Posted: May 25th, 2022

Cross examination of branded watches in the market

Branding and Positioning

Cross examination of branded watches in the market

The world population is anticipated to grow at an alarming rate of 1.2% which will translate into 700 million customers from the upcoming markets and third world countries (Buchanan, 2007). The global population grossed seven billion in 2011 (Kunzig, 2011). This global population growth will surely drive the industries and their products. With this surging population growth in third world countries and new markets, the watchmakers are full of new prospects and opportunities. The competition will heat up in such markets as the watchmakers will be flogging to take charge of newer markets with their technologies.

The brand bonanza is a huge step forward in this worldwide watch market which entails all of the luxury brands and companies existing in the industry. The luxury markets are cut throat in terms of price wars because the niche markets are multiple and customers are in abundance. The watchmaking companies have purchased luxury brands at the expense of huge sums of money. For instance in 1999, LVMH took over Tag Heur for a price of $750 million. Then in 2000, Vendome purchased three luxury brands in one go:

Jaeger-Le Coultre

IWC Schaffhausen

A Lange & Sohne

The total acquisition cost around $1.7 billion (Buchanan, 2009). Some other acquisitions range from $30 million-$300 million. In case of a healthy and flourishing economy, the watch industry will keep its chin up and will soon be a subject to M&A’s on the basis of value chains, technologies and reputable brands. This can subsequently change the industry profile for the best while it’s is a pure indicative of price wars and domination of the market by a handful of watch corporations. The future of the watchmaking companies lies in these developing nations where vacancy is still available.

Section 2: Swatch is a reputable watch corporation. What strategies should Swatch use to fortify and strengthen brand equity in order to make is competent to rival new products such as iPod nano watch as well as paralleling fashion/designer labels such as LV and Superdry?

Concentrating on company-specific fortes

The marketing strengths and operations assist in assisting firms value superficial operations (Morgan, Vorhies, & Mason, 2009). They are critical to the survival of a corporation. In case of corporate efficiency and marketing operations, Swatch Group is a diversified company with a portfolio exceptional and showcases unique brand visibility. Brand equity plays a pivotal role. In its nascent history, the Swatch Group managed to acquire multiple traits which commenced the “Swatch phenomenon” and diversify the Swiss watch company. The induced strategy process (it’s vital for penetrating the core business opportunities) and the autonomous strategy process (examining new growth areas) (Burgelman & Grove, 2007, p 965) in case of Swatch Group, a company appears to amalgamate the operational efficiencies by penetrating into new areas and broadening its markets. The Swatch Group boasts of a reputed and grounded product portfolio (19 brands), its financial power unlimited, standard of quality are sky high, R&D and global trading operations are versatile. In this business climate, the swatch Group should keep its brand equity and commence to broadening its business horizons in new markets and developing countries. The Swatch Group released its data in 2008-2009, which proves this stance.

Joint collaboration and corporate alliance

The Swatch Group should develop future plans of alliances with retailers and watchmaking corporations, apart from storming through core and non-core venues. It should form an alliance with the well-known Tiffany & Company. The future mergers should be based on non-core assets and core assets. It should also view newer business propositions in newer markets such as India, Thailand, China, Indonesia, Taiwan, Turkey and Singapore. The salaries are rising in such countries and the desire for owning luxury goods is sky rocketing. The Swatch Company has played a pivotal role in time keeping during the past and present Olympics and many other sporting events. It provides data management services too (Watch time, 2007).

Working with niche companies

During the past 15 years, many notable watchmaking companies are turned into niche companies and started selling new and novel products. This is in relation with the altering lifestyle and changes in the world markets. Apart from huge corporation such as Super-dry and LV, the market is afloat with smaller companies selling unique luxury watches to smaller sections and quoting prices for instance $20,000 for a watch. On a worldwide scale, a handful of watchmaking companies are indulged in integration of cost, technological hurdles and future business commitments. Newer designs and technologies are the norm in today’s modern environment. They require great finances to cut through new breakthroughs. Specialized skills and able R&D facilities must be ready at their disposal (Fetz and Filippini, 2010).

