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Presents. Dito Abuladze. David Gelashvili. Tea Manjavidze. Levan Lomtadze. Levan Losaberidze. Tako Khucishvili. History.
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History Swatch is a brand name for a line of wrist watches from the Swatch Group. The Swatch Group Ltd. is a Swiss company and the biggest watch manufacturer in the world (about 25% of the sales). It was formed in 1983 through the merging of the two Swiss watch manufacturers ASUAG and SSIH, and took its present name in 1998 (formerly SMH Swiss Corporation for Microelectronics and Watch-making Industries Ltd).
History In 1982, Swatch was conceived and it was introduced on the market in Switzerland in March 1983. Swatch was originally intended to re-capture entry level market share lost by Swiss manufacturers during the aggressive growth of Japanese companies such as Seiko in the 1960s and 1970s, and to re-popularize analog watches at a time when digital watches had achieved wide popularity.
History The launch of the new Swatch brand in 1983 was marked by bold new styling and design. The quartz watch was redesigned for manufacturing efficiency and fewer parts. This combination of marketing and manufacturing expertise restored Switzerland as a major player in the world wristwatch market. Synthetic materials were used for the watch cases as well as a new ultra-sonic welding process and the assembly technology.
Industry Background Watches were often considered to be financial investments. They were sold primarily through jewelers and upscale department stores. Swiss dominated the watch industry, in large part because of their centuries-long history of jewelry-making expertise. Around the world general consensus was that the only good watches were Swiss watches.
Industry Background In 1951, a company called U.S Time introduced a line of watches bearing the Timex brand name. They developed a way to produce low-cost mechanical movements that used hard alloy metals in place of jewels. Thus the automotive production and low cost of goods made possible the emergence of low-cost competition. With technological developments the demand for watches was becoming more and more price elastic.
Reasons for Birth of Swatch The major reason for the birth of Swatch was the introduction of quartz technology. In 1970 quartz technology changed the nature of competition in the watch industry once again. Quartz used an integrated circuit made up of numerous electronic components, resulting in a watch that was comparable in accuracy to Swiss-made mechanical watches.
Reasons for Birth of Swatch These watches were based on electronics and allowed more sophisticated functionality than their mechanical counterparts. Secondly the chipmakers were constantly lowering the costs of production. Some quartz watches had digital display. The rise of quartz technology hastened the decline of the Swiss watch industry and Switzerland found itself unable to compete.
Reasons for Birth of Swatch Two major Swiss watch producers SSIH and ASUAG were loosing millions of dollars, and Switzerland’s unit share of the world market had fallen to less than 15%. In order to maintain profitability , SSIH and ASUAG had regularly increased prices, which had only furthered Switzerland’s isolation at the upper segment of the market.
Reasons for Birth of Swatch These two companies decided to merge and new company SMH. This company now controlled many of the world’s best-known watch brands, including Omega, Tissot, Longines , and Rado. The CEO of the company Nicolas Hayek decided to retreat no longer.He knew that they needed at least one profitable, growing, global brand in every segment including the low end.
Concept of SWATCH Swatch team decided that the watch would be encased in cheap plastic. It was risky because it could harm the Swiss watch image as being of the highest quality, but if they didn’t have mass production and if they didn’t have a strong position in the low end, they wouldn’t be able to control quality and costs in other segments. In light of the economic state of the Swiss watch industry at the time of the introduction of the Swatch, its directors understood that it was not enough to offer a good watch. The watches needed to be attractive, cheeky and good fun, daring in design and aggressively priced, with high quality and innovative flair. Hayek understood that the key to success would be vertical integration which should have been supported by the low cost of direct labor. Total direct labor should have accounted for less than 10% of total cost. SMH improved its product development which made it possible to work on Swatch.
