Swatch Case Analysis

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Harvard Case Study: Swatch – The Birth of the Swatch By Gilmara B. Amado Rizka R. Pratiwi Sannipa Pattanapiyasup Johnson & Wales University Situation Analysis In 1970s, the Swiss watch making industry faced a great challenge because quartz technology. Unlike mechanical movement which was handcrafted, quartz technology had more variance and it was easier to be mass produced specially by Asian counter-parts. In Two majors watch companies, ASHUAG and SSIH were facing bankruptcy but Nicolas Hayek suggested to merge ASUAG and SSIH in 1983 and called it SMH (Societe Suisse de Microelectronique ET d’Horlogerie). Swiss watch industry market share was predominant on the high price watches and they hold no market share in the under $100 segment, thus Swatch was born to fulfill this gap. Swatch released its first line of watches and from the get go these watches were controversial. First of all, SMH constituted of high end watches and most of them were handcrafted however, Swatch was built and assembled with low-priced quartz and produced in Switzerland which has high production cost. Next, Swatch team decided to encase the watch with cheap plastic, which is reversing the image of the Swiss watch industry of high end products. Lastly, they decided to give a unique message because watch is not only a commodity but also a person’s self-image. Swatches’ designs were different from any other traditional watches. Although they were made from plastic, the models were youthful, provocative, stylish and unique. Moreover, price is one of the elements that made the Swatch popular among these customers. Therefore, buying Swatch is an easy decision to make because of the cost, the customers does not over think the process as an impulsive buying and customer tends to buy more than one watch over the year. In recent years, the watch industry still consisted of three

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