Marketing swatch watch Essay Example

serving middle-market customers including Hamilton, and a Basic Range for budget-conscious consumers or those interested in fashion trends where Swatch itself falls under this category. Additionally, they offer Private-Label products designed for third parties who require large quantities of commonly designed watches with Endure being the sole brand by Swatch Group under this label. Alongside Role and Richmond, Swatch Group is one of the top Swiss watch manufacturers globally and has established a strong presence in nearly 100 countries. Its sales have consistently increased worldwide over the past five years, solidifying its position as an industry leader.Swatch Group experienced a significant decrease in stock value in early 2009, but has shown steady growth since then. Figure 1 in the appendix displays the stock value of Swatch Group Ltd. on Virtue-X, the Swiss stock exchange, during this specific period. To assess the company's performance, annual reports from 2005 onwards can be accessed on its website. It is important to consider how changes in net sales affect profitability ratios.

The chart provided shows a slight increase in stock value from approximately 175 CHEF to 200 CHEF in 2005. To better understand this growth, one can refer to the financial statement found within the mid-year financial report for that year. The net sales increased by 5.5% compared to midway through 2004 due to higher demand for watches in the higher price range.

Additionally, Swatch Group successfully recovered from a decline caused by excessive inventory of third-party watches in the previous year. In terms of net income as a percentage of net sales, it improved from 11.7% in the previous year to 13.5% in 2005.

Overall, Swatch Group had a profitable and

stable year.
According to the mid-year report, stock value in 2006 saw growth reaching 270 CHEF but later declined due to the closure of production facilities in the Far East. Despite this decline, Swatch Group still experienced overall growth and achieved a net income that was 14.7% of their total net sales, which is a 1.5% increase compared to last year.

In the first half of 2007, there was continued steady growth with greater expansion in net sales at 16% and a higher profit margin at 17.7%. This growth can be attributed to the opening of additional shops worldwide, resulting in increased market share.

However, during subsequent periods there was a larger decline in stock value similar to what occurred in 2008 when it dropped from 280 CHEF to a low of 125 CHEF. One reason for this decline is that net sales only grew by 8%, which may not have met shareholders' expectations considering past high profitability.

Furthermore, there was also a significant decrease in the company's net income compared to mid-2007, representing only 14.8% of net sales.Sales in the Electronic Systems segments also declined due to a shift towards cheaper cell phones and reduced demand from the car industry. Despite these challenges, Swatch Group managed to increase its market share but at lower profit margins, resulting in a less positive overall situation compared to previous years.

In 2009, Swatch Group experienced a successful recovery, as shown by the stock exchange chart, with stock value increasing from 125 CHEF to 295 CHEF. The company also projected future growth. However, there was a decline of 16.7% in net sales and a decrease in net income as a percentage of net

sales to 12%, according to the financial statement.

This decline can be attributed to challenges faced during that year due to the serious global financial crisis, which resulted in decreased customer confidence and a drop in demand worldwide. Despite the decrease in demand, Swatch Group has maintained stable stock value compared to other market players. This is due to its presence across all price segments globally, making it less vulnerable to crises than its competitors.

As a result, Swatch Group is expected to emerge from the crisis with stronger financial standing compared to its rivals. The Swatch brand requires minimal modification for different cultures as it is originally designed for a global market. Their product range includes watches for various seasons, age groups, and special occasions that appeal to people worldwide.The affordable watches have short lifecycles and generate high sales volumes with low profit margins. Swatch needs to conduct an environmental analysis for its international marketing plan, considering both external and internal factors that impact the company's operations. The report analyzes Swatch's environment, divided into external and internal environmental analysis. Conducting an external environmental analysis helps understand the markets where Swatch operates. To create an effective marketing plan, understanding the market is crucial. Thus, a PEST-analysis evaluates the opportunities and threats faced by Swatch, including Political, Economical, Social, and Technological factors in the company's macro environment. The PEST-analysis concludes that Switzerland is politically stable where Swatch assembles its products without risk from political instabilities. While operating in various countries, Swatch's production facilities are all located in Switzerland to ensure overall continuity without risks. However, there are disadvantages of operating in Switzerland as authorities closely monitor imports, exports,

and merchandise during transit.They have strict regulations regarding labeling products as "Swiss-made," which is highly esteemed in the watchmaking industry. The recent economic downturn has had a negative impact on Swatch and other companies, resulting in decreased consumer purchasing power and spending on luxury items such as watches. Additionally, there is a potential risk of foreign exchange exposure due to different currencies in countries where Swatch operates, particularly with the strong Euro prevalent in neighboring nations. In the marketing analysis section of this report, social and cultural factors will be thoroughly examined. There have been significant technological advancements within the watchmaking industry, resulting in smaller and more advanced watches than ever before. Swatch must keep up with these technological innovations. Furthermore, e-commerce is gaining prominence and should be considered for development by Swatch. Lastly, conducting a SWOT analysis provides valuable insights into both external opportunities and threats as well as internal company aspects. The external environment focuses on identifying opportunities and threats. Table summarizing the SWOT analysis can be found in figure 2 of the appendix. Swatch can benefit from e-commerce as it offers more trading opportunities for customers who prefer ordering products online instead of visiting physical stores. Another opportunity for Swatch is to target the lower-end of the watches industry due to economic downturns leading to an increased preference for cheaper watchesSwatch can enhance its brand by implementing eco-friendly practices like reducing mercury batteries and limiting nickel materials. There is an opportunity for a joint venture with Tourney, known as the world's largest watch store according to Guinness World Records. Swatch can expand into Tourney retail stores located in premium and luxury outlet

