Airbus vs. Boeing in VLA market.

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I. INTRODUCTION

In December 000, Airbus formally committed to develop and launch a super jumbo plane known as the A80 at a launch cost of $1 billion. Prior to and after Airbus' commitment, Boeing started and canceled several initiatives aimed at developing a "stretch jumbo" with capacity in between its existing jumbo (the 747) and Airbus' planned super jumbo.

In addition to making the super jumbo one of the largest product launch decisions in corporate history, this figure represented 6% of total industry revenues in 000 ($45.6 billion) and more than 70% of Airbus' total revenues in 000. The inherent risk associated with this major strategic commitment is magnified by the fact that Airbus must spend the entire amount before it delivers the first plane. History has shown that many firms including General Dynamics, and, more recently, Lockheed, have failed as a result of attempting such bet-the-company product development efforts. If, however, the launch effort does succeed, Airbus is expected to dislodge Boeing as the market leader in commercial aircraft after more than 50 years of market dominance by the latter.

This paper presents an analysis of this new product commitment and, more generally, of competition in very large aircraft (VLA is defined as planes capable of seating more than 400 passengers).

II. CASE BACKGROUND

In the early 10s, Airbus and Boeing independently began to study the feasibility of launching a super jumbo. Both agreed there was a growing need for a super jumbo because of increasing congestion at major hubs. Alternative solutions were seen as either infeasible, in the case of greater flight frequency, or ineffective, in the case of flights to secondary airports. Fairly quickly they realized that there was room in the market for only one competitor.

Finally, Boeing and Airbus agreed to collaborate on a joint feasibility study for a Very Large Capacity Transport (VLCT) plane that could hold from 550 to 800 passengers. When the collaboration began in January 1, they envisioned the plane would cost $10 to $15 billion to develop (with estimates ranging from $5 to $0 billion) and would sell for $150 to $00 million each. Their preliminary demand estimate was reported to be 500 planes over the next 0 years.

In July 15, however, the collaboration ended. Airbus realized that Boeing's participation in the joint effort may have been only to stall the market so that Airbus did not develop anything itself. The two firms also disagreed at a very fundamental level about industry evolution. Boeing maintained that increased fragmentation in the form of point-to-point travel would solve the problem of congestion at major airports. Airbus, on the other hand, believed that hub-to-hub travel would continue to grow.

With the collaboration over, both competitors returned to independent study of the super jumbo market. For its part, Boeing considered two updated and "stretched" versions of its popular 747 jumbo jet. In fact, Boeing never formally announced it was going to develop the stretch jumbo yet did, in January 17, announce it was canceling the development effort. A little more than two years later, however, Boeing reversed course once again and now said it was going to build a stretch jumbo at a cost of $4 billion. The 747X-Stretch was supposed to hold up to 50 passengers and, according to Boeing, would be available by 004, two years ahead of Airbus' A80.

Concurrently, Airbus forged ahead with development of a super jumbo jet and finalized plans in 1 to offer a family of very large aircraft. The first model, the A80-100, would seat 555 passengers and second passenger model, the A80-00, would seat 650 passengers in the three-class configuration and up to 0 in an all-economy version. Airbus also planned to build a freighter version, the A80-800F, capable of carrying up to 150 tons of cargo. In terms of pricing, the A80's list price is significantly higher than the 747's list price, $0 million vs. $185 million. Developing the first passenger model and the freighter version of the super jumbo is expected to cost $1 billion.

Between June 000, when the Airbus supervisory board gave approval to begin marketing the plane, and December 000, airlines placed orders for 50 super jumbos and bought options on another 4 planes. With these orders in hand, including a number from important 747 customers such as Singapore Airlines and Qantas Airlines, the Airbus board officially launched the new plane. According to its internal projections, Airbus forecast a need for more than 1,500 planes of this size over the next 0 years, expected to capture up to half the market. In addition, Airbus estimates it will break even with sales of 50 planes (on an accounting, but not cash flow basis) and they currently have 100 firm orders and extra 100 options.

On March th, 001, Boeing announced it was stopping the development of its stretch jumbo and would begin development of a new aircraft known as the sonic cruiser (7E7). This plane would fly faster (Mach 0.5 vs. Mach 0.80), higher, and more quietly than existing aircraft. It would also be significantly smaller than the stretch jumbo (00 passengers vs. 50 passengers), though it would cost more to develop ($ billion vs. $4 billion). The sonic cruiser is not only more consistent with Boeing's predictions regarding industry evolution towards greater point-to-point travel, but also adds a third dimension speed to the capacity/range product space.

III. FINANCIAL MODELS

A Base case Go to Heaven.

To help us assess the valuation impact of various strategic actions in this sequence of competitor interactions, we built financial models of Airbus's super jumbo development project. We begin our reviews of these models with a projection of Airbus's investments in and returns from the super jumbo over a 0-year horizon. The model uses inputs from Airbus as well as from equity research reports on Airbus and EADS by analysts at Lehman-Brothers (LB), an industry consulting and data tracking service. All the data taken from the case are summarized in Appendix 1.

Before getting into the details of the model, two limitations are worth noting. First, this investment is incredibly complex and we have, by necessity, vastly simplified inputs to create a more tractable model. Second, many of the inputs are informed estimates because Airbus has released few details other than expected investment costs. Critical details surrounding pricing, volume, and funding remain shrouded in secrecy.

The discussion here focuses on the key assumptions of the model and the principal results. A first important assumption is that we estimate project value as of year-end 001. We also take into consideration that Airbus has spent $700 million on the plane by December 000 (Airbus Briefing, 000). Finally, we calculate the value accruing from years 1 to 1 (001 to 01) and did not use any terminal value.

In the base case, which is reproduced in Appendix , we assume Airbus will sell 50 planes per year in steady state after an initial ramp-up period (1 aircraft the first year, approximately 5% of production capacity then 8 for the second year which is approximately 75%) for a total of 750 planes by 01. This number is slightly less than its stated goal of capturing half the projected market for super jumbos (1/ 1,550 planes = 775 planes). By way of comparison, most analysts are predicting that Airbus will sell from 515 planes to 665 planes in their base case scenarios. More interestingly, Airbus' assumption exceeds the average number of 747's Boeing has sold over the past 0 years (4 planes per year).

We also assume the realized price in 008 will be $5 million, which will produce an operating margin of 5%. Also, analysts tend to assume that Boeing, a monopolist with more than 1,000 planes of cumulative production, has operating margins of 15% to 0% on its jumbo the 747.

Using a discount rate of %, these inputs imply a positive NPV of $1.1 million, consequently the IRR of the project is 10.47% which is higher than the discount rate. With respect to the break even point, we reach an accounting break even point (basic method applied by Airbus) at 4 aircraft sold, different than 50 announced by Airbus. On the other hand, if we improve the formula by taking into account commercial discounts or prices evolution, then we find a break even at 77 AC reached in 014.

B Pessimistic case Go to Hell.

If we stop our assumptions at the end of the first study, then the problem is solved we just have to launch the AXX!

The difficulty comes from the fact that the debate offers different opinions among specialists (economics, accountings…). Some say that this project is viable; others will say that Airbus made a big mistake.

