While no single brand could fight us on ourturf, competition,as a whole, hasrepositioned Titan.

The top echelons of the Tata Group have seen two clear personality types. One, with all the flair and panache, visible in the likes of Russi Modi and Dr JJ Irani, and the other comprising people such as Bhaskar Bhat, managing director, Titan Industries Ltd, who are firmly rooted to the ground. Unlike his predecessor Xerxes Desai, Bhat is decidedly low profile. But it is Bhat - who joined the watch division of Titan way back in 1983 - who has been a key person in building the Titan brand in India. And he is a man who has no doubts about the way ahead for his company, which he admits to Shamni Pande of agencyfaqs!, was beginning to slide into its "mid-life crisis". Here are some excerpts from the interview.

Edited Excerpts

It is a very hard act to follow… there is no question about it. He was truly the founder of this company and set it on course to become truly great with great brands. Two businesses were literally redefined by him. He is an example not easy to emulate. I am doing what the company needs to do and which I am comfortable doing.

We are moving into the future confidently, but we are also taking cognizance of the present and solving the problems of the past. There are three areas one needs to look at. There are the problems of the past, and there is the present that has to be managed. And there are opportunities in the future that one needs to grab. We have to do all three well.

We made big investments in certain areas in the past - particularly in Europe. Thus there's a hangover that needs to be dealt with. We mentioned it in our annual report last year. There is also a very big debt-equity problem - that has again come from the past, and which needs to be solved. But the company has great assets as well. We have good people, terrific businesses and brands, great distribution and we are growing.

For the present, we have to focus on two areas, to ensure that both the businesses are on the growth path. The growth of the jewellery division was always good. It has been growing at over 30 per cent, way ahead of most other branded goods in the country in the last three years. The problem was with watches. It declined last year, though this year it has started looking up.

We also had a problem in our cost structure. We are trying to deal with it by initiating a number of cost reduction exercises that will make us much stronger. You must be aware that we have just completed our very successful VRS. There are many other measures such as this to make us more lean and fit.

We have also crafted a very compelling strategy for the future, which includes converting the jewellery business into a retail business, transforming the watch business into a two-brand - mass market and mid-premium market - business. Many have asked me, what is the one thing that you will do different? The sensible thing to do is to take advantage of your strength to build the future. The result could be dramatic, but the acts in themselves may not be so. We have taken the help of external consultants such as McKinsey, Quadra and Interbrand to evaluate our Titan brand, and in the process we have gained many interesting insights.

What emerged from our consultations with these agencies is that the brand Titan was facing a mid-life crisis. We were leading the market, but for a while we had stopped considering ourselves as market leaders. This does not mean we stopped being the market leader in terms of our market share. Being a market leader and leading the market are two different things.

The Titan brand has three attributes - leadership, innovation and pride in the consumer's mind. Research tells us that even to an up-market SEC A customer, Titan means style and elegance. Where we fell short was in these "softer" attributes. Primarily because innovation was less frequent and less visible from Titan in the last few years (here I am talking about watches).

However, we are back on the track with innovation, which is the essence of Titan, apart from leadership and pride.

We have 75 per cent market share in the mid-market category; so obviously there are still some who are not with us. It would be silly on my part to sit here and keep arguing that the customer is stupid to go and buy a Swiss watch. The fact is that such customers have five Titan brands and maybe one Swiss brand. The important thing is that the affection for the brand is still very high. With the launch of brands like Titan Steel, Edge and Fastrack we are trying to bring the magic back into the brand. That the strategy is working is evident from the fact that Titan is back on the growth path. We are growing in value as well. In fact, our value growth is higher than our volume growth. This means the sale of brands for which the unit price is higher is also going up. Not just that. Our mass-market player Sonata is the No 1 in its category. Yet, we have not invested much on it. So the opportunity to invest and grow that market is still very high.

Fundamentally, in the watch market Sonata will address the first-time watch owner. Titan, as it used to do in the past, will address the multiple watch owner. Price and distribution, above anything else, will drive the mass market. In the premium segment we will drive growth through innovation at various levels - at the point of retailing, in the product and in our advertising.

You are absolutely right! But let me correct you on one score. Chinese players do not dominate the mass end, it is the grey market that does so. The challenge really is to recognise the needs of the mass end - constantly introduce attractive designs to lure buyers.

The Sonata customer is really a mass-market guy. We are not assuming that he does not want style. You are absolutely right when you say that there are a lot of attractive and affordable designs available today. But there is a large market out there, comprising non-watch owners, which we address through Sonata. Look at the figures. There are only 200 million watches owned by 190 million Indians; 800 million people don't own a watch! Granted, there are a lot of children and old people in that set. Leave them aside and you have close to some 200 million Indians who do not own watches. For them owning a "good" first watch is important. Having said that, I acknowledge that there is also a market for cheap and fashionable watches. But Sonata is not really aimed at that market.

