JACOBO SANMARTÍN

MARKETING - SWATCH CASE

CASE ANALYSIS MARKETING MANAGEMENT

1. Why was Swatch so successful? How was Swatch different in relation to

other watch brands?

At the beginning of the 1980s, Hayek, a consultant with no experience in watchmaking,

he was summoned by Swiss banks to prepare a report on how to organize the
Swiss watchmaking sting. But he ended up reinventing it by introducing materials and
cheap manufacturing methods and the concept of a fashionable Swiss watch. The industry
of watches and in particular wristwatches, was completely governed by the
Swiss watches, which are characterized as the best in the world, with greater
category, quality and above all built with the best components and stones
precious. The above summarized a watch of the highest quality but at a very
high. After a few years, new watches appear based on a technology
completely new, quartz. This new way of making watches creates a
total revolution in the industry. The main characteristic of quartz watches was
its low manufacturing cost, which translated directly into a new alternative
for customers, as its price was much lower than Swiss watches. On the other hand the
Asian companies implemented this new technology for mass production and
they led the industry to fall into an unsustainable price war for the
Swiss companies due to their high costs. In the face of the new paradigm of the industry
relojera, Nicolas Hayek propone la fusión de las 2 principales empresas relojeras suizas
and thus the new SMH society is born, which also manages to evade bankruptcy that
was inevitably coming from the merged companies. The new society
I face the competition by creating a completely innovative new product and
revolutionary for the watchmaking industry and especially for Swiss companies
dedicated to that sector "Swatch". In this new watch, two characteristics were merged.
essential for consumers, on one hand the watch was affordably priced and on
on the other hand, its guarantee seal was for being Made in Switzerland: a recognized country, like
creators of the best watches in the world), therefore Swatch was the blend
perfect between quality and good price. On the other hand, the creators of Swatch bet
for an innovation in the industry by realizing that a watch is much more than a
accessory product.

ht[Link]

1
 JACOB SANMARTÍN
MARKETING - SWATCH CASE

SWATCH CASE 1

1. Why was Swatch so successful? In what way were Swatch watches

different from what the industry had seen before?

In my opinion, the key to Swatch's success was knowing how to connect in an emotional way.
with young people by offering them a quality, innovative, and accessible product.
Swatch watches had the high quality of Swiss watches, unique designs and colors.
on the market, they were synonymous with fashion, fantasy, provocation, and joy, their price
It was quite accessible and you could find them in the most fashionable areas all over the
world.
As Nicolas Hayek explains regarding the success achieved by Swatch: '...
we offer only watches, but what we are offering to others is
our personal culture.

2. What elements of the brand's original marketing plan were the most
crucial? Do you agree with the product, distribution, and
promotion?
The main elements of Hayek's Marketing Plan that were crucial
for Swatch are:

Vertical integration of the company - All manufacturing and assembly is done in Switzerland.
Low-cost manufacturing materials - The watch is coated in plastic and not in
precious metals.

Unique message – An emotional message that Swatch is fashion, joy, provocation.

Regarding Swatch's strategy, I completely agree because by moving away from
The traditional practices managed to captivate a market that seemed lost.
Swiss.

I think it's worth emphasizing the following points:

Product: Swatch offers a product manufactured and assembled to high standards

from Switzerland, designed by the best designers in Milan, completely innovative and
fantastical but at a very affordable price that doesn't change in 10 years.

2
 JACOBO SANMARTÍN
MARKETING - SWATCH CASE

Distribution: Swatch chooses to distance itself from jewelry stores and specialized shops.
watches and decide on an unconventional retail distribution: establishments
independent, markets, own spaces in large warehouses.

Promotion: Swatch dedicates 30% of the retail price to advertising and...

they lean towards unconventional activities: sponsorships of break-dance competitions,
promotions with famous characters, special events, giant watches placed
in buildings, etc.

In many ways, Swatch forced consumers to think about watches

a completely different way. Can you think of other products in other
categories that have done the same? Think of an example to share it with the
class. I believe that the clearest example of products that have revolutionized the
market by changing the way of thinking of the consumer is Apple. Not only was their slogan
"Think different." Instead, they were able to create needs in a market that
it seemed monopolized.

4. Right now, if you had to create a new sub-category of watches, what would it be?
Could this new sub-category have the same impact that Swatch had in 1983?
In my opinion, Swatch did not create a sub-category of watches because low-end watches
costs already existed and were dominated by Asians. The success of Swatch was to create
an unconventional marketing strategy to emotionally connect with
the consumers.