Though we can think that people from Airbus thought twice before taking this decision, we decided to change assumptions linked to the future. Indeed, in 001, nobody can really know what the next years will bring to this industry. Moreover, in 001, AXX was not called A80 yet the project was just at its beginning, the studies were not mature which involves that design, performances or even investments linked to the dedicated tooling were not definitely frozen. All the data given in the case (Appendix 1) could be modified…just to see if Airbus was not a bit optimistic.

In this second study, we have taken 4 main assumptions.

The first one is based on demand which decreases significantly in 011 and 017. This is done to simulate either economic crises, either a new Boeing (7XX?) that come on the market, either the effect of terrorism.

The second one is about commercial discounts that have to be applied. The first 00 aircrafts will be discounted at 5%, as suggested in the case text and afterwards, each A/C will be discounted at 10 %.

The third assumption is about production costs. In 001, the industrial process wasnt defined at all and the aircraft definition was not either. All difficulties met due to the large volume of this A/C, the flexibility of parts or the tolerances concerns involved costly solutions sometimes. The assumption of increasing the production cost is therefore realistic

The fourth one is about Tax rate, which is increase every year in the financial model. All the assumptions about this study are summarized in Appendix .

The conclusion about this study could be catastrophic… The NPV found after 0 years was so negative the forecasted period has to be increased with 10 years. And even on a period of 0 years, the NPV is still negative. The basic break even does not change a lot in the method used by Airbus, as we find 0. But as this method does not take into account the real price paid by customers, the second one is more realistic facing the NPV results, as it gives a break even at 161 A/C!!!!

Some will think that this case is really pessimistic, but at the beginning of 001, who could have thought about September the 11th?

Moreover, Boeing has enough experience and resources to make a new A/C if it decides its reliable. Economic crises unfortunately also exist.

What is the good way of thinking between these extreme studies?

To help us taking the best decision as possible, we need to study the main parameters that have an influence on NPV to know their effects.

IV IMPACT OF VARIABLE DATA

This section analyzes the impact of variable data such as pricing, sales forecasts, production cost, additional investments and tax rates.

We assume that only one data changes while others remain same.

A- The key factors.

A-1) Pricing

Pricing in very large aircraft are of additional interest because pricing pressures drive the theoretical predictions that the entrant will introduce the new product (the super jumbo, in this case) and that intermediate products will be unprofitable for the incumbent.

It is useful to begin this examination of pricing by noting several basic facts about it. First, both Boeing and Airbus post list prices for their entire product lines. Boeing, for example, shows a price range for each aircraft on its corporate web site, where the range depends on the specific configuration. Second, both companies announce nominal changes to their price lists annually. Third, planes sell at large discounts to list prices, ranging from 18 40% for Boeing and 16-7% for Airbus and 5 to 40% for the first firm A80 orders placed.

With that background, several indicators of pricing pressure in the very large aircraft segment can be cited. Let start with Airbus' A80 which has a list price of $18-$40 million in 000. Given the 17-1% discount typical for the largest Airbus planes, the realized prices should be around $178-$187 million assuming a list price of $5 million. As it turns out, however, the early sales have occurred at prices as low as $15-$140 million or, in other words, essentially at "steady state" cost. While some of the early launch customers like Qantas and Virgin reportedly paid approximately $150 million per plane.

For instance (base on the current financial model enclosed in Appendix 1), if we assume that Airbus applies an average discount of only 5% on all its sales, then, we must wait until 08 to find a positive NPV for a total number of 1100 aircraft.

A-) Sales Forecasts

A--1) Demand Forecasts

The forecast of the demand is a key factor for the success of the A80 project; however, the demand can be deeply influenced by several external factors such as new entrant in the super jumbo market (e.g. Boeing) economic crisis, increase of fuel cost or, as we have recently experienced the dramatic effect of terrorism. To simplify our study, we will focus on the effect of the new comer on the VLA market.

Because large aircraft take years to design and develop, require enormous up-front investment, and have useful lives of over 0 years (some people think that the 747, for example, will have a useful life of 50-plus years), Airbus and Boeing both generate long-term demand projections for their products. Airbus's Global Market Forecast (GMF) is based on annual demand for new aircraft on each of 10,000 passenger routes linking almost 000 airports. In contrast, Boeing's Current Market Outlook (CMO) forecasts economic growth in 1 regions around the world and then uses these assumptions about growth to forecast traffic flows in 51 intra- and inter-regional markets.

Although both had decreased their growth forecasts in response to the Asian financial crisis in the late 10s, they disagreed sharply, however, about demand for the VLA segment due to their divergent view on industry evolution Boeing towards greater fragmentation and Airbus towards greater capacity planes. Table 1 summarizes their evolving 0-year forecasts regarding the number of VLA deliveries. Its most striking feature is the fact that Airbus' market forecasts have consistently been more than three times larger than Boeing's forecasts. And while both companies' forecasts fell in the late 10s, primarily because of the Asian crisis, Airbus' latest forecasts are down only 15% from their 17 high, compared to nearly 0% for Boeing's.

Table 1

0-Year Forecasts of the Number of VLA Deliveries

(Passenger Jets 500 seats only)

Boeing

CMO

Forecast Airbus

GMF

Forecast

15 n/a 174

16 n/a n/a

17 460 144

18 405 1

1 65 108

000 0 15

Source Boeing Current Market Outlook (CMO) and Airbus Global Market Forecast (GMF), various years.

The magnitude of the discrepancy is surprising given Boeing and Airbus's collaborative efforts in the early and mid 10s, a process that must have involved detailed discussion of different market forecasting techniques. It provides a sense of some of the ambiguities inherent in coming up with long-run demand forecasts for such products. And the direction of discrepancy is interesting, too Boeing's forecasts are lower than Airbus's, not the other way around.

Although Boeing's more pessimistic forecasts may represent its best estimate of future demand, an alternative interpretation is that they fulfill a strategic purpose. One possible purpose, more likely to have been important before Airbus committed to develop the A80, might have been to discourage entry by downplaying super jumbo demand. Additionally, perhaps, Boeing wanted to reinforce its point of view by signaling to third parties- investment analysts, investors, governments, customers, suppliers and even employees- that Boeing is acting responsibly in not launching a very large aircraft. Symmetrically, Airbus might be expected to overstate demand to make the case that it is acting responsibly in launching. Such signals of "taking care" tend to be most important in high-ambiguity environments. As a result, the possibility of strategic manipulation of forecasts understatement by Boeing, overstatement by Airbus merits mention, even though the statistical power with which it can be tested on its own (as opposed to in conjunction with other pieces of evidence) is limited.

Once again, if we compare the average sales of Boeing 747 over the last 0 years (4 aircraft per year) and if we apply this figure to our financial model from 010 then, we need to wait more then 10 years to find a positive NPV.

The demand is therefore a key factor for this study because its influenced by hypothetic competition, economic crises, political events, prices, terrorism etc…

A--) Production Capacity Forecasts

The demand forecast being a key factor, we chose to base our study on the sales forecast. Indeed, if demand is higher than production capacity, then some customers wont be able to be delivered their aircraft. Demand forecasts were therefore a necessary factor, but not enough to take into account Airbus production capacity. As a result, all is summarized in sale forecasts factor.

