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What do you think has been the contribution of the marketing function, the product design function and

the operations function to the success of Swatch?

The success of Swatch took place despite the other branded goods equal desperation for growth and the valueconscious consumers resistance to price increases in an era of low inflation (Noella, 2002), and are opting for high-quality private label goods instead of brands (Devincentis and Kotcher, 1995). Thus, Swatchs innovative evolution had essentially had broaden their consumer base. For Swatch, the recuperation and improvement from their diminished market share due to their high-priced watches and the availability of low-priced brands, can be attributed to these three factors. First, the development of their product from the use of classy materials to plastic cased watches and the subsequent cost reduction that they garnered allowed for lower prices. Thus, enabling them to compete with other brands. The production process having designed to be more efficient than its competitors allowed for the manufacture of cheaper products. The development of the operation however was due mainly to the change in the product design; both increasing the economies of scale of Swatch making it able to increase its target market and thus, boosting its market share. As illustrated by Carter, Melnyk and Handfield (1995) product design is one of the primary locus of competitiveness in today's dynamic marketplace. What Swatch did was introduced a new trend coupled by an inherent company philosophy that welcomes change, and positions the firm to adopt, with flexibility and ease, differing goals and strategies as conditions warrant. And, finally, Swatch had configure itself in order to swiftly develop and launch new products, speedily manufacture these products, and deliver them to a more sophisticated, demanding, and competitive marketplace through the use of cross-functional and concurrent engineering structures and processes (Carter, Melnyk and Handfield, 1995). This strategy by Swatrch can be linked to the fundamental idea behind cross-functional teams is to include marketing, engineering, manufacturing, finance/accounting, R&D, purchasing, quality assurance, designers, suppliers, and even customer representatives in the early, formulative stages of the design process. This approach helped to minimize the cost of design changes and maximize results for Swatch. According to Thomas and Sadat-Hossieny (1995), approximately 70% of Swatchs product's ultimate cost is determined during concept formulation, when engineering designs are in their early stages and product objectives are being determined by marketing. Cleverly planned, the Swatch watch took on a different role, it had transformed itself to a piece of accessory. The packaging accorded to the new look by Swatch had offset its former image and included the younger crowd. Thus, the marketing strategy in line with its new design had attain a marketability extended to ignore social stratification. No matter how impressive a product may be, it must be marketed correctly to succeed. Hayek realized that the Swatch required the public to think about watches differently. Until the 1970s watches were considered purely functional items that one wore to tell time. There was no fun involved with buying or wearing a watch. Harnessed correctly, this could be used to create an advantage over the Japanese brands. Hayek, along with his newly hired advertising agency, decided to position the Swatch as a fashion accessory. To appeal to the consumers emotional side Hayek hired designers from all areas, not just accessories, to create an easily recognizable image. Swatches would not

be black and white like their predecessors; they would be alive with vibrant colors and crazy designs to match moods and senses of style. The underlying Technical Innovation and New Product Development: Swatch strategy was to motivate customers to buy multiple Swatches.

How do you think Swatch compares with most watch manufacturers? As a business, Swatch seems to be exemplary: it produces watches that work and are inexpensive, and it makes use of talented artists and designers. Swatch watches are diverting, desirable and of-the-moment. Originally sold as disposable watches, they are now sought by collectors precisely because of their creative designs. Swatch has a wide-range of watches to suit practically all tastes and ages, but one thing is common between all its four rangesthey represent freshness and trendiness in their designs. A reason why Swatch is so famous today is partly because of its enthralling history. Until the 1970s, Switzerland had a near monopoly on watch making. Then, Japanese and Hong Kong manufacturers diligently marketed the electronic watch (actually invented by the Swiss), worldwide. Almost overnight, Swiss watchmakers lost almost all of their market for moderately priced watches, and the industry seemed to be on the ropes. The company overcame the crisis and was actually responsible for the survival of the Swiss watch industry. The core of the Swatchs strategy lies in building and highlighting 'differentiators' at all points of contact, while targeting a wide cross-section of trend conscious consumers. By adopting this route, Swatch aims to build a credible and 'aspirational' brand image and provide the consumers a truly international brand experience which it believes is very critical for success in the market. their study, extension evaluations depended on both category similarity and brand concept consistency. Arguably, Swatch had the most successful brand extension program. Compared with Timex and Rolex, brands with dominant associations related to performance (e.g., Timex) extended best to categories which shared the functional association (e.g., stopwatches), and symbolic brands with dominant associations related to prestige (e.g., Rolex) extended best to categories which shared the prestige association (e.g., bracelets), independent of category similarity, does not enjoy the level of success by Swatch. Unlike other brands, the company marketed the trendy synthetic watches to young consumers with the idea that as they grew older they would upgrade their watches to higher-end SMH brands like Omega, Blancpain, or Longines. Customers often bought Swatches in bulk, coordinating different watch styles with their wardrobes, something that Rolex and Casio have not done. Furthermore, Swatch launches every three months a new set of designs would be rolled out; each would be composed of the five basic Swatch lines: formal, active sports, casual leisure, fashion, and art. The revolving change in the lineup enticed people to buy Swatches more frequently than absolutely necessary, just as changing fashions frequently created a wardrobe half-full of unstylish clothes. What do you think the Swatch operation would look like in terms of inputs, the transformation process and outputs? Sketch out a diagram that models the marketing, product design and operations functions.

In the 1960's, the name of the game was to produce low-cost products by employing methods of mass production. Companies built facilities as large as could be properly managed to take advantage of economies of scale. In the late 1970's and early 1980's, Japanese and European producers introduced lower cost goods, and U.S. producers responded by emphasizing increased production efficiency and waste reduction philosophies. Manufacturing strategies of lean production, inventory reduction, and just-in-time were copied from the successful Japanese manufacturers, who established themselves as world-class, low-cost (cheaper) producers (Jurkus and Willins, 2001). In essence, there were three basic ways in which companies can compete: development, production, and distribution (Carter, Melnyk and Handfield, 1995). This is where Swatch built its competitive advantage. Following the model, we can see that Swatch had first evaluated the market, created an innovative product design and devised a production operation that will minimize cost without diminishing the quality of the product. Coupled with an effective marketing plan, Swatch became one of the best selling watches of all time.

http://www.scribd.com/doc/17134280/The-Birth-of-Swatch
The case study is particular in that it does not clearly present a particular problem that the brand Swatch might be having. Indeed, at the time the case study was written, the brand continued to be highly successful and produce significant revenues for the company. The problem, however, can be anticipated in the Looking Forward chapter. The most important problem and challenge that the company is facing is related to the fact that it needs to find the right alternative solutions for the moment when the market demand will cool off and the customers will have grown over the initial impact that the innovative concept that Swatch brought about would cool down. Indeed, initially, people were so interested in Swatch because the brand had managed to put together in the same product innovation and technology, all at a more than reasonable price. The initial growth throughout the period from 1990 to 1993 was in fact generated by the novelty that the brand had brought on a market that was used to getting a lower quality or a non-existent design when the price was dropped. However, Swatch had managed to have a great design and an excellent technology, at the low priced that was promised, and people were s

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