Consumer

Product

Price

Place

P Law

Competition Technology

Needs romotion

Economy

Culture

What was the answer?

• A low-cost, high-quality plastic watch – low cost means high volume

– high volume permits economical automation

– automation reduces labor costs (<10% of total costs)

– with low labor costs Swiss can produce the entire product themselves (vertical integration)

– do not have to outsource for parts, they can maintain strategic independence

Consumer

Product

Price

Place

P Law

Competition Technology

Needs romotion

Economy

Culture

Product Positioning

Cost

!"#$%

&'"#(

Quality

j brands

W n Attributes

10 10

i (b) Inexpensive 6 9

SWi =1 i = 1

S i = 1

Wi Xij

Importance eight Swatch Timex

(a) Tells Time

(c)

i = n

i = nAttitude (j) =

ConsumerPrice P Law

Competition Technology

Place

Product

Needs romotion

Economy

Culture

Consumer

Product

P Law

Competition Technology

Place

Price Needs

romotion

Economy

Culture

The SMH ("Swatch group") product line

Breguet Blancpain Glashutte Original

Jaquet Droz

Leon Hatot Omega Rado Longines

Union Balmain cK Tissot

Hamilton Certina Endura Mido

Flik Flak Swatch CY3 Les Boutiques

The Swatch group product line

Consumer

Product

Price P Law

Competition Technology

Place

Needs romotion

Economy

Culture

Consumer

Product

Price Law

Competition Technology

Place

Promotion Needs

Economy

Culture

Brand identity and brand image

• What was the brand image Swatch intends to portray? –

–

–

–

• What image do you have of Swatch watches? –

–

–

–

• Brand extensions? –

–

Psychographic segmentation of U.S. consumers

• 6-10 Consider it "cool", because big kids have it (42% awareness!)

• 11 –15 ("teeny boppers") provides sense of identity

• 11 –15 ("young rockers") high awareness, but represents t.b. lifestyle

• 11- 15 ("students") Swatch too wild for them, but they might buy it to fit in

• 16 –22 ("rockers") like the price, but dislike the male model geeks

• 16 –22 ("preppies") prefer a dressier watch

• 16- 22 ("trendies") hate it; "fast food of time pieces" (73% wear no watch)

• 22 –32 ("transitionaries") like its durability, disposability, price

• 22 –43 ("older casuals") watches are used to tell time (4% awareness!)

• 33- 43 ("weekend hippies") teen image (high awareness, but 43% have never seen a Swatch in real life

Consumer

Product

Price

Place

P Law

Competition Technology

Needs romotion

Economy

Culture

What was Swatch's innovation for stimulating demand for watches?

Market Segments

• Swatch was part of a multi-segment strategy 8

42

450

> $400

> $75

Omega Longines

Swatch

millions pricesold

per year

j brands

Weight n Attributes

2 7 7

(0.3) Taste 6 6 4

(0.1) 7 5 2

SWi =1 i = 1

S i = 1

Wi Xij

i

Importance Ultra Brite Gleem Crest

(0.6) Decay Prevention

Whitening Power

i = n

i = nAttitude (j) =