A-) Production costs

The assumption of the financial model is that the operating margin is 5%. However, if we refer to the operating margin estimated by Boeing on the 747s which is 15 to 0% then it has a consequence on the Airbus projection. For example, with a 15% operating margin, we need an additional 10 years of full production capacity to get a positive NPV. Even with a 0% operating margin (consistent with Lehman-Brothers estimate) an extra 6 years of full production/demand (we assume that Airbus sells all the aircraft produced) is needed to make the project viable.

As the operating margin is a direct consequence of the Aircraft price (which is taken into account) and the production cost, we chose to study the effect on production cost (that remains the same whatever the A/C price is, whereas the operating margin changes).

A-4) Investment expenditure

Increasing the R&D investment from $11 billion to $1 billion, an additional years of full capacity (150 aircraft) will be required to get a positive NPV with a total number of aircraft about 150…

Therefore, the investment expenditure is also a key factor, all the more as in 001, as the aircraft was not fully defined yet, the precise investment could not be definitely known.

A-5) Tax rate

The taxes paid on OPBT have an influence an NPV. Within the next 0 years, what will be their evolution? To make a rough estimate, the tax rate was defined as a linear function increasing from 8% every year.

B Study Between hell and heaven.

B-1) Process

Those key factor being defined, a third study was achieved in 5 parts. These 5 parts (.1 to .5) are released in Appendix 4.

The purpose of this study is to determine radar graphs that indicate areas defining the Heaven area where NPV0.

As these key factors consist of many other parameters, they had to be simplified by taking their average value, expressed in percentage increase relative to a reference value.

Each study changes one of these 5 parameters so that it can represent a bad situation for the project. As a result, the NPV decreases and becomes negative. During the study, the other parameters are adjusted so that they remain at an acceptable value for the project, until the NPV equals 0 (or be as close as possible from 0).

As a result, we obtain the limit value between Hell (NPV0) and Heaven (NPV0).

The radar graph is a tool that enables to measure the influence of changed parameters on the other ones, by defining the validity area o the project.

In fact, there are thousands and thousands of combination possible to design what we want to forecast, and therefore, there are many different possible curves.

B-) Limit of the process

The 5 studies were just an approach of this, but many more should have been made to have a more precise approach of the possible events and their consequences (nevertheless, the Excel sheet enables all possible combinations).

Moreover, as the key factors were simplified, their precision is lower. For example, the average sales number of aircraft does not take into account the sales distribution among the years. Additional studies therefore need to be made to compensate this lack of precision.

To be more efficient, the graphs need to be built on the same scale (which is not the case in this study due to the page size, to ensure maximum legibility).

B-) The main results.

The figure results are given in appendix 4 for each case (.1 to .5).

- Study .1 Average AC sales not optimistic.

- Study . Average Prices reduction not optimistic

- Study . Average Investments increase not optimistic

- Study .4 Average Production cost increase not optimistic

- Study .5 Average Tax rate increase not optimistic.

The main comparison between those cases can be made on the graphs and tables in appendix 4.

To summarize, comparison between those studies is given in the next table

Study Worst factor (Improved) break even Break even year Years forecasted

.1 AC sales 8 014 0

. Prices reduction 417 015 1

. Investments increase 8 014 1

.4 Production costs increase 515 017 0

.5 Tax rate increase 0 014 0

V - CONCLUSION

As a result, a first glance on the key factors demonstrates that individual extreme evolution of one factor doesnt kill the project for the next 0 or 1 next years.

The break evens change from 8 to 515 depending on the assumptions, and is reached between 014 and 017. Additional studies would probably add more precision on this.

The only factor that really causes difficulties is the AC production costs (study .4) for which NPV can just be positive after 0 years forecasted and AC prices increase.

But this parameter is linked to Airbus, not to the market. Its Airbus turn to find the right production process and ensure the correct design of the aircraft to optimize production costs, or to deal the best prices with subcontractors.

A company such as Airbus trusts in the knowledge of entities such as Design office and production and therefore, as executive management is influenced by this opinion about these entities, he probably thinks that production costs will be quickly reduced, as done on previous aircrafts.

Most of these parameters will never reach so extreme values, and all the more not at the same time. Additional simulations would demonstrate that if or factors tend to be pessimistic in the 0 or 0 years, as they would not reach so bad values, we could have a positive NPV after or 4 years.

This does not mean the project is not risky! But we can just take the assumption now that if things go reasonably wrong in the world in the 0 or 0 next years, this should not kill Airbus if the decision is taken to launch the program, moreover if governments estimate Airbus should not disappear…

As a conclusion, we decide to launch AXX.

