Communicating Value: Swatch
Question 1
Selling a low-cost quality product is one of the marketing strategies that contributed to Swatch’s success. SMH was able to produce an affordable watch due to the vertical integration strategy that required the watch to be built and assembled in Switzerland, bringing down production costs. The decision to encase the watch in inexpensive plastic also helped the company mass-produce Swatch and gave it a stronghold in the low ends, enabling it to compete with other watch brands (Donzé, 2014). Marketing swatch as an emotional product was also critical in its success, as wearers of watches attach sentimental value to them. Swatches were different from any other watches in the industry as they were made of plastic, with outlandish and witty designs that incorporated intense, brash colors that had never been used before in the watch industry.
Moreover, the company produced many models, giving customers many options to choose from, depending on the occasion or whim. Swatch collections were also replaced rapidly, giving consumers the incentive to buy more than one watch from different groups. I agree with the original product, channel, promotional and pricing strategies as they helped produce a quality watch that was affordable even to people in the low ends, while at the same time creating unpredictable, youthful, stylish and provocative designs. When Franco Bosisio says that Swatch is sold at a clean price, he means that the price is uniform across all markets, remains unchanged despite the huge demand, and is not marked up (Schopfer, 2019). The company, by keeping its price constant despite the massive demand for particular designs, is on the right as it tells its customers that swatches are approachable and affordable.
Question 2
Before Swatch was introduced to the watch industry, the most prominent watch brands included Omega, Movado, Beaume & Mercier, Rolex, Longines, Piaget, and Timex. A Rolex was different from a Timex in that the Rolex was designed for high-end users as a mark of prestige and status, made of precious jewels, and enclosed in cases composed of precious metals. Moreover, the Rolex was mechanical and repairable, and its channel of distribution was through upmarket stores and jewelry vendors (Donzé, 2014). On the contrary, a Timex was made of alloy metals, had a simple design, and an exterior made of cheap materials, giving the watches a strict appearance of functionality. Timex watches were also disposable, eliminating the need for repair and affordable, appealing to low-income earners. Further, they were distributed through cheap department stores like discount houses and drugstores.
The Rolex also differed from a gold-plated Seiko in that the Rolex was mechanical, while Seiko used quartz technology, making it a cheaper and more sophisticated option that could also provide information about the day and date. Consumers made their buying decisions on the basis of product quality and price, making watch companies come up with equally accurate but affordable alternatives to the Rolex.
Question 3
Since 1993, the watch category still has three main sectors. Since Swatch was the pioneer in the fashion sector of watches, it has been facing competition from established fashion brands like Relic and Benetton. The second category is the upper-price sector, comprising of watches that cost $350 and more. Omega was the first brand, but later, SMH added Rado and Longines brands to this subsector. The third category is mid-price, which consists of watches that cost between $100 and $350 (Schopfer, 2019). Here, SMH sells the Certina, Tissot, and Hamilton brands. In addition to Swatch, SMH has eight other subcategories; Omega, Certina, Flik Flak, Longines, Blancpain, Tissot, Hamilton, and Rado.
If I had to create a subcategory for watches, it would be Sight. This subcategory would be for the visually and hearing impaired. It would have a touch-sensitive screen to help the visually impaired know the time once they touch it, and have a sign language feature to interpret sign language to people communicating with the deaf. The product would take the industry by storm as it would capture a market segment previously overlooked by watch manufacturers. For SMH to remain competitive in the watch category today, it has to continually look out for untapped markets and diversify into other industries.
Question 4
The swatch telephone also changed the way people think about communication. It helped businesses communicate easier and reduced the time taken to pass messages. It also helped businesses to connect different offices, facilitating the growth of customer networks. Further, the swatch telephones helped companies reach consumers from the comfort of their homes through telemarketing and execute direct sales (Donzé, 2014). They also enabled organizations to conduct surveys and establish customer needs. For interpersonal communication, the swatch twin phone, especially, made conversation lively as two people could answer or make calls at the same time.
The smart car is another innovative product of the Swatch group. The automobile revolutionized travel by producing a type of car that used fuel efficiently was environmentally friendly, and could be parked in small spaces. The products have similar characteristics in that they are innovative and efficient. For Swatch to maintain relevance and sustainable growth in global markets, I would recommend that it diversifies into the digital and clean energy spaces as they are continuing areas of global attention.
References
Donzé, P. (2014). A business history of the Swatch Group: The rebirth of Swiss Watchmaking and the globalization of the luxury industry. Springer.
Schopfer, M. (2019). Swatch Group: Evaluation of Swatch group.