 the company set up its production facilities for the manufacture of quartz analogue electronic watches at Hosur, near Bangalore.

Within three years of launch, Titan emerges as the leader in the Indian quartz watch market- the fastest growing segment of the industry. Titan sold 7, 50,000 watch in the very first year and crossed the 3-million mark by the fourth year, securing 60 per cent share of the quartz watch market.

Expansion and Growth

The 1990s were decade of expansion and growth for Titan set in motion expansion plans in quick succession for achieving a capacity of 4 million pieces. In addition. Titan sold over a million pieces of Timex watches during this period as per its marketing arrangement

with Timex Watches Limited. By 2001, Titan was making and marketing over 6 million watches, thus becoming the six largest global players in the manufacturer brands category, i.e. watch companies which, by themselves manufacture in the components that go into the branded product they market. The company’s watches are currently sold in about 40 countries of the world, through marketing subsidiaries based in London, Dubai and Singapore. Titan also makes watches for other international labels.

Excellence in Marketing and Brand Building

Titan`s expertise in marketing, especially in brand building, has elevated Titan to the fore-front of Indian brands. The Economic Times survey for the year 2001 on India`s most admired brands, ranked Titan as the country`s most admired brand. In fact, winning awards for excellence has become a way of life with Titan. Titan has been ranked as India`s leading consumer durables marketing company for the past eight years {1993-2000} in succession in polls conducted by the advertising and marketing publication A & M. And, in each of the years between 1994 and 1998, in surveys conducted by The Far Eastern Economic Review, it was rated as one of Asia`s top 200 companies and India`s top 10.

TITAN`A MARKETING STRATEGY

When Titan entered the market, HMT was the unquestioned leader in the industry in fact; the name HMT had almost become synonymous with wristwatches. Titan has to reckon this reality while formulating its marketing strategy. Titan consciously voted for a confrontation strategy. It confronted the leader, HMT, head on and soon acquired the leadership position in the quartz segment of the watch industry.

Titan`s marketing strategy has four main components:

A.) An aggressive approach in product A high-quality product, supported by state-of-the art technology A long product line, with a wide range of models.B.) An effective positioning strategyC.) High – profile distribution, dominated by the showroom conceptD.) Effective promotion.

AGGRESSIVE PRODUCT STRATEGY

Product, the No. 1 Weapon in Titan`s Marketing Strategy

In its effort at developing a marketing strategy capable of confronting the leader, Titan chose product as the No.1 weapon. Titan put on the market a wide and attractive range of quality watches. The watches were also contemporary in style. Titan added new models and dials at regular intervals.

In its effort at product augmentation, the company`s product engineering group developed a number of new watch movements including dual time, world time, alarm and long-battery-life watches. In short, Titan offered a product that combined quality and fashion; it provided an abu8ndant choice in terms of styles and models. Titan Currently offers a choice of over 1,000 designs.

Right Product Choice – Titan Opts for Quartz

Titan made its product choice very sensibly. When Titan entered the watch business, mechanical watches dominated the market. Those days, HMT, the market leader, was producing mechanical watches in the order of five million pieces per year. Titan had to make a conscious choice- Shou8ld it goes in for mechanical watches? Or should it follow the global trend and go for the Quartz? Or should it go in for a combination of mechanical and quartz watches?

Initially, Titan considered the option of making both mechanical and quartz watches. But, on a closer examination, it decided to stick exclusively to quartz. It proved a sensible move. The world over, the trend has since been towards quartz. Moreover, setting up a mechanical watch plant required more investment. By choosing the quartz route. Titan was able to enter the industry with lesser investment: a quartz watch normally has less than half the parts of a mechanical watch. Titan was aware that the decision to go for quartz would deny Titan the market of mechanical watches, the high volume and lower end segment. Titan consciously opted for quartz.