malls across the US, presenting significant prospects in the American market. However, Swatch also faces challenges such as the economic recession that reduces consumers' purchasing power and impacts sales. Counterfeit products are another threat in the watch market, risking illegal duplication and misleading sales of genuine items. Moreover, potential product failures can harm Swatch's reputation since Swiss watches are renowned for their accuracy and reliability. High raw material prices, especially plastic and fine steel necessary for watch production but currently costly, pose additional challenges. Furthermore, competition from fashion houses like Gucci entering the profitable high-end watch market poses a threat to Swatch.Conducting an internal environmental analysis is vital for understanding a company and its decision-making processes. To analyze Swatch's internal environment, we will use the SWOT analysis in Figure 2 of the appendix, focusing on strengths and weaknesses. Swatch benefits from a strong brand reputation and dominates the global watch market due to owning renowned watch brands. Continuous innovation and a diverse product range help maintain and expand their brand reputation further. Swatch also retains customers and fosters brand loyalty by being experts in watch manufacturing, allowing them to enhance their own products as well as sell parts to other companies. This vertical integration has contributed to their strong position in the industry, giving them control over production, distribution, stores, and design. This level of control reduces risks and production costs by avoiding reliance on external parties seeking high profits. Additionally, Swatch showcases its significant capital through costly marketing endeavors such as sponsoring Formula 1 and other sports events. These efforts demonstrate their commitment to extensive marketing and improve brand recognition and sales revenues across

multiple locations.Despite its strengths, Swatch has weaknesses that need to be addressed. One weakness is the low productivity of their employees compared to competitors. Official data shows that Swatch has lower revenue per employee figures than others in the industry, indicating less efficiency among their workforce and a need for improved productivity measures. Additionally, Swatch has a weakness in their low asset turnover ratio, which is significantly lower than that of their rivals. Over the past few years, Swatch's turnover ratio has not exceeded one percent while the market average is higher, posing challenges for operational management and profitable asset deployment. Moreover, being located in Switzerland leads to high production costs for small and complex watch components, resulting in relatively low profit margins for Swatch's basic and middle-range watches. The company segments its "Swatch" product line based on major segmentation variables including geographic, demographic, cryptographic, and behavioral factors. Geographically, they target various world population segments rather than specific regions or countries as their customers can be found globally. Demographic segmentation focuses on different age groups with customized products and marketing strategies.The Swatch brand offers a diverse range of products that appeal to both genders, with specific lines like "Lifestyle - for her" and "Lifestyle - for him." The watches in the "Create by Swatch" line, designed by street painters and artists, are particularly popular among teenagers. On the other hand, adults tend to prefer the more classic watches from the "Full Blooded" collection.

Swatch aims to cater to different lifestyles by offering products suitable for physically active individuals through their "Swatch Snowplows" line. These watches provide ski passes and access to ski runs right from

your wrist. Additionally, they offer watches for those who prioritize quality and prefer a more classic design at affordable price ranges.

Their women's watches are designed with specific colors and motifs that appeal to female customers, while men's watches are larger and come in colors typically preferred by men. With prices ranging from â?30 to â?160, Swatch targets customers from various income levels, including low to middle-class individuals.

In terms of consumer behavior, Swatch has created watches suitable for all occasions including active wear, classic styles, and fashion statements. They have also introduced special edition watches for holidays such as Mother's Day, Valentine's Day, and Chinese New Year. By providing customers with alternatives to traditional gifts like flowers or jewelry while raising awareness of the Swatch brand.

Overall,, Swatch offers an extensive selection of stylish timepieces that cater to different tastes and preferences while maintaining affordability.Applying the theory of Buying Decision Behavior classifies this segment as "Narrate-Seeking Buying Behavior". Customers purchasing a Swatch watch have low involvement mainly because of its affordable price range. However, customers perceive a significant distinction between Swatch and other brands due to the unique marketing and promotion strategies employed by Swatch. The company uses differentiated marketing strategies to target different market segments. This is demonstrated by Swatch's diverse product lines, such as "Create Swatch" for teenagers and "Swatch Snowplows" for physically active individuals, as well as their high-quality classical watches at affordable prices. By adopting this approach, Swatch aims to establish a strong presence in multiple sectors of the watch market. However, this also leads to increased costs since each product line requires its own marketing approach (refer to chapter 4.5). If we

were to map out Swatch's positioning across all their product lines, it becomes clear that they would dominate almost every category because of their ability to cater to various segments with their watches. This gives Swatch a competitive advantage by offering products customized for different age groups and life-cycle stages. The popular Swatch line, created by the Swatch Group, is well-known for its innovative approach in the watch market and plays an important role in the success of the Swiss holding company.The brand's success is attributed to the development of an innovative production method that simplified the assembly process. In the 1980s, Swatch introduced watches with only 51 components, deviating from traditional mechanical watches that typically had more than 91 pieces. The Swatch Group implemented a groundbreaking technological innovation by integrating these 51 spare parts directly into a durable plastic case. This advancement allowed them to produce affordable and high-quality watches that appealed to a wide range of customers.

They adopted the "blue ocean" approach for their products, as described by Kim and Membrane (AAA, b,c), which focuses on untapped markets with undefined products and less structured competitors. By focusing on value innovations that create uncontested market space and outperform rivals, the Swatch Group effectively aligned with this strategy.

CEO Nicolas Hayek emphasized the importance of crafting a message around the Swatch brand rather than solely creating an image. This statement aligns with the blue ocean strategy and effectively showcases their intended product positioning as perceived by consumers, according to P. Kettle and G. Armstrong (2006:88).