The Birth of Swatch

BIRTH OF SWATCH 5

TheBirth of Swatch

Birthof Swatch

Question1

Theglobal watch industry was dominated by Swiss manufacturers before thebirth of Swatch. The watch-making technology was defined by theartwork of fine jewelry that represented a peculiar kind ofostentation that characterized the watch industry. For that matterover 90% of the world’s watch market was supplied by Swisscompanies that employed few people in each unit(Moon, 2004).Some of the brands that led the market before the innovation of theSwatch were the Beaume &amp Mercier brand that was established in1830, Longines, established in the early 1830s (specifically 1832),the Omega brand that got in the market by the mid 1800s (specifically1848), the Piaget model of 1874, the Movado model of 1881, and thefamous Rolex Model that hit the world global market in 1908. 99% ofimported watches in the United States were from Swiss companies. By1945, the world’s watch industry was dominated by all these brandsat about 80% in total. The brands constituted fine micromechanicalengineering technology and jewelry from hard stones and preciousmetals. They existed when low-cost competition was not yet entrenchedin the watch market. The broadened the definition of a watch bysimply bringing out the product as high-end apparel that symbolizedclass and culture. This explains why Swiss companies were slow toadopt a low-end pricing strategy and manufacturing technology thatcould leverage the low sales that came thereafter when low-endcompetition began to emerge from Japan and Hong-Kong. Owning a watchwas almost similar to owning expensive jewelry that could be handeddown from one generation to the other one as a cultural souvenir.

Question2

TheSwatch represented a break away from the traditional production andmarketing models that has characterized the watch industry. The firmcame up with a diverse marketing mix in terms of designs, productlines, promotional mix, retail strategy, pricing, and associating itwith other market brands.

Productdesign: The Company contracted different designers to come with avariety of designs that could resonate with changing market.According the then Chief Executive Hayek, there over 3000 unutilizeddesigns from the best designers in the world. The company had aspecial team that was mandated to scrutinize and chose the bestdesign for the market. This was unconventional with the industrynorms that had previously focused on high-end casings rather thanattractive designs.

Productlines: Swatch used different styles that were four times models thatcompany needed to penetrate the market. They used a quick-replacementstrategy to ensure that the products were not duplicated.

Promotions:Swatch’s promotional strategy was phenomenal that targeted theentire market. They used celebrity endorsements, televisioncommercials, using collectors clubs, street journal’s, andcapturing customer emotions. These promotional strategies establishedbrand loyalty that increased the company’s profits.

Retailstrategy: the company adopted a retail strategy that wasdistributional in nature. It was keen on getting as close tocustomers as possible through non-traditional purchase points. Anexample of a popular purchase was the Veggie Swatch center thatallowed customers to access the latest models of the Swatch.Departmental stores were also instrumental in distribution the Swatchmodels all over the world.

Pricingstrategy: Vertical integration allowed the company to capture bothends of the market. Considering that the retail industry had grown ininnovativeness, blending unique style with a considerably low pricewas the most admirable approach that Swatch adopted.

Reference

Moon,Y. (2004). Thebirth of the Swatch.Harvard Business School.