Harmonizing the knowledge assets

The watch industry is full of potential assets and entrepreneurial leaps. All of the watch companies tend to create growth and focus on new technologies. Thus, the Swatch Group should be basically busy in capitalizing on the available collective knowledge and reputed brands. It is pretty apparent that LVMH and Richemont among other watchmakers are full of expansive financial resources, cut throat products, proficient R&D and skilled labor. This certainly helps in creating new products, form strategies ventures and working marketing programs (Fetz and Filippini, 2010).

Taking advantage of luxury section

In case of luxury brands, most of the luxury watchmaking companies are situated in Switzerland. The Swiss watchmaking giants are unique and produce immensely rich products due to their strict emphasis on quality control, alliances, heritage and luxury corporations (Watch time, 2007). This has merits and demerits at the same time as sustaining the performance desired can be a bit problematic. This involves core competencies and working with skilled staff. The Swatch Group is plagued with the same issues as all other Swiss luxury brands.

Making strategic trade offs

The M&A’s, alliances and internationalization issues have plagued Swatch and LVMH since 1995. The watchmaking companies are focusing on M&A’s and alliances since then. The top three tier companies namely, LVMH, Richemont and Swatch have spearheaded many acquisitions for fortifying their brand portfolios. In the present market circumstances, the Swatch Group should focus on strategic alliances in the European market (Fetz and Filippini, 2010).

Drivers of globalization

Apart from the cheaply priced watches, the worldwide watch industry isn’t exactly a commodity business, but an intense cut throat market. The speed of the competition, but the luxury industry is quite lucrative to afford huge R&D facilities and promote their products. This compels the heavy brand corporations to focus on R&D in order to expand their portfolios and budget their marketing schemes. Thus, the small level companies lag behind these heavy duty corporations in terms of R&D and technologies. The Swatch Group should maintain its driver’s seat position with its brand equity, financial viability and global brand recognition (Diez-Vial, 2007).

Adjusting the business model and diversifying

The rivals of Swatch Group are fast catching up for instance Super-dry and LVMH in terms of products, new technologies and spearheading marketing campaigns. The watch industry is a niche-based business; the competitors remain alive and very much in the hunt. In the upcoming years, the Swatch Group will be evolving its business model and stage an entrance into newer industries and focus on non-core assets. It opened a watchmaking school in 2005 in the city of New Jersey for dealing with trained personnel and skilled staff issue (Shuster, 2005). The Swatch Group is at a cozy position with watch movements and components due to its subsequent integration. The company should continue to lead the wrist watch parts industry by sixty percent. It’s the biggest supplier itself and should look to maintain that (Watch time, 2007).

References

Buchanan, N. (2007, April). Buuding the base. Watch Time, pp. 67-70.

Buchanan, N. (2009, October). Wild times. Watch Time, pp. 72-128.

Burgelman, R.A., & Grove, A. (2007). Let chaos reign, then rein in chaos — repeatedly: Managing strategic dynamics for corporate longevity. Strategic Managementjournal, 28, 965-979.

Diez-Vial, I. (2007). Explaining vertical integration strategies: Market power, transactional attributes and capabilities. Journal of Management Studies, 44, 1017-1040.

Fetz, A., & Filippini, M. (2010). Economies of vertical integration in the Swiss electricity sector. Energy Economics, 32, 1325-1330.

Kunzig, R. (2011, January). Population 7 billion. National Geographic, pp. 32-69.

Morgan, N.A., Vorhies, D.W., & Mason, C.H. (2009). Market orientation, marketing capabilities, and firm performance. Strategic Managementjournal, 30, 909-920.

Shuster, W.G. (2005, July). Swatch Group will open U.S. watchmaking school. Jewelers Circular Keystone, p. 68.

Watch Time. (2007, June). Boom times for luxury timepieces, p. 40.

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