If I had to create a sub-category of watches, I would consider making something similar to

what Swatch did. Using a strategy similar to that of Swatch with its watches.
limited edition, I would create a line of watches designed by contemporary artists and
by the most influential people in the world: painters, sculptors, actors, singers,
politicians, businessmen, etc.

3
 JACOBO SANMARTÍN
MARKETING - SWATCH CASE

SWATCH CASE 2
The watch industry underwent an evolution over time. Make a
analysis at the product depot level, need that was focused on satisfying the category
and how the consumer made their purchasing decisions.

At the beginning, clocks were considered a jewel of engineering, as they required

from an expert jewelry maker added to the experience of an engineer
specialized in micromechanics. Thanks to this combination, devices were created.
extremely detailed and perfect mechanics at quite high prices.
With the arrival of World War II, a new type of watches became popular.
Timex brand, which were disposable, at a very low cost, which implied a price
smaller. Timex with a simple design and cheap exterior materials, gave to the
products with an exclusively functional style.

Following the emergence of low-cost watches, a technological innovation arises: The

quartz technology, which thanks to its integrated circuit made up of numerous
electronic components, provided a clock comparable in precision to clocks
mechanisms made in Switzerland, in addition to providing more functionalities such as delivering the
date and the day of the week, these watches, with Seiko at the forefront, were also of a
low cost, but a little higher than the Timex, they tried to have a more touch
elegant in presenting bathrooms in another and silver to thus appear as fine jewelry.
This is how 3 great categories have been described. First, there is a clock made
with precious materials, set in jewelry and handcrafted: Rolex. On the other hand,
the other extreme, a totally functional, disposable watch, without any kind of pretense
more than just telling the time: Timex. Finally an intermediate watch, with a lower cost with
respecto a los relojes suizos, pero con la tecnología y los materiales de los relojes
disposable: Seiko.

The swatch was made with the intention of satisfying a need for self-expression; fun,
creativity and imagination for young people and adults. This product was based on the use of
cheap plastic, quartz, colorful, funny and extravagant designs, made by
multidisciplinary teams of artists, designers, and architects manufactured in
automated chains. Naturally, this pushed for it to be, subsequently,
considered a high-value product.

In this category, the consumer has various options to choose from, where anyone
They will fulfill the main objective of a clock that allows you to see the time, without
the embargo on your decision will depend on the specific consumption characteristics of each customer and

4
 JACOB SANMARTÍN
MARKETING - SWATCH CASE

the utility you want to give to the product, that is to say, do you seek status? Do you want something
Economic? Do you want to leave an inheritance to your descendants? Do you want something economical?
but with style? Are you looking for something that matches your personality?

In what aspects was Swatch's business model and strategy different from that of
any other company in the industry? Determine the key strategic elements
that justify the success of Swatch (Help: analyze the competitive strategy, of
growth, the design of its competitive advantages, brand strategy and
positioning.

Some of the elements that made a difference in the business model

as in the strategy, against its competitors and which in turn allowed to avoid the
retreat from the Swiss watchmaking sector from the market were the following:

Change in the Commercial Strategy:

It is one of the most important factors that influenced the resurgence of watches.
Swiss. Because, initially, the company did not have a clear strategy.
to face the change that was occurring due to the emergence of the
competition with low prices nor the entry into the quartz market. In this way,
it was aimed to maintain, at the beginning, the prices including in some brands there was a
increase of this, which caused a worse decline in the market.
With Hayek's arrival at the SMH company as CEO, there was a
change in the commercial strategy that was based on a commitment regarding the
vertical integration, the assembly and manufacturing will be carried out by the company in Switzerland,
also that it was necessary to have a competitive brand in each segment and a
decentralized marketing. This is how the quartz watch, Swatch, was born, which
achieved immediate success in the low-priced watch sector.

New Competitive Strategy

The strategy that was applied was to enter the low-priced watch segment and
achieve a differentiation from the competition, so that Swatch was not considered
as not just a product but having an emotional image before the consumer,
that a unique message will be delivered, materializing the dream and imagination
from childhood or from youth. In this way, new designs were created that had
vivid colors, extravagant designs, unique, among others. This is how there was a great
a variety of watches for every occasion that consumers could choose from.

5
 JACOB SANMARTÍN
MARKETING - SWATCH CASE

Also, the way to showcase the product marked a differentiation since it

they used unorthodox methods

Growth Strategy:

One of the strategies applied was product development since the

the main focus was the constant innovation of the watch, regarding the design. It was about
to deliver different types of designs throughout the year, so that the consumer would have a
variety to choose from. Therefore, the selection process for the designs was very
rigorous, not all the designs created at the Swatch Design Center were implemented
cable. Different sources of inspiration were also sought to achieve a
variety of styles.

