Product StrategyMARK4210 Spring 2017MARK4210 Spring 2017MARK 4210 Spring 2018 Professor Eugene R. Raitt1
Situation Analysis(Customer, Competitor, Company)Market Selection(Segmentation, Targeting, Positioning)Marketing Mix Formulation(Product, Pricing, Distribution, Promotion)- Quantitative Analysis- Consumer BehaviorSimulation GamePharmaSimElements of Marketing StrategyFundamentals ApplicationCourse RoadmapCourse RoadmapMARK 4210 Spring 2018 Professor Eugene R. Raitt2
MARK 4210 Spring 2018 Professor Eugene R. Raitt3
The Birth of the SwatchCase Discussion Questions:1.Prior to Swatch, what was the watch industry like in various historical stages (prior to 1950s, between 1950s-1970s, 1970s-1980s)? Consider the various aspects of the watch category (e.g., category usage, marketing mix, consumer behavior).2.Why did Swatch become a success, what are the key elements of their marketing plan (e.g., positioning, marketing mix) that contributed to their success?3.How has Swatch influenced/impacted the watch industry in terms of how people view the category and consumer behavior?MARK 4210 Spring 2018 Professor Eugene R. Raitt4
Swatch: Company BackgroundSSIH & ASUAG (parent companies) faced insolvency in 1983; potentially selling premium brands to Japanese companiesInefficient structures – separate watch companies within companies; own marketing, own R&D, own manufacturing1945: Swiss companies had 80% of watch market 15% in 1983MARK 4210 Spring 2018 Professor Eugene R. Raitt5
The Watch Industry Pre-SwatchPrior to 1950s19511970sPositioningA specialized form of jewelryFunctional tools -- rugged, utilitarian, and masculineCheap jewelryProductContained jewels; require great care and precision; handed down from one generation to nextQuartz technology. Mimic the traditional appearance of more expensive, Swiss-made mechanical counterparts.ChannelSold through jewels and upscale department stores, repaired by jewelers. Drugstores, discount houses/shopsDepartment stores (n/a in the case)Jewelers (n/a in the case)PromotionMacho "torture tests" that mocked the delicacy of high-end watchesPricingFinancial investment; probably on par with Jewelry$6.95-$7.95; so low that they were considered disposableBetween $50 to $350MARK 4210 Spring 2018 Professor Eugene R. Raitt6Timex. inexpensive mechanical watches using hard alloy bearings instead of jewels
The Watch Industry Pre-SwatchMarket share continuously dropped80% of the world's total watch production prior to 1950Global share declined from 80% in 1946 to 42% in 1970Market share in different price segments$350+ watches: ~ 8 million units, 97% Swiss$100~$350 watches: ~42 million units, 3% Swiss<$100 watches: 450 million units, 0% SwissCompanies in lower price categories moving up to compete with Swiss companiesMARK 4210 Spring 2018 Professor Eugene R. Raitt7
1983: SSIH & ASUAG merged to become Societe de Microelectronique et d'Horlogerie (SMH), Swatch was launched1986: Nicolas Hayek (Chairman), left, and Dr. Ernst Thomke (CEO 1984-1991)MARK 4210 Spring 2018 Professor Eugene R. Raitt8
Swatch’s Marketing Mix: ProductUse bold, intense colors and designs (compared to watches before which were black, brown, or white) Designed in the Swatch Design Lab by artists, architects rather than engineersInnovations that are non-functional but playful and provocative (e.g., see-through watch, scented watch) Clever branding: “Swatch” – traditional perceptions of Swiss quality/reliability, but also friendly, approachable, trendyMARK 4210 Spring 2018 Professor Eugene R. Raitt9
Swatch’s Marketing Mix: Product Lines•Tremendous diversity, 70 designs that changed 2x/year; which encouraged the perception that watches were accessories to be mixed-and-matched depending on one's outfit, mood, or taste•Collections changed on a seasonal basis•No repeat production runs•Limited editionsMARK 4210 Spring 2018 Professor Eugene R. Raitt10
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