< In Conversation >
President and CEO of TAG Heuer Jean- Christophe Babin tells Mitrajit Bhattacharya that the strength of the brand is in sticking to the basics and having a variety of offerings at the same price point
First and foremost, how are you approaching the so-called meltdown?
At TAG Heuer I am looking at whom I am selling to. My target group is the business community, the executive class, excluding the ultra rich. TAG Heuer, even during the great times, offered to wait and tried to stick to the value-formoney policy. We never took advantage of easy times to boost our prices artificially. Last year we launched the Grand Carrera for about Rs 2 lakhs in retail price. At the same time we renewed a lot of the Formula One brand which starts at Rs 30,000 and this year again in Basel, we have additional news on the Formula One, but at the same price range. The product that we are introducing with Shah Rukh Khan is the best in the category, in the range of Rs 1,50,000. We offer at each price point, the best value-for-money. My retailers tell me that my price is better. There is nothing better than this watch for Rs 1.75 lakhs. There is nothing better than the Formula One at Rs 30,000 which is an advantage as people are a bit more cautious about spending. If they can get the latest model at the best price, accompanied with very good customer service, it’s reassuring. Look at the new Carrera; it’s been there for 40 years in the market, it’s better than ever and costs Rs 1.75 lakhs.
How was 2008 and what are your forecasts for 2009?
2008 was good even though there were really two different parts; the third semester was very much in line with 2004, 2005, 2006 or 2007. I am presently talking about Europe and will come to India later. The second half, that is October onwards, was more difficult because of the slowdown in USA and US-related markets, including Latin America. This acceleration of slowdown has made the second half much tougher than the first half. So all in all, it was a good year but if I look and project this on 2009, it will surely be a challenge. I see no reason why short-term situation will improve much in the US. It might stabilise but it won’t boom back rapidly to 2007-08 levels.
Do you foresee a negative or a positive growth?
I believe that even if we do a good job in US this year we are unlikely to sell the way we did last year. It will not be reasonable to believe that we will grow.
Talking to different CEOs I realised that everyone is returning to the core values of the brand. I also feel that somewhere down the line there will be some realignment in geography because USA and Japan, the two biggest markets, are more affected than the rest. This is even more relevant for TAG, as these are huge markets for you.
At TAG Heuer, we stick to the basics; we never did fancy shapes or too much of bling. We were always steady. Last year we marketed Grand Carrera, Monaco, F1 Aquaracer, etc. We have been doing this for 40-60 years. We have a close association with some of the best car brands like Mercedes or Audi, to Formula 1 with McLaren which won the world championship with Lewis Hamilton… we have stuck to our basics.
You have invested a lot in the lines over the years.
We did lot of streamlining in the 1990s to come to these five lines which are really cemented into our roadmap. We won’t change these lines. They will be improved, like Porsche does for the 911. Our communication is very clear: ‘What are you made of?’ Since 2000 we have had the same ambassadors: Tiger Woods, SRK and Maria Sharapova. Brad Pitt made way for Leonardo DiCaprio. Apart from Lewis Hamilton, we have Räikkönen from Ferrari. So in the racing part, we have two best drivers in the world, one from McLaren and the other from Ferrari. We have Bollywood represented by SRK, Hollywood by Leonardo, golf by Tiger Woods and tennis by Sharapova.
Do we see more investments in Asia, especially China and India?
We had started to aggressively invest in China and India very early on. So to rebalance our investments by geography, a ten years perspective was taken five years ago for India and China and that will continue.
Are you already committed to India?
Yes, when you walk down the street or a mall in India, the brand is much more visible than it used to be earlier. Advertising is powerful. You can see the latest model on the point of sale the same day you see in New York.