Diseño de ventajas compettvas:

Among the competitive advantages that Swatch had, there is the variety of
unique designs created by a diverse group of artists, architects, who used
different sources of inspiration. Another advantage was the advertising campaigns that
they were carried out to make the product known, such as the launch that was carried out
in Germany, where a large-sized Swatch was manufactured. The marketing plans,
they also made a big difference compared to the competitors, since they did not
they carried out common activities of the environment such as sponsoring contests of
break dance until promotions of characters famous.

Brand strategy:

SMH was responsible for producing different products where each one...
It corresponded to a private label, this was the strategy that was applied. Some of the
The brands of these watches were: Omega, Longines, Rado, Tissot, Certina, Hamilton. Each
one of these brands delivered a different message and corresponds to a segment
different in the market, such as Omega was in the segment of the
expensive watches and was destined for people who succeed in different fields,
important people. The Swatch brand extension was also applied, which was
Flick Flack, directed at the children's sector.

6
 JACOBO SANMARTÍN
MARKETING- SWATCH CASE

Positioning strategy:

It was based on the lifestyle, as it focused on the interests and needs of the
consumer, for this reason radical innovations were made in the design, also
they generated new product lines such as: Scuba, waterproof watches,
Chromo, they were technical watches that offered functions such as four hands of
stopwatch.

Realice un análisis del diseño de la marca Swatch a través del modelo de Aaker.
Identify the four pillars of the brand, the essence of the brand, and its proposal.
value based on the benefits provided.

Análisis estratégico de la marca:

Customer analysis: Initially in the watch industry, many times these

they were considered an economic investment, customers valued that highly
the watches were made of precious metals and sold in jewelry stores
and department stores like first-class products. With the appearance of the
low price competition and the unmet need of people who wanted
to acquire a quality watch but they did not have the resources to purchase it
the scenario changed. The customers' vision changed drastically and with it the
composition of companies in the industry, customers were no longer seeking great luxuries,
but they sought other characteristics according to their lifestyle, needs,
resources, age, etc., such as appearance, functions, and price.

Competitive analysis: Swatch sought to be perceived as a brand that sold a

emotional product, economic, with innovative designs, high quality, with prices
easy to remember, easily accessible, but above all to send messages with their watches.
Its customers see the brand as an authentic, innovative brand, like watches to the
fashion that fits their interests and styles.

The company had great strengths and strategies; working with people
avant-gardists with fashion, designers, specialists, innovators, staff that went
working from generation to generation what it did was to know in detail the objective of the
company, with unconventional marketing plans and constantly new collections
of designs by the Swatch brand, despite the vulnerability it has in producing

7
 JACOB SANMARTÍN
MARKETING - SWATCH CASE

low-cost products in a competitive industry, became a

a distinctive brand very difficult to surpass.

Self-analysis: Currently, the Swatch brand is perceived as a brand

avant-garde, constantly innovating in its designs, with watches that are more than a
product carry personal culture, leaving a legacy of quality watches, to the
fashion and at affordable prices.

Swatch also has the ability to continue creating new products, with
new features and as always of great innovation, with an organizational culture
what makes them continue as one of the leaders in their field.

Brand identity system:

Brand as a product: Swatch provides its customers with innovative products with
attributes such as: style, with different functions and uses, quality that generates value to being
an accessible price, for users of different styles and ages, a product that
It generates credibility by being manufactured and assembled in Switzerland.

Mark as an organization: Swatch has great organizational attributes that have

led the brand to have loyal customers, the main reason is the constant innovation of its
products that make it difficult for the competition to copy them, the search for quality
and functionality, automation of your productions, with human resources
committed, trained and informed, decentralizing the marketing and
centralizing production, a brand focused on the customer and their needs both
tangibles like emotional.

Brand as a person: It is a genuine brand that seeks not only to send products to its
consumers, but also 'passionate, distinct, and authentic' messages,
that makes it a brand close to people, a brand that caters to their needs
personalities and ways of expressing themselves, these messages and compatibility with their
Consumers make this brand difficult to imitate.

Mark as a symbol: By using this mark, users feel and see themselves as individuals.
that follow and express their convictions, their personality, and ways of seeing life,
provocative and full of zest for life. All this with unique and fashionable designs, with a
a story that brings the brand of quality products such as those made in Switzerland.

