SCHOOL OF BUSINESS

Anisha.R
Konda Aswini
Siba Sankar Pati
Swati Sinha
Telidevara Chaitanya

ASSIGNMENT
ON
A premium watch
 A Time-Tested Symbol of Craftsmanship

Rado watches are associated with top quality timepieces made from the finest scratchproof
materials in the world and the brand has succeeded over a short period in building up a
distinctive brand with successful worldwide distribution. In 1983, Rado joined the elite SMH
group, now known as the Swatch Group, the biggest watch conglomerate in the world. Rado's
sister brands within the Group include Omega, Breguet, Hamilton, Longines and Tissot.

Rado watches are unique in every way. The history of Rado begins in 1917 in the small Swiss
town of Lengnau, when the three brothers Fritz, Ernst, and Werner Schlup open the Schlup &
Co. clockwork factory initially producing watch movements only. In 1957 the company launched
its first collection of watches under the RADO brand . Since its formation, Rado has continually
fascinated watch lovers all over the world with its groundbreaking innovations. With the classic
Original, Rado introduced the first scratch-proof watch to the market in 1962. Many more high-
tech developments have followed.

A Brief History of Time

From the earliest periods man has used some form of time measurement, be it only the
seasons of the year or phases of the moon. Earliest of time keeping instruments were
developed along two main lines - from the shadow stick, probably the earlier, and then the
water clock. Sundials (first used in ancient Egypt, 1500-1300 BC) and water clocks (developed
by the Greeks, 400BC) were eventually developed to give surprising accuracy. Various other
methods were also used. Alfred the Great of England was reputed to use burning candles to
measure time (980 AD) while burning incense was in use in China about the same time.
By the 1400s mechanical clocks were built in Europe using a mainspring and balance wheel.
In 1510 Peter Heinlein, a Nuremberg locksmith, introduced portability by inventing the
pocket watch. In 1583, Galileo Galilei realizes that the frequency of a pendulum's swing
depends on its length and in 1657 Christiaan Huygens used this theoretical advance to
invent the first pendulum clock, capable of far greater accuracy than any preceding
timekeeper. But the clock did not work at sea, and this was a crucial flaw. In 1759 John
Harrison built a clock that only lost 5 seconds on a voyage from England to Jamaica.

The rise of Swiss watch making

Geneva had been a center for the jewelry industry for centuries, but John Calvin, a famous
theologian and protestant reformist frowned upon it as a manifestation of luxury and excess.
Calvin took power in Geneva in 1541 and promulgated his Ordonnances Ecclesiastiques, one of
whose provisions banned the wearing of the jewelry. The jewelers rapidly turned their craft
skills, knowledge of metals and artistic flair to a useful industry – watch making. The
Watchmakers' Guild of Geneva was formed in 1601 and was the first watchmakers’ guild in the
world. A century after Calvin, Geneva was becoming overcrowded and many watch makers
decided to move out of the city into the surrounding Jura Mountains. By 1790, Geneva was
already exporting more than 60,000 watches. The explosion of the industrial revolution in
England forced the Swiss industry to face the challenge of foreign competition, particularly in
the market for exports. The fragmented Swiss industry undertook several cooperative actions
to defend its competitive position. The industry established several watch making academies at
home and watch-repair schools in major foreign markets.

To differentiate themselves from large foreign competitors, the Swiss industry banded its small
firms together under the umbrella ‘Swiss made’ brand. By 1920, this brand (‘place of origin’ in
legal terms) had become an important symbol of quality, style and prestige. To this day,
watches, clocks and alarm clocks manufactured in Switzerland bear the designation ‘Swiss
made’ (or its abbreviation ‘Swiss’) as well as the logo of the producer or distributor. And
globalization of trade has done nothing to diminish its importance. ‘Swiss made’ embodies a
concept of quality that includes the technical quality of watches (accuracy, reliability, water-
resistance and shock-resistance), as well as their aesthetic quality (elegance and originality of
design). It covers both traditional manufacturing and new technologies like micro-electronics.

Even as it continued to push the frontiers of technology, the Great Depression that began in
1929 forced the Swiss industry to consolidate. In 1930, a number of firms including Omega and
Tissot banded together to form SSIH (Societe Suisse pour l’Industrie d’Horlogerie). Another large
consolidation in 1931 led to the formation of ASUAG (Allgemeine Schweizerische Uhren AG) of
which Rado was also a part of. Both groups included watch brands and
companies that were 150 to 200 years old.

