Contents

1.0 Executive Summary 1

2.0 Introduction 3

3.0 Situation Analysis 5

3.1 Environmental Analysis 5

3.2 Competitive Analysis 6

3.3 SWOT Analysis 6

4.0 Marketing Strategy 7

4.1 Mission 7

4.2 Marketing Objectives 8

4.3 Financial Objectives 8

4.4 Segmentation and Targeting 8

4.5 Positioning 10

4.6 Strategic Options & Strategic Choice 10

4.7 Marketing Mix Decision 11

5.0 Implementation 12

5.1 Timeline 12

5.2 Financial Costing 12

6.0 Controls 13

7.0 Conslusion 13

References 14

Appendix 15

1.0 Executive Summary

Swatch was one brand of Swatch Group Ltd. and the most successful wristwatch in the world. From 1983, it’s already 24 years of existence, and the fact that the company is still here, the Swatch watches are still in the collection items of the collectors and still in the wrist of other users, then Swatch will continue to grow and expand (Thinking made easy,2008).

There are two primary reason for the success of Swatch: one is the effective marketing strategy which the company uses by satisfying its target market well; the other is high quality and various design. Due to its high quality, Swatch watch is no longer just a simple everyday watch but one of the hot collectible items in the world. Additionally, they also have series of watches for every season, every special occasion and every event in the world (Thinking made easy,2008).

However, more recently the whole watches market has been driven by a number of forces, which provide both opportunities and challenges with most of watchmakers. Swatch is no exception. Intensive competition between different brands is increasing in order to survive in this changeable market. The needs and wants of individual customers vary greatly and continually, which also means the customer is still seeing something new that will urge them to continue to support the products (Thinking made easy,2008).

Therefore, Swatch must continue their performance and work and continue to research about its marketing environment, adjusting its marketing strategy timely to target customers.

The aim of this report is to recommend a new marketing strategy to Swatch company, which can help this company win the competition, increase the sales profit and maintain brand loyalty.

According to PEST analysis, Five forces analysis and SWOT analysis, the environment where Swatch company exists could be seen clearly. Lately e-commerce is used widely and becoming more popular. Due to the credit crunch, customers switch their purchase from Luxury items to low-price items. However, persistent economic recession in the UK has an adverse impact on Swatch. Intensive competition with other companies still put heavy pressure on it. Fortunately, Swatch has already been a strong brand image in the customers’ mind and has a wider presence in the fashion market. The high-quality and unique products are also becoming its strengths.

Women are the major buyer in the UK market and they purchase more for themselves than men. In terms of segmentation, targeting and positioning, the target market of Swatch is working women among the 24 to 35 age group, who are able and willing to spend more on themselves. With the tendency of high porportion of single women, and high late marriage rate, this age group will extend to benefit the

company a lot. Swatch also position itself in a high-quality but low-price place to attract more customers.

Combining with all of above analyses, this report recommend Swatch to adopt market- penetration strategy, which requires the company to sell current produt to its current market. Customerized product sold with high price right aims at its target customers and satisfies their tastes.

Under the help of moderate implementation and control, it is evident that market - penetration strategy fit for Swatch and would bring maximized profit to it.

2.0 Introduction

According to Kidd (2007, p.1-21), the watches market has shown a consistent growth profile, with year-on-year sales rises from 2002, to reach a value of £1.22 bn by 2006. However, more recently the watches market has been driven by a number of factors, whether positively or negatively.

• Limited growth and any downturn in the UK economy would lead to declining sales

• Higher spending in other areas, such as clothing, food and travel

• Many brands compete with each other to gain more customers, which increases the product-competitiveness and price-competitiveness

• Expansion in the retail distribution

• Reposition into the fashion market

• Women are the major buyers in UK market and majority of their purchases are for themselves

The Swatch Group Ltd is based in Switzerland and the world’s largest watchmaker (Kidd,2007, p.27). It owns 19 watch brands, such as Omega, Rado, Longines and launches its products over 50 locations, including France, Germany, Italy, USA, the Virgin Islands, Thailand, Malaysia, and China, with its main facility in Switzerland. Swatch is one of the brand owned by this company, who is very famous for its slim plastic watches. As it is stated that (oppapers,2006), Swatch has uniquely pioneered the low cost fashionable watch market by combining fashion, style, and Swiss technology, and it sells watches, various accessories and apparel primarily to teens and young adults in the world.