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DSL Technologies

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DSL Technologies

DSL (Digital Subscriber Line or Digital Subscriber Loop. A technology that enables high-speed transmission of digital data over regular copper telephone lines. DSL works by using more of the capacity of the phone line. Voice and traditional modems work by modulating a signal in a limited range of frequencies (thousands of cycles); broadband sends a digital signal over a wide frequency (millions of cycles). The accelerated growth of content rich applications and online gaming, which demand high bandwidth, has changed the nature of information networks. High-speed communication is now an ordinary requirement throughout business, government, academic, and home office environments. Internet access, telecommuting, and remote LAN access are three of the clearly defined services that network access providers are offering now. These rapidly growing applications are placing a new level of demand on the telephone infrastructure. 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ATM Network Access As with frame relay the xDSL technologies can also be used to carry ATM cells to an ATM access device, where they are statistically multiplexed over an ATM backbone. XDSL Types Digital Subscriber Line, or DSL, is fundamentally another name for an ISDN-BRI channel operating at the Basic Rate Interface with two 64 kbps switched channels and one 16 kbps packet switching and signaling channel. This circuit can carry both voice and data in both directions at the same time. xDSL refers to those various arrangements in which advanced modulating techniques are imposed onto the local channel in order to derive higher throughput in one or both directions. The various types of xDSL are described in the following paragraphs. HDSL High-bit-rate Digital Subscriber Line (HDSL) derives its name from the high bandwidth that is transmitted in both directions over two copper loops. HDSL has proven to be a reliable and cost effective means for providing repeater-less T1 and E1 services over two twisted pair loops. This proven technology has already resulted in the deployment of over 300,000 HDSL equipped circuits throughout the local access infrastructure. HDSL transceivers can reliably transmit a 2.048 Mbps data signal over two non-loaded, 24 gauge (0.5mm), unconditioned twisted wire pair loops at a distance of up to 13 kft (4.2 km) without the need for repeaters. Eliminating the need for repeater equipment and removal of bridged taps significantly simplifies the labor and engineering effort to provision the service. This attribute eliminates the need to identify, modify, and verify a controlled environment, with power, secured access, and other factors needed to support repeater equipment. It also reduces the time, cost, and effort of isolating faults and taking corrective action when a failure does occur. 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This allows for easy, cost effective implementation of such services as remote cell site support of PCs, remote LAN access, distance education and training, digital imaging, or any other service which requires a larger amount of bandwidth. ADSL Probably the most common xDSL type is Asymmetric Digital Subscriber, which takes its name from the comparatively high bandwidth in one direction, with low bandwidth in the opposite direction. ADSL uses a single phone line for transmission. Many service providers have also come to recognize its potential to support a range of data applications. Additionally, ADSL's ability to operate at speeds of up to 6 Mbps positions it to support real time broadcast services and pre-recorded interactive video services; and to have multiple video and data activities underway simultaneously. ADSL supports applications with asymmetric traffic demands such as: • Web Surfing, • File Downloads, • Distance Learning. RADSL Rate Adaptive Digital Subscriber Line (RADSL) is a simple extension of ADSL used to encompass and support a wide variety of data rates depending on the line's transmission characteristics. This is advantageous in situations in which there is a lower bandwidth demand and in situations in which the line quality is less than needed for full bandwidth implementations. VDSL Very High-bit-rate Digital Subscriber Line (VDSL) provides very high bandwidth asymmetrically (up to 52 Mbps in one direction and 2 Mbps in the other) to businesses and residences with broadband access requirements over a Fiber-To-The-Curb (FTTC) network. Within the FTTC architecture, VDSL will address the last section of copper cabling to the subscriber premises. Typical distance and implementation of VDSL is 1 km @ 26 Mbps. Unfortunately, this type of xDSL is not very common because of lack of FTTC networks available today. xDSL Technology (how it works) XDSL signals are designed to maximize the rate of transmission of digital signals through non loaded twisted pairs, making use of bandwidths that can be greater than 1MHz, much greater than the 3000Hz or so allocated for voice transmission. There are several types of xDSL signal in commercial use today. Each signal type is implemented in circuitry with accompanying software, called a transceiver. The transceiver design includes the encoding or modulation scheme along with decoding or demodulation applied to convert serial binary data streams into a form suitable for transmission through twisted wire pairs. The transceivers may also employ various signal processing, equalization, amplification, and shaping techniques to adapt transmission for physical attenuation and phase distortions experienced by signals transmitted through twisted wire pairs. The transceiver software and circuitry may also use coding techniques to detect and correct noise that is present on a twisted wire pair. A variety of signal processing techniques have been developed over the past10 years to increase the bit rate of digital transmission through telephone loop twisted pairs. The following sections will describe these technologies. 2B1Q The DSL acronym was first used as shorthand to refer to the line code designed to support basic rate integrated services digital network (ISDN) transmission through twisted wire pair loops. The ISDN basic rate signal is required to carry an information payload of 144kbps, consisting of two "B" channels of 64kbps each and one packet data or "D" channel of 16kbps added for framing, error detection, and other overhead functions. The ISDN line of "U" interface operates at a raw data rate of 160kbps. In the mid 1980's the T1 committee in the United States created a standard U interface using a four-level line code referred to as 2B1Q for two binary bits per symbol carried by a quaternary symbol design. 2B1Q line code was designed to support ISDN transmission through loops of 18000ft or less, meeting voltage pulses of +/- 875V and +/- 2.625V. The symbol rate is 80000 baud and the energy spectrum used by ISDN peaks at 40000Hz. The ISDN signal is transmitted in full duplex mode, bi-directional on the same pair of wires. In order to accomplish this, transceivers must contain a hybrid function to separate the two directions of transmission. To help the receiver differentiate between far-end transmission and reflections of near-end transmission from irregularities in the twisted pair transmission line due to wire gauge changes and bridged taps, echo cancellation techniques are used. The range of operation of ISDN is dictated by both attenuation and self near-end cross talk (NEXT) from adjacent 2B1Q ISDN signals. The 2B1Q line code is sometimes referred to as a base band signal because it uses energy in frequencies down to zero, overlapping with the voice frequency band. In order to carry voice through a DSL, the voice signal is digitized using PCM techniques and carried in one of the B channels. In ISDN applications the D channel is reserved for data packets that are primarily used for call processing. In carrying simultaneous voice and data the ISDN basic rate line carries a maximum of 64kbps of data. In the absence of voice, both B channels may be bonded together to increase the data capacity to 128kbps. Both ends of an ISDN connection must use the same bonding protocol. ISDN connections are made by dialed access though a local digital switch that also terminates voice lines. QAM Quadrature Amplitude Modulation (QAM) utilizes amplitude and phase modulation to transmit multiple bits per baud. Unmodulated signal exhibits only two possible states allowing us only to transmit a zero or a one. With QAM, it is possible to transmit many more bits per state, as there are many more states. This scheme utilizes a signal that can be synthesized by summing amplitude modulated cosine and sine waves. These two components, being 90 deg out of phase, are called quadrature, hence the name Quadrature Amplitude Modulation. By combining amplitude and phase modulation of a carrier signal, we can increase the number of states and thereby transmit more bits per every state change. CAP Carrierless amplitude and phase (CAP) modulation technique is closely related to QAM in that amplitude and phase are used to represent the binary signal. The difference between CAP and QAM lies in the state representation of the constellation pattern. CAP does not use a carrier signal to represent the phase and amplitude changes. Rather, two waveforms are used to encode the bits. The encoder replaces a stream of digital data with a complex equation that symbolizes a point on the constellation diagram. Thus, for a 32-CAP, there would be 32 possible locations on the diagram, all of which can be represented as a vector consisting of real and imaginary coordinates. Consequently, 32-CAP would result in 32 distinct equations of the type, each one representing five bits of data. CAP modulation is very suitable for use with ADSL. DMT The spectrum from 0 to 4 kHz, voice band, is designated for plain old telephone services (POTS). Downstream (ATU-C to ATU-R), the spectrum from 26 kHz to 1.1 MHz is further divided into 249 discrete channels. Upstream (ATU-R to ATU-C), the spectrum above the POTS band consists of 25 channels between 26 kHz and 138 kHz. Echo canceling between the downstream and upstream signals permits reuse of these sub-channels. With the exception of carriers used for timing, each carrier is capable of carrying data. However, only those carriers with sufficient signal to noise ratio (SNR) are allocated payload for transmission. Each transmitting carrier is allotted a bit count and transmits power, based on the characteristics of the sub-channel. This results in an optimized data transfer rate for the current line conditions. DMT allocates bits and transmission power away from the induced noise. The advantages of this process are an optimized data rate and less interference with other services existing in the same sheath, due to the symmetrical nature of induced crosstalk. The DMT technique exhibits a high degree of spectral compatibility based on power spectral density, rather than absolute transmit power. DMT has a substantial advantage over single carrier modulation systems in the presence of impulse noise. DMT spreads impulses over a large number of bits, averaging peaks. Only if the average exceeds the margin does DMT produce an error -- single carrier systems will error every time a peak exceeds the margin. DWMT Discrete wavelet multitone (DWMT) technology increases the usable capacity of telephone wires and coaxial cable, allowing telephone companies and cable operators to deliver two-way broadband telecommunications services over their existing networks. DWMT uses Multicarrier Modulation. A multicarrier system uses a transmission band efficiently by dividing it into hundreds of sub channels that are totally independent and spectrally isolated. In practice, implementations of multicarrier systems use orthogonal digital transformations on blocks of data, a process called subchannelization, in an attempt to achieve the frequency partitioning shown in the figure below. By keeping the signal sub channel power contained in a narrow bandwidth, each sub channel occupies only a small fraction of the total transmission band and overlaps only with immediately adjacent sub channels. When a signal is transmitted over a long copper loop (e.g. several miles), the higher frequency components of the signal attenuate significantly more (tens of dB) than the lower frequency components. Narrowband interferers from AM or amateur radio signals also affect the transmission by destroying the signal in parts of the band. Multicarrier technology, called Discrete Wavelet Multitone (DWMT), provides sub channel isolation that is superior to DMT. DWMT uses an advanced digital wavelet transform instead of the Fourier transform used in DMT. Echo Cancellation The T1.413 standard for ADSL defines two categories of modems: frequency division multiplex (FDM) modems (Category I) and echo cancellation modems (Category II). FDM systems allocate separate frequency bands for upstream and downstream transmissions. Echo canceled systems send upstream and downstream signal over the same frequencies. Since the attenuation of a signal over a copper line increases with frequency, it is desirable to transmit data using a frequency band that is as low as possible. In an ADSL system, the lowest attenuated frequencies begin right after the POTS band. In FDM system, the lower frequency band is used for upstream transmission while the downstream transmissions are allocated to the higher attenuated frequencies. Some xDSL transceivers use echo cancellation (similar to the echo cancellation utilized in the standard V.34 28.8kbps duplex modem) to exploit the lower attenuated frequencies and increase its downstream performance. By utilizing the lower frequencies for both upstream and downstream performance, the transceiver can deliver higher downstream performance, particularly on the longer loops where the higher frequencies become severely attenuated. In an effort to promote interoperability between FDM and EC systems, the echo-canceled transceivers can be configured to operate in an FDM mode in order to communicate with a category I (FDM) modem. Conclusion the twisted pair wires between the telephone central office and end users of telecommunication services has a great deal more information capacity than used for the regular voice services. Several base band and pass band transmission systems collectively referred to as xDSL, have been developed over the last ten years that enable up to several megabits per second of data to be carried over the regular telephone twisted pair line. The xDSL family of technologies provides a wide variety of line driving schemes to accomplish and satisfy different market needs over today's infrastructure. xDSL has application in both the corporate and residential environments as well as flexibility to meet the market challenges. Since xDSL operates at the physical layer of OSI seven layers standard, it can be used in conjunction with ATM and Frame Relay technology. The most promising of the xDSL technologies for integrated Internet access, intranet access, remote LAN access, video-on-demand, and lifeline POTS applications in the near term is ADSL or R-ADSL (a rate-adaptive version of ADSL). During the past year, ADSL has concluded trials by more than 40 network service providers throughout the world, primarily in North America and northern Europe. Service introduction began in 1997, but ADSL service is still being rolled out in many areas. In the meantime, xDSL technologies and standards will continue to evolve, as will user demand for these emerging services relative to other local access service alternatives. The ability to utilize the existing telephone copper wire infrastructure as well as interoperability with ATM and Frame Relay technology, position xDSL as the most promising of the broadband access technology options for both residential and business users.

