Swatch Case Study

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After Hayek took over as CEO of Societe Suisse de Microelectronique et d’Horlogerie (SMH), he realized that the company’s watch making process needed to be looked at and reanalyzed. No more could they reject the lowest market segment of watches as it was proving to be the most highly profitable, so they decided to introduce the Swatch. The product would be marketed as a watch that was affordable but still carried the prestige of a Swiss watch. Most of all, this new product line was to be innovative- nothing like any other watch on the market. Along with this, Hayek wanted the Swatch to have meaning and emotion, because influencing the customer’s emotion can lead to spontaneity which will positively affect their market demand. This was the most critical element to the brand’s success as these unique design concepts and emotion based marketing strategies, such as hanging the giant watch in Frankfurt, intrigued the younger generation and the demand for these watches exploded around the world and helped SMH cement its place in the lower segment of the watch market. Without this, they probably would not have been able to separate themselves from their competitors spelling doom for the company.

Before the Swatch or any other inexpensive watch, people wore watches as a sign of wealth. Most watches were built through hard manual labor and had rubies and other expensive materials making it difficult for an average Joe to purchase it. But after the world war, the Timex was released and this changed everything as these mass produced disposable watches were priced very economically. Sales boomed for the product and the lower segment flourished. But for the wealthy, companies like Rolex still existed to offer a luxurious product for a very premium price, and the most important element for these customers was the prestige of the watch maker and Rolex was just that. Omega, SMH’s most exclusive brand, was also facing failure till the resurgence of Swatch. Success in another...
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