Swatch Group's Luxury Watch Trend and Market Analysis

This report provides an analysis of Swatch Group's luxury watch trend, including its growth in Switzerland and globally. It evaluates the company's ability to adapt to disruptive technology and maintain a competitive advantage through marketing. The report also discusses the impact of a potential 10% move in francs on earnings, which could affect revenue by 14-18%. With operating income increasing by 70%, Swatch Group is expected to continue its success in the watch industry for the next 2-5 years.

BUSINESS ESSENTIALS: 2

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Overview of company.................................................................................................................1
Competitors of Swatch................................................................................................................1
Positioning of Swatch watches...................................................................................................1
Competitive edge........................................................................................................................4
How swatch responded to market...............................................................................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Business essential is referred as introduction about business world and provides help for
preparing economic roles of worker, consumer or citizen in ever altering world with effective
written and oral communication, adaptability, collaboration, agility and leading through
influence. The present report will give brief discussion about luxury watch making industry and
Swatch organization. It will be exploring and researching this sector in which its top competitors
are extracted. Further, it will provide positioning of Swatch along with its multiple efforts for
attaining competitive advantage with marketing area. In the similar aspect, it will be mentioning
trend of this organization in specific industry.
Overview of company
Swatch Group Ltd is leading in arena of watch throughout the world and it manufactures
mechanisms of watch with supply not only in group of in-house brand but with Swiss watch
industry as well. It had faced multiple challenges in year 2016, as group has desire for observing
methods to decrease its exposure to Chinese market.
Competitors of Swatch
The Swatch competitors in luxury watch industry are Timex and Mondaine. As Timex is
headquartered in Middlebury, Connecticut was founded in year 1854. Timex is operating in field
of retail distributors as it produces 507% of the revenue of Swatch. In the similar aspect,
Mondaine is observed as one of top competitors as it is headquartered in Freinbach, Schwyz. It
has fewer employees as compared to Swatch. With list of majority of groups with most luxury
watch brands as Swatch is major group with its own range of brands. There is presence of
multiple watch brands in single group where Swatch is innovator in this modern scenario
(Annual report of Swatch group, 2017).
Positioning of Swatch watches
The watches of Swiss are ranked in segment of high priced market but Swatch has
implied unique approach as of low price along with high quality and it still includes accuracy in
quartz, water and shock resistance. Positioning is referred as process through which marketers
create image and identity in mind of particular target market with its brand. In this aspect,
Swatch's approach has been considered by positioning product as fashion watch as in entire
market ut had been created which is much larger than compared to original watch market.
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Its positioning is still very innovative comparatively to its competitors. The watches of
Swatch are considered in category of entry level watches which are formed with plastic and
differ through stainless steel, traditional or leather watches. Swatch had made watch as fashion
object which should be altered in every season. It main aim is to offer watch for every individual
at any moment of life. Its product has absence of technological invention and revolutionized
application of watch as it has created fashion accessory along with management of altering
behaviour of consumer. In the present scenario, watches are replicated as consumables or mode
of expressing itself which reflects real added values. It also allows for consumer to differentiate
through others. This is stated as main reason for success of Swatch as it is shows better way for
expressing mood along with best fit. It helps in enabling buyers of small budget for purchasing
watch but production is very limited for each model so its better for purchasing Swatch at first
time (Gilbers, 2018).
In year 1970, Seiko was top watch throughout world on basis of strength of its
revolutionary quartz technology. Some savy American and Swiss newcomers in this watch
industry had launched their own revolution. In the similar aspect, Swatch, Fossil and Guess had
led and created new category of watch i.e. fashion watch. Quartz technology was common,
boring and worse so by observing this trend, it shifted focus from innovative technology to watch
aesthetic. It gives title to cool watch but claimed about non electronic accuracy with outrageous
design. There is creation of innovative phenomenon as watch wardrobe which could be
elaborated as buying numerous watched for different occasions or outfits.
