A Study on
Citizen Watches
Prepared by:
Submitted to:
Dave Mayur (12M24)
Dr. K.S. Prasad
MBA Sem 4 G.H. Patel PG Institute of Business Management
1|Page
Citizen Watch
Introduction to Company: Citizen watches, a Japanese multinational company with a 70 year old heritage
and worth 3 billion (US$), sells world-class watches and allied products in more than 150 countries worldwide. The company was founded in 1924. As one of the world's leading watch brand with renowned Japan watch making art, CITIZEN was officially introduced into India through its local subsidiary company, Citizen Watches (India) Pvt. Ltd in 1997. The entry was heralded by the revolutionary concept, Eco-Drive – the world’s 1st light powered watches, lending an air of excitement and expectation around
the brand and adding to the excellent equity CITIZEN already had enjoyed in India. Citizen’s association with India goes aong way back when 1st Prime minister of India,
Pt. Jawaharlal Nehru, visited the Citizen Watch Co in Japan. Impressed by the technologically advancement he sought technology know-how for India. And HMT, the PSU, was selected for technology transfer of the same in 1964. Citizen began in Tokyo in 1918 as a horological research center, the Shokosha Watch Research Institute. In 1924 the institute manufactured its first pocket watch. Six years later, the group organized itself as a corporation, Citizen Watch Co., Ltd., to facilitate marketing of its products, under President Yosaburo Nakajima. The new company owed its name to Tokyo Mayor ShinpeiGotoh, who named Shokosha's first timepieces Citizen Watches, so that they would, in his words, be "close to the hearts of people everywhere." In addition to watches, Citizen produced precision instruments used in their manufacture. In 1936 the company built the factory in the Tanashi area of Tokyo that remains its main production facility. Also in 1936, Citizen began selling watches in Southeast Asia and the South Pacific; China also became a destination for exports. The company's international horizons remained limited to other Asian countries until well after World War II. In fact, Citizen's export business dried up after the outbreak of hostilities with the United States, as the Japanese economy geared itself to meet military needs. In 1941 the company began producing machine tools, a business it retained. 2|Page
PRODUCTS : Watches and parts, Information equipment and parts, Electronic equipment and
parts, Industrial machinery and equipment, Jewelry. Citizen Watch Co., Ltd. is one the world's largest watchmakers. Although still best known for its watches, the company has since the mid-1960s diversified its product lines, expanding into clocks, jewelry, and eyeglass frames; electronic devices such as chip LEDs, liquid crystal displays, quartz oscillators, and electronic viewfinders; electronic products such as printers, disk drives, electronic thermometers, and calculators; and industrial machinery, including automatic computer-controlled lathes, robots, general-purpose machine tools, and measuring instruments. About 37 percent of Citizen's net sales are derived from watches, watch parts, and clocks, 33 percent from electronic devices, 7 percent from electronic products, 11 percent from industrial machinery, and the remaining from other products, which include jewelry, eyewear, jigs, and tools. Citizen generates 58 percent of its revenues outside of Japan.
INDUSTRY DOMINANT TRAITS
Number of Rivals
Buyer’s needs and requirements
Scope of Competitive Rivalry
Market Size and Growth Rate
3|Page
Production capacity
Pace of Technological change
ECONOMIC TRAITS
Product Innovation
Market Size & Growth Rate:
50 million wristwatches are sold in India every year. Notwithstanding the presence of global players and the opening up of the market, the Indian market has always been dominated by a single player. In the past, till the late 80’s, in the
mechanical era, HMT dominated the market. And after that it has again been the domination of a single company, Titan. Today Titan has almost 65% market share of the organized watch market in the country. The organized watch market itself is estimated at 35% of the total industry size. In value terms the size of the organized market is estimated at around Rs. 4000 crores, which means that the average price of watches sold even today is less than Rs.1000!!! Watches are typically segmented into specialist watches and f ashion watches. All International watch brands have a clear position as to where they belong. In India most sales are in the fashion segment and this fine distinction has not yet been used by marketers. Male watch buyers far outnumber females and account for around 65% of sales. Students are the largest segment of buyers accounting for approximately 30% of the sales. Of the Rs 4,000-4,400 crore watch industry, around 60 per cent falls in the organized category with 40 per cent making up the unorganized segment. In the organized sector, 70-80 per cent is captured by lower end watches (less than Rs 2,000-3,000) and a maximum of 20 per cent is occupied by the mid-, upper-mid, and luxury segments. Citizen’s product concentration is mainly in the mid -segment (Rs 10,000-13,000),
with some watches in the upper-mid segment (Rs 40,000 and above). They have more than 300 watches in the market currently, with the main focus being on the Rs 8,000-20,000 range. Globally citizen Watches has 3.9% market share in year 2012.
