IE EMBA – S2 – Raffy Karamanian– Oct 2015

The Birth of the SwatchSales & Marketing Management – IE S2

IE EMBA – S2 – Raffy Karamanian – Oct 2015

IE EMBA – S2 – Raffy Karamanian– Oct 2015

Success & DifferentiationWhy was Swatch so successful? In what way was the Swatch different then any watch the industry had ever seen?

Product Quality

Pro

du

ct P

rice

Luxury Product

• Swatch delivered a innovative product • Delivered a new perception to watches• High quality product with low / fixed pricing • Large collection – became fashion item • Large network of distribution• Leveraging on Swiss skills

Mass Product

• 2,500 Swiss Watchmakers (Luxury)• Considered luxury & financial investment • 1945 – held 90% of world market share • Sold through jewellers & up-scale stores

Nicolas Hayek “I decided, we could retreat no longer….. We needed at least one

profitable, growing, global brand in every segment – including the low end.”

• Low priced watches (mass market) • Considered almost disposable • 1983 – Held 85% market share (units)• Sold through low priced outlets, etc..

* The information on the slide has been obtained from HBS ‘The Birth of Swatch Case’. The visual representation of the companies in term of price vs quality is not accurate and has been placed for presentation purpose only and to reflect Swatch’s adopted strategy.

RolexBeume & Mercier

Omega

LonginesPiaget Movado

The Traditional Swiss Watch makers

Times

Hattori-Seiko

Citizen

CasioSeiko

The American, Japanese, Hong Kong, etc..

Efficient Strategy

SwatchCompetitive pricing & Larger target segment

Leveraging on the quality of the Swiss

Unique Message & Genuine Emotion

Swatch – (Swiss + Watch)

Price Focused

Non Strategic Direction (low quality vs high price)

The following quadrant reflects product offering based on Price vs Quality. This representation visualizes the strategic direction adopted by Swatch, their key success factors and reflects its differentiation points from other watch manufacturer worldwide.

Q1

IE EMBA – S2 – Raffy Karamanian– Oct 2015

The Marketing MixWhat elements of the original Swatch marketing plan were most critical to the brand´s success? Do you agree with the original product strategy? The channel strategy? The promotional strategy? What about the

pricing strategy - what does Franco Bosisio mean when he says that the Swatch is sold at a “clean price”? Given the huge demand for Swatches (particularly for certain models), did the company make a mistake in not raising the price for some of its styles?

• The information on the slide has been obtained from HBS ‘The Birth of Swatch Case’. • Swatch picture has been obtained from google images.

Product Strategy • High quality. Low price • Fashionable Items • Large collection of choices

Channel Strategy • Shop in Shop• Mini boutiques • Non traditional POS (limited) • Free standing mono-brand location (flagships )

Promotion Strategy • 30% - double the industry average on advertising• Unique style / fashion / trendy / etc… • Unconventional methods (ex. Germany) • Joy of life

Pricing Strategy • Very competitive in market • Fixed and ‘Clean’. • Rounded figures and no fluctuation based on demand • Low priced in comparison to product coming for Swiss

The ‘Swatch’ strategy is certainly positioned as innovative plan. (1) Leveraged on Swiss standards. (2) It holds a unique message and genuine emotion. (3) Its delivery of unconventional promotional campaigns backed by a

strong distribution strategy (available in almost every country in the world). (4) Crafting a pricing strategy against the basic fundamentals of economics (supply vs demand) can be considered a

‘Clean’ Pricing Strategy Masterpiece

Q2

IE EMBA – S2 – Raffy Karamanian– Oct 2015

Differentiation & Purchasing BehaviorPrior to the introduction of the Swatch, what kinds of watches were popular among consumers? In what way was a Rolex different from a Timex, or from a gold-plated Seiko? How did

consumers make buying decisions?

• The information on the slide has been obtained from HBS ‘The Birth of Swatch Case’.

Luxury Product

Mass Product

• High end Swiss made watch holding (legacy, history, and craftsmanship)

• Limited quantity handmade piece of jewellery; built with care and precision

• A luxury product and statement

• Distributed through luxurious channels / department stores – jewellery stores.

• Passed on from generation to generation.

RolexBeume & Mercier

Omega

LonginesPiaget Movado

Luxury Products (e.g. Rolex)

Times

Hattori-Seiko

Citizen

CasioSeiko

• A functional watch / seasonal watch –no cultural / historical legacy

• Mass produced, affordable, and targets everyone.

• Daily usage – non-luxury

• Distributed through variety of outlets and stores. (No high end jewellers).

• Disposable

Mass Products (e.g. Timex, Seiko Gold) VS.

Buying Decision• Price of jewellery • Luxury product / statement • Belongingness to the prestige segment • Financial Investment

• Timekeeping instrument• Affordable and functional • Disposable items • Trendy and fashionable

Until the 1945, with 2,500 firms, the Swiss dominated 80% of the world’s watch production. Following 1951, affordable mass produced watches penetrated the market mainly from the

US, Japan and Hong Kong. In 1983, the Swiss re-joined the market through Swatch.

Q3

Product Quality

Pro

du

ct P

rice

Efficient Strategy

Swatch

Price Focused

Non Strategic Direction (low quality vs high price)

IE EMBA – S2 – Raffy Karamanian– Oct 2015

Changing Thoughts – Other ProductsIn many ways, the Swatch forced people to think about watches in a way they had never thought before. Can you think of other products in other product categories that have done the same thing?

• Pictures obtained from google images

Ford – Model T The I phone IKEA Apple Watch

I resemble it to Ford due to its affordable pricing strategy,

unique message, and genuine emotion

I resemble it the I-Phone by introducing innovation, quality,

and design, to the mobile industry.

I resemble it to IKEA by delivering minimalistic concept, high quality vs low price from a

relatively expensive country (Sweden)

I resemble it, because I feel history is trying to repeat itself.

It feels like its gonna be the next Swatch. Wide product variety.

#Price #Message #Emotion

#Design #Quality #Innovation #Fashion

#Price #Quality #Swedish

#Variety #Fashion #Design

Q4

I have not identified a single product holding Swatch’s revolutionary strategy (as a complete package); However, I have listed 4products from different industries that share similarities in their approach to consumers similar to Swatch’s disruptive direction.

IE EMBA – S2 – Raffy Karamanian– Oct 2015

What will be your next Model?Thank You – EMBA – S2 – Raffy Karamanian