Seiko Go Upmarket

Topics: Seiko, Quartz clock, Watch Pages: 7 (2228 words) Published: November 14, 2012
* Executive Summary
Seiko Watch Corporation and its predecessor had always been innovative in watch technology development and brought many industry firsts to the watch market, and Seiko was very successful before the 1990s. With competitive environment change started in the 1990s, Seiko found it was not in the right segment of the market for growth, this segment is high end watch market. Seiko tried to break into the high end watch segment, but the attempts haven’t been proved successful.

Based on detailed analysis of Seiko’s industry environment, competitive arena, and internal issues, conclusion was drawn that Seiko’s past vision, strategy and structure didn’t support its ambition to be an important player in the high end watch market. Countermeasures were then proposed: 1) have a clear and viable vision for future; 2) install a solid strategy of brands differentiation; and 3) match the strategy with organizational structure and resources. * Introduction

This case, “SEIKO WATCH CORPORATION: MOVING UPMARKET”, examined Japanese watch maker Seiko’s history, major technology developments, competitive environment, business expansion, and efforts and challenges to uplift brand image to compete in high end market segment.

Seiko’s predecessor K. Hattori was established by 22-year-old founder Kintaro Hattori in 1881. The business was started with second-hand clocks sell and repair, and later on retailing and wholesaling of imported clocks. Hattori then established Seikosha (“Seiko” means exquisite and “sha” means house in Japanese) in 1892 to begin to produce wall clocks, launched the first wristwatch in Japan in 1913, and started to use Seiko brand on watches in 1923. Since then, Seiko had been enjoyed rapid growth in domestic market until 1950s when it accounted for 50% of total production in Japan, while Citizen and Orient shared the remaining 50%.

Facing pressure from Swiss watch makers, Seiko started to upgrade its technology to improve accuracy and add features, and managed to be comparable with Swiss products in terms of accuracy in the early 1960s. Around the same timeframe, after dominating the domestic competition in the late 1950s, Seiko started to go abroad. Through advertising initiatives such as being official time keeper of the 1964 Tokyo Olympic Games and continued technology focus such as being the world’s first company to introduce quartz wristwatch in 1969, Seiko earned its place in international market: it had become the leading watch brand in most Asian countries and successfully built sales channels in US and European countries by 1970s.

Though Seiko was historically accepted by domestic customers as luxury watches producer at top-end of the market in addition to mid-range watches, its several attempts to reposition itself to high-end segment in international watch market didn’t enjoy much success: in the late 1970s, Seiko bought Jean Lassale, a Swill watch brand, to form a sub-brand “Seiko Lassale” to sell luxury quartz dress watches at higher price points in international markets, but this brand was not successful in the US and Europe markets and eventually discontinued; another sub-brand “Grand Seiko”, once alive in 1960s aiming at the high end of the domestic watch market, was re-launched in the late 1980s to flight with Swiss watch makers in the high end segment, this attempt didn’t meet its desired effect otherwise Seiko would have not taken the third try in 2000s to move upward of the market through the spring drive technology. In 2007, doubt about brand upgrade was casted on Seiko again. * Analysis of the issues

The myriad of problems facing Seiko can be traced to below three causes.

Industry environment - Strategic context change of the horological industry
The first phase - before the late...
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