Bibliography

Bibliography: 1. Marlis Humphrey and John Freeman, "How XDSL Supports Broadband Services to the Home", IEEE Network., vol. 11, no. 1, Jan-Feb 1997, p. 14-23. 2. George T. Hawley, "Systems Considerations for the use of XDSL Technology for Data Access", IEEE Communication, vol. 35, no. 3, Mar 1997, p. 56-60. 3. Bhumip Khasnabish, "Broadband to the Home (BTTH): Architectures, Access Methods, and the Appetite for it", IEEE Communication, vol. 35, no. 3, Mar 1997, p. 58-69 4. ADSL Forum website , www.adsl.com 5. Analog Devices website, www.analog.com 6. Kimo website, www.kimo.com 7. Westell website, www.westell.com 8. www.encyclopediatech.com.

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Solar

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Major Issues Although there are numerous problems facing SDI and its leadership (short on capital, insufficient and inefficient production, poor marketing, etc.), these "symptoms" are a reflection of management's lack of business knowledge, engineering knowledge, and an overall lack of strategic direction.

Industry Definition For the purpose of this analysis, SDI is assumed to be in the bird feeder industry. More specifically, the company is in the strategic group that concentrates on high-end, squirrel resistant bird feeders.

Driving Forces (1) Increase in the number of bird watchers (growing market), () geographic influence bird watchers seem to be concentrating in certain areas, () Technological advancements in bird feeder design.

KSF's (1) Functionality (Resist squirrels/feed birds), () lawn appeal, () quality, (4) price also seems to be an issue.

SWOT Analysis of The Solar Feeder.

Strengths

1. Award-winning product innovation

. Aesthetically appealing product relative to its competition (lawn appeal)

. Very positive, enthusiastic organizational culture

Weaknesses

1. Lack of money

. Lack of management know-how and vision

. Production is inefficient resulting in long delivery delays and a product that is too expensive for the market.

Opportunities

1. There are investors with sufficient capital interested in investing in SDI.

. The market for birdwatchers is growing rapidly

. There are untapped distribution channels that could expose more potential customers

Threats

1. Demand of the product is seasonal.

. The industry has Low barriers to entry.

. There are a number of groups, including much of SDI's target market, that are sensitive to how animals (including squirrels) are treated.

Alternatives

1. Outsource SDI manufacturing

+ Increase the level of expertise in this vital function

+ Efficiency increase could lower cost of goods sold allowing price decrease

+ Free SDI management to concentrate on raising capital and marketing the product

Lose control of a vital function

Requires a great deal of coordination because of the tight technical tolerances

Possibility of technology being leaked once it is "out of house"

Requires capital that SDI does not presently possess

. License SDI technology to a more established company in the industry.

+ Plays to SDI's core competency (anti-squirrel technology)

+ Frees management from responsibilities for which they are obviously ill-prepared

+ They may actually MAKE money from their invention

Loss of control in all business decisions (depending on how the license is written up)

May be difficult to locate a suitable, interested partner

. Develop mission, vision, and strategic business plan.

+ Provides direction to a directionless organization

+ Satisfy potential investors' desire for business plan, thereby increasing capital available to finance business

+ Improve business knowledge of SDI manages

May not possess the expertise to do this without outside help

Time is of the essence and strategic planning takes time

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Causes of World War 1

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Europe in modern times has always been faced with the problem of war, and this war was bound to erupt sooner or later. Many events and countries have contributed to the outbreak which has now led to what authorities are calling "The First World War." No one has ever seen such brutality, such devastation.

The war which has broken out this summer of 114 is unlike any previous conflict. But its hard to believe that a war so big has only 5 main participants Britain, France, Russia, Germany and Austria - Hungary. European countries have failed to develop ways of settling their differences and living together in peace. The formation of rival alliances and the adoption of a policy of militarism have been the outcomes from the countries being driven apart by things such as nationalism and economic rivalry.

In the late 1th and early 0th century, two opposing alliances were formed in the most powerful nation of Europe. Conflict between them grew, ensuring that the conditions of war were present, a lot earlier than when soldiers went into action in 114.

After a victory in war against France in 1871, the German Empire was formed. The ruler of Germany from 1888, Kaiser Wilhelm II, was determined to turn his empire into a world power. In order to do so, he built up Germany's industry and its armed forces. In particular, a new navy was to be created by the Kaiser, which would rival Britain's fleet. Tension grew rapidly between the two nations as a result of this arms race.

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Germany joined Austria - Hungary and Italy in 188 to form the Triple Alliance which created three allies known as the Central Powers. They agrees to help each other in the event of enemy attack. The alliance's most powerful member was Germany, with Italy being the weakest and anxious to avoid a war as they had become a united kingdom and the Austro - Hungarian Empire was crumbling.

