OCCUPY YOUR WRIST. Lucerne University of Applied Sciences and Arts Design Management International Strategic Design Planning Project October 2012

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1 OCCUPY YOUR WRIST. Lucerne University of Applied Sciences and Arts Design Management International Strategic Design Planning Project October 2012 Tutor: Hans-Kaspar Hugentobler Authors: Alice Dal Fuoco, Thomas Petrig

2 table of contents 3 who is swatch? 4 10 types of innovation analysis/current situation 7 value curve/current situation 8 ethnographic research/personas 10 ethnographic research/insights 11 need finding 12 value curve/future 13 value exchange types of innovation analysis/future 15 conclusion 17 appendix

3 3 who is swatch? Founded in 1983 Headquarter in Biel / Bienne Famous for its plastic watches, Swatch found a niche market by offering high quality watches to a very low price. The innovative new approach at that times was the answer to the aggressive competition from Japan, such as Seiko or Citizen. Swatch is considered to have saved the swiss watch industry from its collapse. Swatch has matured to a differentiated brand and has established a dominant position in the global watch market. vision We produce beauty, sensuality, emotionality in watches and we also produce high-tech on your wrists. Both, emotionality or poetry and high-tech are part of what we feel towards our customers. We love them genuinely. We want them to be happy we want YOU to be happy. 1 mission Swatch has taken advantage of the Group s vast experience, know-how and production capacities in micromechanics and microelectronics to develop its activities in the telecommunications and internet sectors, where Swatch Access (wireless access control, internet access, e-commerce) is but one example of the brand s remarkable ability to transform advanced technology into successful products. The successful introduction of jewelry products by selected brands has established a basis for a growing presence in this sector. 2 enthusiastic provocative innovative * values of swatch

4 4 10 types of innovation/ current situation Business Model How the enterprise makes money Enabling Process Routine non-differentiating processes often outsourced to others Swatch s business model was unique and extremely innovative at the time they entered the market with their plastic watches. At a time where watches were perceived as a luxury product, Swatch were able to create an entirely new market segment for the watch industry by introducing their high quality at a low price watches. But since then, they didn t put much effort into innovating their business model and as a result of that their main revenue stream is still the sales margin of product sales. Networking Enterprise s structure and value chain As Swatch are managing the entire value chain by themselves, they also manage the non-differentiating processes internally. Core Process Differentiating proprietary processes Swatch s core processes are the design, production and marketing of high quality watches. Due to the implementation of the automatic ink jet production line and the decrease from 90 to 51 watch components, Swatch are able to produce high quality watches at a low price. Swatch is not dependent on setting up a network because they manage their entire value chain within the company. Occasionally Swatch is partnering with famous artists or designers as Jeremy Scott, Keith Haring or Stella McCartney, to launch special edition watches. Product Performance Basic Features and Functions Nicolas H. Hayek once said, I understood that we are not selling a consumer product, or even a branded product. We were selling an emotional product. A Swatch watch is more than just a high business model network enabling process core process product performance product system service channel brand customer experience finance process offering delivery

5 5 quality and affordable fashion accessory; it can be seen as an emotional object. Swatch puts the most effort into the design of their watches, which is reflected in their monthly changing and stunning products. Service Assistance provided to prospects and customers In order to deepen the relationship with their customers, Swatch is providing an exclusive membership service known as the Swatch Club. The Swatch Club is meant to be a community of Swatch aficionados, who after buying the yearly Swatch Club s watch, have exclusive access to limited edition watches. This concept worked somehow quite well during the 1990s but since then Swatch never made any attempt to improve or redesign their Swatch Club concept. Besides the Swatch Club, Swatch is also providing the typical product services such as 24 months warranty and other services at their own Swatch stores. Brand How value is communicated to customers Swatch is steadily working on strengthening its brand through their online shop, advertisement, event sponsorship, PR, social media and their Swatch stores. But more and more Swatch is focusing on their as event sponsor for events such as the freestyle. ch, Art You, Biennale or the FIVB Swatch Beach Volleyball Tour. But also Swatch s daily presence on social media platforms such as facebook, twitter and instagram contributes to the Swatch brand. Customer Experience All aspects of customer interactions with a company its brand Due to their various brand strengthening activities and their main operating channels, Swatch is able to deliver customer experience through social media, the swatch store, competitions, the swatch club and events. Channel Conduits through which offerings reach customers Swatch is operating through four main channels such the Swatch Stores, Retailers such as Manor, Online Shop and the Swatch Club. business model network enabling process core process product performance product system service channel brand customer experience finance process offering delivery

