“The Birth of Swatch” 1) Why was the Swatch so successful? In what way was this watch different from others in the industry? Before Swatch started, Nicolas Hayek said “ Why cant we design a striking low cost, high quality watch and build it in Switzerland” just by reading this statement we can come to the conclusion that this was a new innovative idea, so what separates swatch from the rest of the other watch producers? * High quality * Build in Switzerland Very low cost Why was swatch so successful? Hayek had led the way for the success of the swatch by committing SMH to a business strategy that in many ways defied industry wisdom about how global watch companies should be run, this strategy was based on: * Strict commitment to vertical integration * Decentralized marketing * Portfolio management Swatch watches were a not the typical Swiss watch however they managed to maintain a high ‘Swiss’ Quality image.
They were the pioneers of a new-industry. The swatch team decided that the Swatch would have a unique message, one unlike that of any other watch brand in the market. 2) Do you agree with the original product strategy? The channel strategy? The promotional strategy? What about the pricing strategy? 1. The product strategy: I do agree, if swatch did not exist, Swiss manufacturers would have lost huge market share in the sale of watches because of the high prices.
Swatch with its innovative thinking not only created a new face for Swiss watches but also kept the majority market share of watches in the nation of Switzerland. 2. The channel strategy: Swatch promoted and sold there watches in super-markets, food stores and small boutiques situating it in those places you don’t attract the normal person that has already come to the decision of buying a watch you attract the person that just encounters it in their daily life and will buy it although they never actually thought of buying a watch. . The promotional strategy: Also there promotional was never usual through media and advertisement but through new and innovative methods for people to see their product like in Germany and Switzerland where they placed a huge swatch on various buildings. Other Swiss manufacturers like Rolex, now 10 years later have implemented this promotional strategy. 4.
The Pricing strategy: Perhaps the most impressive phenomena is how swatch managed to make there product in Switzerland and maintain very low prices, the pricing strategy is perhaps the most important strategy the not only won Swatch a reputation of producing the new phase of watches, it also won them a majority market share, 3) How has the watch category changed in the last two decades? Swatches revolutionized the watch industry. Firstly, because they are cheap and this comes as a follow through of new Quartz technology, and Japanese and Chinese competitors creating a new market.
And mainly because they are Swiss, irrespective to price, Swiss watches have always been leaders in this industry, they have however been expensive leaders, Swatch introduced cheap high quality watches, a new innovative idea. When considering an overview of the industry as a whole, we see that Vertical integration seems to be one of the biggest developments into the production of watches. Producing from within the business has meant the brands hold more control over the costs of their designs and the perception of the products produced.
A big mistake most brands do nowadays is they have many suppliers and most parts of their product is produced elsewhere, it is very hard to control cost and most importantly quality. If we take the example of the iPhone, that is not only produced by one manufacturer in china, it is produced by three, as a result quality is not up to standard and iPhone will very soon lose market share as a consequence. Swatch has kept its designs in Switzerland, within the company making quality control and cost much more efficient.