4|Page
In India Titan remains the leader in the mid-segment with a market share of 5060 per cent, Citizen comes second at 8 per cent, closely followed by Tissot and Seiko. SCOPE OF COMPETITORS RIVALRY
Competition in the watch market is intensifying not only against Japanese brands, but also against high-end Swiss brands and low-end Chinese manufacturers along with alternative products such as mobile phones with watch functions. With regard to movement business, despite citizen’s high market share, volume growth is slowing down and low demand due to the rise of Chinese manufacturers may trigger price decline. Focus on more affordable – and casual – watches will help Citizen Watch Co. gain market share in the luxury timepiece market.Citizen Watch Co.Acquires Bulova Corp. from Loews Corp. for $250 million. With this acquisition, which includes the luxury Wittnauer brand along with mid-priced brands Bulova, Accutron, and Caravelle, Citizen move up from its current ranking as the fifth most popular luxury watch brand, behind Rolex, Cartier, Omega, and TAG Heuer, according the Unity Marketing's quarterly Luxury Tracking Study which surveys 1,000+ luxury consumers on their luxury purchases and spending. Following are the main competitors of Citizen Holding in watch segment: Titan Tissot Seiko Timex HMT Rado Casio
Watch manufacturers are not the only competitors of Citizen Watch. In the early 2000s Citizen faced a new challenge as sales of watches flattened, particularly in 5|Page
Japan, because of the proliferation of cellular phones and other portable electronics devices, which typically had built-in clocks, making watches less of a necessity. Demand for Citizen Watches in North America, however, remained robust as the EcoDrive models were particularly well received and were generating one-third of North American revenues by 2000. By this time, watch operations were responsible for less than 40 percent of global revenues as the company's diversification drive continued.
Buyer’s need With growing middle-class income, luxury watches have found an eruption in demand in the post-economic slowdown era. Leading producers like Titan Industries, Timex, Timond, HMT and Gitanjali are currently facing a demand which surpasses supply. In the past two years, high-end luxury watch brands have grown by 20-22 per cent, as against 7-8 per cent growth in low-end watches. Still, the surge in demand seems to have not been expected. Indian companies start manufacturing such watches at least six months in advance to meet seasonal demands. Anticipating lower domestic production, local retailers start their bookings in global markets at least six to eight months ahead of occasions like Christmas, New Year, etc. But, the current unseasonal demand was not anticipated six months ago, due to uncertainty over the global economy, resulting in demand outstripping supply. The Citizen Watch Group has positioned customer satisfaction at the very core of its management and always seeks to provide high-quality products and services from the customer's perspective. We listen to customer opinions and make use of them in product development and improving services. In fiscal 2012, collected customer opinions and comments were categorized for analysis into sales and planning, development and manufacturing, and service categories. The respective responsible divisions then took measures that will be useful in making improvements. 6|Page
The Citizen brand, in particular its Eco-Drive models which are environmentallyconscious by being powered by light, not batteries, are well positioned to appeal to younger, value-conscious consumers TECHNOLOGY
One pivotal technological breakthrough was the development of a light-driven watch. CITIZEN pioneered this engineering innovation well ahead of other watch manufacturers as early as 1976, which led to the launch of the highly acclaimed EcoDrive in 1995. Utilizing electrical power converted from virtually any light source, this extraordinary innovation changed forever the way watches could be powered. Eco-Drive eliminated the need to ever replace batteries, which made it especially beneficial to areas where such specialist batteries were not obtainable. This leveled the field for citizens of virtually every country to be able to experience unrestricted joy of wearing and using a CITIZEN watch. Basically citizen watches are using two types of technology for their watches, they are as follows... 1. ECO DRIVE Watches: It starts with a simple, yet revolutionary concept: A watch that never needs a battery. Citizen Eco-Drive technology harnesses the power of light – from any natural or artificial light source – and converts it into energy which is stored in a permanently rechargeable lithium-ion cell. It recharges continuously in any kind of light to run forever. Each year hundreds of millions of watches are left in drawers at home because the batteries stop working and aren’t replaced. Eco -Drive timepieces break that cycle and deliver an outstanding range of benefits for today’s consumer.
