Swatch - Case Study

SWATCH CASE STUDY – Patrick Byrne

1. Why was the swatch so successful? In what ways was the swatch different than any watch the industry had ever seen?

• They maintained a strong position in the lower end by dropping the price and introducing Quartz technology, which functioned on electronics rather than mechanics.
• They implemented a low price point, which made it easy for consumers to purchase Swatch watches on impulse.
• Hayek not only sold the product as a watch to tell the time, but added genuine emotion to the product for it to become part of an individual’s self-image. He makes note that he was not just offering style to consumers, but an authentic message that tells the individual who they are and why they do what they do.
• They made models for every occasion and released 2 collections a year, which offered consumers a watch that triggered immediate emotional reaction to their liking.
• Although they were made out of plastic, their unique bold designs (incorporating witty and outlandish features) and use of brash, intense colours allowed them to differentiate themselves amongst competitors.

1. What elements of the original swatch marketing plan were most critical to the brands’ success?

• The decision to decentralize marketing was most critical to the company’s success as this allowed them to control their marketing activities from not only one central place, but also wherever they were operating business.
• Furthermore, it was Swatch’s emphasis on below-the-line activities was key to their success. The company became known for unorthodox promotional stunts. For example, to launch Swatch in Germany, they built a giant Swatch model and suspended outside the tallest skyscraper in Frankfurt, the headquarters of Commerzbank to deliver there high quality, low cost message.

1. Given the huge demand for swatches (particularly for certain models), did the company make a mistake in not raising the price for some of its styles?

• No they didn’t. Each sector (low, medium, high) had a specific price range. There was huge demand for the lower sector, with watches selling at a price of $40. This was price was affordable, clean and simple, meaning that it was easy to pay for, rather than being $41. Such a comfortable and affordable price range, made it easy for customers to be the product on impulse.
• Furthermore, 1993 figures from the case study reveal the success of each sector, with the low sector selling 34.9 million, the mid sector selling 6.4 million and the high selling 4.2 million. Therefore, the decision to sell at a low affordable price lead to their success. Had the company raised its prices, impulse customers would’ve been less inclined to purchase the product.

1. In many ways, the swatch forced people to think about watches in a way they had never thought before. Can you think of other products in other product categories that have done the same thing? Bring at least one example to class. The example can be from any category. What do swatch and your examples have in common?  How were they able to do it?

• Apple

• Here are 3 ways Apple set itself apart from its competitors

• Think different – Think outside the box and don’t let what other companies do impact your ideas and products – This will drive innovation.
• Management style – All decisions are made by single executive committee so everything is coherent.
• Design DNA – the design principles are obviously apple.

• Apple and Swatch both focused on designs that had never been seen in the industry before. They did this by analysing the market to see what already existed and what it was lacking. Through innovative thinking they were able to design products that not only served the core function, but also became a more personalised item for the consumer, as they offered products specific to needs of each customer.