Swatch Group. To Mr. Nick Hayek, Swatch Group Ltd From Nanyang Consulting

Transcription

1 Swatch Group To Mr. Nick Hayek, Swatch Group Ltd From Nanyang Business School Deeksha Bajaj Bohao Zou Zeeshan Ashraf Wendell Shirley

2 Problem Statement Net sales decreasing by 3% Competitors are launching advanced watches Expected growth in the smart watch category 66.7% in 2017 Are smartwatches threat or opportunity for Swiss watchmakers? What can Swatch do to grow in future? 2

3 Recommendations Launch a new smart watch Connect the traditional watches 3

4 Evaluation of Alternatives Alternatives Potential Revenue Growth Cost Consumer Preferences Existing Capability Overall Grow the existing segments Launch a new smart watch - open for all platforms Connect the traditional watches Launch new activity trackers Unfavorable Favorable 4

5 Recommendation 1: Launch a new smart watch 5

6 Brand Value Curve High Apple Samsung Swatch Low Brand Equity Tech Quality Price Design Savvy Integrated Ecosystem Luxury watches lack in tech innovation and integrated ecosystem 6

7 Luxury Smartwatch Alternatives Leverage existing Luxury Brands (Tissot) Luxury Watches Launch Luxury Smartwatch for each model Offer Luxury Smartwatch options within Experience Stores Criteria for Selection: Cost Customer Service Customizability Brand Image Launch Smartwatch version selected mechanical models & offer omnichannel experience 7

8 Luxury Smartwatch Branding Multiple Brands Endorsed Brands Sub-Brand Corporate Brand Leverage Brand Equity Leverage Existing Limited Resources Increase Number of Valued Brands Existing luxury brand equity will help preserve new luxury smartwatch 8

9 Omnichannel Strategy Pre Sales Experience stores Brand ambassadors Sales Online orders Offer customisation Leverage network of retail stores in 50 markets Swatch Retain Customers Weekly newsletters CSR initiatives Post Sales 24/7 customer service Personal account assistant Customize each stage of sales through customer life cycle 9

10 The Launch Plan 1 Leverage internal design team 6 Create experience counters at existing retail stores 2 Partner with external R&D teams 5 Develop rapid prototype 3 Outsource production of electronic components 4 Build in-house assembly line Adopt a mix of in-house and outsourcing capabilities to launch new smart watch swatch edition 10

11 Recommendation 2: Connect the traditional watches 11

12 Connect the traditional watches Target Segment Lower end quarts watch (<$150) Product Features 1. Provide basic connectivity (GPS, Bluetooth) example: withings 2. Activity tracker features 3. Swatch mobile application Bring the traditional watches into the IoT era 12

13 Branding Fashionable Technology Sports Smart Touch Zero One Kids and Elderly Position Fall Down/ Emergency call Healthcare Heartbeat Sleeping patterns Medical reports Extreme Conditions Weather Pressure Launch low end feature series 13

14 Distribution 1 Leverage existing online and offline stores 2 Key Accounts: schools/ hospitals/ CSR Not much extra distribution costs 14

15 Balanced Scorecard 1. Learning perspective Staff and salespersons training 2. Internal Perspective Time of R&D 3. Customer perspective Market share of smartwatch category Switch rate from Apple Watch 4. Financial Perspective Profitability ROE 15

16 Financial Management Smartwatch Market Growth in CHF (millions) Net Sales Cost of Goods Sold Operating Income Expenses Net Income Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 New HR Capital Luxury Smartwatch R&D Outsourcing Contracts Online Order-&-Pay System Experience Stores In CHF (Millions) Cross-Platform App-based Ecosystem Connectivity R&D Sales Training Marketing Campaign

17 Implementation Timeline Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Luxury Smartwatch New HR Capital Luxury Smartwatch R&D Outsourcing Contracts Online Order-&-Pay System Experience Stores Classic Watch Connectivity Cross-Platform App-based Ecosystem Connectivity R&D Sales Training Marketing Campaign Launch Connectivity and Luxury Smartwatch Product Lines over 3 year period 17

18 Risk Mitigation Identified Risk Cannibalization of luxury mechanical watch product category Proposed Mitigation Launch smartwatch for mass market Lower control of luxury watch quality Swiss grand watchmaker inspector teams No connectivity for existing mechanical and quartz watches Position unconnected devices as jewelry (not wearables) Increased competition in existing mechanical industry Focus on smartwatch portion of luxury portfolio 18

19 Key Takeaways Are smartwatches threat or opportunity for Swiss watchmakers? What can Swatch do to grow in future? Launch a new smart watch Connect the traditional watches 19

20 Q&A 20