To compete in such a changeable watches market and satisfy its target customers well, Swatch must perform hard. How it can differentiate its products by carrying out a perfect marketing plan to attract its customers and maintain its brand loyalty will be the key and demonstrated in this report as its final objective.

The report will first analyze the external and internal marketing environment for Swatch where it competes by using a range of theoretical frameworks, such as PEST, Porter’s Five Forces, and SWOT. After that, by summarizing these analyses, the report will make recommendations for the selection and development of a new marketing strategy and how this will be implemented and controlled.

3.0 Situation Analysis

3.1 Environmental Analysis

Environmental analysis helps Swatch to understand what is happening both inside and outside the company and to increase the probability that the strategies it develops will appropriately reflect its organizational environment (e-Coach,2008). PEST analysis for Swatch consists of following factors:

Economic

• Current economic downturn

• The credit crunch might decrease the purchasing power of consumers and they may also spend less on luxury items, something that has a greater profit margin for Swatch (Annual Report ,2007).

Technological

• E-commerce becoming prevalent

(See Appendix A for detailed analysis)

3.2 Competitive Analysis

Competitive analysis is a vital part of a marketing plan. Its purpose is to determine the strengths and weaknesses of the competitors within the market (Entrepreneur,2006). Porter’s Five Forces analysis for Swatch can be interpreted as follows:

New Entrants

• Strong brand recognition and customer loyalty --- Swatch is a popular brand among customers

Substitution

• Many brands provide with range of similar styles

• Threat from counterfeit products

Buyer Power

• Buyer power is high in this industry simply due to the presence of so many competitors selling the same products. It is only differentiated in price and consumer loyalty

Overall Intensity of Rivalry

• Intense competition within a very crowded market

(See Appendix B for detailed analysis)

3.3 SWOT Analysis

SWOT analysis is the overall evaluation of a company’s strengths, weaknesses, opportunities and threats, and is a way of monitoring the external and internal marketing environment (Kotler,2009, p.89).

Strengths

• Strong brand and customer loyalty

• Repositioning into in the fashion market

• A wide range of products with different designs across all price points

Weaknesses

• Low asset turnover ratio

• Weak employee productivity --- Accroding to Kidd (2007, p.75), the number of employees in Swatch in 2005 is only 199

Opportunities

• E-commerce offers trading opportunities

• The credit crunch switches customers from buying luxury items to low-priced items

Threats

• Counterfeit products

• Intense competition between different companies within a crowed market

• Current economic recession and policy of price fixing decrease the sales

4.0 Marketing Strategy

4.1 Mission

Swatch’s mission is to offer low cost, high quality, and accurate watch with synthetic material (oppapers,2007).

4.2 Marketing Objectives

• Become the creative and innovative leading brand in global market (oppapers,2007)

• Establish strong brand image in the mind of consumers (oppapers,2007)

4.3 Financial Objectives

• Increase the profit by 10% annually

• Increase sales to 21.7% over the next 2 years

(see Appendix C for financial forecast)

4.4 Segmentation and Targeting

As Kotler(2009, p.247) defined that segmentation is to divide a market into distinct groups of buyers with different needs, characteristics of behavior, who might require seperate products. The profile for the Swatch’s ideal customers consists of following factors:

Demographic:

• Gender: male and female

In 2007, 11.1% of women bought watches for self, while 9.3% went to men;

5.3% of women bought watches for someone else, while 3.4% went to men

(Kidd,2007, p.43)

• Age: 15-19, 20-24 and 25-34

In terms of amount of people who purchased watches during 2007,

the first age group accounted for 23.4%;

the second age group occupied 18.1%;

the third age group had 16.9%

(Kidd,2007, p.44)

Psychographic:

• Lifestyle:

Live a progressive lifestyle and pursue trend

Once the firm has identified its merket-segment, it must decide which ones to target (Kolter,2009, p.267). Swatch will focus on working women among the 24 to 35 age group. Firstly, It is clear that female purchasing goods for themselves more than male and they take the lead in the whole market. Therefore, in order to be more self-aware in the fashion sense and more likely to be influenced by trends, as well as lifestyle, women willing to spend more on themselves (Kidd,2007, p.43). Secondly, more recently there is a downward tendency in the number of marriage in the UK. Two main drivers are behind it. One is single people increased from 3 million in 1997 to 9.2 million in 2007(National Statistics,2007); the other is the average age at which couples are getting married has risen to 32 for men and 29 for women (Kidd, 2007, p.5). Therefore, the 24 to 35 age group may be more established in independent finance and lifestyle.