Aggressive Launching

Having made the decision to favour of quartz. Titan launched its product with a real bang. In fact, the Titan launch was so grand that the market got the impression that Titan was the first company in India to introduce quartz watches. Actually, HMT had already done in 1981, followed by Allwyn in 1984. Titan went the whole hog towards spreading the quartz culture.

Titan Opts for the Best Technology

Titan went in for the most modern technology and the best international collaborationThe Titan range Addressed to Different Segments

Classique: Distinctive watches combining the elegance of Gold and leather, in 135 different designs.

Royale: Stylish dress watches in all gold and precious metals, in 40 different designs.

Exacta: Contemporary watches in stainless steel to withstand the rigors of daily life, in 100 different designs.

Fast Track: Casual watches with an accent on youth and the outdoors, in 25 different designs.

Sonata: For the low-end market.

Raga: Exclusively for women.

Aurum: Jewellery watches in 18 carat gold, studded with precious gems and colored stones.

Titan`s collaborator in watch movement, France Ebauches, is one of Europe`s leading manufacturers of watch movement. And the Citizen Watch Company, Japan, Titan`a collaborators for the watch case, is equally well known in its field. Titan also secured the best equipment from Switzerland, Japan and France.

Long Product Line and Wide Range of Models

A wide product range--- over 1000 models, incorporating world trends—was the other major element of Titan`a product strategy. And, Titan cleverly exploited HMTs weakness in terms of its narrow range. In fact, Titan`s marketing strategy revolved around offering the consumer an unprecedented choice of models. Even in the early phase of its entry, there were as many as 70 models in the Titan range targeting different segments. Titan also kept expanding its range all the time. For example, when Titan saw that plastic offered scope for bold, contemporary styling, something not possible with steel or brass, it went in for plastic dials in a big way.

Customers tempted to own more than one watch: By offering a wide range of models, Titan benefited in yet another way. Customers were tempted to own more than one watch. Titan designed different watches that matches one`s dress and occasions. Titan calculated that creating a desire in the minds of the customer by showing him a wide range of models could in the long rung help Titan increase its market share.

Different range for different segments: Titan also segmented the market and made distinct offers for each segment. Chart 16.1 shows how the Titan offers addressed different segments.

Jewellery watches: titan spotted a market in India for expensive, jewellery watches. Titan`a market research revealed that a number of Indians buy expensive watches from abroad. It introduced the Aurum line in the price range of Rs.20,000 to Rs.100,000. Titan`a assessment ran like this: `To start with, we can sell 20,000 watches of this type a year. There are a lot of people in India who would like to own a gold watch. The Indian appetite for gold is insatiable. What we are offering is a actually a gold bracelet along with a watch. One offer initially in this range was 30 models.

The additions to models continued and Titan brought in designer watches, the Euro Collection, designed by European designers.

Product Quality

Titan flew down technicians from Europe to train its Indian staff. Watch movements in the jewellery range had to be finer and more carefully assembled Gold and precious stones were sourced from Surat and Jaipur.

To Ensure Quality, Titan Resorts to Vertical Integration

In the early stages, Titan had to obtain a gold portion of the components through outsourcing from vendors developed within the country. Some imports were also involved. But, Titan was clear that over the long-term, bulk of the requirements should be made in-house. Titan believed that in-house manufacturing was essential to maintain high product quality. Titan soon launched a programme of vertical integration. The first phase of this programmed involved watch case manufacture; and from there, it moved on to other product components.

AN EFFECTIVE POSITIONING STRATEGY

TITAN is known for offering variety in its product till now people gave attention to dress, ornaments, and even footwear but nobody was much bothered about the wrist watch HMT positioned the product as just the time keeping device. They wee termed as the time keepers of the nation. But TITAN tried out something different and innovative which also led them as a successful player in the market. Following are some of their effective strategy.

