The Birth of the Swatch

Case Brief “The Birth of the Swatch”

Problem Statement

By 1992, Swatch had sold their 100 millionth unit making it the bestselling watch of all time and revitalizing the entire Swiss watch industry in the process. There was now concern that the brand was reaching the maturity phase of its lifecycle, and that something needed to be done. Our aim is to explore the options available to revitalize the brand image and find answers how Swatch can grow further.

Situation Analysis

Customers – While there is high demand for expensive mechanical watches the majority of customers today want an affordable watch connects with them emotionally and also defines their identity. For them, watches are a tool for image perception and self-expression.

Competition – Initially, the competition for cheap watches started with the Japanese and Hong Kong makers (Casio, Citizen); they were producing quartz watches at very low prices. SMH counter attacked with introduction of the Swatch. Now, various Fashion brands (e.g. Fossil, Benetton) are entering the market with their own affordable & stylish watches.

Company – Under new management, SMH had successfully introduced the Swatch in 1983 and boosted their sales from 3 million units in 1983 to 31.5 million in 1993. The organization underwent radical changes. Its portfolio is now well balanced spanning from low price (Swatch), mid-price (Tissot, Certina) and high end (Omega, Longines). On the manufacturing side SMH was able to produce the Swatch in Switzerland at low costs incorporating automated production techniques. Combined with aggressive design and marketing it holds a competitive edge in the global watch market.

Context – Until the 70s, consumers had the choice of an expensive mechanical watch from a Swiss brand, or a cheap $10 Timex watch. The introduction of quartz technology revolutionized the entire Watch industry. Economic factors like the booming world economy have accelerated the development towards affordable but...