The watch brand would directly migrate through affordable segment on basis of watch
market to mid range along with luxury segments. It has been initiated through Swatch as fashion
watch brands such as Anne Klien and Gucci had prepared licensing deals with various watch
organization in the 1970s. It had attained uniqueness by creating sensation which spawned a new
category of watch. It is plastic quartz analog watch formed through ETA for retail which is
conceived as accessory of fashion. It creates fashion oriented products which will be affordable
and fashion forward lead towards repeat purchases. The philosophy of Swatch is innovation, fun,
provocation, forever and has description of approach of Swatch for marketing and product
development. Initially, it has targetted fashionable young people as it also dials through riot of
colourful, cheeky and cheerful designs (Ariel Adams, 2018).
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Swatch alters for aesthetic allowed photographs, paintings, designs, printings always goes
to dial where design has stolen the show. In this context. Swatch has collaborated along with
contemporary artists to limited of collection edition pieces. On basis of analysing market trends
and capturing market share where previous leaders had captured because of innovation. In this
perspective, Citizen was capable for capturing market share through innovative method with
formation of watches which are cheaper from industry standard at time. By considering watch as
fashionable along with representative of individual's personality where Swatch has managed for
attaining huge brand awareness with positive emotional connection. As this feature has allowed
for differentiating itself through competitors in strong and durable aspect.
It has repositioned itself as targetted upper-middle class youth as its potential consumer.
This is replicated as very popular successful brand as it offers high end product which is
culmination of affordability and fashion. It is very cost effective and classic wrist watch where
Swatch had continued for success and growth with context of pricing policy. In this context, it
had faced stiff competition through numerous brands and has adoption of policy of competitive
pricing for attaining competitive advantage. Simultaneously, it has pocket friendly and
reasonable products which had provided help business unit for gaining other market and
increment in revenue shares (Donzé, 2018).
Illustration 1: Success factors for watch brand
(Source: Joe Thompson, 2018)
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Henceforth, Swatch is considered as brand with huge competitive advantage as it is Swiss
brand which reflects excellence design and quality. It operates in almost 50 countries and well
recognized brand with context of history and heritage and positioned in luxury segment.
Competitive edge
Its new strategy is production system and shows evolution dictated through repositioned
towards luxury. Its main characteristics are vertical integration on basis of producers of external
parties, end of supply of parts and movement blank to Swiss watch makers along with
recognition of production of quartz movements abroad. Swatch has attained competitive edge
with innovative marketing along with its designs. It had attained expertise in event sponsoring,
marketing and creation of special watches for famous events such as World Breakdance
Championship in Newyork at Roxy theatre. In the similar context, there is held of street painting
performance in London and Paris and has sponsored emerging new sports such as snowboarding,
mountain biking and freestyle skiing. It had created Swatch collectors with 74500 members in
less than 2 years (Drasković, Marković and Petersen, 2018).
For purpose of attaining success, there is presence of multiple curious aspects about
Swatch watches which had caught attention from Americans to departments and Hong Kong as
well. Swatch was only in plastic cases and sold as accessory of fashion which was marketed such
as watch with various other collections. As its competitors had observed this and quickly
capitalized on this aspect and enjoyed esteemed position in market with adaption of aggressive
marketing campaign for retaining and creating positive brand awareness. It had also launched
campaigns through social media platforms on its own website, Facebook and twitter's page
which has huge fan following (Swatch Reports Highest Profit in Three Years Amid Watch
Rebound, 2018).
Swatch advertises its product through print and electronic media in magazines and
television and very active participant in different sponsorship deals for gaining exposure. There
is high diversity in its competitors along with strategy of differentiation and complemented with
other factors of industry has allowed for profit and industry. There is implementation of
positioning Swatch brand has little contested with low price range market. It has dominated self
-defined market niche position. There is accomplished through implementation of new
technology, improving assembly efficiencies and clothing designers.
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Swatch is timekeeper along and active sponsor of European and Olympic sports as it has
presence in industry of entertainment by entering in deal of partnership with World Volley ball
federation. There is launch of Swatch members club for its loyal consumers. It has implied
outstanding technical capabilities along with specific quality, design and very affordable price as
in promotion of Swatch, it had made as interesting point and ease to purchase for everyone. The
main criteria for success of brand leads to reliability and quality in brand and other is modern
design and last is related to technology which is very significant in present and future scenario.
How swatch responded to market
There was emergence of the strongest through recent downturn in this industry. Swatch,
Richemont and Rolex has boosted shares of international market as in this case, Swatch had
attained growth in sales by twice as fast with Swiss watch exports. The reliance on wholesale
channels of sales had remained very high and various brands had owned the biggest listed Swiss
watchmaking groups, Richemont and Swatch group with efforts for building own retail markets.
