Marketing Strategy Case Report

The Swatch Group MK 6410 Marketing Strategy

1. The Swatch Group managed their branding strategies by breaking up the watch market
into four segments – Swatch, Tissot, Omega, Breguet. The four segments were broken up
according to the watch price point and reputation. Each segment has one core brand that
competes for market leadership as either the first, second or third market leader. The remaining
brands in the market seek to fulfill regional and niche tastes.
Each brand operates almost entirely sovereign to the larger group. Each band has distinct
features which remain specific to the brand. The overall Swatch group does a review to ensure
that each brand stays unique and within their market segment. Another overall application
within the Swatch group is research and development. R&D is completed on a company-wide
basis and shared with the brand the development is thought to apply to the best.
I am impressed by the shear coverage of the market the overall Swatch group has because
of their market segmentation and various brands. Most watch companies are only in one
segment. By being in all market segments, Swatch could have the advantage of understanding
any emerging market segments or meeting any consumer needs that fall between segments.
However, because of the number of brands within the watch market, Swatch sometimes
competes against itself. For example, the Swatch brand was the official timekeeper of the
Olympic games and was replaced by another Swatch brand, Omega, in 2006. Additionally,
Swatch is sometimes hamstrung on making decisions on one brand because they may affect
another closely related brand. For example, Omega should increase their price to be perceived as
an investment and true luxury good to compete with Rolex. However, if they increase the price
of Omega, they may jeopardize their upper end brand, Breguet. Finally, each brand does not
benefit from the overall company brand. The overall company, Swatch, does not add value to
each brand because it is associated with the lower quality watch.
To avoid the dilemma of competing against themselves, Swatch should study the market
and allocate primary brands based on the largest and most profitable market segment. This would
help make the decision to increase Omega’s price clear because the luxury sport watch market is
the largest. Additionally, I would change the company name or improve the company brand.
Swatch is the company name and the brand of the mid to low-end watches they sell. The Swatch
company name does not benefit the high-end watches like Omega or Breguet because of the
name association with mid to low-range watches. By changing the company name to one of the
higher quality watches, Omega or Breguet, the company name is by default higher quality. This
will not hurt the low-quality brands, and will help improve the view of the high-quality brands.
2. The article states that, “watch distribution in the U.S. is at the level of the third-world
country. Most retailers sell watches like a commodity, nothing else…” To change this situation
in the U.S., I would create an emotional connection to the Swatch brands and brand all Swatch
products as status symbol. Coffee in the U.S. was a commodity until Starbucks entered the
market. They created a status symbol and an emotional connection to ease and uniformity.
Additionally, to continue to change the situation in the U.S., I would train the sales
people on how to sell the product as a luxury good instead of service. Also, I would have display
requirements that focus on luxury and emotion instead of as a watch needed for utility.

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 Marketing Strategy Case Report
The Swatch Group MK 6410 Marketing Strategy

3. The article states that, “from a pure branding perspective, Omega has a very, very long
way to go to get anywhere near Rolex.” Several marketing strategies can improve Omega’s
situation. First, Omega needs to better educate the consumer and distributor. The consumer does
not view the Co-Axial technology on Omega as an improvement over Rolex because they do not
understand the advantage. The distributors also do not sell and show the Omega watch in the
U.S. as a luxury good instead of a commodity. Educating the consumer and distributors can solve
this problem.
Second, the consumer does not perceive Omega to be a luxury product because it is
priced significantly less than Rolex. To compete with Rolex, Omega needs to be perceived to be
close to equal to Rolex by the consumer. Emphasizing cost effectiveness on a luxury product is
counteracts the luxury product image. By increasing the price to near the price of Rolex and
educating consumers on the quality, Omega can be perceived to be more like Rolex.
Third, Omega needs to advertise luxury and status. Although Omega is a sporting watch,
a large percent of their secondary consumer, young professionals, buy Omega for the status
symbol. It is important that Omega advertise luxury and status to appeal to a greater audience
beyond sports.
Finally, Omega needs to spend more on advertising. Their competitor, Rolex, spends
significantly more and captures more of the market. Omega does very well in the sports arena
and in certain countries such as China, but other countries with a longer Rolex memory, such as
the U.S. need more attention. Omega needs to spend more on advertising directed at the U.S. and
other struggling Omega counties. Specifically, the advertising needs to be focused on luxury and
status to sway the Rolex users that Omega is the same quality.
4. A good brand elicits an emotion and from the consumer and ideas about the company and
transfers it to the product. For example, Apple brand elicits quality and status. Chipotle is
associated local, Tex-Mex and delicious. To build a good brand, a company needs to carefully
construct their image.
First, the company must communicate a clear customer promise. This promise communicates the
emotion and image perceived by the consumer.
Second the company must build trust with the customer by delivering on the promise. The
company needs to provide what they promised, and inform the customer of any new information.
Third, the company needs to continually improve the promise. Continuing to improve the
promise of the brand keeps the consumer engaged and the brand relevant.
Finally, the company needs to seek to innovate beyond the familiar. Innovation on the brand and
product can expand the market and keep the brand relevant.
Building a brand is extremely important because it is how the company is perceived. By creating
a promise, executing, improving and innovating, the company can build a strong and lasting
brand.