Nicolas Hayes that the Swiss players lacked discipline and strategy. SITUATION ANALYSIS EXTERNAL By 1983, with the advent of low cost competitors and the Introduction of the quartz technology, the Swiss watch Industry was faced with a new reality; It had gone from owning 80% of the market In 1946 to 15% In 1983. This was primarily down to new consumer habits, which created three broad segments: High Price: The customer sought to purchase a watch as a financial investment (Role) and this was their strength where they commanded 97% of the market share.
Mid Price: The customer ere bought into watch that looked more expensive than it was (Citizen); with only 3% of the market share, the Swiss watch industry had the brands but no penetration. Low Price: The customer here looked at the watch as a functional object and was price-sensitive (Timex, Seeks); the Swiss watch industry had no representation in this segment. It was a perilous situation to be in, catering only to one segment of a market with big players, looking to make inroads via acquisition of brands into the only segment that the Swiss watch did business In. INTERNAL To deal with the “craziness”, Mr..
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Hayes defined the company’s strategy was to have one global star (BCC Matrix: Henderson, 1970) in each one of the segments including the low cost. Given that they had stiff competition and nothing to show for in the low cost segment, the resources were focused on developing it, always with an eye on building synergies and protecting its mid and high cost segments. What Hayes did next was nothing new in concept (other industries had been using a similar approach) but path breaking in its execution and delivery by working on the three liars that would eventually change the horizons of the Swiss watch industry itself.
Those being vertical Integration, use of cheap materials and creating a strong, unique message. This strategy caused the birth of the Swatch and made it one of the most innovative product of Its times let alone the watch Industry, primarily because It broke barriers of traditional manufacturing processes, offering the perception of a high quality Swiss watch at an entry-level price. It’s communication strategy profile advertising along with BTL marketing activities to make their message unique.
ALTERNATIVES The Switch watch industry by the early ass’s could have also driven another way by focusing on a niche market that prided itself on tradition, personalization and innovation in mechanical technology in the premium and luxury segment. It could build and widen its market by communication the strength behind the Swiss made watch as a luxury tool. The benefits would include: Avoiding risk by entering the low cost segment that could dilute the image Oh high quality instruments. In doing so, the Swiss could actually risked their USPS and slide further down.
Create barriers of entry into the premium segment by playing with the consumers’ perception that if it isn’t Swiss it isn’t luxury. Something the Italians and the French have done with fashion. The drawbacks of playing this game made likely, The expanding low and mid price segments could create a few big players with ambitions to penetrate the premium segment. Their financial strength would make this possible eventually. The premium segment had too many players most of them with heavy overheads odd R&D and assembly that crunched their margin, making them vulnerable to unworthy suitors.
RECOMMENDATIONS It is very hard to ignore the imploring success of SMS in introducing Swatch to the world. This success would caste a large shadow over any other recommendations, which is why it would be best to discuss the marketing-mix in perspective of how it was best done. Product: Swatch made the mass-produced, Swiss-made, low cost paradox possible, which in itself was unimaginable. Added to it was the design, which created unique watches with diversified designers giving it wide appeal, produced in limited productions made Swatch extremely desirable, unique and fractionated from any existing product in the segment.
Promotion: Their marketing activities were far from orthodox, they spent 30% of their revenues on high profile advertisement and ground breaking below the line activities, which was something unheard of in the watch industry until then. Their communication was almost flawless in creating an emotional connect with the consumer while making the brand approachable and highly visible. Pricing: One of the key factors of making Swatch a runaway success was it’s pricing. It stayed bang in the middle of the low price segment with a perceived value of being more expensive than it actually is because it was a high quality Swiss watch.
The pricing made their communication of being approachable, extremely effective and encourages impulsive or rather emotional spending. Place: Swatch went to extreme lengths to communicate their message and made their products approachable by choosing shop in shops in department stores, mini boutiques, product-related theme environments and onboard stores in fashion forward areas as opposed to high end department sto