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Seiko Case Study Essay

Wide brand recognition. Seiko’s Spring Drive will need to differentiate from Seiko’s low end market watches.
Seiko’s goal is to gain a market share in luxury watches to a level of 100,000 high-end mechanical watches by 2013. Communication will be executed through niche luxury and/or collector’s media and events following product design and manufacture. We recommend that the launch of the product should be executed in the domestic and Seiko’s strongest market – Japan which will be followed by other markets soon. Success will be monitored closely through key performance indicators.


First founded in Tokyo in 1881, Seiko rose from a company repairing and selling second-hand clocks to one of the leading names in the watch industry. While Seiko is a well-known producer of inexpensive and luxury watches alike in Japan, its brand image is significantly different abroad. Their watches are globally considered very reliable and having an excellent price to quality ratio, but are not considered luxury and are not held to a high esteem among collectors and watch enthusiasts.

Up to the invention of quartz watches in 1969, wrist watches were exclusively mechanical. Afterwards, it became much less expensive to produce precise wrist watches. With the advent and rising popularity of mobile phones, people stopped perceiving wrist watches as a necessity to tell the time, as they can now turn to their mobile phones for this purpose. Customers now perceive watches primarily as either a fashion accessory or a status symbol, which greatly contributed to the drop in demand for low-end watches. Since Seiko is not considered a high end luxury watchmaker, selected clientele are not buying their luxury wrist watches.

PESTEL analysis of the company

Political| * pricing regulation, taxation policies can affect Seiko as it has relocated its watch manufacturing to less expensive Asian markets (China)| Economic| * demand for budget watches demand is down *
luxury watches market grows fast * 90’s recession in Japan * cheap labour abroad (e.g. in Hong Kong, China)| Sociocultural| * mechanical watches seen as a status symbol | Technological| * high quality mechanical and hybrid watches * budget quartz watches * widespread use of mobile phones reduces the need for watches as means to tell time| Environmental| N/ANA|

Legal| * local laws in countries where watches are produced can impact brand perception (e.g. Hong Kong 1980 trade law requires the country of origin of the watch is declared according to the country of origin of parts used)|


Strengths * Dominant brand in Japan and Asia * Mechatronic-manufacture * Reputation of reliability, quality and service worldwide * Technology driven innovative products with long tradition/history of craftsmanship| Opportunities * Latest hybrid technology * International luxury watch market * New target audience (high-end consumers) * Brand recognition/ market repositioning * One marketing strategy for all markets| Weaknesses * Small geographical market * Perception of cheap brand affordable for low-mid end consumers and poor brand perception in EU and US (~50% of market) * Low priced products * Uneven marketing strategy per mkt.| Threats * Similar technology advancements among competitors * Strong competition in all segments, especially in low to mid-price area * Stagnating market in low to mid-priced segment * Market oriented to high-end products|

Problem statement

In 1999 Seiko unveiled first commercial watches based on the new and innovative Spring Drive technology, which was awarded Watch of the Year award by TimeZone.com in 2005. Seiko sees this new technology as the opportunity to grow its luxury watches market share, which is currently dominated by its Swiss competitors. Seiko has to decide how to brand these
new watches; whether to use the globally known Seiko brand which is currently not perceived as a high-end brand, or to market this technology under one of the high-end brands.

Alternative Solutions

A. Reposition of the Seiko brand

1. PRO: existing brand with long tradition known for quality and innovation 2. CONS: not perceived as luxury; long period/money needed to change perception

B. Use existing Credor luxury line and differentiate it from Seiko

1. PRO: existing premium brand is well known on the Asian market; in line with company strategy/vision 2. CONS: heavy investment for expanding brand awareness outside Japan; cannot use current positioning

C. Partnership and/or acquisition of existing worldwide known luxury brand

1. PRO: established luxury brand; short time to market
2. CONS: very high cost


We recommend branding under the existing Credor luxury line, as this will enable Seiko to build on its core values of quality and worldwide brand recognition. Seiko’s Spring Drive will need to differentiate from Seiko’s low end market watches.

Action Plan:

* Goal: Increased market share in luxury watches to a level of 100,000 high-end mechanical watches by 2013 * Strategy
A. Target Market
* Customers:high and upper-middle class who perceive quality and exclusivity * Company:Seiko Watch Corporation and additional luxury brand * Collaborators: Seiko Epson, Seiko Instruments, Seiko shops, luxury retailers * Competitors:other high-end mechanic watch brands

B. Value Proposition
Customers will have quality-driven, reliable and exquisite watches. Collaborators will be entitled to increased profit margins and a distribution opportunity for this exclusive brand. The company will have increased revenues and positioning in the luxury market

* Tactics
A. Product: launch more Credor lines (spring drive & mechanical) through distributors B. Service:build on Seiko’s good reputation of customer service C. Brand:Credor= innovation and refinement

D. Price:$3,300 to $5,000
E. Incentives:
* Exclusive one day online sales for customers; loyalty program discounts; * Profit margins, competitive advantage, advertising for collaborators * Profit-sharing plan for employees
F. Communication: Advertising (TV/fashion/sports), sports event sponsorships (Golf/ Olympics); exclusive magazines; luxury watch showrooms G. Distribution:Seiko stores, High-end stores; Airports

Implementation plan

The implementation plan will consist of the following segments:

The product will be designed with a team of collaborators – designers (in-house and outsourced) and in-house engineers. Once the product is designed and set, we can start the production of the test quantities. After the test quantities are confirmed, Seiko can move to a larger production scale.

In the meantime, initial communication gives the selected crowd a “pre-look” to what is to come at Seiko. The communication is executed through niche luxury and/or collectors’ media and events. Exclusively available for the clientele Seiko is targeting. This creates desire for the collectors and gives Seiko the much needed information and feedback on the product, allowing a small window for the product modifications. Secondary communication already allows Seiko to be more accurate in its predictions on coming to the market, targeting a wider audience of potential buyers, with the strict targeting to high end, luxury brand buyers.

We decided to have a prelaunch because it is the opportunity to create positive buzz around the new product. Collectors are being invited to highly limited events that are being launched for a selective market. At the event they will be the first to have the opportunity to purchase the new product.

We recommend that the launch of the product should be executed in the domestic and Seiko’s strongest market – Japan which will be followed by other markets soon. After the launch we need to monitor our success closely.

* Infrastructure: Major operations carried out in headquarters (Japan) where management team is in place. The production capacity needs to be increased, thus, hiring and training of personnel is priority in order to support the gradual expansion. Personnel dealing with increased number of distribution channels to be hired/trained.

* Processes:
* Manufacturing processes are carried out in house; increase by 2013 * Launch world-wide brand image campaign
* Identify and educate selected high-end retailers and distribution channels * Ensure service to customers, collaborators
* Schedule: In order to achieve sales of 100,000 pieces by 2013; we will increase sales by 15,000/year (30% mechanical/70% spring drive)

Recommended control metrics

Key Performance Indicators we believe would be monitored closely:

* Luxury watch market share (monitored quarterly)
* Revenue in luxury watch segment (benchmarked to previous revenues, quarterly) * Profit in luxury watch segment (after month 12, all costs concerned) * ROI on the market dollar (launch will consume most of the marketing $)

The competition will be evaluated on a quarterly basis.

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