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The Birth of the

The Birth of the Swatch

Presented by:

Jackie Rezk, James Person, Simon Kegler, Marc Chabane, Stacy

Martinez, Jordan Martinez, Joe Cassissa

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The Birth of the

Background

SMH controlled 9 global Swiss brands

including Swatch.

Prior to the 1950s, watch-making was a craft

that required the skills of a master jewelry

maker.

The Swiss dominated the watch industry.

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The Birth of the

Problem

The Emergence of Low Cost Competition

With the introduction of low cost competitors, the

Swiss share of the global market declined from80% in 1946 to just 42% in 1970.

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The Birth of the

Arising Competition

In 1951, Timex introduced a low cost watch.

One of every three watches sold was a Timex

Quartz technology was introduced in 1970

and changed the industry once again.

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The Birth of the

The 4 Ps - Product

Product

1.Quartz Made in Switzerland

2.Encased in cheap plastic

3.Unique design and message

emotional product

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The Birth of the

The 4 Ps Price

Price

$40

SFr 50

DM 60

7000

Consistent global price parity

Low and simple prices encourage Impulse Buying

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The Birth of the

The 4 Ps - PlacePlace

Designed in Italy, made in Switzerland

Launched in SUI, GB and US (1983)

Immediate global success

Unit Sales (1993):

EU: 37.4 Asia: 42.6, America: 6.1, Other: 0.9

h h f h

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The Birth of the

The 4 Ps - Promotion

Promotion

- always deliver a message!

High-profile advertising approach

Preserve uniqueness

Sponsorships/Endorsements

30% of retail price spent on advertising

#1 in watch industry

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The Birth of the

SWOT Analysis

Strengths Swiss Quality

Made in Switzerland label was a global seal of quality,

status, and prestige.

Vertical Integration

Assembled all of the watches sold and built most of the

components for the watches assembled.

Decentralized Marketing

Each of SMHs nine brands had total authority over

product designs and marketing.

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The Birth of the

SWOT Analysis

Weaknesses Price

SMHs flagship high-end brand (Omega) sold for between

$700 and $2,000.

Efficiency

90% of Swiss watchmaking firms employed fewer than 50

people.

Retreating Attitude

The Swiss refused to compete with Japan and Hong Kong

companies.

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The Birth of the

SWOT Analysis

OpportunitiesMergers

SSIH and ASUAG merged to create Societe Suisse de

Microelectronique et dHorlogerie (SMH)

Market Trends

The opportunity to enter the low cost market segment.

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The Birth of the

SWOT Analysis

Threats Competition

U.S. Time introduced disposable watches.

Several Japanese companies begin expanding.

Technology

In 1970, Quartz technology is introduced allowing

companies to create watches comparable to Swiss-made

mechanical watches.

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The Birth of the

Alternative Solutions

Problem: The emergence of low cost competition Solution 1: Compete In Each Market Segment

Compete directly with Quartz competition & low cost mechanical

watches (Timex)

Solution 2: Dominate High End Market

Solution 3: Create Alternative To Budget Watches

Make the Pie Bigger

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The Birth of the

Alternative Solution Evaluation

ImportanceCompete

Directly

Dominate

High End

Create New

Alternative

Growth

Potential5 3 1 5

Profit 4 4 2 5Quality

Perception4 3 5 3

Sum 43 33 57

Solution: Create Fashionable Watch That Is Affordable

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The Birth of the

Four Actions Framework

Eliminate

Expensive raw materials

High production costs

Distribution strategy: High-end

POS

Raise

Affordability

Fashion appeal

Reduce

Production costs

Production techniques

Create

Vertical integration

Efficient production techniques

and manufacturing processes Unique mkt msg.

Distribution strategy: Retail POS

Design: New fashion appeal

Low-price mkt segment

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The Birth of the

Strategy Canvas

Pric

e

Raw

Mater

ials

Prest

ige

Man

ufactu

ringIn

novtion

Supply

Cha

inVa

lue

Market

ing

Portfo

lio

Factors

Value

Swiss

Swatch