TITAN POSITIONS THE GENERIC DEVICE WATCH AS AN ORNAMENT

TITAN positioned the watch, which till then was a commodity like product, into an ornament one would like to wear; it was an ornament showing time. This strategy of TITAN was to change the individual’s perception towards watch, it tried to position the watch as an ornament or rather a dress. This strategy promptly drew people’s attention and was a quiet a lot successful in changing their perception. They started seeing a watch more as an expression of an individual taste and style than as a mere timekeeping device. As a result of this demand of designed and stylish watch started growing. This was the real success of titans positioning strategy

TITAN MAKES ITS WATCH A GIFT ITEM

Another element of titan’s positioning strategy was that they popularized their watches as gifts. TITAN presented their watch as an ideal gift. So they addressed particularly two segments

The person to person gift on wedding or other festival occasions The corporate gift.

In the personal gift segment, it was campaigned as the best gift for friend, the parent, the child, or the partner in our life. For these purpose TITAN made the product available at locations like bookstores, gift shops, and boutiques. Titan paid priority attention to gift shops titan recognized the fact that it was competing not only with other watch companies but also with the entire category of high value gift items. It was even competing with shirts and saris. So Titan opened its counters in restaurants, in photography shops and in fashion wears shops. Titan was going by the principle that once you have targeted your customer, you better follow him wherever he goes. With this strategy, titan succeeded in deflecting a part of the discretionary spending from other products to watches.

The other market which was segmented by the titan was the corporate world. the corporate campaign said that it was something that your customer will be happy to receive it .for this it also decided to get a corporate watch designed specially for corporation .once titan established itself among the leading corporate, it used the fact for its promotion .for example, it highlighted that companies like HLL, Brooke Bond, Eureka Forbes, Lipton, Diners club and Nestle were already using titan watches as gifts.

INNOVATIVE DISTRUIBITION

Matching with this product positioning, titan adopted an innovative distribution strategy. Titan had made a quick study of the 8000 odd retail watch outlets in the country. The majority of the existing outlets were perceived by the consumers as just stores, not as showrooms of watches titan voted for the showroom idea and started franchising a network of trendy titan showrooms. To quote titan, “we felt the need for such excusive

showrooms, where we have control on the décor, the ambience, the selection of staff and the level of inventories, as we wanted to upgrade the quality of display of our wares and also to expand the market for watches.” It was Titans conviction that if the watch is positioned as a fashion wear, the store image was very important and had to be in tune with the overall product positioning.

SELECTION OF FRANCHISEES/SHOWROOMS

Titan went about the task of selecting the franchisees/showrooms in a systematic manner. It released an elaborate advertisement in the national and regional press, inviting applications from prospective dialers and giving a resumes of Titan’s activities, its marketing strategy and the plans of the company for appointing franchises/showrooms all over the country. Titan also briefly outlined the benefits the franchisees would get and the inputs required of them. The high standards of merchandising, display, sale and service expected of the franchisees were also specifically mentioned.

The applicant should possess a showroom of approximately 50 sq. m; in a high consumer traffic area; should have excellent salesmanship; should be willing to invest in interiors as per the company’s advice; and should be able to maintain high standards in merchandising, displaying, selling and servicing watches.

Titan also took care to communicate the point that the watches are proof the House of Tata. The ads communicated, Tata presents a promising business opportunity through the Titan franchise.

Since the Titan watch was positioned as a symbol of fashion, status and contemporariness, rather than a utility. Titan insisted on attractive showroom in the best location as a major criterion in dealer selection. The ads carried a picture of the Titan showroom that was already functioning in Bangalore, attractively displaying more than 150 international designs of watches. Titan wanted the franchisees to perceive the Titan business as one of dealing in ornaments, rather than watches. As a result of this focus, Titan was able to recruit excellent franchisees within a short period. Three years later, when Titan went in for another round of selection of franchisees, it organized an equally systematic selection. This time, it employed the pithy slogan in its ads:

TitanIs

Shopping

ForShowrooms.