6 6 Neglected Niche Bridge The Extremes With Hybrid Solutions The 10 types of innovations framework revealed that according to Monitor Group s Thinking Differently Innovation Types, Swatch is following the Neglected Niche innovation strategy. In 1983, Swatch created a totally new market by selling mass-produceable and high quality watches at a low price. This niche market, also referred to as low budget watch market, has evolved into the biggest market of the watch industry. The main building blocks of the Neglected Niche innovation strategy are based on core process, product performance, brand and customer experience. As a result of that, Swatch was able to differentiate themselves from luxury brands such as IWC, Tag Heuer, Rolex etc., by turning the watch into an affordable and fashionable product. business model network enabling process core process product performance product system service channel brand customer experience finance process offering delivery

7 7 value curve/ current situation quality design / aesthetics price Swatch is able to keep a relativley high quality and at the same time keeping the price low, due to standardized manufacturing processes. Since its introduction in 1983 Swatch has not invested in major technological innovations. Swatch differentiated by increasing it s presence on art, sports and fashion events and workign with renowned designers who designed limited editions. This enabled Swatch to clearly differentiate its position to all the other large watch brands in the low-budget segment. technology individuality fashionable low high

8 8 ethnographic research/ personas meet zoé! Zoé is 40, and works as a business analyst at Swiss. If friends of Zoé had to describe her with one adjective, they might say, over-punctual. She s the swiss-ness in person, and maybe because of that she s a Swatch aficionado. Zoé still remembers the time when the Swatch hype started to take over the world in the 90s. All her friends were members in the Swatch Club, and started collecting the limited editions like others collecting postage stamps. But she never joined the Swatch Club, she preferred being a simple Swatch customer who occasionally buys a new watch to match it with new outfits. She values the ever-changing designs so she always can select a new watch it s cheap and she can always buy a new one if she feels like it. Usually, she decides to buy a new watch when her current one starts to wear out, as the Swatch watch is not build for eternity. Wearing a watch on her wrist is for her like brushing her teeth, you just do it and it therefore is one of the first things she does in the morning. She buys her watches in the Swatch store at the airport, because she travels quite a lot, or now and then does some Sunday-Shopping at the airport. In order to gather essential information from current Swatch wearer, two completely different customers have been interviewed. The aim of these interviews was to uncover if there are any unmet needs or discomforts people experiencing with Swatch, whereby the product focus was only set on the watches. The characteristic information about the interviewees was taken also directly from the interview and translated into a persona. Image Source: flickr.com, J Trav Persona Set

9 9 ethnographic research/ personas meet steven! Steven is 23, and studies business informatics in the first semester. Besides his studies he works as an IT Application supporter at Crédit Suisse. If friends of Steven had to describe him with one adjective, they might say chic. Steven is an extremely fashion-conscious man, who loves shopping and therefore perfectly matches his accessories to the outfit. One of Steven s favorite and most valuable accessories is his IWC PORTUGIES watch. Steven has always been fascinated by mechanical watches and especially by the skillset needed to construct such a high-end watch. Steven only wears his IWC watch when he s in the mood to wear it and when it fits to his outfit. But when he goes swimming or partying with his friends he doesn t like to wear it. Steven considers buying one of the color watches of Swatch, because he likes the variety of colors and the value for money for such a watch. Steven perceives Swatch as an extremely sympathetic brand, but to him their brand and product language is sometimes too childish. Image Source: flickr.com, J Trav Persona Set

10 10 ethnographic research/ insights Swatch stands for Switzerland. A Swatch watch isn t a product I would buy with the intention to keep it for the next 10 years. One of the first actions in the morning is to put on my watch. I don t recall a specific watch of Swatch, it s always those I like at the moment. The reason why I am wearing a watch has a lot to do with it being a styling accessory. I throw them away when they re broken. I only keep those given as a present to me. Quotes of interviewees are one of the most powerful tools to display key insights gathered from an interview. The quotes on the left hand side are based on statements the interviewees made during the conversation.

