Case 1-2
Swatch Makes Time for Luxury
From plastic to platinum—the wristwatch company known for fun fashion accessories is now
focusing on the watch as a status symbol. When Switzerland-based Swatch Group
[http://bi.galegroup.com/essentials/company/115?u=tlearn_trl] was founded in 1983, popularly
priced quartz watches made by Japanese firms had taken considerable market share from
traditional Swiss watch brands. Swatch’s bold idea for recapturing share was to combine colorful
cases, bands, and faces into eye-catching watches that were functional, affordable, and
fashionable. The company began introducing an ever-changing array of new models, which
helped consumers begin to think about wristwatches as both trendy and collectible. It also
decided to restrict some models to certain geographic areas. This encouraged consumers to be on
the lookout for new Swatches when traveling and to snap up models not sold in stores at home.
The idea of building a wardrobe of watches caught on. Consumers—particularly women—
quickly became accustomed to buying Swatch watches as they would any fashion accessory, on
impulse or to match particular outfits. Showing off new and unusual Swatch models—especially
those not locally available—became another way to express individuality and status. Soon
Swatch’s success attracted the attention of rivals that entered the market with a wide range of
inexpensive watches for everyday wear.
To avoid the profit-sapping problems of this intense competition, Swatch made another bold
decision. Without abandoning its basic $35 Swatch models, the company started acquiring
established quality brands such as Omega and Hamilton. It also bought super-luxury brands such
as Breguet, which offers hand-made, limited-edition watches priced as high as $500,000. The
posh image of these brands brought a new dimension to Swatch’s corporate reputation and new
possibilities for marketing more watches to more segments.
Now the company can cater to buyers seeking an extraordinary piece of jewelry for
themselves or to give as a special gift—buyers for whom price is a secondary consideration.
Swatch’s high-end brands can also satisfy the needs of wealthy consumers who get in a buying
mood while on vacation and choose fancy watches in exclusive boutiques or airport duty-free
shops. Knowing that more luxury watches are sold to men than to women, Swatch has also
partnered with the Tiffany jewelry retail chain to design and market high-quality women’s
watches as fashion accessories.
To connect with customers beyond the purchase of a single wristwatch and strengthen brand
loyalty, Swatch has been using a variety of marketing communications. Its luxury brand ads
appear in magazines geared to high-income consumers. It publishes Voice, a twice-yearly
lifestyle magazine, to inform customers about fashion trends, special Swatch events, new product
news, and more. Its online newsletter keeps customers updated on the latest styles and trends. On
the Swatch website, enthusiasts can click to join the Swatch club and gain access to members-
only products, contests, collectible watches, blogs, photos, and videos. In addition, Swatch
mounts special events for customers all over the world, such as a beach-theme party in Austria
and a weekend pirate-theme cruise in Turkey.
Thanks to its portfolio of more than a dozen brands and a global chain of 600 stores, Swatch
has become the world’s leading watch marketer. Its annual sales have risen to $5 billion, despite
mixed global economic conditions. In fact, luxury watches now account for more than half of
Swatch’s profits, and the company is readying more fine-jewelry accessories under its status-
symbol brands. Still, competition from high-end brands such as Patek Philippe, Piaget, Cartier,
and Bulgari has become more intense over the years. Will Swatch continue to thrive in such a
highly pressured environment? Only time will tell.
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Case Questions
1. What role does the consumer’s culture seem to be playing in Swatch’s marketing strategy?
2. Explain, in terms of internal consumer processes, why Swatch puts so much emphasis on
marketing communications.
3. Under what circumstances would the decision to buy a Swatch watch be a high-effort
decision? A low-effort decision?
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