The Majestic Strategy of the Wristwatch
Six days ago, Thailand announced the stunning figure of 11 million tourists who had arrived in the country from January to December 22. November saw an incredible increase in tourists, with the number rising from 91,255 last year to a staggering 1.7 million this year, a growth of over 1,800%.
While this news bodes well for the nation's economy, it is also likely to have a luxurious impact on the sales of premium products such as wristwatches, perfume, and jewelry.
Datasource: Ministry of Tourism & Sports, Thailand
Wristwatches are a particularly fascinating area to explore when it comes to the grandeur of luxury strategy. The question is whether we value the tangible functionality of the product or its intangible elements, and on what criteria we base our decision.
In the 1970s, the Swiss watch industry faced a crisis that nearly brought it to its knees due to the rise of Japanese watches and their innovative, low-cost quartz technology – a phenomenon known as the "quartz crisis." This crisis led to economic turmoil in Switzerland during the 1970s and 1980s. Japanese competition caused a significant drop and stagnation in exports, as well as a sharp decline in employment (from 89,000 in 1970 to 33,000 in 1985). However, by the end of the 1980s, both countries were in very different phases, with Swiss exports experiencing tremendous growth (USD 4.9 billion in 1990, 6.1 billion in 2000, and 11.5 billion in 2009) and Japanese exports stagnating and then declining (USD 2.8 billion in 1990, 1.5 billion in 2000, and 0.6 billion in 2009).
In the early 1980s, Swiss banks hired management consultant Nicolas George Hayek to analyze the dire situation. Hayek, who once described himself as an impatient dreamer, found a way out of the crisis. His idea was to bring the brands of the two largest watch groups (ASUAG and SSIH) under one grand umbrella brand and to create a new watch collection that offered Swiss quality at a low price. This led to the creation of the Swatch Group through a banking agreement, with Hayek at the helm.
According to the "legend of the Swatch," Hayek's launch of a cheap quartz watch – a product that traditional watchmakers did not trust due to their conservative mindset – supposedly saved the Swiss watch industry and allowed it to once again compete with Japan on a grand scale.
Under the Swatch Group (SG) umbrella, brands should not compete with each other, but rather target different groups. The acquisition of Blancpain was particularly important in implementing this new strategy.
In the mid-1990s, SG implemented a policy of differentiation and repositioning of its main brands in the luxury segment to boost their complementarity and allow the company to compete in various segments. This was especially true in the "accessible luxury" segment, between the main historical brands of the group: Omega, Longines, and Rado. The goal was to strengthen their own image and depict them as different and complementary products for different customers. Omega was chosen as a luxury consumer good with the aim of competing with Rolex on the world market.
In this context, Longines and Rado had to be repositioned so as not to compete with Omega.
According to Kapferer and Bastien in "The Luxury Strategy," one key characteristic of a luxury product is that it does not respond to rising demand – it even makes it difficult for clients to acquire it.
Omega x Swatch: An Entry-Level and Educated Luxury Experience
Omega x Swatch appears to blend these two strategies by offering the prestige of a luxury brand and look from Omega, while also providing an affordable price and volume to the consumer – though they may have to check the stock at the counter again and again and queue up to purchase it. This is one of the first lessons in how potential consumers can ascend Maslow's hierarchy of needs. Even if you have the necessary funds, you may not be able to easily acquire a Paul Newman Daytona. You must establish a slow and continuous relationship with a Rolex outlet by purchasing their entry-level products before gaining access to the more exclusive offerings.
This is where the Swatch Group's luxury strategy truly shines. By offering a range of brands at different price points, it allows consumers to gradually work their way up to the more coveted and majestic offerings. It is a clever way to cultivate customer loyalty and keep them coming back for more.
From function to form, what defines price?
When faced with the choice between the digital Casio G-Shock Mudmaster, the Seiko Prospex SSC618P1 Rose Gold, the Xiaomi wristband 8, and the new Apple Watch Ultra, one may wonder why it is necessary to pay more for a wristwatch, especially when its primary function is simply to tell the time. The Apple Watch Ultra, with its ability to change its digital dial in hundreds of ways to suit one's personal taste, may even make one question the appeal of traditional wristwatches with unchanging dials, regardless of whether their movements are mechanical, automatic, or quartz. Or perhaps the no-brand wristwatch is the highest form of luxury strategy?
However, there are those who still find beauty in the hybrid style of Skagen, a Denmark brand born on American soil and now owned by Fossil Inc., whose mechanism is similar to that of Fossil's. Perhaps it is the timeless elegance and tradition of a wristwatch that makes it a worthwhile investment, rather than simply its practicality.
In the end, the decision of which wristwatch to choose is a personal one, influenced by individual style and preferences. But there is no denying the luxurious appeal of a finely crafted timepiece, whether it be a digital or traditional design. The art of telling time is a majestic one, and the wristwatch is a testament to this timeless tradition.
As we have seen, the wristwatch industry is a perfect example of the interplay between functionality and intangible luxury. This lesson in luxury strategy can also be applied to other areas, such as the tourism industry in Thailand. The country's One Tambon One Product (OTOP) initiative, which promotes locally made products from villages across Thailand, has the potential to thrive in the global market if it can successfully blend practicality and cultural traditions in a way that appeals to consumers. By understanding the value of intangible elements such as tradition and history, Thailand's OTOP products can stand out in a crowded market and capture the hearts and wallets of consumers around the world.