Titan and Favre Leuba: Moving Up the Value Ladder

Truly powerful brands seek to ‘brand’ the inimitable. Branding therefore is a quest to singularly appropriate something which does not lend itself to perfect copying. Branding success greatly depends upon what a brand ‘owns’ in customers mind- something tangible which can be ‘specified’ in measurable terms or something held in ‘imagination’ which beats comprehension and measurement.
Titan Industries, a dominant player in Indian watch market plans to acquire Swiss watch brand Favre Leuba for two million Euro, approximately Rs 13.6 crore. Favre Leuba brand is likely to bring two very distinctive and intangible or ‘imaginary’ aspects to Titan’s portfolios which do not permit ‘cultivation’. And these are: the year 1737 and the word ‘Swiss’.
What is strategic about this acquisition?
In the times of free technology transfer and advances in engineering and reverse engineering, players in different markets are ‘enabled’ and ‘empowered’ to come close to the top brand (S) in product centric aspects. For instance Japanese watches or watches by other brands in other countries do not differ ‘significantly’ in the way a watch is ought to function and perform. Titan Industries like Japanese players (Citizen and Seiko) has managed to carve out its own space and earned respectability. Accordingly Titan has different types of watches in its portfolio like slim, chronographs, retro looks, gold, and automatics. The company has been very successful in crossing over the ‘barriers’ imposed by the ‘industry’ which came in the form of ‘impositions’ such as technology threshold, service network, range, and credibility and marketing muscle. It is no surprise that Titan gained leadership position in India.
The wrist watch industry is asymmetrically divided? Broadly there are two types of brands in watch industry globally. One set of brands sell watches in huge number and the other group sell watch by perceived value. At the base and the middle levels a brands such as Titan, Citizen, Seiko, Armani, Boss, Hamilton, Guess, Casio, and Kenneth Cole fight for a piece of the market pie. The functionality and image combination does allow them to be aggressive in their respective niches in the overall lower or middle price category but they are not able to cross over to the ‘elite’ top group dominated by and large Swiss brands. These brands are severely constrained by the ‘value’ they embody. Many brands in so called ‘mass’ category may offer product quality which can seriously measure up the quality sophistication level of brands in the ‘top’ category yet these brands are not able gain entry into the restricted club dominated by the likes of Rolex, Omega, Breguet, Piaget, Tag Heuer and Patek Phillipe.
Titan is one company which is driven by a serious strategic orientation. One of its earlier attempts to become a global player was not met with desired level of success when it began to set of sales outlets abroad. Titan brand to a potential buyer did not signify much. It has been seriously building up its credentials to emerge as a global watch powerhouse. Having achieved credibility and trust in the bottom (Sonata) and middle (Titan) tier of the market, it is a logical progression to move up the value spectrum. Xylys brand has been one such move in this direction. This brand was created to provide Indian aspiring customer to acquire a Swiss made watch at an ‘accessible’ price.
The communication of Xylys deliberately distanced the brand from ‘Titan’ brand in order to avoid mid price Indian rub off effect. But getting to an even higher tier of the watch market pyramid required appropriation of something which cannot be bought off the self or developed in an instant- the heritage. In some categories the most defining aspect of pull is brand heritage. Heritage and legacy are difficult barriers to cross for newer brands in categories like scotch, watches, perfume, tweed and jewels. These are ‘connotative’ categories where the source of authenticity is the date of origin which links the brand with ‘older’ ways as against ‘modern’ of doing things. This meant very restricted access to people, handmade, customized and exquisite. Still many top end cars indicate the name of the worker who personally who made the car. Every Breguet watch is numbered (AL Breguet designed first watch for the Queen of Naples, sister of Napoleon, Napoleon himself owned one). Look carefully most of the Swiss watch brands proudly convey year when these started production with an intention to convey heritage, legacy and authenticity.
What do you do when the barrier to participation is not product centric rather a mental construction? This provides protective insulation from competition. The ‘made in Switzerland’ label and the year of ‘origin’ are two significant barriers to entry that Titan intends to overcome by acquiring Favre Leuba of Switzerland (1737).

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One thought on “Titan and Favre Leuba: Moving Up the Value Ladder

  1. Thanks for sharing this, .. Capitalising on heritage, legacy and authenticity and targetting ELITE segment could be the strategic implication, but at the same time, it might be difficult and a tough task for Titan to revive a brand like Favre Leube which has been at a dormant stage for a long.
    It reminded me of the article i read in ET few days back, which said that buying new brands is not just about a new life, but is also about drift and death. History shows that golden brands lost their lusture under their new owners ( example: citra, dalda, Binaca, Moti Soap- (though categories are unlike with regards to Favre Leube- Swiss watches, but the story remains same) because at the time of acquiring, less heed is paid to the brand equity, culture, infrastructure and visionary identity.
    Brand like Favre Leube was present in India for five decades till early 1980’s but then swayed away with its mark over a period of time. Favre Leube is a flagging brand, if Titan converts it into The Asset, it would be a successful story.

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