The Birth of the Swatch

Sales & Marketing Management IE S2

IE EMBA S2 Raffy Karamanian Oct 2015

IE EMBA S2 Raffy Karamanian Oct 2015

Q1

Success & Differentiation

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

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.

The American, Japanese, Hong Kong, etc..

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

The Traditional Swiss Watch makers

Luxury Product

Price Focused

Non Strategic Direction

Omega

Beume &
Mercier

Rolex

2,500 Swiss Watchmakers (Luxury)

Considered luxury & financial investment
1945 held 90% of world market share
Sold through jewellers & up-scale stores

(low quality vs high price)

Longines

Product 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.

Mass Product

Efficient Strategy

Citizen
Seiko
HattoriSeiko

Piaget Movado

Leveraging on the
quality of the Swiss

Casio

Competitive
pricing & Larger
target segment

Times

Product Quality

* 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 Swatchs adopted strategy.

Swatch

Swatch (Swiss + Watch)

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

Unique Message &

Genuine Emotion

IE EMBA S2 Raffy Karamanian Oct 2015

Q2

The Marketing Mix

What elements of the original Swatch marketing plan were most critical to the brands 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 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

Product Strategy

Promotion 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 )

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

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

IE EMBA S2 Raffy Karamanian Oct 2015

Q3

Differentiation & Purchasing Behavior

Prior 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?

Until the 1945, with 2,500 firms, the Swiss dominated 80% of the worlds 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.

Luxury Products (e.g. Rolex)

Luxury Product

Price Focused

Non Strategic Direction

Omega

Beume &
Mercier

High end Swiss made watch holding

(legacy, history, and craftsmanship)

A functional watch / seasonal watch

no cultural / historical legacy

Limited quantity handmade piece of

jewellery; built with care and precision

Mass produced, affordable, and

targets everyone.

A luxury product and statement

Daily usage non-luxury

Distributed through luxurious channels

/ department stores jewellery stores.

Distributed through variety of outlets

and stores. (No high end jewellers).

Passed on from generation to

generation.

Disposable

Rolex

Product Price

Mass Product

Efficient Strategy

Citizen
Seiko
HattoriSeiko

Piaget Movado

Casio

Times

Buying Decision

Swatch

Product Quality

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

(low quality vs high price)

Longines

VS.

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

Timekeeping instrument
Affordable and functional
Disposable items
Trendy and fashionable

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

IE EMBA S2 Raffy Karamanian Oct 2015

Q4

Changing Thoughts Other Products

In 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?

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

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

Pictures obtained from google images

IE EMBA S2 Raffy Karamanian Oct 2015

What will be your next Model?

Thank You EMBA S2 Raffy Karamanian

IE EMBA S2 Raffy Karamanian Oct 2015