The introduction of the Swatch watch is not simply a single-company success; it revolutionizes the whole Swiss watch industry. It is a brand name associated with style and fashion that has sold over 200 million units within a decade obtaining strong presence in all big markets.
By 1998 the watch industry is shifting to the mature phase of its life cycle, bringing new challenges to Swatch and the other watch manufacturers. Swatch management team is facing the necessity to reconsider strategy, pressed by several major developments:
By 1998 the watch market is reaching its maturity phase. What is typical for the maturity stage in an industry is decreasing sales growth and tougher competition (Thompson, 1996). Persuasive promotion and strong brand identity are key success factors for market leaders and this is one of Swatch's competitive advantages that can be used to counteract competitive pressures.
Increased competition in the maturity stage of the life cycle means more companies adopting the Swatch strategy in terms of pricing and brand positioning, competing on the same market segment. Swatch's major competitors are The Timex Corporation with a number of watch brands positioned differently to cover different market segments; Guess, already part of The Timex Corporation; Fossil, and Casio.
There are several factors that influence the intensity of competition (Porter, Competitive Strategy, pp. 17-21). ...