Harvard | Business | School

Marketing ChannelsCase Study

Nick Gage | Ben Lyon | Shannon Tacke | Kevin Virgilio

November 19, 2009

shm | OVERVIEW | shm

shm | MISSION | shm

production

What?

distribution

Where?

marketing

How?

THE MISSION: TO UTILIZE SMH’S RADICAL INNOVATIONS

IN DESIGN, AUTOMATION & ASSEMEBLY , AS WELL AS IN

MARKETING & COMMUNICATION TO HAVE A COMPETITVE

BRAND IN EVERY PRICE SEGMENT IN THE MARKET.

shm | ISSUES | shm

Production

• Bringing SMH Production Cost to Asian Levels

• Keeping production costs low while maintaining quality and design standards

• Centralized manufacturing and assembly divisions lead to high operational costs due to import tariffs and high direct Labor costs

Future of the Swatch Brand

• Hayek has expressed interest in extending the swatch brand to new arenas such as pagers, telephones, automobiles, and fashion merchandise (the future is uncertain)

Swiss Markets & Competition

• Tend to focus on high-priced watch segment

• Renewing the omega brand is critical

• SHM Sells movements at low margin to foreign and national watchmakers who make minor adjustments to their movements and sell for high profit

Asian Markets & Competition

• Tend to focus on low-priced watch segment

• Clock import quotas & high import tariffs make it difficult for shm to be competitive

• China / H.K markets have highest potential for growth

Japanese Markets & Competition

• Tend to focus on high-priced watch segment

• Main competitor: Japan’s Citizen Watch Company Ltd which has production facilities in Switzerland, Germany, France, Italy, US, Thailand, & china

shm | ISSUES | shm

shm | ALTERNATIVES | shm

shm | RECCOMENDATIONS | shmproduction what? Although foreign labor is much cheaper

maintain producing watches nationally

Begin acquiring Swiss & foreign movement and component manufacturer to increase

selling power against other watch manufactures

Intense investment in manufacturing and innovation is the only way maintain a

competitive edge

Designing and manufacturing High-end necklaces, bracelets, and purses to showcase

at upscale Swatch boutiques

shm | RECCOMENDATIONS | shmdistribution

where?Keep the swatch brand away from discount

retailers and jewelry stores

Open hundreds of Swatch Retail Outlets in key cities in Europe, China, India & US

Open Swatch Mega Stores in New York, London, Paris, Beijing, Hong Kong

Open boutiques to serve the high-priced segment of the market

Place Swatch Kiosks in Strategic international Airports

shm | RECCOMENDATIONS | shmmarketing how? Maintain the Use of Unique Promotional

activities

Look at opportunities to promote at 96’ Olympic games and 94’ World Cup

Have Swatch be the clock to countdown every major city’s new year

Chose strategic celebrity endorsements in entertainment, cinema, fashion and Sports

shm | FINANCIAL PROJECTIONS | shm

shm | FINANCIAL PROJECTIONS | shm

0%

5%

10%

15%

20%

25%

30%

35%

40%

1987 1988 1989 1990 1991 1992 1993 1994

Low Mid High Move/Comps Other

Sales by Product Type

(as % of gross sales)

shm | FINANCIAL PROJECTIONS | shm