BIRTH OF SWATCH

Nitin Gavishter 2014038

Priyanka Mitra 2014047

Ques 1 :

Prior to the introduction of Swatch, what kinds of watches were popular among
consumers? In what ways was a Rolex different from a Timex, or from a gold-plated Seiko? How has the
industry/ category evolved from Swiss watches to Timex & then to Quartz?

Period before swatch can be divided into 3 eras

PRE

1950

Watchmaking was considered to be an art requiring

theskillsofamasterjewelercombinedwiththoseofamechanical engineer

Watches contained precious stones like jewels, rubies sapphires etc.

Consideredto bea financial investment oftenpasseddownthrough generations

Sold primarily thorough jewelers

ThemarketwasdominatedbythewatchesmadeinSwitzerlandwereconsideredto
beofbetterquality

E.g. .Omega, Rolex etc.

1950-1970

emergence of disposable watches

Simple design, low price

Got sold through low priced outlets like drugstores and discount houses

E.G. Timex

POST 1970

emergence of quartz technology

moresophisticatedfunctionality

Lower price

E.G Seiko

Ques 2:

How is Swatch different from earlier watches? What according to you are the main
reasons for the phenomenal success of Swatch (max. 3 reasons fully elaborate each reason).

REASONS FOR SUCCESS

1. Cost leadership throughautomation
cutting down on labor and focusing more on automation by introducing the
quartz technology ( labor cost only 10% of total cost )

concentrated

on vertical integration and managed to get the number of

components down from 91 to 51
changed

the materials used to much cheaper alternatives like plastic casing

2. Uniqueness in design
was

the first Swiss watchto concentrate on designs and selling it as a fashion

accessory
Hayek

felt that every watch should contain a message

Their

outlandish designs coupled with the use of brash, intense colors

immediately created a niche for itself
Dozens

of models were available for each collection

Top designers were hired to design watches for Swatch

watches rather than just being a medium of time keeping became an item of
fashion

The whacky designs coupled with the low price really set the market for
Swatch

3. Connecting with the customers through various initiatives:

Swatch spent 30% of its revenue in advertising

The creation of a giant 500 feet, 13 ton model of a Swatch to launch the
brand in Germany was one of a kind promotion in the watch industry

created the Swatch Collectors Club for its ardent fans

Swatch customers were intensely loyal and they were always on the lookout
for newer model ( high loyalty and involvement)

Ques 3 :

What elements of SMHs overall business model have been most critical to the

companys success from 1983 to 1993

PRODUCTION :

Automated Production Line. Low labor costs

Vertical Integration

Low cost of production

MARKETING AND COMMUNICATION :

Not just affordable but approachable

A watch for every mood

Unconventional Promotional Stunts

DISTRIBUTION :

company adopted an unconventional retail approach that created many non

traditional points of purchase

moved out of jewelry display and pushed for mini boutiques that focused
exclusively in the Swatch brand

Veggie Swatch line was sold in fruit and vegetable markets

Ques 4 :

Now the Swatch group owns over 18 brands of watches. How do they manage such a
large brand portfolio and cope with the potential dangers of brands cannibalizing each other?

Decentralized Marketing Activities, Design and Communication and

Centralized Production

Sufficient differentiation has been achieved with respect to each brand on

the basis of Unique Brand Message, Design and Origin

Each Watch owns a separate spot in the perceptual map

Separate distribution channels

Every Watch has a separate TV spot and campaign that reduces possibility of
cannibalization

Ques 5 :

In many ways, Swatch forced people to think about watches in a way they had never
thought of before. Can you think of brands in other product categories that have done the same thing?
Bring at least one example to class.

Luxottica World Wide owns 12 Eyewear Brands i.e., Ray Ban, Oakley, Arnette,
ESS, Mosley Tribes, Sferoflex, Persol, Oliver Peoples, Revo, Luxottica, Killer
Loop, Vogue

Almost all of them are market leaders in their particular segments

The way they have managed to differentiate their brands is almost similar to
Swatch

Ray-Ban

The worldsbest known sunglasses.

Oakley

The worlds leading sports optical brand

Vogue

Styles stand out for their innovative design, for the wide variety of colors and
frames

THANK YOU