Titan’s Dealer Network Today:

Titan watches are now sold for more than 6,000 retail shops, spread throughout the country, covering 1,200 towns. They are backed by a wide service network. Titan’s 140 exclusive showrooms (World of Titan) and 150 multi-brand showrooms (Titan Time Zones) have set a new trend for watch retailing in India. The showroom has indeed been the key to Titan’s distribution strength and it forms an important part of the company’s marketing strategy.Well-Focused Promotion:In promotion too: Titan chosen aggressive approach, matching with its overall strategy of confronting the leader. Titan spent over Rs 20 crore per year for advertising in the initial years. The Titan message was truly persuasiveSales Promotion:Titan paid good attention to sales promotion too. One of its sales promotion schemes “Gold Bonanza” offered a first prize of jewellery worth Rs. 1.5 lakh in cash. The budget for this campaign was Rs. 50 lakh.

CUSTOMER SERVICE

Customer service was also the one of the strong point in the titans marketing mix. Titan understood that in most businesses, service is neglected and poor service is often cause hurt to the feelings of a customer. Titan therefore laid down its service objectives very carefully .to quote titan it is our belief that, when a customer walks into a shop to get a titan watch serviced, there are in fact three types of repairs which need to be effected: repairing the watch, repairing the feelings of the customer and the repairing damage done to the company’s image. Attention, therefore, has to be given to the physical environment in which the customer is received, the manner in which he or she is dealt with by the service personnel. The speed and the quality of the actual repair job and the charges collected for the repair. Such a corporate concern for the customer and for the quality of service rendered to him was not a common feature in the then prevailing Indian business scene. Titan, in fact, made its service a much-talked about affair. Titan under priced repair and service charges, battery and other replacement spares.

TITAN ENTERS THE LOW PRICE SEGMENT, BY TEAMING UP WITH TIMEX

Titan saw that if it could provide watches priced between Rs 350 to 500, it would complement the Titan range and confer a dominant position on Titan as a player in all segments of the watch industry.Titan worked out a tie-up with Timex Corporation of the US, the world’s fourth largest watch-making company, and promoted Timex watches Ltd.It dominates the US market with 25% market share.To start with, Timex offered around 200 models in four distinct ranges. The plan was release 800 models over a period of five years.The Timex alliance was in operation only for few years. Subsequently Titan terminated the tie-up.

TITAN ATTACKS HMT IN THE LOW PRICE SEGMENT

The tie-up with Timex served Titan’s overall strategy of confrontation with HMT, in early growth stage. Titan’s idea was to knock out HMT even in the lower end of the watch market without getting into the mechanical segment.Titan achieved a market share of 75% of total quartz watches in India.While mechanical watches still accounted for 5 million of the 10 million unit’s domestic watch output, its share in the total has been steadily falling.By offering a lower priced quartz model’ the switchover from mechanical could be accelerated and HMT could be confronted even in the lower end of the market. Titan did succeed in making inroads into HMT’s stronghold through Timex.Together with Timex’ Titan achieved a market share of 75% of total quartz watches in India.From a leadership position in the business, HMT started decline. Throughout the first half of the 1990’s, HMT’s Losses went up. It touched Rs 53 crore in 1994-1995, when it sales revenue was Rs 138 crore, and sales volume was 2.9 million units.

HMT’S Defense

It had to sharpen its marketing, widen its product range, and add teeth to distribution, advertising and sales promotion.

HMT launched its elegance series of watches in the high price range of Rs 1600 to Rs 3500. With, HMT too moved in to the world of high fashion in the watch business.To strengthen its position at the lower end, HMT launched its low-price digital watches and the plastic quartz range-Pace and Astra. HMT’S new strategy had to naturally cover the distribution aspect, especially the showrooms.

