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Swatch’s Marketing Mix: DistributionEschewed normal channels of watch distribution (e.g., jewelers)Created non-traditional distribution channels: shop-in-shop systems, mini-boutiques, free-standing Swatch stores
Swatch’s Marketing Mix: PromotionHigh profile, TV focused30% of retail price on advertising; highest advertising budget in industry in 1992 (more than double the industry average)Special editions with well known designers to create buzz (not profits)Unconventional promotional activities1984 Launch in Germany: 162m, 12 ton giant Swatch in Commerzbank HQ, FrankfurtIn 1984, famous French artistKiki Picassowas asked to design the first-ever Swatch Art Special watch.
How did Swatch Change the Game?Prior to SwatchSwatchDefinition of quality & valueworkmanship, value of materials, or accuracy subjective, emotional valuePurchase criteriaprice, quality, functiondesign, subjective feelingDecision processdeliberate, plannedspontaneous, impulseConsumption patternsfrom occasionally buying one/few watches frequently purchasing multiple watchesCustomer basecustomers who use watch for functionality or investmentattracted younger customer base, esp. those previously disinterested in watches
Swatch’s Strategy: Breakaway PositioningCreated a totally new category for a mature product category“Played a different game”In contrast to technological innovation driven success of Timex/Citizen/Seiko (i.e., low cost manufacturing, quartz technology), Swatch pivoted based on a radical product vision “Borrow” association from a different & existing category – for consumers to categorize product differentlyBreakaway Positioning
Examples of “Breakaway Positioning”
The Birth of the Swatch:Key Implications & LearningsCreated new category for existing mature product by “borrowing” successful approaches from a different existing category Strategic direction backed up by developing new competencies to ensure success in the ‘new’ category (e.g., low cost Swiss manufacturing, new channels) An integrated and consistent marketing plan were in sync/synergistic with the new positioning(e.g., Swatch’s 4 Ps)As these breakaway product become more mainstream, the original category tends to expand its boundaries to accommodate the new sub-category.
Looking Ahead: PharmaSim Decision MakingNext class (March 14, Wed) : meet in LSKG005PharmaSim practice round ends Mach 14 (Wed)@7pm