In the early 0th century, Britain was a great industrial nation with a worldwide empire, with the country's main protector being its strong navy, therefore the army was small and not compulsory. Britain kept a close eye on Germany's military build up to preserve its own position of power in nothern Europe.

After being defeated in the Franco - Prussian War, France lost provinces of Alsace and Lorraine to Germany, which was a great blow to national pride. The French vowed to win them back. In 104, Britain and France (with its Anti - German feelings) formed the Entente Cordiale.

From 184, the Russian Empire was ruled by Tsar Nicholas II, but its army was poorly equipped and they had no desire for war. They were compelled, however, to support the Serbs against Austria - Hungary.

107 came and another alliance was formed - The Russians, Britain and France formed the Triple Entente. This now meant that the Triple Alliance faced potential enemies to east and west. War now seamed likely... Germany believed it was inevitable.

Archduke Franz Ferinand was heir to the throne of Austria - Hungary and in June, 114, made an official visit to the city of Sarajevo in Bosnia - Herzegovina with his believed wife Sophie accompanying him. The events that took place that day finally plunged the world into a full scale world war.

Bosnia - Herzegovina had been an official part of the Austro - Hungarian Empire since 108. The Serbians and Slavs believed that their nation should be part of the neighboring Slav state of Serbia. Some people were prepared to use violence to gain independence from the Austro - Hungarian Empire - including members of a secret society known as the Black Hand.

As part of the Black hands campaign for independence they planned to assassinate the Archduke. Although 6 of the men failed, the 7th, a 10 year old, shot and killed both Franz Ferinand and his wife. Their deaths brought political crisis to Europe.

Austria - Hungary decided to take a firm stand against Serbia of whom they believed had supported this act of terrorism. The emperor of Austria - Hungary got the assurance that the Kaiser would come to their aid if war broke out and on rd July, he sent Serbia an ultimatum.

The ultimatum contained many demands. All organisations in Serbia that were plotting against Austria - Hungary were to be stopped. When Serbia replied on 5th July, it agreed to most of the demands and none were rejected outright.

However, this was too late. Austria - Hungary has already decided war was necessary. War was declared at 11.10am on 8th July 114.

The systems of alliances began to operate at once. At the present moment Germany is backing Austria - Hungary, although Italy is remaining neutral. Russia has sided with the Serbs and France is backing Russia, its partner in the Triple Entente.

We have a report from a young soldier fighting for Germany who managed to briefly talk to our reporters.. "When we set off for France this month, we expected an easy victory and a rapid return home. We were told the trip would be an "Excursion to Paris." But there is little to none truth in that. The world is in chaos and there is no one to point the finger at, no one to blame. If only it were that easy..." Anonymous

If only it were that easy... Everyone is to blame for this war, we only hope it won't take as long to end as it took to start.

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Titan-marketing strategies

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INTRODUCTION

Titan, a Tata group company entered the watch market in 187. Since then it has developed into one of the most recognized brands in India. In fact, in a recent survey conducted by A&M, Titan emerged as the top brand in the consumer durable segment.

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HMT, the undisputed leader of the wristwatch market before Titans entry completely neglected the quartz watch segment. Titan successfully filled this gap. Its wide range of designs, high profile advertising and distribution network helped it gain a substantial market share in a short span of time.

The Titan brand was essentially positioned as a premium brand. As a result the lower segment was left uncovered. After it entered into a joint venture with Timex, it made inroads into this segment too. Internationally, Timex is seen as a mid-priced quality watchmaker. Its association with Titan in India led to wrong segment targeting. Here, the middle and higher income groups were buying its watches. In 18, this association came to an end erasing Titans presence in the lower segment. Since then, it has launched the Sonata range of watches that is in direct competition with the Timex range.

Marketing Data

Market share

From its inception, Titan decided that it would be the shaper of the watch industry and not an adapter. They created competitive advantage through differentiation. They first concentrated on technological leadership. The Tatas took decisions they will manufacture only quartz (analog and digital) and not mechanicals, and they would set up state-of-the-art plant to manufacture watches in a wide variety of designs and prices. HMT and local players had always looked at the functional utility of the watch. Titan was first in India to introduce the 'style' concept. They projected the watch as a fashion accessory. They clearly identified that their main competitor was not HMT, but the gray market.

A firm differentiates itself from its competitors if it can be unique at something that is valuable to the buyer beyond simply offering low price. Differentiation allows a firm to command a premium price, to sell more of its products at the same price, or to gain equivalent benefits such as greater buyer loyalty. Differentiation leads to a superior performance if the price premium achieved exceeds any added costs of being unique.

At Titan the products were developed in such a way so as to enhance quality and features to increase buyer value. This was the perfect example of differentiation through technological leadership and product technological change.

In the initial years Titan chose to concentrate on the higher end of the market, which was responsive to the 'style' element of the watch. Also this segment of the market was relatively price inelastic. This was done so as to build the brand image of Titan as manufacturer of good quality stylish watches. Over the years the Titan brand and its signature tune Mozart's Fifth Symphony has become one of the most recognized in Indian consumer durable goods segment.

10s saw the liberalization of the Indian economy. There were two trends in the watch industry after liberalization, viz. the giant of the watch industry changed from HMT to Titan, and small manufacturers have gained strength in the market. Why did this happen? Mainly because times changed, but HMT did not. In fact when the other rivals were running a 100 metres, HMT was walking backwards. HMT lacked a clear market strategy or research. It failed to develop a good network of loyal and honest dealers. There was rampant corruption in the marketing division. HMT also failed to provide a basic feature that any products must always satisfy quality. In fact of all the watches that HMT sold in the market, 40% came back within months for repairs. About 7% of the watches were rejected at the dealers' level because of the manufacturing defects. Being a public sector undertaking, HMT had to dance to the tunes of the political bosses. It was overstaffed and grossly inefficient with 60% of the sales being expended as salaries. Last but not the least, though HMT had about 45% market share in the early 10s, its share in the high margin high growth quartz segment was a mere 18%. This led to a sudden and drastic decrease in HMT's total market share in mid-0s.

During this period, the unorganized sector also grew very fast almost 55% of the demand in the total market size of 0 million watches was being met by the unorganized sector. With the import duty reduced to 5% (earlier 50%) and with the import license for watch movement being easy to obtain, many smalltime players cropped up. These small players offered competition to Titan on the price front.

Titan once again showed that it was a shaper and not adapter. Over the years Titan had built a formidable distribution and support network. Titans customer orientation was reflected through their advertising campaigns. Whereas HMT called themselves timekeepers of the nation, Titan told the masses if you have the inclination, we have the time.

Brand share

Domination by unorganized sector and Declining market share

In the premium segment, the company has to face the likes of Omega, Swatch etc., while at the lower-end of the watches segment the company has to compete with the unorganized segment. Moreover, the margins are wafer-thin in the low-price segment.

The company is loosing its grip over the mid-price segment in which it had been an undisputed leader. Its erstwhile partner Timex is giving strong competition and has been gaining market share (increased from 18% to %) at the expense of Titan. Titan has already started price-cuts and exchange offers in this segment to keep its hold over it.

Identification of customer usage

Titan has segmented the watch market and clearly identified clearly the needs of each group. The strategy that Titan has adopted in recent years is that of focus. It has segmented the market into different need groups and tailored its strategy to the exclusion of others. By optimizing its strategy for the target segments, it seeks to achieve a competitive advantage in its target segments.