8
 JACOBO SANMARTÍN
MARKETING - SWATCH CASE

Essence of the brand:

The central identity represents the essence of the brand. In the case of the Swatch brand.
They are watches not only with style, but watches with a message, with a culture.
personal. The central identity of Swatch makes the brand unique and valued for
its consumers, makes it a brand loyal to its beliefs and core values
through time, building new and varied strategies to guarantee their
staying in the industry and being superior to its competitors.
Mainly, it has achieved this with trained personnel, with growing progress.
technological and innovation and the focus on the needs and vision of its clients, the
the commitment of this brand creates close and loyal ties with its
consumers.

Value proposition:

Functional benefits: The attributes of Swatch watches are:

high-quality designs, a variety of designs suitable for everyone's personality
person, manufacturing and assembly in Switzerland, new collections continuously
offering new styles, innovative watches, physical accessibility to the products and
new features.

Emotional benefits: Swatch is seen as a brand that delivers a product

emotional since it offers not only a product or a new style, but also offers you
also a message. With their designs and styles according to each person's personality
Swatch client sends passionate, distinct, and authentic messages that tell the
people who one is oneself and why one does what one does. In this for their
Competitors become very difficult to imitate as customers are offered a culture.
personal.

Benefits of self-expression: A person's self-concept when using a product

Swatch defines itself as a provocative person, who uses products.
high quality, a product of vibrant colors that make her look like a person with
joy of living and with spontaneity.

Relative price: Swatch watches have a low price, making them accessible.
economically to potential consumers, this does not make the product a
poor quality, on the contrary this brand has demonstrated the quality of its products to
through time and the benefits it brings with it. By not being an overrated brand

9
 JACOBO SANMARTÍN
MARKETING - SWATCH CASE

at its price and demonstrating its quality and benefits, makes this a great
combination that generates more value for the customer.

What elements of the original Swatch marketing plan were most critical for the
Brand success? Is its tactic consistent with its brand strategy? Analyze:

Swatch's marketing plan consists of a strong definition of the objectives that

they wanted for the brand. Swatch's plan was to deliver a unique and vital message for
the customers. The message was that Swatch offered high quality, low prices,
provocation, joy of living, and offering the personal culture of the company, which
made it stand out from the rest of its competitors, seeking to project an image
emotional to the product in order to stand out and compete directly in the segment of
low-priced watches.

Another one of the most critical elements for success was the positioning of
the watches, as people felt and believed that if the watches were made
Switzerland was the best in the world with the best existing quality. Therefore, Swatch
had the advantage of positioning and belonging to the group of watches of
low price, which made it more attractive and of course with its striking styles, its
various designs and creations.

La táctcatene directa relación con la estrategia puesto que se utlizan métodos y

mechanisms to convey the message that Swatch intends for all its customers,
adopting the measures described below.

The product strategy and tactics were based on vertical integration in the process.
for manufacturing in order to maintain the quality of the products and the optimization of
production process in order to minimize costs, which translated into a
advantage. Also the variety of designs, colors, and the huge number of collections.
what himself they were launching,
they were doing
of Swatch a product of fashion.
La estrategia y táctca de canales se basaba en evitar las joyerías y lastendas
specialized in watches that were the most used pathways for manufacturers of
watches. Therefore, Swatch decided to take the path of retail stores, which
made the creation of special and more innovative sales points. This is why
They installed independent stores focused on selling Swatch watches, such as
example the "vegetarian line" that was sold in fruit markets and
vegetables.

10
 JACOBO SANMARTÍN
MARKETING - SWATCH CASE

The communication strategy and tactics were based on the originality of the product or better
said, the value proposition and the message that was meant to be delivered, an important one and
apasionado, distntvo y auténtco, que hacía que las personas se sinteran identficadas
and that would align with Swatch's personal culture.

The pricing strategy and tactics focused on staying consistently low.

prices, despite the passing of years, of the new collections that were being released
market and the unmet demand in certain countries such as Italy; which led to the
people will remember its price and that it was easily accessible, which was leading to the
people to choose to buy a Swatch watch quickly and easily, since it does not
I needed to think a lot. The company's policy at Swatch was not to raise the
prices to distributors with the commitment that they would not raise the price either
of the watches.

Given that Swatch had a high market share and had loyal customers
to the brand, it could be said that if the prices of the products were increased, this
It could have affected the level of sales, since Swatch had a policy
low prices. Thanks to the fact that customers who bought Swatch watches were loyal to
the brand, and inferring from the text that they were not very sensitive to price changes, they
I could say that the company made a mistake by not raising the price of the products.
avoiding greater growth in sales.

11
 JACOBO SANMARTÍN
MARKETING - SWATCH CASE

12