4.5 Positioning

To working women among the 24 to 35 age group, who have strong purchase power, Swatch is the watchmaker that produces more unique watches than any other brands for it has the most variety of designs. Their high quality but low price make customers move to multi-ownership across a rang of looks and price points.

4.6 Strategic Options & Strategic Choice

According to the SWOT analysis above, it is evident that Swatch has a steady presence in the fashion market with strong brand image and customer loyalty. In order to maintain and take advantages of such strengths, Swatch should adopt the market-penetration strategy which means to sell existing products into existing markets with the objectives of securing the dominance of current market and increasing market share from current products ( Kolter,2009, p.85).

Comparing with the cost-leadership strategy and the product development strategy, the former calls for price cutting when selling products. It not only reduces company’s sales profit, but also affects its brand image. The latter strategy requires company to develop a new product, which may cost so much money and time to do the market research and product test.

Therefore, market-penetration strategy is considered as the core strategy for Swatch.

4.7 Marketing Mix Decision

Swatch’s marketing mix is comprised of the following four aspects:

Product

• Customization --- to personalize the watch to fit customers’ taste and make it more unique

• Special features emphasize more special and limited edition for a youthful, innovative and exciting look.

Price

• Premium price --- to reflect the exclusiveness, limited and high quality of the product;

Place

• To open duty-free shops in the airports such as Gatwick and Birmingham airport and in Eurostar station in London --- Eurostar estimates its passenger numbers will increase from 8.3 million this year to 10 million by 2010 ( Railnews,2007).

• To put banner on the Internet such as Face Book

Promotion

• Celebrity endorsement --- to inviteLeona Lewis and use her image

• Advertising --- Print and broadcast ads/Posters and leaflets/Billboards

• Direct & Interactive marketing --- E-mails/mobile messages/ Web sites

5.0 Implementation

5.1 Timeline

Timeline includes key activities, schedule and department:

| M |1-2 |3-5 |6-9 |10 |11-12 |Department |

|Y | | | | | | |

| | | |Event | |

|2009 | | | | |

| |R&D department deal with the technique issues before producing |Announcement | |Marketing, PR and R&D|

| |product |For the event | | |

| | | |Advertisement | |

| | | | | |

| | | |Direct & Interactive | |

| | | |Marketing | |

| |Direct & | |Direct & |Advertisement |Marketing, PR and R&D|

|2010 |Interactive |Advertisement |Interactive | | |

| |Marketing | |Marketing | | |

| | | | | | |

| | | | |Direct & Interactive Marketing | |

5.2 Financial Costing

• Launching show (invite Leona Lewis)

cost 1 million pounds

• Poster and internet banner

cost 5 million pounds

• Using Leona Lewis image

cost 4 million pounds

• Total: 10 million pounds

6.0 Controls

• Research by R&D department

• Monitoring the trend of the sales' volume, revenue, and profit monthly and annually

• Customer relationship management --- to collect and keep customer information in the database

7.0 Conslusion

Finally, on the basis of all analyses, it is obvious that market-penetration strategy fit for Swatch. Swatch’s main customers are working women who own a strong purchasing power and pursue a trendy lifestyle. Therefore, customerized watches right aim at this target market. This innovative evolution will essentially not only strengthen its current customer loyalty, but also broaden its consumer base. Selecting the watch parts from a wide-range of current watches could reduce the cost. However, due to the limited and unique features, these watches sell with a high price. Hence the turnover would be increased thus Swatch UK company would make the maximized benefit.

