Watch Market Case Study

When the watch market was becoming increasingly dominated by manufacturers in Japan, USA and Hong Kong, ETA introduced Swatch in 1984. It found a niche market and sold its watches as a fun and inexpensive chic brand that was geared towards outgoing and extroverted customers in the 15-29 age-group. This competitive advantage is under attacked by numerous competitors as this sector of the industry is fairly easy to enter. Swatch’s largely successful initiative to market its watches as not a watch, but a and fashion accessory that happens to tell time is also making this competitive advantage unsustainable. This is because it is not relying on a core competency like watch-making or watch quality, but instead on its ability to constantly keep up with the latest fashion trend, in which it does not have much control. Swatch must also decide whether to stick strictly on being a watch company or being a fashion and watch company .

Solution-

Swatch’s ability to generate higher profits from making Coca Cola branded watches without the Swatch logo provesd that it has no competitive advantage in the actual watch. It is however important for Swatch to keep and defend its niche market by partnering with fashion and other “tend-setting” retailers to produce exclusive styles of watches that compliment other lifestyle trend for the teeny boppers group. Management wants to attract clients in the higher aged group, but it would need to diversify its watches to appear as a more high-end brand and less of a plastic, teen-item image . We believe that it will be able to target two different client-bases given that Swatch’s advantages lie in its Swiss heritage, and its unique “fashion watch” branding. Swatch should keep a very limited exposure to the apparel industry, ideally limited to the United States because its distribution channels in Europe are primarily jewelry stores. It would be too costly to open new distribution