And The Fall…

In 1945, Swiss firms accounted for 80 per cent of the world’s total watch
production and 99 percent of all US watch imports. The number had fallen to
40% by the 1970’s. Switzerland's traditional dominance of the international watch making
market was foundering. The arrival of digital technology and the use of quartz-based timing in
so-called quartz analog watches gave rise to a new breed of cheap Asian watches and to a new
generation of giant Japan and Hong Kong-based industrial manufacturers. The Swiss market,
with its tradition of small, often family-owned firms, and its continued focus on more
expensive, labor-intensive mechanical movements, was caught by surprise by the gains made
by such brands as Seiko and Citizen.

While Swiss watchmakers had been among the first to debut digital watches at the high end of
the market at their debut in the late 1960s--most of the Swiss industry considered these and
quartz-based timing a fad that would swiftly pass. Instead, demand for these easily produced
watches (in contrast to the meticulous craftsmanship needed for most mechanical watches)
encouraged a whole new crop of worldwide competitors to enter the field. By the mid-1970s,
the market had become glutted, prices plunged, and the entire industry underwent a crisis,
even as demand for digital watches and their LED or LCD faces vanished. The appearance of the
first quartz analog watches, which supplanted mechanical movements with quartz-based
"modules" while retaining traditional analog watch faces, however, would prove more
enduring. Here again, however, the Swiss industry clung to mechanical movements, convinced
that the quartz fad would soon end as well.

By the end of the 1970s, the Swiss watch making industry was in serious trouble. Many spoke of
exiting the watch making market altogether, or limiting craft-based production to the high-end
and luxury markets. By 1983, its share of world watch and clock exports had fallen to about
25%. The number of Swiss firms in the industry fell from 1618 in 1970 to 630 in 1983 and
employment fell from about 90,000 to 34,000 during the same period. SSIH and ASUAG, the
two largest watch making groups in the country, faced liquidation. Their Swiss creditor banks
were on the verge of selling the valuable branded assets such as Omega, Longines, Tissot, and
others to foreign competitors, many of them Japanese.
The Swatch Group
At this late stage, Nicolas G. Hayek, at that time CEO of Hayek Engineering received
an assignment to assess the chances of survival and to develop a strategy for the
future of both companies. The now renowned Hayek Study recommended:

(a) The merger of SSIH and ASUAG

(b) The launch of a low-cost, high-tech line of watches with an emphasis on design

The merger led to the formation of SMH and the watch line that Hayek recommended resulted in
the Swatch brand. Hayek took over as CEO of the new SMH Group that established its
headquarters in Biel, Switzerland. This watershed event not only created new possibilities but
also launched a new culture that would make the SMH Group the largest watch-making
company (in value) within five years. This enabled Rado to ride the wave and fortify its position
in the market as an exclusive brand selling luxury watches to its customers.

The Organization of Swatch Group

The Swatch Group is a strongly integrated enterprise vertically, this for being able to conserve
strategic independence and freedom of maneuver in the market. The single marks do not build
more their clocks, because the production is totally centralized with the use of parts the most
standardized the possible and is moreover strongly automated. The corporate structure,
differently from the production, is the most possible decentralized. The Swatch Group has 9
main marks on a world-wide scale: Blancpain, Omega, Longines, Rado, Tissot, Certina, Hamilton,
Swatch and Flik Flak. Every brand has its own organization, its management, and even its own
buildings. The marks have the complete control on the design, the marketing and the
communication. But they have a role decidedly limited in the production and the assemblage.
For this reason they must negotiate with the technological branch and that one of the
production of The Swatch Group. A productive organization of crucial importance is Eta, which
constructs all the quartz movements of The Swatch Group. Eta that has center to Grenchen, 20
minutes to the south of the home office of The Swatch Group to Biel, has the responsibility of
all the research on the electronic movements and of all their production and the assemblage.
Eta is a productive empire. It allows working to gigantic factories building movements for the
greater part of the producers of Swiss clocks, and assemblage systems highly automated in all
the country. Obviously only Eta is in a position to satisfy its main customers: The Swatch Group
marks. Therefore is always in course negotiations on the style in relation to the quality, on the
design in relation to the feasibility, the speed in relation to the cost. These rigid borders and
these laborious negotiations let The Swatch Group to reduce the general costs at the bottom.
The Rado Product Strategy
Thus Rado like the other subsidiaries is not responsible for the
manufacturing of the watches. Although, they have complete creative
freedom from the group when it comes to design and marketing of the
timepieces. Rado has always maintained itself as a premium watch
company with very high levels of craftsmanship involved. Their focus in
designing of watches has always been that of using novel and strong
scratch-proof materials together with using advanced technology.