Investment for expansion and modernization

HMT also came up with a plan to invest Rs 100 core for expansion and technological up gradation of its watch factories around the country.HMT introduced some attractive sales promotion schemes, too. And, one such scheme called the ‘Festival of Time’, with a bumper prize of one kilo of gold medallions did create ripples in the market.HMT which was first Indian company to launch quartz watches lost ground in the segment following the aggressive entry of Titan. It is not as though HMT did not have any strength at all. On the contrary it had a number of unique strength, its infrastructure, its vest, technical manpower and the capability to make almost all the components of quartz in-house. Unlike Titan, who had to import components like dials, hands and batteries.But HMT failed to work out winning marketing strategy using its strengths. It had very limited no. of design. And company’s assessment that quartz would remain a restricted market also proved wrong. Based on this assumption, it had pegged its quartz manufacturing capacity at a very low level.

Titan Modifies Its Marketing Strategy

Global Competition Poses a New Challenge to Titan.While Titan had conquered HMT and other domestic players, with the opening up of imports, it had to face global competition-competition from Swiss and Japanese brands in particular. In 1998, the government had removed most of the restrictions on the import of fully assembled watches into the Indian market. It resulted in a virtual upheaval in the domestic watch industry.

Titan modifies its Target Market

Now, Titan wanted to target semi- urban and rural consumers as well. By now, the company had developed several market segments with large potential-women, youth, children, sportsman, etc.

Decides to Tap Rural Markets in a Big WayNow, a more conscious and direct opening to the vast rural markets of the country were being made. New market had to been formed, and taped. Towards achieving this objective, Titan launched a detailed study of the rural markets.

Titan Modifies its PositioningTitan now decided to modify its positioning as well. Titan was originally positioned as an elite product, a brand of classic elegance for the sophisticated urbanite. It now broadened the focus.

The new marketing objective is to cover a larger number of small towns and villages to increase brand presence in the semi-urban and rural areas.

Distribution and Promotion Further StrengthenedTitan now strengthened its distribution and promotion. By 2001, the number of Titan outlets was hiked to 6000 from 5500.

Product Innovation Continues as a Central Theme

Launch of Nebula, another Range of All Gold Watches:By the close of the 1990s, Titan launched another gold range watch-Nebula. Aimed at the well-to-do, 25 years plus segment, the company initially launched 24 models. The range was meant for both men and women.

Titan Launches Digital WatchesTitan also moved up in technology and brought in the Digital Fastback-a range of digital watches, designed exclusively for the young and sporty. There were 22 designs in four series, to start with.

The Indian digital watch market consisted of mainly Timex and Sitco, plus the grey market brands. Titan wanted to fill the gap left by its break with Timex.

Advantages of Market Segmentation

The main objective of segmentation is to increase your sales (i.e. strengthen your position in the market) and increase your profits. It helps you achieve this by helping you to;

Identify new product opportunities. It does this by helping you identify the needs of different market segments and developing products to satisfy those needs.

Develop more efficient methods of promoting existing products by enabling you to:

Identify new or highly profitable markets or new channels of distribution.

Target a particular market segment more efficiently than spreading limited resources over a wide area.

Maintain sales but reduce expenditure on promotion and advertising.

Disadvantages of Market Segmentation

Generally there is an increase in costs with segmentation stemming from increased;

Market research - the need to better understand the needs of the various market segments.

Research and development - the need to produce different products for the different market segments.

Production costs-the need for different products for different market segments.

Administrative costs-the need for separate marketing plans for the different segments.

Inventory costs-the need for additional stock to cover variations in demand plus additional stock holding and control systems.

Distribution costs-the need for different distribution channels for different market segments.

Advertising and sales costs-separate plans have to be developed and implemented for each segment.

Conclusion

The underlying principle of market segmentation is that the product andServices needs of individual customers differ. Market segmentationInvolves the grouping of customers together with the aim of betterSatisfying their needs whilst maintaining economies of scale. It consistsOf three stages and if properly executed should deliver more satisfiedCustomers, few direct confrontations with competitors, and betterDesigned marketing programmes.

Bibliography:

Books: Marketing Management-Philip Kotler

Marketing Management-NamanKumari & Ramaswamy

Website: www.titanworld.com www.images.google.co.in www.marketingteacher.com

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