Market segmentation is concerned with identifying differences in the buyer behaviour, allowing a firm to match its capabilities with distinctive products and related marketing programs. Market segmentation tends to focus on the marketing activities in the value chain in which Titan commands a very formidable position. This also allows Titan to find out how it should serve each segment.

Titan has tried to achieve a balance of cost focus and differentiation focus. By this we mean that in the lower end (Popular segment) of the market, it seeks to achieve a cost advantage by exploiting the differences in cost behaviour. In the mid- and higher-end (Mid and Premium segment) of the market, it seeks differentiation by providing better designs.

To achieve this Titan has segmented the market and launched a brand or a sub-brand to meet the needs of each segment. Thus it aims to be a market leader in each niche it aims to serve.

Consumer demographics

How has Titan segmented the market?

Titan has segmented the market on the basis of the following variables

Demographic

Ø Age children, young adults, adults

Ø Social class upper, middle and lower

Psycho graphic

Ø Lifestyle professionals, affluent

Ø Personality adventurous, cool, traditional

Behavioral

Ø Benefits functional, attractive, reliable

Ø Occasions gifts, special occasions

Geographical

Ø Region Europe, Middle East

Targeting segments

Titan goes for full market coverage with its different sub-brands. The different market segments that it targets include

Upper premium segment This range includes Tanishq and a new brand (soon to be launched) , Phillipe Charriol. These watches are in the price range of Rs. 0,000- Rs. 1,00,000.

Premium segment This range includes Insignia, Royale, Regalia and the recently launched Nebula. The prices are from Rs.6000-Rs.10,000.

Middle segment This range has Fastrack, Raga and Dash! These watches are priced between Rs. 750- Rs.4000

Lower segment The Sonata and Exacta range caters to this segment. The prices vary between Rs.00-Rs.100.

Speciality segments These are special segments that tend to overlap with the others, because they are not mainly differentiated on the basis of price. For instance, Fastrack Digital caters to those looking for a functional watch, PSI 4000 to the adventurous and thrill seeking.

User positioning Titan caters to several user groups- children (the Dash! Range), sportspersons and adventurers (PSI4000 and Fastrack range). The Fastrack range is seen as being contemporary, sturdy and reliable. The advertising, packaging and merchandising of this range is young, vibrant and 'cool' (the ad line says Cool watches by Titan)

Price positioning

In the overseas market, especially in Europe where it is competing with Swiss and Japanese watches, it is positioning itself as value- for- money reasonably priced (less than Swiss watches and higher than Japanese), attractively styled and of good quality.

The various brands of Titan and the price range in which they fall are tabulated which follows

Brand Price Range No. Of Models(Approx)

Insignia Gents Rs. 750 to Rs. 7750 8

Insignia Ladies Rs. 1600 to Rs. 7500 8

PSI000 Gents Rs. 1780 to Rs. 7500 61

PSI000 Ladies Rs. 800 to Rs. 450 6

Regalia Gents Rs. 180 to Rs. 770 157

Regalia Ladies Rs. 175 to Rs. 7770 168

Royale Gents Rs. 60 to Rs. 810 1

Royale Ladies Rs. 110 to Rs. 80 1

Classique Gents Rs. 850 to Rs. 450 68

Classique Ladies Rs. 565 to Rs. 0 161

Spectra Gents Rs. 1140 to Rs. 180 57

Spectra Ladies Rs. 650 to Rs. 1410

Exacta Gents Rs. 600 to Rs. 1170 48

Exacta Ladies Rs. 55 to Rs. 800 5

FasTrack Gents Rs. 550 to Rs. 140 57

FasTrack Ladies Rs. 850 to Rs. 1050 11

Technology Rs. 50 to Rs. 8170 55

Raga Ladies Rs. 140 to Rs. 4000 1

Nebula Gents Rs. 850 to Rs.1500 8

Nebula Ladies Rs. 550 to Rs. 650 4

Bandhan Rs. 1675 to Rs. 8085 4

Sonata Gents Rs. 5 to Rs. 115 00

Sonata Ladies Rs. 50 to Rs. 1100 6

Sonata Pair Rs. 145 to Rs. 000 10

Dash Boys Rs. 5 to Rs. 5 15

Dash Girls Rs. 50 to Rs. 50 1

Source Tradepost, March 000

New product activity

The outcome of the company's R&D is the world's thinnest watch, Titan Edge, that is all set to shore up the company's brand equity amidst growing competition. Added to this, Nebula Gold series has been introduced to target the premium segment.

Product Review

Performance and physical characteristics

The various sub brands that collectively make up the time keeping giant we know as Titan

Sonata

This is Titans most basic range, offering reliable, everyday-working watches reasonably priced between Rs 50- Rs 00. A case of socio-economic segmentation. These are perhaps HMTs most direct competitors, offering more or less similar attributes to those offered by HMTs watches.

Nebula

Originally part of the Tanishq line, Nebula became part of the Titan line when Tanishq was made exclusively a jewellery line. One of Titans most expensive range of watches, they are still marketed as solid gold watches under the ad-line, The Jewelers Collection, a case of Geoclustering technique of segmentation. Priced between Rs 6000 -Rs 1,500 these watches are rather obviously targeted at the upper-most end of the market, in competition with brand such as Rolex and Cartier.

Dash!

These are bright, colorful watches aimed at children aged 6-14 years, offering the advantage of a recognized, high quality brand, economically priced at Rs 50 onwards. These watches are marketed under the ad-line Wow Watches from Titan thereby making them instantly appealing to their target audience. Dash! has created an entirely new market segment in the watch industry and dominates it. Recently however, with the entry of Swatch, with their children-oriented Pop-Swatch watches, Dash! finally has some competition. Dash! is still likely to dominate this segment however, as no other brand is quite ready to offer such competitive prices.

Fastrack

These are Titans youth-oriented, style watches, priced between Rs 550-Rs 1500. Incorporating the all-new international frosted look, these watches offer contemporary styles that are fresh and vibrant, for both men and women (Geoclustering segmentation). The all-steel body comes in a variety of frosted finishes- steel, gold ion plated and black ion plated and with PVC, leather and cool metal straps. All watches are highly water resistant, ranging from 50m to 100m. Their ad line, Cool Watches from Titan speaks volumes about the segment it is targeted at. Fastrack recently launched its digital range as well, and now counts among its main competitors Sitco and Casio (in the digital range) and Esprit and Swatch (in the analog range).

Classique

These watches are targeted at the older, male segment of the market, and profess timeless elegance through a combination of fine leather straps, clean classic dials and sleek cases, thus making it, A perfect fit for formal wear. Classique is the embodiment of everything that is everlasting yet contemporary. These watches tend to be generic in their simplicity, and find no real competitors, save for perhaps HMT. These watches are priced between Rs 550 to Rs 000.

Insignia

This world watch priced between Rs 4000- Rs 7500, is an eloquent fusion of design, craftsmanship, and precision engineering. An Insignia is 10 times more complex than a regular Titan watch, incorporating the best of materials; high-grade anti-allergic steel, scratch resistant sapphire crystal and special hard gold plating. Individually numbered, each Insignia comes with a two-year international guarantee.