11 11 ethnographic research/ analysis The interviews have brought up the topic of national identity and Swatchs strong relationship to Switzerland, which lead to the insight that as a Swiss a Swatch establishes a patriotic bond; a sense of identity. Furthermore, Swatch is not considered as an object with outstanding product quality, it is generally not perceived as a product with much longevity. Due to its low price, a Swatch is easily thrown away or replaced, unless it was a gift and is considered too personal to be thrown away. The insights gained from the ethnographic research lead to the following set of new criteria for the value curve: *identity *longevitiy *personal

12 12 value curve/ future quality design / aesthetics With the three new criteria in place, the following new value curved was defined. Swatch should keep its current values in place, namely manufacturing aesthetically design watches, at a low budget price, as this is key in differentiating swatch from its competitors. price technology Nonetheless Swatch should not take its strong bond to national for granted, but further embrace its national identity values. individuality fashionable Longevity is another issue, where the desire or satisfaction with the watch should not exceed the actual product life cycle. The last critera focuses on investing in making Swatch highly personal and making this value a key component of Swatch. identity longevity personal low existing value curve future value curve high *identity *longevitiy *personal

13 13 value exchange watches, jewelry The value exchange between Swatch and the customer describes the exchange of the three currencies of value: goods, services, revenue This currency describes the exchange of goods, services or knowledge products that generate revenue. self-confidence, individuality stories about sponsored events, art, sports, fashion knowledge This describes the exchange knowlwedge that supports the core product and service value chain. intangible Benefts This describes the type of exchange of value that go beyond the actual product or service and cannot be accounted for traditional financial measures. loyalty, recommendation feedback payment, sales margin from unit price

14 14 10 types of innovation/ future Business Model How the enterprise makes money Since 1983 Swatch s business model hasn t changed, and therefore they should consider in finding new revenue streams. By following a strategy of providing a platform engaging users to take part in the design process, they could add extra fees on the watches like on the limited editions. This would have affect on Swatch s current production lifecycle, instead of producing the watches in masses they could save resources and inventory costs by introducing just in time production. Product System Structured offering with an array of tailorable, integrated components As a mass producer of watches, Swatch should try to make the watches more personal again. People only keep objects when they perceive it as personal, such as presents from their family or close friends. By providing a platform encouraging people to contribute in the meta-design as co-designer, they could make people business model network enabling process core process product performance become more emotionally attached to the products. People would then be able to upload their designs and let them get rated by the Swatch Community. Swatch should also consider bringing more longevity into their product lifecycle, by making the watches more modular. Instead of forcing people to dispose the watches when some components become fragile, they should provide solutions for an easier replacement. Brand Customized Comfort Make everyone feel special How value is communicated to customers Swatch should maintain its strong and innovative brand strategy, but they should consider in engaging more with the customers by showing what s happening behind the scenes. By offering customers the possibility of co-creation as mentioned in the product system, Swatch should also think about inviting the top co-designers to their design office. By having so-called A events they could engage more with their customers and share the experiences in their social media community. product system service channel brand finance process offering delivery customer experience The future value curve for Swatch lead to the conclusion that according to the Monitor Group s Thinking Differently Innovation Types, they should consider to follow the Customized Comfort innovation strategy. This innovation strategy connects comfort, customization and special, which perfectly matches the criteria (identity, longevity, personal) gathered from the ethnographic research.

15 15 conclusion The goal of the Strategic Design Planning project was to apply the key principles of human-centered innovation planning in the context of an organization. these criteria into a new value curve about a possible future state, taking identity into consideration but increase the personal value of Swatch. The project helped us to apply the different tools and methods of human centered innovation planning, such as the 10 types of innovation, the value curve or the value exchange to decipher Swatch current way of approaching innovation. With desk research we were able to determine Swatchs current innovation model, which is finding a niche in the market that is being underserved. Furthermore we developed a clear understanding what values Swatch currently embraces and at what extent, such as its focus on low technology, price but high value in design/aesthetics. With the new criteria and the new value curve, we were able to translate them into a strategy by means of a new positioning inside the 10 types of innovation model. We there focused on Swatch finding new revenue streams in changing their business model, establish a product system to increase the personal relationship to its customer and maintain its current branding strategy. To conclude, the whole process was very complex to follow and required a high-level and abstract thinking. At times it was hard to connect the different steps to make an overall cohesive analysis and recommendation. Ethnographic research lead us to insights from potential customers what Swatch is for them and what they associate with or miss about Swatch and its products. But in the end, WE MADE IT. Taking these insights we were able to break them down into three essential criteria: Identity, Longevity and Personal. We infused

