Swath Group has numerous previous triumphs arising fromrepositioning approaches and an increase from purchases. The companywas recognized as a world leader in the manufacture of watchestowards the end of the 1990’s. Swatch had 14% of the internationalmarket share, in addition to apparent increasing gross transactionsand net gains. Despite the successes, the company was internallyfacing many issues. The issues required to be resolved for the groupto progress with its success. Swatch was experiencing stiffcompetition in numerous market places, involving the hugest consumerbase, America. Additionally, Swatch had an abundance of products thatfairly diverted purchasers and distributors. Last, manufacturingexpenses progressed to escalate in the home base, Switzerland.Different competitors were hastily reducing their expenses viatransferring manufacturing to foreign nations, a measure Swatch Groupwas slow to adopt.
Product mix and competitive issues
Swatch generally had an unmatched capability of availing clientswith an array of products to all market regions. The group coulddistribute technologically advanced watches, which acted as skipasses, stylish watches like the Swatch, or a wonderful watchthat had a diamond stud. Products were made to meet all market needs.The result is that some products made more sales compared to others.In specific, the Swatch watch was unable to successfully penetratethe American market and different regions due to unpredictableconsumer conduct. Another reason was arising from the fact that manyclients and resellers were not confident in the product. Swatch washastily loosing competitiveness against different players like,Timex, Fossil, Seiko and Guess. There were no resellers, and clientsperceived that Swatch had filled the market with very many products.The clients perceived Swatch as a trend.
In the 1990’s, the company’s Omega product experienced the sameissue, which was solved through repositioning. This entailedarticulate selection of marketing plans and a reduction of theproduct line. The same should apply to Swatch, a product that targetsmiddle price clients. Since the figure of resellers in the beginningof 1990 reduced from 3,000 to 1,200 in 1998, Swatch must employ aSWOT analysis in validating what product lines are triumphant in themarket hence, drop the unproductive lines. Additionally, the companymust assess their consumer base and validate whether it may besuccessful to introduce an advent product line, which capturesprevious clients that have now advanced in life and are able topurchase costly watches. Selecting an effective marketing promotionwill assist in drawing advent clients from the middle-class market,while concentrating on the smaller figure of program lines. Anothermarketing promotion should also be endorsed to target on existingclients. The promotions should be adopted in different nations toguarantee Swatch progresses to be well recognized.
The group’s endeavor to manufacture fourteen diverse productstakes away their realization of consumer conduct and lifestylealterations. Since the main four products, Tissot, Swatch, Rado andOmega, result in more that 82% of sales, as well as 88% of operatinggains, more focus needs to be towards the products. Internationally,the Group comprised of 14% sales of the Omega and Rado watches.Swatch group needs to concentrate on luxury brands that may betriumphant in Japan. Japanese clients are recognized for theirknowhow of name brands, in addition to having a great desire topurchase luxury brands. Watches from Switzerland have been a favoritefor Japanese clients for a long period and will progress so to the21st century.
Because of high demand, offshore production centers are emerginginternationally. A majority of the Group’s competitors have alteredtheir manufacture to foreign markets, in turn reducing their fixedexpenses that led to the rise in gains. The company has demonstratedloyalty in its home base, since the market at home comprises of yearsof experience in watch making. Another reason is that it isimpossible to stamp a watch with the label ‘Swiss Made’ exceptwhen at minimum 50% of value products made in Swiss are notable inthe timepiece. Though the combination of aspects increasing theprobability of outsourcing differs from one company to another, thereare fewer themes, which Swatch Group required to discover inreference to the outsourcing pressures. The group should realize thatoverall concerns in reference to expense and quality are the majordrivers towards outsourcing. Additionally, outsourcing may alter afixed expense to a variable one, significantly assisting the groupwith differing volumes.
It is possible for most enterprises to gain tremendously viaoutsourcing and manufacture in a different nation, however, the grouprequires validating if it will be triumphant and profitable.Outsourcing is not a fast fix reaction to manufacturing expenses orincreasing profits. In addition, the decision to outsource comprisesof numerous outsourcing regions, which are unequal, diverse invarious serious regions. Choosing the correct alternative mandatesbalancing aspects like culture similarity, geopolitical peril,expense and the presence of resources. To assist in narrowing theirconcentration in the analysis, the company may consider India as anoutsourcing region.
The Indian market has a great domestic demand and availability ofcheap labor making it a suitable target for the group. Indiacomprises of a population of more than one billion and is the fifthbiggest economy internationally. The country is recognized for itsprogressively developing consumer class comprising of wealthy andmiddle class civilians. The wealthy class makes up 46.1% of clientexpenditures, while the middle class comprises of 19.3%. The Rado andOmega products may target the Indian clients. Tissot and Swatch, dueto their affordability, may still draw clients and become asuccessful product in India. To successfully compete withcompetitors, Swatch may access advent distribution channels throughmerely opening extra freestanding, multi-brand Indian outlets, whichhas been triumphantly done in other nations. Tag Heur is anillustration of outsourcing, which already has six boutiques andintends to enhance the figure as the year ends, in addition to comingup with multi-brand outlets. Apart from opening fashionable SwatchStores, the company needs to organize the penetration of Urban Indiavia multi-brand outlets. The objective of the Indian approach couldbe to create and emphasize differentiators in all contract centers,whereas focusing more on the fashion conscious Indian clients.Adoption of the recommendation will make it probable for the group tocreate a trustworthy and desired brand outlook, as well as offering aglobal brand experience. A majority of the globally recognizedstylish watches is unavailable in India and the company can benefitfrom the situation through establishment of their stylish watchbrands. Through maintenance of its major brands in India, the companyreduces promotion expenses.
Another recommendation involves a joint venture with Titanmanufacturers. Titan has been depicted as an international player inmanufacturing, with a 25% share of the entire domestic market, whichis thrice the competitor’s size. Amidst internationallyacknowledged brands, Titan has almost 50% share. It has a wide arrayof products in appearance, prices and functioning, recognized fortheir unique production. This is in line with Swiss’s concentrationon mechanical manufacturing segments, where conventional artistryprogresses to be the validating aspect. Titan was being a jointventure amid Tate and Tamil, resulting in success, Swatch needs tocopy the move. The venture will assist the company penetrate theIndian labor force whereas noting economies of scale in regard toreduced labor expenses with Titan. Swatch will also attain thecritical mass important in competing internationally is all industrysectors. Economies of scale are attained through the transfer ofbattery manufacture, compiling the watches together, marketing inIndia and case manufacture, as India has cheaper labor compared toSwitzerland. Via economies of scale, it becomes probable to competebased on eminence and costs, in available markets like North Americaand Europe.
Impact of recommendations
The suggested recommendations provide Swatch with a greaterinternational place to protect its market and better compete byoffering affordable prices. They also ensure that Swatch is capableof defending its advent and developing markets in China and India,which provide Swiss with a chance to ensure their leadership withinthe major price range internationally. Additionally, therecommendations safeguard the group from probable new entries in thelocal market. Globalizing the main business of Swatch to adventmarkets such as India will assist them to progress with theirdominance in global watch manufacture. The joint venture minimizesexpenses and assists in the reduction of labor expenses, in turnminimizing the impediments of entry to new markets.