The Birth of the Swatch

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Case Analysis:
The success of Switzerland Company named Swatch owned by “Societe Suisse de Microelectronique et d’Horlogerie” (SMH) is a perfect example of a successful brand and product management. Their success was based on the fact that Swatch had completely excelled in each and every step of developing and executing its outstanding marketing strategy.

In early 80’s the biggest problem for the Swiss watch industry was the rapid growth of quartz technology which changed the rules of the game. Low cost watches created a new product and market segment. Unluckily the Switzerland companies didn’t respond to this new threat due to their arrogance. They thought that quartz watches were unreliable, unsophisticated and beneath Swiss quality standards. In that situation, changing the way of doing business had become the matter of “change or die” for the Swiss watch industry. SMH became the only Swiss company who decided to lead the way and creating a smart way to differentiate themselves from other competitors. The goal of the company was to compete in the lower end of the market. Therefore they created new brand named Swatch. Their business model was based on vertical integration in Switzerland. The purpose of this action was to bring production cost down to the Japanese level. To achieve this they were needed to produce Swatch on a mass production base on fully automated production lines. The swatch watches were also supposed to be made from cheap plastic, which would also push their price down.

Initially, Swatch decided to differentiate itself from segmentation and positioning perspective. They choose young people as their primary target segment since they believed that youth had no longer perceived watch as a usual jewelry but a simple device connected with their routine life. Additionally, young people have limited income to purchase luxury products. They tried to possess their product that possibly will help to define their life-styles and personalities. As...
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