Concept of SWATCH Hayek wanted to introduce a watch which would be something more just a consumer product. He wanted to bring something different, unpredictable, youthful, provocative, and stylish, which wouldn’t make you think you much. Swatch wasn’t just affordable it was approachable. It meant that buying a Swatch was an easy decision to make, an easy decision to live with. It was meant to be provocative but still wouldn’t make you think much. Swatch was sold at an affordable price all around the world. Its price was one of the elements that made the Swatch so popular just 40$ in the United States, SFr50 in Switzerland. This low price tag made it easy for consumers to purchase Swatches on impulse.
Positioning of Swatch With breakaway positioning, a product escapes its category by associating with a different one. Customers associate products with a category through their design, distribution channels, promotions, and pricing. Each of these elements provides cues to consumers. By manipulating these cues, a firm can change how consumers `frame' a product and, therefore, how they respond to it. Instead of seeing the breakaway product as simply an alternative to others in its category, consumers perceive it as altogether different. By imaginatively repositioning their products, companies can change how customers mentally categorize them. They can rescue products struggling in the maturity phase of their life cycles and get them back to the growth phase. And in some cases, they might be able take their new products forward straight into the growth phase.
Positioning of Swatch Swatch is an excellent example of breakaway positioning. Before Swatch was launched in 1983, Swiss watches were marketed as a form of jewellery. They were serious, enduring, expensive and discreetly promoted. Swatch positioned its watches as playful fashion accessories. They were fun, not expensive, and showily promoted, to encourage impulse buying. Their price - $40 when the brand was introduced - expanded Swatch's reach significantly.
SWATCH MessageAdvertising & Promotion The Swatch’s distribution strategy was different from other watch company’s strategies. Instead of placing the watch in the jewelry stores and specialty watch shops, the company adopted an unconventional retail approach that created many nontraditional points of purchase such as fruit and vegetable markets. After analyzing the swatch history and today’s image we understood that the brand personality of swatch is built on excitement. It is imaginative, stylish, unpredictable, daring and always up-to-date. SMH’s general approach to promotion was to spend roughly 30% of the Swatch’s retail price on advertising. The company used special events and product placements to promote the Swatch brand. For example when launching the watch in Germany, Swatch team built a giant Swatch and suspended to outside the tallest skyscraper in Frankfurt, the headquarters of Commerzbank.
SWATCH MessageAdvertising & Promotion Swatch has millions of consumers. In our opinion these people are highly innovative- The degrees to which consumers are receptive to new products, new services or new practices; Low in dogmatism because these kinds of people are more likely to prefer innovative products to established or traditional alternatives; With a strong need for uniqueness; they have high OSL(optimum stimulation level) because they have greater willingness to take risks, to try new products, to be innovative; Also they could be more materialistic people: Value acquiring and showing-off possessions ,are particularly self-centered and selfish, Seek lifestyles full of possessions Have many possessions that do not lead to greater happiness; We also decided that because of its brand image and marketing plan Swatch would be appealing to consumers with these personality structures: Extraverts-gregarious, assertive, and generally seek out excitement, Open to experience-involves active imagination, aesthetic sensitivity, attentiveness to inner feelings, preference for variety, and intellectual curiosity, with high agreeableness-tendency to be pleasant and accommodating in social situations. People who score high on this dimension are empathetic, considerate, friendly, generous, helpful, and generally likable.
SWATCH MessageAdvertising & Promotion The principle of stimulus generalization is applied by marketers to product line, form, and category extensions. Swatch adds new shapes and designs. It creates many new collections and all these new products are easily associated with a well known and trusted Swiss Brand. As the purchase of Swatch doesn’t need much thinking and high-involvement we think that Swatch uses peripheral routes to persuasion. Learning occurs through repetition and processing of visual cues such as the model or the setting. Swatch’s motives were emotional and not rational. The selection of the watch among customers was spontaneous and without much thinking according to the subjective criteria. Swatch advertisements were and are appealing to social needs, such as need for affection, friendship and belonging. Love for family, love for friends and spending time with those people who we admire was a motivator in many advertisements of swatch, especially in the 80ies.From the trio of needs need for affiliation was highlighted.
SWATCH MessageAdvertising & Promotion Swatch is a triumph of imagination. If you combine powerful technology with fantasy, you create something very distinct.