We have still not put enough investment in Sonata for a semi-urban person to consider it a good wedding gift. We could import Chinese goods, brand them Sonata and sell it here. But we didn't. It's like Bata, Arrow or Madura Garments choosing not to sell in Linking Road (in the suburbs of Mumbai, famous for cheap and fashionable wear). These are branded products, offering quality at a certain price. Marketing strategy is about making those choices.

In short, being a market leader does not mean you will serve 100 per cent of the market. Yes, we will not give up the chase on product innovation, coming up with more luring models of Sonata to compete with those unbranded products, but it will not be the most important element in our marketing mix either. Because the most important thing for us is quality. I started answering your question by saying that the challenge for us is to constantly offer happening designs at affordable rates. Till now we did not really invest in the brand Sonata as it had the ability to push through on its own into the market.

We have introduced a number of products, but they are not differentiated enough from the players who have come in recently, like Esprit, Swatch, Rado or Tissot. These brands are beginning to define the look in the market, whereas earlier, it was Titan that defined the look. Why? Because we did not really showcase our new products enough. So it is both communication and the slow pace of product introduction that contributed to the perception of Titan being "not happening". That is why we went vigorously forward with Titan Steel, which has the most contemporary look in a watch, or even Edge that is a technological marvel and feeds into the innovation and pride part of the brand-building efforts. Nebula at the high end - solid gold watches - again takes the proposition of innovation, pride and value-for-money forward. No Swiss brand can offer solid gold watches at our prices. Nebula is a very compelling offering; starting from Rs 6,000, it goes all the way up to Rs 35,000. Each of these ranges is happening in its own right.

We are working at focusing our ads sharply. Look at our Edge communication. It has been the most successful campaign we have had in a long time. We have exceeded all out targets. It has contributed a great deal to the Titan brand image. The claim of it being "the slimmest watch in the universe" feeds into the pride aspect by harping on the technical novelty. Mind you, this is not my opinion. Respondents to our survey have said that this has managed to break clutter. Granted, for Fastrack it has been Narain Karthikeyan and the name, and the product did not come through well enough in the ads. So now we have started using the press to bring the product to the consumer along with the brand. Titan Steel has been very visible in the press, on television and we broke away from the normal Titan execution, which is soft and elegant. It was a very different ad, it was sharp and showed nightlife et al.

We need to scale up our advertising. The sub-brands are tightly focused towards their target segments, but the stress on the umbrella brand has been low for the last three or four years. We spent more money in 1996 than in 2000. Hence, one of our important strategies is also to scale up our ad spends significantly, to make all our new products visible. Simply because the desire for a brand is largely driven by its advertising. The reason why we have grown despite going slow on advertising is because of our excellent distribution network. While no single brand could fight us on our turf, competition, as a whole, has repositioned Titan.

But we are trying to come back. Last year, we spend around Rs 25 crore on communication, publicity etc for watches. A 20 per cent increase on this would bring us huge mileage.

I am not talking in term of doubling or tripling our spends. There are a lot of wrong notions in a young brand manager's mind about advertising. It's like an iceberg and only one-eighth of what a brand does is visible; seven-eighths is under the watermark. And this has to do with supply chain, distribution, quality, the processes of listening to the customer. It is the linking of all those activities, which deliver value to the customer. But typically, most get carried away. You're right in saying our communication is not cut-through, but it is also important for a company like ours to be continuously customer-centric and not be led by competition. The competition is there for us to understand the market place. But at the heart of the matter is the consumer. If we understand the consumer needs correctly, if we drive his need, then competition shouldn't matter.

You can look at this the other way round also. You can say competition is there for us to beat, and in that process we'll serve our customer. But we do not believe in that. We do not want to remove our eyes off the ball. That is why there is so much affection for our brand.

Tanishq is a mainstream player in branded gold jewellery. If we have to be like Oyzterbay, then we have to reduce our size by about 10 times. It is equivalent to one of our small sub-brands. We already have a complete bouquet of offerings. We have the 'G' collection; we have FQ - which is not sold in the main Tanishq boutiques. It is sold in shop-in-shop department stores.

As a company, we are planning to double our turnover in the next five years. We are looking to more than quadruple our profits. Jewellery is growing at over 40 per cent this year; we will maintain that rate. Watches have started showing a growth of 10 per cent from a state of decline in the year 2000. While Sonata is the biggest in terms of volume, it is Royale and Regalia (the gold-plated watches) that are our biggest value contributors.

Meanwhile, the domestic market will continue to be our thrust area. Besides this, the middle and the far east are the two regions outside the country that have grown in a big way for us, where we will continue to invest and grow. Europe is a containment strategy, but we will continue our presence there in a small number of markets.