Seiko Case Study Summary

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  • Topic: Seiko, Watch, Seiko Epson
  • Pages : 7 (1725 words )
  • Download(s) : 593
  • Published : April 4, 2012
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Company background

First founded in Tokyo in 1881, Seiko rose from a company repairing and selling second-hand clock to one of the leading names in the watch industry. Over the course of its history, Seiko has proved to be a very innovative company; it was the first company to launch the quartz wristwatch in 1969, it produced the battery-free Kinetic line in the late 1980 and launched the mechanical/quartz hybrid technology under the Spring Drive brand in 1999. While Seiko is a well-known producer of inexpensive and luxury watches alike in Japan, its brand image is significantly different abroad. Their watches are globally considered very reliable and having an excellent price to quality ratio, but are not considered luxury and are not held to a high esteem among collectors and watch enthusiasts. In addition to the Seiko Corporation which is best known for their watches, the Seiko Group consists of Seiko Instruments Inc. (best known as a producer of electronic components and scientific instruments) and Seiko Epson Corporation (best known for their printers, scanners and projectors).

The build-up to the current situation

Up to the invention of quartz watches in 1969, wrist watches were exclusively mechanical. Manufacturing of mechanical watches is generally an expensive and a rather complicated process, as it requires a lot of effort, especially if the watch is to be precise. Up until that time the Asian market was mostly dominated by Asian manufacturers, while the European and US markets were traditionally dominated by the US and Swiss manufacturers. With the invention of quartz watches, however, it became much less expensive to produce precise wrist watches based on the quartz technology. As the first company to produce quartz watches, Seiko made a name for themselves in the US and Japan as a manufacturer of highly reliable and relatively cheap watches. At the same time, precise mechanical watches remained very popular in the high-end market, because of the effort needed to manufacture them. With the advent and rising popularity of mobile phones, people stopped perceiving wrist watches as a necessity in order to tell the time, as they can now turn to their mobile phones for that. Customers now perceive watches primarily as either a fashion accessory or a status symbol, which greatly contributed to the drop of demand for low-end watches. In order to remain a strong manufacturer of wrist watches, Seiko has to move upmarket, i.e. move towards high-end and luxury watches, traditionally dominated by Swiss manufacturers.

PESTEL analysis of the company

Political| * Pricing regulations, taxation policies can affect Seiko as it has relocated its watch manufacturing to less expensive Asian markets (China)| Economic| * budget watches demand is sluggish * luxury watches market grows fast * 90’s recession in Japan * cheap labour abroad (e.g. in Hong Kong, China)| Sociocultural| * mechanical watches seen as a status symbol despite being generally less precise than quartz ones| Technological| * high quality mechanical watches * high quality hybrid watches * budget quartz watches * widespread use of mobile phones reduces the need for watches as means to tell the time| Environmental| N/A|

Legal| * Local laws in countries where watches are produced can have an impact on brand perception (e.g. Hong Kong introduced a law in 1980, whereby the country of origin of the watch is declared according to the country of origin of parts used)|

SWOT ANALYSIS

Strengths * Dominant luxury brand in Japan and Asia * Mechatronic-manufacture * Reputation of reliability, quality and service worldwide * Technology driven innovative products * Long tradition/history of craftsmanship * Excellent value * Vertically integrated| Opportunities * Latest technology * International luxury watch market * New target audience (high-end consumers) * Brand...
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