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The Birth of Swatch

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Zachary Wang

on 19 December 2013

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Transcript of The Birth of Swatch

Agenda
1. Introduction
2. Launch of Swatch
-Essence
- Marketing Analysis (3 Cs)
-Marketing Strategy (STP)
-Marketing Mix (4 Ps)
3. Success of Swatch
4. Future development
5. Similar case
6. Q&A
Introduction
Launch of Swatch
Future
Development
The Birth of
Swatch

Industry Background
Prior to the 1950s
Swiss dominated the watch industry

Watches were made with jewels, considered as high-priced financial investments, as with fine heirlooms

From 1951
Challenges
Low-cost Competition Emerged:
1951, US Time introduced the disposable watches bearing the Timex brand name


Late 1970s
The introduction of Quartz Technology(from 1970):
Comparable in accuracy to Swiss-made mechanical watches
More sophisticated functionality
Significantly lower cost
Japanese manufacturers: Hattori-Seiko, Citizen
Dilemma

The essence
Swiss watch makers had refused to embrace the quartz technology and insisted on making high-end mechanical watches

Couldn't compete with other watch-making companies in costs of production

Continuous decline of market share

Resulted in the free fall of the Swiss watch industry
Nicolas Hayek
Marketing Analysis: 3Cs
Marketing Strategy: STP
Marketing
Mix (4Ps)
Success of Swatch
Consumer
Company
Competition
Segmentation
Swatch inspired customers’ spontaneity and loyalty.
Positioning
Swatch makes unique high quality watches in Swiss at an affordable low price.
Targeting
Product
Price
Promotion
(Communication)
Place(Distribution)
Swatch actually
sells personal
culture!

Why not
low-end?
Why not
high-end?
Middle range?
Needs:
-Reasonably-priced watches
Preferences:
-Fashionable
-Shows personality
Behavior



Strategic Planning
- Developing a competitive brand in the low-end market while maintaining the market share in other ranges
Benchmarking with Japanese
and Hong Kong competitors
Cash Cow
More intense competition in the low-end watch market
New companies emerged with new products
Hard for further market penetration in low-end market
A new brand would compete with its own profitable brands, such as Omega.
Customers were already loyal to certain brands.
Hard to come up with a new impressive design.
Proposal: Sub-brand under Swatch

Reasons:

Great potential
(spent less effort in this range 10% of the gross sale)
Comparative advantage
(efficient production )
Strong and loyal customer base of Swatch
Well-performed distribution channels
(ex. Flik Flak)
Aging targeted customers, entering middle-income group
( tastes, value changed)
SMH offered different brands to satisfy the needs of different segments
-Demographic: income & Age
Income:


Young, fun-loving, fashion-savvy,
and price-sensitive people, who
value quality, simplicity, practicality, and durability of their watches.

Swatch offers accurate,
unique, fashionable, high quality Swiss-made watches
at an affordable low price.
Approaches:
Combine with new technologies (water-resistant, GPS, Internet)
Besides Fashion, more classic designs.
Vertical integration(mass production) to bring its production cost down
Encased in cheap plastic instead of metals and jewels.
Unique designs(youthful, provocative, stylish and unpredictable)
Innovation
Affordable and approachable price increased sales.
Swatch set a simple, clean price everywhere in the world (ex:$40 in the U.S; SFr50 in Switzerland; DM60 in Germany)
Kept the same regular price for the first 10 years including limited editions

Around 30% of Swatch’s retail price spent on advertising
Unorthodox promotional activities
-Giant Swatch suspended outside the tallest skyscraper saying “Swatch. Swiss. DM60”
-Swatch Collectors Club
Decentralized marketing under SMH
High Middle Low


Blancpain Longines Tissot Certina Swatch
Selective distribution
Indirect channel

-Unconventional retail approach, eg. department stores
-Shop-in-shop systems
-Kept separately from the jewelry displays
-Guaranteed a large number of loyal customers
-Monobrand Swatch stores:
Limited supply of the latest designs, located in exclusive, high-fashion district



Age:
Citizen
Low cost
Quartz technology
Casio
Unit sales increased rapidly and reached 31.5 million by 1993, generating more than SFr2000 million accumulated profit

In 1993, SMH's production of watches grew to 87 million units, giving SMH a world market share of 9%

1. A new type of product in soft drink industry (more specifically, coke industry).
2. Similar taste to classic coke, but with no sugar in it and 0 calorie. ---Perfect innovation with no harm to classic coke and brand image.
3. Favored by people who are on a diet and try to lose some weight.
4. Changes people's attitude towards soft drinks.
5. Invest heavily in advertisement and promotion.
slogans: "love it heavy"(UK 2010)
"light it up!"(US 2006)
Similar Case
Diet Coke
6. INNOVATION never stops.
The entire Swiss watch
industry benefited and
commanded 55% of the world
total value in 1993

It's becoming a trend for people to wear Swatch
Team member:
Crystal Shu, David Huang
Grace Guo, Gloria Li
Yingbo Wu, Zach Wang
Full transcript