(1638 words)

References

• e-coach. (2008.) Strategic Analysis for the Business Environment. [Online] Available at: http://www.1000ventures.com/business_guide/mgmt_strategic_environmental_analysis.html [Accessed 5 December 2008]

• Entrepreneur. (2006.) Competitive Analysis. [Online] Available at: http://www.entrepreneur.com/startingabusiness/businessplans/article25756.html [Accessed 4 December 2008]

• HM Treasury. (2008.) Public Sector Finance Statistics. [Online] Available at: http://www.hm-treasury.gov.uk/psf_statistics.htm [Accessed 15 November 2008]

• National Statistics. (2007.) Population Trends-128. [Online] Available at: http://www.statistics.gov.uk/StatBase/Product.asp?vlnk=6303 [Accessed 27 November 2008]

• Oppapers. (2008.) SWOT Analysis Swatch. [Online] Available at: http://www.oppapers.com/essays/Swot-Analysis-Swatch/132566 [Accessed 6 December 2008]

• Oppapers. (2007.) The Swatch Group. [Online] Available at: http://www.oppapers.com/essays/Swatch-Group/119820 [Accessed 6 December 2008]

• Oppapers. (2006.) Swatch. [Online] Available at: http://www.oppapers.com/essays/Swatch/80738 [Accessed 6 December 2008]

• Philip Kotler & Kevin Lane Keller, 2009. Marketing Management. 13th ed. (s.l.): Prentice Hall

• Railnews. (2007.) Competitive Analysis. [Online] Available at: http://www.railnews.co.uk/news/general/2007/09/06-paris-london-speeds.html [Accessed 20 November 2008]

• Samantha Kidd, ed., 2007. Market Report 2007. 23rd ed. (s.l.): Key Note Ltd

• Swatch Group. (2007.) Annual Report 2007. [Online] Available at: http://www.swatchgroup.com/en/investor_relations/annual_and_half_year_reports [Accessed 24 November 2008]

• Thinking made easy. (2008.) Swatch Case Study. [Online] Available at: http://ivythesis.typepad.com/term_paper_topics/swatch_case_study/index.html [Accessed 5 December 2008]

Appendix

Appendix A

PEST Analysis

| | |

| |The policy of price fixing amongst the big watch groups within the UK have some negative impact to |

|Political |the industry in general and Swatch in particular, as it is at the forefront of this allegation (HM |

| |Treasury,2008). |

| | |

|Economic |Current economic downturn |

| |The credit crunch might decrease the purchasing power of consumers and though they will still buy |

| |the essentials they may be more cautious. They may also spend less on luxury items, something that |

| |has a greater profit margin for Swatch (Annual Report ,2007). |

| | |

|Soci-cultural |High impact of fashion trends |

| |Swatch repositioned itself into the fashion market (Kidd,2007, p.18) |

| | |

|Technological |E-commerce becoming prevalent |

| |The Swatch has given special interest to the areas of technology such as microelectronics and |

| |micromechanics (oppapers,2008). |

Appendix B

Porter’s Five Forces Analysis

| | |

| |Strong brand recognition and customer loyalty --- Swatch watches are very|

|New Entrants |popular amony the young people, even their parents |

| |High entry barriers --- it needs high capital investment; retail is at |

| |the stable stage within the UK, and new entrants may have little scope to|

| |establish themselves. |

| | |

|Substitution |Many brands provide with range of similar styles |

| |Customers switch from buying watch to mobilphone, which also have |

| |timepiece on it |

| |Threat from counterfeit products |

| | |

|Buyer Power |Buyer power is high in this industry simply due to the presence of so |

| |many competitors selling the same products. It is only differentiated in |

| |price and consumer loyalty |

| | |

|Supplier Power | |

| |Low production costs |

| |Threat of high material cost |

| | |

|Overall Intensity of Rivalry |More and more companies are trying to get into new fashion style and low |

| |price |

| |Intense competition within a very crowded market |

Appendix C

Financial Forecast:

The Swiss franc's currency code : CHF

| |2010 |2009 |2008 |2007 |2006 |2005 |2004 |2003 | |Gross sales |CHF million |7426 |6751 |6138 |5941 |5050 |4497 |4152 |3966 | |Change from previous year |

% |

21.7 |

19.7 |

17.9 |

17.6 |

12.3 |

8.3 |

4.7 |

-2.4 | |

| |2010 |2009 |2008 |2007 |2006 |2005 |2004 |2003 | |Operation profit |CHF million |1500 |1364 |1240 |1236 |973 |735 |645 |594 | |As a% of net sales % |

% |

26.6 |

24.2 |

22 |

21.9 |

20.2 |

17.1 |

16.2 |

15.5 | |