Psi 000

A range of contemporary sports watches, aimed and marketed as a tough, outdoor, adventure brand (Psycho graphic segmentation). Made from non-allergic stainless steel, these watches have such authentic sports features as luminous dial markings, rotating timer rings, upto 100m water resistance, and screw in crowns to withstand pressure while swimming. As is evident from their advertising, Psi 000 are positioned in direct competition with similar foreign brands such as the Swatch Irony. These watches are priced between Rs 800 to Rs 7500.

Raga

These are exclusive watches for women, with design elements that are first of their kind. An exciting collection that incorporates traditional Indian motifs, with such innovations as interchangeable straps and a unique three in one watch. Designed exclusively for use with Indian women's formal wears such as sarees and salwar kameezes, this range is truly one of a kind and has no competitors in its segment. These watches are priced between Rs 1400 to Rs 4000.

Royale

This stunning collection comprises of alluring gold plated cases matched with exquisite gold plated straps, and includes designs to suit everything from simple to dressy evening wear. These watches are priced between Rs 60 to Rs 000.

Regalia

Priced at Rs 5000 upwards, and marketed as Incredibly eye catching…magic in gold, these finely crafted watches combine sleek cases and patterned dials with special appliqu s flowing into intricately designed bracelets. This is Regalia… a special watch for a special occasion. With a unique combination of all gold and bicolor looks, this range represents the essence of dress wear (Geoclustering segmentation). Competitors include foreign dress watch brands such as Tissot, Piaget and Rado.

Spectra

A truly unique collection of watches, which combines the sturdiness of steel with the richness of gold. International in its styling, this range is for those who look beyond the ordinary. These watches are priced between Rs 650 to Rs 100.

Promotional plan

Present promotional strategies;

1. Titan Positions the Generic Device-Watch-As an Ornament

Titan positions the watch, which till then was a commodity-like product, into an ornament one would like to wear. It also incidentally showed 'time', that's all! Titan positioned its watch as a part of dress and ornamentation, rather than as a product used for telling time. Titan's positioning strategy was so aggressive that it promptly resulted in a change in the consumer's very perception about watches. They started seeing a watch more as an expression of an individual's taste and style than as a mere timekeeping device. As a result, demand for watches, which were high in style and design, started growing. This was the real success factor of Titan's positioning strategy.

. Distribution and Promotion Further Strengthened

Titan now strengthened its distribution and promotion. By 001, the number of Titan out-lets was hiked to 6000 from 5,500. Exclusive, World of Titan shops went up to 140 from 115, and multi-brand, Titan Time Zones, went up to 150 from 11. Titan allocated an advertisement budget of Rs.4 crore, for fiscal 001 as compared to Rs.5 crore, the previous year.

. Always remember the USP

A USP (Unique Selling Proposition) is not only what gives the customer a reason to buy the brand, but is also what helps him distinguish the brand from its competitors. Titans USP is two fold, and can perhaps best be described in six words. An Indian company offering international quality. This works for Titan in two ways. First of all, its emphasis on international quality successfully negates its major Indian competitor, HMT, who is still perceived as a company offering solid and reliable, yet singularly unstylish and staid looking watches. Secondly, with the plethora of foreign brands available in the country today, Titan emphasis on being Indian enables it to effectively meet their threat. Interestingly, while Titan has never actively promoted the fact that its parent company is the Tata Group, at the same time it has never really done much to hide the fact. Thus while capitalizing on the Tata name, it has built its own identity as an Indian brand offering high quality watches at prices significantly below those of comparable foreign brands.

4. Don't neglect Public Relations

Public Relations, or PR, are vital to the success and survival of any brand. Unfortunately, its value as a brand building tool has more often than not, been undervalued. Newsletters, event and entertainment sponsorships, and other forms of PR help to define the personality of a company or brand, positioning it as a good corporate citizen, and someone nice to do business with. In keeping with Indias obsession with cricket, Titan has often sponsored cricket tournaments, including the now legendary 17 Titan Cup. Titan also sponsors a number of popular television programmes, a prime example of which is Star Worlds The Practice.

Proposed promotional plan

Though being voted Indias #1 company is an honor any company would cherish, we feel that with the surge of foreign entrants into Indias watch market, Titan cannot afford to rest on its laurels. Titan should prepare for a war…A MARKETING WAR.

Before elaborating upon the strategies Titan can adopt in the future, it is important to understand that the best strategy for a market leader is to play defense. However, a defensive strategy should by no means be confused for a passive one. In their famous book Marketing Warfare, Al Ries and Jack Trout identify major principles of defensive marketing warfare;

1) The best defensive strategy is the courage to attack yourself The best way to improve your position is by constantly attacking it. In other words, Titan should strengthen its position by introducing new products that make obsolete its existing ones. It is better to take business away from yourself than have someone else do it for you. This puts the competition in a tough spot as a moving target is harder to hit than a stationary one. Titan should continuously innovate and introduce new models. The importance of R & D (Research & Development) has been realized only recently. In recent times it has been R & D that has provided the edge to both products and brands.

However this strategy can be applied mainly to the lower range or digital range of Titans watches, as the concept of class remains constant over a period of time. Attacking yourself may sacrifice short-term profits, but it has one fundamental benefit. It protects market share, the ultimate weapon in any marketing battle. Any company that hesitates to attack itself usually loses market share and ultimately market leadership.

) Strong competitive moves should always be blocked Most companies have only one chance to win, but leaders like Titan have two. If Titan misses an opportunity to attack itself, it can often recover simply by copying the competitive move. However, the leader ought to move rapidly before the attacker gets established. There is no room for oversized egos or complacency in marketing. Blocking works well for a leader as it takes time for an attacker to make an impression in the mind of the target customer.

For example if Timex comes out with a new technology watch Titan should counter the move by introducing a similar line of watches. In marketing warfare, psychology is always on the side of the larger competitor. It is thus always better to overcome than to undercover.

We therefore feel that it is only through the proper implementation of such defensive techniques that Titan will be able to stave off the threat of the numerous foreign brands in the country today.

In closing, we sincerely hope that we have been successful in our endeavor to not only discuss the various techniques employed by Titan Industries on their road to being Indias favorite brand, but to have also shed some light on our perspective of marketing in general.

CONCLUSION

The well formulated marketing strategy enabled Titan achieve its main objectives; Carving out a sizeable market share within a short span of time; building a powerful brand; developing and efficient retail chain; and making attractive profits from the very first year onwards. During the year 1-000, Titan sales turnover came to Rs.60 crore; watch business accounted for 76 per cent of this turnover, and the balance was met by jewellery. Net profit was Rs.1. crore and the watch business generated 0 per cent return on capital employed.

BIBLIOGRAPHY

BOOKS

Ø Dholakia, Nikhilesh; Khurana, Rakesh; Bhandri, Labdhi; Jain, A.K.; (1) Marketing management, cases and concepts, Chennai, Mc Milan India Limited, rd Reprint.

Internet Article

Sabarwal,Arun(00)Titan[online] Available

Ø http//www.Titanworld.com,(00, december,8)

CONTENT

INTRODUCTION……………………………………………….1

MARKETING DATA ………………………………………….-5

PRODUCT REVIEW……………………………………………6-7

PROMOTIONAL PLAN………………………………………..8-

CONCLUSION……………………………………………………10

BIBLIOGRAPHY…………………………………………….…...11

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