Swatch case

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The Birth of Swatch Case Study

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Swatch case

  1. 1. the birth of TEAM 8 25005 Amit Seth 25006 Anandh Krishnan CK 25015 Chellaram 25021 Sachin 25027 Karthik Prasad 25030 Mithun Dutta 25037 Palaniappan 25038 Prabhu Raj 25056 Surenderan E
  2. 2. <ul><li>Swiss Watch Industry background: </li></ul><ul><li>Watch making – Skills of a master jewelry maker & micromechanical engineer. </li></ul><ul><li>Swiss dominated the watch industry because of their centuries-long history of jewelry making expertise. </li></ul><ul><li>Emergence of Low-cost Competition </li></ul><ul><li>U.S. Time – introduced line of disposable watches(TIMEX). </li></ul><ul><li>Low Cost & Durable </li></ul><ul><li>By 1950’s 1 out of 3 watches in US is Timex. 1970 most sold watches in world. </li></ul>
  3. 3. <ul><li>The Introduction of Quartz Technology </li></ul><ul><li>Swiss Watch Industry in Free Fall </li></ul><ul><li>Societe Suisse de Microelectronique et d’Horlogerie (SMH) </li></ul><ul><li>ASUAG & SSIH </li></ul><ul><li>Hayek, the CEO of Zurich-based consulting firm, merged 2 companies - SMH. </li></ul><ul><li>Shift in strategy – decided not to retreat. Aimed at broad market presence and at least one profitable, growing, global brand in every segment. </li></ul>
  4. 4. SWATCH Origins <ul><li>Swatch concept </li></ul><ul><li>Low end product initiative was a quartz watch “ Swatch ” (Second Watch) </li></ul><ul><li>Production cost to Asian level – focus on labor(<10% of total cost) & automated production line. </li></ul><ul><li>Number of individual parts slashed to 51 from 91. </li></ul><ul><li>Swatch – encased in cheap plastics & have mass production & strong position in the low end. </li></ul><ul><li>Unique message – Not selling a consumer product or branded product, but a emotional product. </li></ul>
  5. 5. Positioning Breakaway: Swatch does not fit into either sub category
  6. 6. Product <ul><li>Swatch Introduction </li></ul><ul><li>Launched in March 1983 (Swiss, GB & US). </li></ul><ul><li>First year – 200,000 units, within 2 years 100,000 units a month. </li></ul><ul><li>Designs & Collections </li></ul><ul><li>Swatch Design Lab - cranked 2 collections every year (70 different styles). </li></ul><ul><li>Collections were replaced rapidly, people bought from different collections. </li></ul><ul><li>Designs were created by assortment of artists, architects and industrial designers. </li></ul><ul><li>See-through watches & scented watches. </li></ul>
  7. 7. Price Prices low @ $40 to $50 Promotion SMH spent 30% of Swatch’s retail price on advertising. Notorious for unorthodox promotions In Germany – Swatch 500 feet high, 13 tons in front of Commerzbank. 1990: Started Swatch collectors club. (50000 members in a year @ $90 each p.a.) Place (Distribution) Avoided jewelry stores & Specialty watch shops “ Veggie Line” – in fruit & vegetable markets. Used shop in shop systems. Opened a number of free standing mono brand Swatch stores.
  8. 8. <ul><li>Customer Retention </li></ul><ul><li>Loyal Customers – affordable price, Price remained the same for 10 years($40 - $50) </li></ul><ul><li>Easy decision to make and live with, didn’t make the customer to think too much </li></ul><ul><li>The Swatch Success Story </li></ul><ul><li>'80s fads included wearing two Swatches and using a Swatch as a ponytail band </li></ul><ul><li>  26 million watches sold in 1992 alone </li></ul><ul><li>Swatch message – Swiss made, Low cost, Provocative & Joy of life. Not offering watches , but personal culture. </li></ul><ul><li>Largest selling watches in the History </li></ul>
  9. 9. Omega <ul><li>Omega greedy for volume </li></ul><ul><li>Launched across Hi/Med/Lo Prices </li></ul><ul><li>What does Omega stood for? </li></ul><ul><li>1985: Hayek puts Omega back on track-”a watch for people who achieve” </li></ul>
  10. 10. SMH Portfolio <ul><li>Vertical Integration (assembled all watches & built components for Watches) </li></ul><ul><li>Decentralized Marketing ( SMH’s 9 Brands had authority over product designs & Mktg) </li></ul><ul><li>Portfolio Management (SMH’s goal - competitive brand in every price Segment) </li></ul><ul><li>Swatch pagers/telephones, Swatchmobil (Smart GmbH) </li></ul>
  11. 11. Swatch Unit Sales Trend YoY Sales Growth
  12. 12. Swatch/SMH Lifecycle
  13. 13. Current Situation <ul><li>Still manufacturing done in Swiss </li></ul><ul><li>Hayek sees China as a market than as a supplier. </li></ul><ul><li>&quot;We're a world leader in micromechanics,&quot; Hayek says. &quot;We're not just a watch company.“ </li></ul><ul><li>Consistent in its marketing communications </li></ul>
  14. 14. Thank you

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