7|Page
Eco-Drive watches use a battery recharged by a solar panel hidden under the watch face. In the rare and discontinued Eco-Drive Duo series, the solar power was supplemented by an automatic quartz power source. There was also an Eco-Drive Thermo model that exploited temperature differentials between the wearer's skin temperature and ambient temperature to recharge the battery.
2. ATOMIC TIMEKEEPING The watches can synchronize with radio clocks in Japan, North America, and Europe and will automatically select the correct frequency for doing so based upon location of home time zone. The watch actually tracks two time zones —home and world—but synchronizes to the 'home' zone. When traveling, the user may swap the 'home' and 'world' zones—thereby enabling proper time signal reception on a different continent while retaining the other time.
PRODUCT INNOVATION
With the increase in use of mobile phones, need of watches is decreased to a great extent. Citizen Watches also faced this problem. The need of luxury watches will increase in future, so Citizen Watches can introduce the new series of attractive luxury watches to cover market in India. As we already see that the major part of watch industry is captured by unorganized sector and this sector is selling watches which are generally low in prices as compared to other branded watches. Hence citizen has scope to cover market share by introducing low range of watches, which are in price range of upto Rs.6000.
8|Page
Citizen Watches had covered urban market of India. It can innovate some product for rural market as well to increase market share. Also Kids segment in watches is majorly untapped by citizen watches. So company can innovate products for kids.
Situational Analysis :
Situation analysis refers to a collection of methods that managers use to analyze an
organization's internal and external environment to understand the organization's capabilities, customers, and business environment. The situation analysis consists of several methods of analysis: The 5Cs Analysis, SWOT analysis and Porter five forces analysis. The situation analysis looks at both the macro-environmental factors that affect many firms within the environment and the micro-environmental factors that specifically affect the firm. The purpose of the situation analysis is to indicate to a company about the organizational and product position, as well as the overall survival of the business, within the environment. Companies must be able to summarize opportunities and problems within the environment so they can understand their capabilities within the market. Contents Micro Analysis
1) Customer:-
Citizen watches are for people; as the name suggests, Citizen Watch is made for citizen of the world. Citizen watches India has introduced four types of watches - Gents, Ladies, Promaster and Super Titanium. All four types cater to different target audience with different marketing strategy. Citizen watch in India has adopted 360 degree marketing communication and made all efforts to reach the hearts of Indian consumers
2) Employees:-
9|Page
Citizen Watch has total 18,459 employees. The employee’s growth in organization is 2.0 %. 3) Advertisement :Citizen watches is emphasizing on doing advertisement of its brand image. Recently it has done aggressive promotion. Citizen strengthens its commitment to India with their new brand ambassador Kevin Pietersen at an event in New Delhi. Kevin Pietersen is one of the finest batsmen in global cricketing arena today, his sophistication & style superbly personifies the brand. Cricket is a celebrated sport across the world today and Citizen's association with the sport by introducing Kevin Pietersen as the brand ambassador reinforces their commitment to reach out to a global market. Citizen is hereby shouldering the responsibility to help cultivate a culture of positive change and an ongoing evolution through a new chapter of watchmaking craftsmanship. Citizen Watches India also associated with the much awaited Warner Bros. Pictures film, The Dark Knight Rises, which was released on July 20 across India. The co-branded advertisement will be promoted in all multi -brand stores across the country.
10 | P a g e
Macro Analysis:1) Competitors :Today each and every industry is having competition. Similarly Watch industry is also having much competition. Since the company’s founding in 1930, CITIZEN has focused on pushing the boundaries of watch making so that more people around the world can wear superior watches. Simultaneously it is facing much competition in various markets.Following are the competitors of Citizen Watches..
GLOBAL MARKET
INDIAN MARKET
Rolex
Titan
Fossil(France)
Tissot
Casio(Japan)
Timex
Seiko (Japan)
HMT
Swiss Watches. Etc...
Lamex etc…
2) Political- legal environment:Political and legal environment are not affect much to products like watches. There are several rules related to watch manufacturing companies which citizen Watches needs to follow. This rules are mainly related to labour laws. 3) Economic environment and Technological environment :Economic environment includes such factors like per capita income, expenditure, savings etc., but watches not much expensive. So no one will hesitate or think to spend on watches as it has longer life.
Technological
environment involves technological advancement affect to the production process etc. Citizen is using two technology as mentioned above.
