In 1993, after 10 years of consecutive strong worldwide sales growth, the Swatch brand showed some first signs of reaching maturity status in the product life-cycle stage. In the first phase of maturity status in 1993, slowdown in sales growth appeared in the US market. Sales in recent years have dropped by 35%, making evident the need of adapting the marketing strategy by repositioning the brand to the new marketplace requirements.
Emergence of a Swiss made mass- market brand
Swatch brand emerged in reaction to the absolute absence of Swiss watch makers in the low end market. In the 1980s, Swiss was only dominating the high end market with a market share of 97% that included watches priced above 350$ and a total of 8 million units sold. In the medium range, watches between 100$ and 350$, the m/s of Swiss manufacturers was 3%. The low end market segment, watches for a price up to 100$, represents a total world market size of 450 million units.
Swiss watch industry did not integrate the Quartz technology, introduced in the 1970s, based on the belief that this electronic technology was substandard versus the traditional mechanical watches. Japanese companies adopted the Quartz technology (amounting for 75% of global market) and became the market leader in watch production.
In 1983 a new Swiss company SMH with new management emerged, after the merger of the two dominant Swiss companies SSIH and ASUAG, which owned many of the world's best known watch brands, but were losing money and faced insolvency risk. The aim of the new CEO was to have at least one profitable and growing global brand in every market segment.
Swatch initial differentiation strategy
Swatch was a quartz watch in plastic case, launched in 1983 and positioned in the low-price market. It was entirely produced and assembled in Switzerland at competitive production cost. But, the main differentiation of Swatch was based on its unique design and style. The Swatch watch was using flashy colors, exotic fashionable designs and plenty different models for each occasion that were consistently renewed. This was a totally new concept in the watch industry and strongly differentiated versus the traditional watch makers as well as cheap US and Asian producers. The continuous introduction of new collections, very different from one another (coupled with affordable price) , resulted in many consumers owning plenty of swatch watches.
C. Alternative Evaluation
Swatch Brand revitalization
The message of the Swatch brand is decaying. In the fashion sub-category market segment, Swatch is facing increased competition from licensed fashion brands, such a Benetton, Guess and other own-label watches. The current positioning of Swatch seems no longer viable and a reinvention strategy is required. Brand extension by introducing new products, or to reposition the existing brand in other market segments can be of advantage but is...