Swatch

Case Analysis: The Swatch Group Executive Summary S.W.O.T. Analysis Strengths * High brand awareness as a market leader In the Swiss watch exports, the Swatch Group has biggest market share of 25% compared to other opponents, including Rolex and Richemont Group of 21% and 20% respectively. * Various products for different segments The Swatch group has strong reputation and owns 19 world famous watch brands, such as Omega, Rado, Tissot, Swatch, Longines, Tiffany & Co., ck watch & Jewelry, Certina, Blancpain, Jaquete Droz, Leon Hatot, Union Glashutte, balmain, Mido, Hamilton, Flik Flak, Endura, and Brequet. Among all these brands, each brand targets different customer segments from Basic to Prestige and Luxury. For example, Brequet is the one of the world’s top luxury watch brands and Swatch is focusing on the youth segment. * High quality products from experiences of developing technology and innovation In 1990s, The Swatch Group acquired Blancpain and Breguet which both have experienced manufacturing division providing movements for Omega. The Swatch Group’s two units, Nivarox and ETA, provided all of the group’s brands with high quality watch parts. Therefore, Omega has technological superiority of products over Rolex because the Omega watches can last up to 100 years with the almost zero-friction Co-Axial movement. Moreover, there are more and more customers requiring not only accurate watches but also practical and unique ones. As a result, the launching of Co-Axial movement technology made Omega a mechanical watch successfully. * Emotional communication The Swatch Group believed that the Omega watch is not just a commodity but more than that. They positioned their products from functional to emotional items by conveying emotional brand messages through mass communication, such as events and famous spokespersons. As the official time keeper for global sporting events like Olympics and Golf tournaments, Omega successfully built its brand image and value proposition. Moreover, Omega often used international celebrities as brand ambassadors, such as George Clooney and Cindy Crawford, to attract customers’ attention and escalate their perception. * Clear group organizational structure and well-trained sales staff The Swatch Group is a multinational company that has 26,200 employees across 50 countries with 250 boutiques’ locations across the world. Every local distribution subsidiary is led by a country manager and the main brands were represented by a brand manager. In this way The Swatch Group can adapt to different cultures of countries and make adequate marketing actions. Additionally, in mono-brand boutiques The Swatch Group has qualified sales staff able to educate customers. The more customers know, the more they want. Weaknesses * Lake variety marketing plan The brand such as Omega is highly dependent on its brand spokespersons for its marketing and advertising campaigns. They spend less on advertising than their major competitor Rolex. As a result, Rolex has higher popularity than Omega. * Limited market share growth due to competition In Europe, the traditional market (France, Italy, Switzerland, and Germany) grows steady but slow and the growth rate will be overtaken by Greater China area (China, Hong Kong, Taiwan, and Macau). Opportunities * Growing markets in Asia The Swatch Group has a great opportunity to increase its luxury segment sales in developing and emerging economies in the world. Market potential in USA * R&D Swatch Group is big enough to put more effort in the R&D and to be a pioneer for new categories of watches. With reputation of Swatch Group, a new category of watch can affect the market or create a market. Threats * Strong competitors Competition from other brands, such as Rolex and Cartier, is a high threat because they have stronger positioning as luxury watches than Omega does. * Economic downturn effects The slow recovery of economy might limit the spending on high-priced watches. The market demand in Europe has a slow growth and the growth rate will soon be overtaken by the Greater China region. * Increasing costs Growing price of raw material is another big threat to Swatch Group. The price of the major components, plastic, steel, and iron is increasing year by year. * Increasing fake watches As the brand's success grew so did the number and quality of counterfeit. Some of the fake watches are so good that only an expert can distinguish. Strategies/ Recommendations Pricing * Joint Venture Joint venture is a common strategy for the multinational company. For The Swatch Group, joint venture could be a great method to enter the developing countries or emerging market. The partner in the local market can help Swatch Group to improve the reputation and sales because Swatch Group cannot predict the situation in different culture. For example, Swatch Group needs to find more partners in China due to the average income level in China is boosting and more and more Chinese would like to buy the luxury watch to show their status. Another reason is that China made so many counterfeit goods including Swatch Group’s main brand Omega. Swatch Group has to lower the price of the products in China by joint venture and compete with those fake watches. Joint venture not only protects the reputation but also reduces the risk in foreign countries. Loyalty Swatch Group is in a high competition industry. The watch companies have to catch the trend of fashion for maintaining the old customers and increasing the new customers. However, when we talk about fashion and it brings unpredictable. The company needs to do the survey frequently and prevents to out of fashion. To increase the royalty from customers, Swatch Group also has to meet the demand of the customers that changing demand every year. I think the other thing they always have to do is the consistent of high quality customer service such as customer database and database marketing.