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17 17 appendix/ interview zoé* Wieso hast du dich für eine Swatch entschieden? Weil ich die Uhren schön finde und weil sie nicht ein Vermögen kosten und weil ich nicht immer die gleiche Uhr haben möchte - es kostet nicht viel und dann kann ich mir auch wieder eine neue kaufen. (...) und sie halten meistens sowieso nicht so lange. Sie sind sehr schnell zerkratzt und vorallem bei den Plastikuhren, kaufe ich ziemlich schnell wieder eine. Ist dies deine erste Swatch? Nein Wenn nicht, was hat dich dazu bewogen noch eine weitere zu kaufen bzw. würdest du dir noch eine weitere von Swatch kaufen? Ach keine Ahnung, ich hatte schon relativ viele. Es waren bestimmt mehr als einfach nur 3-4. Wenn du an Uhr denkst, denkst du an Swatch? Nein wenn ich Swatch höre, denke ich an eine Uhr. Also Schmuck würde ich wohl nie bei Swatch kaufen. Wo bist du Swatch schon überall begegnet? Im Flughafen, Bahnhofstrasse... im Ausland sehr viele Swatch Läden. Im Flugzeug. Als ich noch jung war, hat man noch Swatches gesammelt. Dort hat man sie zwar gekauft, aber nie getragt. Nein, alle Kollegen haben viel Geld ausgegeben um eine solche zu haben, alle Chronos und Scubas. Ein Kolleg von mir ist oft geschäftlich geflogen und musste für alle Swatch-Uhren kaufen. Welche Produkte kennst du von Swatch? So kitschigen Modeschmuck machen sie noch und Uhren. Machen sie sonst noch was? Was hat dich immer wieder dazu bewogen neue zu kaufen? Die alte war nicht mehr schön und ich will dafür kein Vermögen zahlen, und CHF ausgeben. Welche Eigenschaften schreibst du Swatch zu? Immer wieder etwas Neues vom Design. Von der Qualität her, ist das Uhrwerk wahrscheinlich schon gut, aber von der Qualität her ist es nichts hochwertiges. Eben ich denke auch nicht dass sie dafür gemacht sind, dass diese ewig halten. Sie haben ja auch kein kratzfestes Glas. Welche sind dir besonders aufgefallen? Mir kommen keine bestimmten Modelle in den Sinn. Es sind vorallem die, welche mir im Moment gefallen. Ich habe die Scubas und Chronos nicht so cool gefunden. Ich bin jemand, für mich ist eine Uhr nicht extrem wichtig. Ich muss eine haben, weil ich nicht jedesmal mein Handy hervorzücken um nach der Zeit zu schauen. Ich brauche eine Uhre am Handgelenk, aber es muss nicht eine CHF sein, aber sie darf schon schön sein. * Name changed

18 18 appendix/ interview zoé* Wieso hast du dich für eine Swatch entschieden? Weil ich die Uhren schön finde und weil sie nicht ein Vermögen kosten und weil ich nicht immer die gleiche Uhr haben möchte - es kostet nicht viel und dann kann ich mir auch wieder eine neue kaufen. (...) und sie halten meistens sowieso nicht so lange. Sie sind sehr schnell zerkratzt und vorallem bei den Plastikuhren, kaufe ich ziemlich schnell wieder eine. Ist dies deine erste Swatch? Nein Wenn nicht, was hat dich dazu bewogen noch eine weitere zu kaufen bzw. würdest du dir noch eine weitere von Swatch kaufen? Ach keine Ahnung, ich hatte schon relativ viele. Es waren bestimmt mehr als einfach nur 3-4. Was hat dich immer wieder dazu bewogen neue zu kaufen? Die alte war nicht mehr schön und ich will dafür kein Vermögen zahlen, und CHF ausgeben. Welche Eigenschaften schreibst du Swatch zu? Immer wieder etwas Neues vom Design. Von der Qualität her, ist das Uhrwerk wahrscheinlich schon gut, aber von der Qualität her ist es nichts hochwertiges. Eben ich denke auch nicht dass sie dafür gemacht sind, dass diese ewig halten. Sie haben ja auch kein kratzfestes Glas. Wenn du an Uhr denkst, denkst du an Swatch? Nein wenn ich Swatch höre, denke ich an eine Uhr. Also Schmuck würde ich wohl nie bei Swatch kaufen. Wo bist du Swatch schon überall begegnet? Im Flughafen, Bahnhofstrasse... im Ausland sehr viele Swatch Läden. Im Flugzeug. Als ich noch jung war, hat man noch Swatches gesammelt. Dort hat man sie zwar gekauft, aber nie getragt. Nein, alle Kollegen haben viel Geld ausgegeben um eine solche zu haben, alle Chronos und Scubas. Ein Kolleg von mir ist oft geschäftlich geflogen

