1. In what ways was Swatch different than other watches on the market at the time of introduction? What were the “product forms” within the watch “category” prior to Swatch? Before the 1950’s, The Swiss dominated the watch industry, the Swiss watches represented the quality, status and prestige. Then the low cost competitors appeared and became so popular which meant a threat to the Swiss watches. The Swatch (“Swiss” + “watch”) was the best result for this problem, which was a mass-market product, a low-end quartz watch. But the Swatch was different than other low-end products, because it had a unique message.
Swatch was an emotional product, an important part of the customer’s self-image. They could add genuine emotion to this product, attacked the low-end competitors with this strong emotional message that is why they could succeed. In the watch market, there were low-priced, mid priced and high-priced watches. Before the Swatch, Swiss watches had been only in the high-end category. But the Swatch competed with the low-priced quartz watches, like the Timex or the Japanese companies such as Hattori-Seiko and Citizien.
2. Explain how each of the elements of the marketing mix was utilized to create the brand. Include: Product design, Product line mgt and training, Promotion (media, designers, advertising—traditional vs.non traditional.) Retail strategy, Brand associations, Pricing strategy What positioning strategy did Swatch use? How was it created? The product design of the Swatch watches was unique, and although they were made of plastic they featured specially designed in a youthful, provocative, stylish and sometimes unpredictable style that used brash, intense colors. Costumers had a wide range of choice, models for every occasion, for every taste and personality. The design of the product represented the emotional message, that the Swatch watch was important part of the customers’ selves-images.
The Swatch Design Lab is designed 2 collections per year with watches in 70 different styles per collections. The 2 collections per year meant that the products were changed so rapidly and new models hit the market on an ongoing basis. For example in Italy where people are keen on fashion, the market exploded. In order to selling popular designed product, the company hired artists, architects and industrial designers to create them. They rotated the designers through the lab, and they usually stayed at least 6 month to 2years in order to guarantee the variety and creativity and to avoid to be getting tired.
Sometimes they produced limited editions (like the Veggie line) which generated more attention and publicity in the media and the Swatch fans loved it. Swatch was also famous for its innovations such as see-through watch and scented watch. The Swatch’s price strategy was clear, they sold their products at an affordable price everywhere in the world (in the US: $40, in Switzerland: SFr50, in Germany: DM60, in Japan: Y7000). What is more important that they didn’t change their price in the first ten years despite their incredible success. Their price strategy helped their positioning, and helped to communicate their brand message: “Swatch is not just affordable, it’s approachable. Buying a Swatch is an easy decision to make, an easy decision to live with.”
The Swatch was unique in its advertising strategy too. They spent 30% of the retail price on advertising which was compared to the industry average, was more than double. Besides the high-profile advertising, they also used below-the –line activities, like break-dancing sponsorship, celebrity endorsement, special events, or product placements (for example the Giant Swatch in Germany). They created a Swatch Collectors Club for their most ardent fans, who could receive a subscription to the Swatch Street Journal magazine which contained the latest news, information about Swatch.
The Swatch’s distribution strategy was so different from the other watches’. They created new approach and ways of points of purchase. For example The Veggie Swatch line was sold in fruits and vegetable markets. They didn’t sell Swatches in jewelry displays like the others; they preferred shop-in-shop systems or miniboutiques, freestanding monobrand Swatch stores.
The brand associations of Swatches based on the quality of Swiss watches, but they were affordable in a low-cost price. These two attributes together meant some kind of provocation, funny, fanciful, and the joy of life. The Swatch watches with their unique design were full with emotions.
Swatch’s positioning strategy was that they created a new submarket, they served unmet needs. They created a Swiss watch with trustworthy and quality for the mass market. In the mass market there already had been low-end watches, but they offered more, they added design, emotions and personality to their brand. They used the differentiation and the cost efficiency at the same time; they offered quality in low-price.
3. How did Swatch establish sub-category membership? With which sub-category were they attempting to associate? Swatch target market was a new emerging submarket, they sold well designed, unique, “fashion-watches “, but in a low price. Before Swatch, the need for fashion-designed watch had been already existed but it wasn’t available for everyone just the high-end. Creating designed Swiss watches in an affordable price for the mass market established a new sub-market. They had a competitive advantage compared to the other low-end watches because they had their message. A strong, distinct, authentic message that tells people who you are and why you do what you do. The swatch brand associations are: the Swiss high-quality, low cost, provocative and joy of life. What is more important, they offered their personal culture and people wanted to belong to that “Swatch brand community”.
4. Swatch forced people to think about watches in a new way, to associate watches with other categories. What other products have associated with other categories in order to “borrow” category attributes and break-away from traditional category associations? Give 3 examples and explain how they did it. The Protein bar also created a new category. People eat candy bar for different reasons, for example it helps them to study, others need it before exercising or just for pleasure. They realized that there is a submarket, people who eat candy bar before exercising, because they need the energy. They created the protein bar which contained the needed energy, but with less sugar and fat so it is more appropriate for them than candy bar. Starbucks forced people to think about having a coffee in a new way and created a new category.
They wanted to not just grab a coffee on way to work, but have a delicious coffee with well quality in a unique, familiar, friendly atmosphere with comfortable chairs and canapés when people can feel like they are at” home”. They created this “Starbucks’s atmosphere“and “Starbucks’s culture”. They offer their coffee more expensive than other regular coffee shops, but people want it because it is not just a coffee it’s an experience. People wanted to be a part of it, wanted to belong to this “Starbuck culture”. The online course is a new way, an emerging submarket of education. Online courses are perfect for those who want to study and want a degree but they don’t have time to go to college, maybe because they have to work in full time, have a family or live far from any college which suits their preferences. Online course is perfect for having a second degree. With online course students can manage their time better, they can have a class when and where they want.
5. Today, if you created a new sub category for watches, what would it be? What would you do to take the industry by storm (redefine/broaden the definition)? Identify an emerging submarket. There are people who like the idea of watches, to know what time is it, like to wear jewelries, but prefer to wear something new, something trendy instead of regular watches. We can imagine rings and necklaces with small, pretty watch displays in it. We can imagine it as a high-end product for woman and for example featured with crystals. Another emerging submarket can be the sport watch which is recommended especially during sports and has special featured like calorie counter or pulse measuring. It is not designed as jewelry; it is more casual, sporty and comfortable. Nowadays, everything is “going green”; people are becoming health aware, try to live healthy and do sports, so they can be an emerging submarket.