The Birth of the Swatch

kThe Birth of the Swatch

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 Nicolas Hayek said: "we were not just selling a consumer product or even a branded product. We were selling an emotional product. It can be an important part of your self-image". Therefore, Swatch positioned itself as a "young, cool, trendy" product with affordable, simple and clean price that enabled young people to personalize themselves by owning the product. By choosing the segment and positioning, Swatch smartly differentiated themselves from the rest rivals by bringing genuine emotion to the product and attack the lower end segment instead of directly compete on price with others.

Swatch tried to send a message: "High quality. Low cost. Provocative. Joy of life." All watches were made of plastic but at the same time they featured witty and outlandish designs and used brash, intense colors. Swatch's design team created like-no-other products by capturing several features such as youthful, stylish, unpredictable or sometimes even whimsical. These features completely fitted the young target segment, thus encouraging them to buy this product and become more loyal. Swatch customers always were looking for intriguing new designs. Since Swatch provided huge range of models, so variety seeking customers also began to buy the Swatch. This helped them to increase their sales and enjoyed sustainable growth, since it was not easy for competitors to imitate their strategy. In addition, innovative and differentiated products