Swatch Group
Is it Time for a Change?
Signal Consulting
Kate Boland | Nick Lane | Greg Piercey | Stephanie Daley
Memorial University
Agenda
Problem Statement Kate
Key Issues
Objectives
Recommendation
Analysis Nick
Alternatives Greg
Implementation Stephanie
Risks and Mitigations Kate
Questions
Problem Statement
How does Swatch Group address the emergence
of the Smart Watch market and major
competitors such as Apple?
Key Issues
Changing Industry
Apple Watch
Wearable Technology
Decline in Sales
Profitability
Currency fluctuations
Objectives
Increase Sales
Improve Profitability
Maintain Brand Heritage
Defend Market Share in Luxury Watch Segment
Recommendation
Launch a new line of luxury Swatch watches
that combine popular smart features with
style.
Analysis
Analysis
Swatchs strategy
Internal External Consumer
Competition
performance environment preferences
Internal - the Swatch business
Diversified:
50 countries and 18 brands
Provide parts and complete products
Top -three worldwide luxury watch brads
Strong history and brand perception
History of market predictability
Internal financial performance
Historic sales growth Swatch sales and net income
(CHF millions)
Sales decline in 2015 8,709
8,456 8,451 8,636
Profitability decline 7,796
21% decline in 2015
27% decline in 2014
95% of profit from 1,928
luxury market
1,604 1,416
1,119 1,143
2012 2013 2014 2015 2015 (adj.)
External the watch industry
History of market disruptions
Significantly differing markets
Swiss (Luxury) China (Low-price)
Watches sold 29.3M 678.5M
Sales $22.9B $5.1B
Price per watch $737 $3
Wearable technologies impacting the industry
External views of the smart-watch
Advocates Detractors
Features Limited battery
o News Pricing concerns
o GPS People buy for emotion
o Health monitor Its a trend / gadget
Swiss watch-makers Watches remain a
are f**ked piece of jewelry
External wearables growth
Wearable sales (units)
66.71 Growth rates of wearable
technologies
50.4
44.1 2015/16 2016/17
34.97
30.32 30.15
Smart watch 66.2% 32.4%
Wristband 16.0% 26.1%
Smart watch Wristband
2015 2016 2017
Competition
Smartwatch:
Apple owns 66% of the market
Financially strong
Dominant player globally
Reliant on other technologies
Activity trackers:
Relatively fragmented
No dominant player
Competition positioning map
Technology-advanced
Apple
Tag
Heuer
Mass
market Luxury
fitbit
Swatch
Rolex
Traditional
Consumer preferences
Consumer preferences (Apple Four major obstacles to
watch vs. luxury watch) buying a smartwatch:
Apple watch
27% customers
1. Battery life
15% 2. Reliant on smartphone
15%
Luxury watch 3. Screen size
customers
4. Price
Prefer Apple Watch Consider Apple watch as a
substitute
What business is Swatch in?
Swatch is one of the worlds
leading luxury watch companies
Alternatives
Alternatives
1 Retrench to Luxury Watch Market
Develop Smart Watch to Compete
2 directly with Apple Watch
Integrate popular smart features into
3 Luxury Watches
Alternative 1 Retrench in Luxury Segment
Stay true to brand Slumping sales
No development Lost opportunity
cost
Alternative 2 Compete Head-on with Apple
Rapidgrow in Appleis established
market leader
Existing technology Compatibility
Alternative 3 Integrate Smart features in
Luxury Watches
Brand loyalty Low technology
Most popular
features only
Battery life
Alternative Comparison
Alternative 3
Alternative 1 Alternative 2
Objective Integrate into
Retrench Head-on w/ Apple
Luxury Watches
Sales
Profitability
Brand Heritage
Defend Luxury
Market
Recommendation
Launch a new line of luxury Swatch watches
that combine popular smart features with
style.
Implementation
The Power of
Looking Smart
Watches remain a piece of jewelry
Nick Hayek
Key Success Factors
Challenger New
Style Variety
approach customers
Implementation
Short (Year 1)
Develop watches
Secure vendor to develop app
Medium (Year 2)
Launch watches & promotion campaign
Long Term (Year 3)
R&D / Launch new features
What looking smart looks like?
Watch Features
Stylish / no display
Quick pay
Activity monitor
Long battery life
Pair with smartphone
Male
Target Market:
Tissot X Age: 35+
Income:$100,000+
Occupation: Business
Professionals
Interests: Travel
Consumer Life Cycle
Fitbit Tissot
Tissot
X
A Smart Ad Campaign
Beautiful Clocks in major airports:
NYC, London, Toronto
It will take you another 1000 steps to
get to your gate and about 3 seconds to
pay for your latte before you board.
A Smart Ad Campaign
Picture a Tissot X customer in the
herd of smartwatch and Fitbit
customers.
Print& Online: travel, GQ,
Economist
Talent Plan
Third party app developer
Special team
Luxury
Smart technology
Technical and marketing
Budget
Year 1 Year 2
Product & App Promotional
Development Campaign
$5 Million $20
Funded by cash.
What does great look like?
Incremental revenue and profitability
$40,000,000
$35,000,000
$30,000,000
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$5,000,000
$-
2018 2019 2020 2021
Revenue Profit
Risks and Mitigations
Risks Probability Mitigation
Competitors Leverage brand
Med
copy loyalty
New technology
Med Acquire/partner
threat
Currency Financial
Low
conditions hedging
Objectives
Increase Sales Look smart campaign
Improve Profitability Added smart feature
Maintain Brand
Heritage Integrity of watch remains
Defend Market Share
in Luxury Watch Style+technology
Segment
Questions
Contingency Plan
Dont go head-to-head with Apple
Stay on Brand
Focus on Luxury and Style
