June 14, 2012
The Swatch group is a family of Swiss made watches that include watches at four basic market segments; basic, middle, high, and luxury/prestige. While net sales have been steadily increasing since 2008, Swatch is having a problem with its Omega brand competing with Rolex. Rolex has continuously outsold Omega since 2006 and the problem is how to position the Omega brand to capture the market share that is currently dominated by Rolex. Omega is currently not perceived as “exclusive” as Rolex, even though the technology is more efficient and advanced. This message however was not being received, particularly in the U.S. market. Solution:
Omega has several different lines that differ in price. Reducing some of these lines that are in the lower end of the spectrum would raise the “exclusivity” of the brand and position it to better compete with Rolex and Cartier. The main difference is customers’ perceptions and awareness of the quality of Omega. Currently Rolex was dominating the market because of its perception as a status symbol. Eliminating some of the lower end models would shift the focus to the “higher end” level of the Omega brand. I would also increase the advertising in the US focusing on the technological aspect of the Omega. Implementation:
Current advertising in the US market by Rolex is 43.4 % while Omega is only 14.8%. In 2010, the net income for Swatch was CHF1,080 million. Some of this could be utilized to increase the advertising budget. This would raise awareness of the high quality and advanced Co-axial technology that the Omega lines offered compare to the Rolex. The continued focus should be on “high quality for the self-made person” as opposed to the “trust-fund” Rolex image. Eliminating some of the lower end Omega lines would decrease the price differential that Rolex has over Omega without having to raise the price of the Omega. This would also protect the sales of the...