The Swatch Group: On Internet Time

Introduction• In November 1998, Swatch group introduced universal unit of time

called Swatch Internet Time(SIT).

• Along with SIT they launched newest Swatch watch model-Swatch Beat.

• Swatch Beat shows both local and Internet time.

• SIT divided every day into 1,000 beats

• I Beat = 86.4 seconds , Each day began with@000 BMT and noon with @500 BMT.

• BMT = Biel Mean Time

The Swatch Group• Formed in 1983 in Switzerland by Nicolas Hayek.

• By 1998 ,it was world’s largest Watch company.

• Producing 119 million watches and watch components accounted for 20%-25% of watch sales world wide.

• Total revenues around $2.2 billion in 1998.

• Addition to watch manufacturing other company’s activities includes microelectronics,automobile, telecommunication.

• Ranked 713 by Business Global 1000 list in market value($5.82 b).

The Swatch Group

The Swatch Group

The Birth Of Swatch-History• The Swatch group was established in midst of crisis in Swiss watch

industry.

• In late 1970,Japanese and Hong Kong manufactures with access to cheap labor, mass production and quartz technology penetrate world low cost watch market .

• Producing 119 million watches and watch components accounted for 20%-25% of watch sales world wide.

• Total revenues around $2.2 billion in 1998.

• Addition to watch manufacturing other company’s activities includes microelectronics,automobile, telecommunication.

• Ranked 713 by Business Global 1000 list in market value($5.82 b).

The Birth Of Swatch-History

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World Sales

World Sales

Problems-Swiss Watch Industry• Despite rapid world market growth, Swiss exports fell from 91

million watches in 1974 to 43 million in 1983.

• Reasons for poor Performance:o Inability to Adapt to market changeso Low innovation and Competitive productso Poor Qualityo Low Brand Management

• Leading to raised prices, restructuring and workers layoff.

• Closing of around 1000-1600,Swiss watch companies.

Hayek Vision• Swiss no presence in Low end/High volume watch market.

• Only 3% presence in Mid segment market and 90% presence in High End market which account for only 1.5% of world volume sales.

• “Made in Switzerland” label carry quality perception for European and Americans as compared to watches from Hong-Kong and Japan.

• Switzerland is uniquely positioned to win low cost-high volume market.

• If you sell high volumes you can automate and keep improving productivity.

Hayek Vision• Young people ,the future consumers are most likely to buy low-

priced watches.

• Word of mouth-The biggest communication for brand is consumer himself.

• He proposed to develop low cost-High quality plastic watch brand.

• “Controlled Chaos”-Adapt and Innovate constantly due to ever changing Market environment.

Hayek Strategy• Concentrated on adopting new technology and to create a new

range of pricing. Bringing SMH production cost to Asian levels.• Keeping production cost low while maintaining quality and design

standard.

• Appointed artists, architects, designers. Proposed more than 3000 designs. Introduced different designs for different segments of customers.

• Introduced a new range of price in price segments.

• Created a swatch collectors club for its fans.

• Unique Adds campaigns.

• Watches for everyone.

Over all strategy for Swatch

Swatch

Parent Company The Swatch group

Category Watches

Sector Lifestyle and Retail

Tagline/ SloganTime is what you make of it; Fashion that ticks

USP Trendy and youthful innovative designs

Segment High quality watches

Target Group Upper-middle class youth

PositioningA watch brand that is the culmination of Art, Sports and fashion

SWOT analysis for swatch• Strength- 1. Have a distinct identity with its plastic body and vibrant colours

2. Limited market share growth due to competition3. Part of the Swatch group that has 28,000 employees across 50 countries operating 900 boutiques around the world4. Associated with sporting competitions has strengthened its brand image5. Top-of-the-mind popular brand across the world6. Excellent advertising and brand image

• Weakness- 1. Fake imitations and replicas affect the brand image and sales

2. Advertising/ branding activities not impactful• Opportunity- 1. Emerging markets in Asia like India and China can be the primary targets for its

distribution expansion strategy2. Swatch can use its positioning as a young brand to diversify in different product categories.

• Threat- 1. High manufacturing cost associated with Swiss brands can lead to switching to

lower cost brands2. Competition from other youth watch brands with a trendy and youthful positioning