19 19 appendix/ interview steven* Warum hast du dich dafür entschieden eine IWC Uhr zu kaufen? Weil es ein Schweizer Qualitätsprodukt ist und weil sie mir vom Design her gefallen hat es ist die einzige gewesen die bei mir in Frage kam bei den mechanischen Uhren. Mechanische Uhren faszinieren mich. Die Market hat mich auch angesprochen. Warum hat dich die Marke IWC angesprochen? Weil die Uhr sehr klassisch aussieht, sie ist nicht zu extravagant und auch nicht zu speziell. Sie ist schlicht, und das hat mich angesprochen. Sommer wenn es warm ist, ist es besser weil diese ein Metallarmband hat und nicht wie die IWC ein Lederarmband. Oder falls ich schwimmen gehe, ziehe ich auch die Tissot an. Ich muss auch nicht immer eine Uhr tragen. Warum trägst du überhaupt eine Uhr? Was bewegt dich dazu morgens eine Uhr anzuziehen? Ich glaube es hat mit dem Stylefaktor zu tun. Ich sehe die Uhr als ein Accessoires. Es ist halt auch praktisch, denn ich muss dann nicht immer aufs Handy schauen wenn ich wissen muss wie spät es ist. War es für dich auch eine Art Investition, dass du diese Uhr gekauft hast? Also es war mir schon klar als ich sie mir gekauft habe, dass das Geld nicht einfach weg ist sondern, dass diese Uhr auch einen gewissen Wert hat und diesen sicherlich auch nicht verlieren wird so wie andere Uhren. Vorallem wusste ich, dass ich diese sicherlich irgendwann zu einem angemessenen Preis verkaufen könnte. Könntest du dir es vorstellen jemals diese Uhr zu verkaufen? Momentan nicht, vielleicht wenn ich mal in Geldnot sein werde lach. Du trägst deine Uhr heute nicht, passiert das noch oft oder warum hast du sie heute nicht an? Ich hatte heute einfach keine Lust eine Uhr anzuziehen. Ich habe ja noch eine Tissot, welche ich ab und zu anziehe, vorallem im Hast du dich jemals beobachtet wenn du deine Uhr trägst, ob du dann wirklich auf die Uhr schaust um die Zeit zu lesen oder doch dein Handy nach vorne zückst? Diese gibt es und mir fällt das auch auf und dann frage ich mich warum habe ich jetzt das Handy nach vorne genommen obwohl ich eine Uhr trage. Eigentlich schaue ich aber schon auf meine Uhr wenn ich sie trage. Würdest du sagen, dass du eine emotionale Bindung zu deiner Uhr hast? Ja ich denke schon, ich würde sie nicht hergeben oder jemandem ausleihen. Auch wenn sie mir jemand klaut und ich das Geld von der Versicherung erhalten würde, wäre es einfach nicht das gleiche. Denn dann ist es nicht dieselbe IWC die ich hatte. * Name changed

20 20 appendix/ interview steven* Findest du, dass IWC und Tissot eher für die Schweiz stehen als Swatch? Nein, ich finde Swatch steht auch für die Schweiz, vorallem die die sich auskennen wissen was Swatch für die Schweizer Uhrenindustrie getan hat. Für mich ist Swatch eine sehr schweizerische Marke und vorallem auch eine sympathische Marke. ich es die nächsten 10 Jahre habe. Für mich ist es eher so es wäre noch cool so eine farbige Uhr zu haben udn vielleicht auch wenns mal passt, dass ich diese anziehe oder auch zum schwimmen weil sie ja aus Plastik ist. Doch für mich ist es keine Uhr die man als Investition kauft oder länger besitzt, oder etwas, dass man seinen Kindern vererbt oder gar sammelt. Hattest du selber jemals eine Swatch Uhr? Ehm nein.doch aber als Kind eine Flik Flak aber ich habe in letzter ZEit schon ein paar mal eine dieser farbigen Swatch Uhren anprobiert, weil mich das Design anspricht und sie auch schlicht ist und man kann sie als accessoire einsetzen. Das wäre durchaus eine Uhr die ich mir kaufen würde. Was hat dich bis jetzt daran gehindert eine zu kaufen? Für mich mussten Uhren immer eine gewisse Qualität haben, also ich wollte einfach lieber ein bisschen mehr Geld ausgeben für etwas, dass dann aber lange halt. Swatch ist für mich eher im unteren Preissegment und es ist nicht ein Produkt, dass ich kaufen würde damit