Swatch Case Study

8 August 2016

What do you think has been the contribution of the marketing function, the product design function and the operations function to the success of Swatch? Please explain in sufficient detail. The Swatch brand launch in the 1980s was marked by new and great styles and designs. It was originally intended to regain the market share that was lost to Japanese manufacturers. The combination of marketing and manufacturing expertise, and stylish product design was able to restore Swiss made watches as major players in the watch industry.

Swatch watches are manufactured in Switzerland, which has one of the highest labor costs in the world. But because efficient manufacturing operations, like building the quartz mechanism directly into the plastic case, and using less components (less than half the number in most other watches), the company was able to produce high volumes at low costs. Fewer components also meant that the manufacture of the watch could be fully automated.

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The company has a very effective marketing strategy.

It has different varieties of watches for different segments (according to age of their customers). It makes sure that it has a series of new watches with different styles for every season (Spring collection, Summer collection, etc. ), every special occasion and every significant world event (like the Olympics and the World Cup). Swatches used to be available in every store at affordable prices (to re-capture the lost market share), but now the company has a different strategy to keep peoples’ interest up beyond the 80s craze it has created.

It is now doing the opposite of what it did decades ago. This is due to more than one factor including the artistic design (which are sought after). Swatch capitalized on the idea of product line extensions and variations. It has also tapped famous personalities like John Lloyd Cruz and Anne Curtis (which are effective celebrity endorsers) to represent the company. Product design is also remarkable because the company hires talented designers. The designers are asked to make sure that their works of art, every design in every series, will meet the expectations of customers.

For this reason, Swatch watches are popular not only in the Philippines but more so in other parts of the world. 2. How do you think Swatch compares with most watch manufacturers? Swatch’s manufacturing operations allows it to produce at relatively high volume and low variety for much of its manufacturing process. It therefore has a relatively simple and relatively cheap manufacturing operation, while at the same time allowing ‘mass fashion’ orientation of its marketing.

Swatch has a higher degree of automated manufacturing (because of the high volume and the standardized products) and rely less on labor in the manufacturing process. The company can allocate more for product design, and less for direct manufacturing labor cost as compared with other companies. Swatch’s designs continue to surprise even the avid customers and it manages to maintain the excitement and continue to capture and captivate customers’ attention.

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