11 | P a g e
SWOT ANALYSIS STRENGTH
1. Citizen has sponsored and associated with prestigious sporting events such as the US open and the World figure skating championships.CITIZEN celebrate a sports milestone of sponsoring the US Open Tennis Championships for over two decades. Now in its 21st year, CITIZEN proudly remain the official timekeeper for the international competition. 2.
Citizen has been following an aggressive advertising strategy in Asia,
particularly in China to strengthen its brand image. This will have positive impact on company. 3. The solar powered series of watches are very popular among the customers. This Eco drive watches are giving first mover advantage to company. 4. Strong brand name and high quality watches helps Company to sell its product without much advertising and promotional efforts. WEAKNESS
1. The brand does not have as strong presence as compared to other watch brands in the emerging economies. 2. The company has not aggressively pursued advertising strategies as compared to some other leading brands. OPPRTUNITIES
1. The brand has a good presence in Asia and aggressive marketing can open up opportunities in India as well. 2. Getting knowledge about the demands of loyal and creating products that are desired by them in order to capture the latent demand.
12 | P a g e
THREATS
1. Japanese, high-end swiss and low end Chinese models provide tough competition to the brand. 2. Heavy price competition in the market also poses a threat to Citizen Watches. 3. Fake watches that carry the same brand name and sell cheaply. Such black market reduce the sale of company, and also decrease the brand image of company. GE M A T RI X In consulting engagements with General Electric in the 1970's, McKinsey & Company developed a nine-cell portfolio matrix as a tool for screening GE's large portfolio of strategic business units (SBU). This business screen became known as the GE/McKinsey Matrix and is shown below: The GE / McKinsey matrix is similar to the BCG growth-share matrix in that it maps strategic business units on a grid of the industry and the SBU's position in the industry. The GE matrix however, attempts to improve upon the BCG matrix in the following two ways:
The GE matrix generalizes the axes as "Industry Attractiveness" and "Business Unit Strength" whereas the BCG matrix uses the market growth rate as a proxy for industry attractiveness and relative market share as a proxy for the strength of the business unit.
The GE matrix has nine cells vs. four cells in the BCG matrix.
Industry attractiveness and business unit strength are calculated by first identifying criteria for each, determining the value of each parameter in the criteria, and multiplying that value by a weighting factor. The result is a quantitative measure of industry attractiveness and the business unit's relative performance in that industry.
13 | P a g e
Industry Attractiveness
The vertical axis of the GE / McKinsey matrix is industry attractiveness, which is determined by factors such as the following:
Market growth rate
Market size
Demand variability
Industry profitability
Industry rivalry
Global opportunities
Macroenvironmental factors (PEST). Since penetration is still low and the unorganized sector big, this industry has a
lot of scope to grow both in value and volume. The jury is still out though whether the Indian companies like Titan will lead this growth or the global majors like Seiko, Citizen etc. After all the domestic players have hitherto grown because of a retail strategy and the wining global players are clearly focused on product Business Unit Strength
The horizontal axis of the GE / McKinsey matrix is the strength of the business unit. Some factors that can be used to determine business unit strength include:
Market share
Growth in market share
Brand equity
Distribution channel access
Production capacity
Profit margins relative to competitors
The business unit strength index can be calculated by multiplying the estimated value of each factor by the factor's weighting, as done for industry attractiveness.
14 | P a g e
Within this overall context, the Citizen Group, in pursuit of steady growth, focused on further strengthening its business structure, while working out a new growth strategy. As a result of these developments, the Citizen Group reported in the consolidated fiscal year under review a decrease in both sales and profits, with net sales of 272.0 billion yen (down 2.8% year-on-year), operating income of 11.5 billion yen (down 30.1% yearon-year), and ordinary income of 13.8 billion yen (down 17.5% year-on-year). The results included net loss of 8.8 billion yen (compared to a 7.6 billion yen net income in prior year) as a result of an extraordinary loss of 23.6 billion yen , which was set aside for structural reform to be implemented under the ―Citizen Global Plan 2018‖ medium -
term management plan newly developed in February 2013.
15 | P a g e
On the basis of information collected with moderate industry attractiveness and high business strength, Citizen Watches fall in GE matrix as shown below…
CONCLUSION: The Industry has potential to grow in near future as it is having high attractiveness. The company needs to understand the market need s and accordingly introduce new product. The company must emphasis on its advertisement strategies in order to attract more market share.
16 | P a g e
