Download - Swatch presentation
Swiss Watch Industry
Drop in share from 80% to 42%.
What were the problems:
Strategy, Structure, Management,
Price, Technology
Retreat
Hayek: “I decided we could retreat no more”
Turnaround
- Stop retreat -a shift in company strategy
- Hayek’s company strategy = broad market
presence (one profitable, growing brand in
each segment including the low-end)
- Communicating their message for each
brand
The Swatch (Swiss +Watch) Concept
- Hayeks low end product initiative - a quartz
watch called Swatch
- Not a commodity product
- Leveraging Swiss reputation
- ‘build where we live’
- Low-end use watch
How?
- Vertical integration
- Automated production - labour less than 10% of costs
- Reduced the number of individual parts from 91 to 51,
resulting in production cost of <10 SFr
- Encased watch in cheap plastic but not a commodity
(point of difference)
- Add genuine emotion to the product -strong message to
low end user
- Unique message = “an emotional product”
Positioning Strategy
Product Strategy
Design- non-commoditised product
- An emotional product
- Spontaneity
- Two collections per year (Similar to Zara)
- High-end, multidisciplinary designers
- Superficial over the utilitarian (WSJ)
Channel Strategy
- Targeted non-traditional points of purchase- Veggie line in Fruit & Veg markets
- Monobrand stores on high-street (e.g. Links,
Pandora)
- Mini-Boutiques in department stores
Promotional Strategy
- Everything we do and how we do it sends a
message
- Advertising in early 80’ Earlier video
- Double the industry standard for marketing
spend
- The most important innovation and marketing -
everything else is a cost
Promotional Strategy
- Avoided the normal above-the-line mass
media marketing and favoured below-the-
line “Guerrilla” marketing:
E.g. Hung an operational watch outside German bank
- Collectors Club: Wear your membership
Pricing Strategy
- $40 = spontaneity, guilt-free purchase. A
clean, consistent price.
- Price was key to everything:- Enabled multiple purchases
- Low production cost enabled this pricing
strategy - still made good margin
- A volume strategy - best selling watch in
history (26m in 1992)
- Increased demand
Swatch Now
- $1bn cash in the bank
- Over 30,000 staff
- Run by Hayek’s daughter & son
- $8.8bn revenue
Swatch this space: Sustaining Value
● How can Swatch ensure they stay relevant today?
○ Continued Innovation...positioned with synergistic products and brands (e.g. Apple watch, Google glasses, etc).
● How can they use digital marketing?
○ Focus on the Consumer Decision Journey (CDJ) and ensure that their marketing spend is in the correct part of the journey that matches
their consumers’ journeys (e.g. post-purchase PWOM on social networks)
Bibliography
- Aaker, D. A. 2007. Marketing Strategy with Digital Marketing, European Edition, Wiley,
Chapters 3-5
- Clerizo, M 2010. Nicolas Hayek: Time Bandit http://magazine.wsj.com/features/behind-the-
brand/time-bandit/ Accessed on 11/10/2014
- Dibb, S. and Simkin, L., 2009. ‘Implementation rules to bridge the theory practice divide in
marketing segmentation,’ Journal of Marketing Management; 25 (3/4), pp 375-396
- Edelman, D., 2010. Branding in the Digital Age, Harvard Business Review, December, pg 63-
69
- Kotler, P and Keller K. 2012. Marketing Management 14th ed: 274-294. New Jersey: Pearson
Prentice Hall
- Quelch J,A and Jocz K,E 2009. ‘How to Market in a Downturn’, Harvard Business Review,
April, pp 1-12
- Swatch Group Annual Report 2013
http://www.swatchgroup.com/en/investor_relations/annual_and_half_year_reports/annual_report
_2013 Accessed on 11/10/2014
- Exploring Strategy 9th Edition, Johnson, Whittington & Scholes.