The third party retailers had provided help all big brands and established a lead over small rivals,
driven through increment in dominance of big stores. The large chain lays special focus on
selling vest known and biggest watch brands and risk is tied with fortunes of retailers. With
reference of product scarcity, Swatch group had launched online store for its eponymous plastic
watches which appears to be slower than compared to Swiss rival for developing online sales
channel for purpose of luxury watch brands. It had been observed that Swatch has not
requirement of ending long-standing relationships among its key distributors in UN and Western
Europe. As Rolex is also resistant for online sales as it is reckoned with huge profit along with
tight control on its retailers and exposure is limited for sales of grey market (Atwal and Bryson,
2018).
Swatch had attained benefit through renewing appetite for multiple luxury timepieces in
Hong Kong and Chine. Even with low-end segment had been directly suffered because of
competition through watches of Apple and reflected signs of rebound. It has lowered prices with
its Tissot brand. According to Swatch, the sales had been accelerated of middle and lower end
watches and this positive trend had continued in month of July as well. The company has
projected strong growth and market share gains in other half. Thus, rich inventory level as
prerequisite for attaining healthy growth with perspective of turbulence in international trade and
introduced punitive tariffs. Thus, it is strategically very important for increment in stocks of
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important essential raw materials. Henceforth, it has reported the highest margin in 3 years amid
watch rebound and operating income had attained growth of 70% in 1st half to 629 million francs
($628 million).
CONCLUSION
On basis of above report it had been concluded that luxury watch trend has attained
growth especially in Switzerland and throughout the world. It has been evaluated that no industry
is safe through disruption and Swiss industry of watchmaking and for adopting disruptive
technology of time along with quartz movement. It had shown that approx 85% of revenue is not
from Switzerland and with 10% move in franc could impact its earnings through 14 to 18%. In
the similar aspect, it had shown that Swatch will attain competitive advantage through marketing
in unique aspect. Thus, it has been articulated that Swatch had raised the highest profit with its
operating income increased with 70% and for attaining success in this sector for next 2-5 years it
should be huighly adaptive and capable for accomplishing requirements of its target customers.
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REFERENCES
Books and Journals
Atwal, G. and Bryson, D., 2018. Global Luxury: Organizational Change and Emerging Markets
since the 1970s. Edited byPierre-Yves Donzé andRika Fujioka. New York: Palgrave
Macmillan, 2018. xix+ 287 pp. Figures, tables, notes, index. Cloth, $159.00. ISBN: 978-
981-10-5235-4. Business History Review. 92(3). pp.582-584.
Donzé, P. Y., 2018. How to Enter the Chinese Luxury Market? The Example of Swatch Group.
In Global Luxury(pp. 177-194). Palgrave, Singapore.
Drasković, N., Marković, M. and Petersen, C., 2018. The Early Days of Swatch: Birth of the
Fast Fashion Watch Business Model. Market-Tržište. 30(1). pp.93-108.
Gilbers, S., 2018. How the Financial Crisis Changed Hip-hop. In The Sociolinguistics of Hip-
hop as Critical Conscience (pp. 163-189). Palgrave Macmillan, Cham.
ONLINE
Annual report of Swatch group. 2017. [Online]. Available through
<https://www.swatchgroup.com/sites/default/files/media-files/2017_annual_report_comple
te_en.pdf>.
Ariel Adams. 2018. The Few Big Companies That Own Most Of The Major Luxury Watch
Brands. [Online]. Available through
<https://www.forbes.com/sites/arieladams/2014/07/31/the-few-big-companies-that-own-
most-of-the-major-luxury-watch-brands/#61aed5af1eb1>.
Joe Thompson. 2018. How Swatch Started a Revolution. [Online]. Available through
<https://www.bloomberg.com/news/articles/2017-11-21/how-swatch-started-a-revolution-
history-of-fashion-watches>.
Swatch Reports Highest Profit in Three Years Amid Watch Rebound. 2018. [Online]. Available
through <https://www.businessoffashion.com/articles/news-analysis/swatch-reports-
highest-profit-in-three-years-amid-watch-rebound>.
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