RADO differs from some of the more traditional luxury Swiss watchmakers in that it uses
unconventional precious materials to achieve a more futuristic look. RADO has pioneered the
use of a number of these materials, e.g., high-tech diamonds, ceramics, lanthanum & sapphire
crystal. However, many RADO watches are (at least, partially) made of more traditional
materials such as gold & steel.

Other than the material, RADO watches also look very different from most of the other luxury
makers. The company is much more adventurous in constructing the shape of its watches than
would normally be expected of a high-end maker. Market reaction to this is generally mixed,
with some preferring the look of the more traditional makers, & others appreciating the more
distinct RADO look.

RADO Product Line

The Current types of watches manufactured by the company are as follows:

 Rado Integral Watches

The Integral watches from Rado offer an elegant complement to professional and casual
wear. They can be worn on a daily basis. Made of hi-tech ceramics and completely
scratch proof, it is thin and has tall rectangular silver-tone ceramic case. Other features
include 100% scratch-resistant sapphire crystal, ultra-precise Swiss quartz analog
movement, and water resistance up to 30 meters (100 feet). Bracelet in integral
watches is made of highly resistant, skin-friendly high-tech ceramics.
 Rado Sintra Watches
The Sintra watches are elegant looking. Made of high-tech ceramics, sapphire
crystal, diamond studded dial and quartz movement. This category of Rado
watches is stunning in its form as well as the typical Rado design which is
rectangular based, with a beautifully flowing transition between the case and
the bracelet. It is designed with definitive Rado signature: daring, powerful
and individualistic.

 Rado Ceramica Watches

This category of Rado watches is made from high-tech ceramics and sapphire crystal.
They are scratch proof watch and available in either black or platinum color. The Rado
Ceramica comes with ultra-precise Swiss quartz analog or digital/ analog movement.
Appropriate for sporty or dressy attire, these watches are exclusive with a unique sense
of style.

 Rado Coupole Watches

Rado Coupole has the top surface covered with dome shaped sapphire crystals and the
lower surface with scratch proof high tech ceramics. The Jubile version is the set of
jeweled watches which have genuine diamonds and precious stones. The distinct
features in Rado Coupole include the ultra precise swizz quartz movement, water
resistance up to 30m and of course the scratch proof sapphire crystal.

 Rado eSenza Watches

Rado eSenza is among the unique Rado watches which are available only on a strap.
They are crafted in stainless steel or ceramic oval cases. These watches carry a precise
quartz mechanism. A multitude of diamond options make it all the more wearable. Rado
eSenza watches for men and women are elegantly styled and make an impeccable style
statement. The diamond encrusted bezel and a beautiful leather band add to its
exclusive beauty. This infuses modern taste with a touch of old world style. These
watches are water resistant up to 30 meters.
  Rado Joaillerie Watches
A perfect blend of modernity and style, the designs are so exclusive
that they make perfect style statements and are perfect
companion for the contemporary woman with the most
demanding standards. It is well known as the watch that mirrors
the 'highly personal' philosophy. These Rado watches mostly come
in expensive metals and are often bejeweled. They are also known
as Jewelry watches because of their superlative appearance.

 Rado Original Watches

The Rado original is better known as a collector's item. The exquisite designs and quality
construction make it a truly delightful buy. This category of Rado watches are generally
known as modern classics. Besides the classic versions, there is the Diver and Chrono
which are unique and add to the exclusivity of Rado watches.
The Rado Original comes with hard metal bezel and sapphire crystal. The sapphire
crystal is faceted for better scratch proof effect. It is 100 meters water resistant. The
diver version come with automatic movement and is 300 meters water resistant and
ideal for professionals. The 'Chrono' version from Rado Original is also special as it
comes with a 1/10 second quartz chronograph movement.

 Rado V10K Watches

It is claimed to be the hardest watch in the world. Made of high-tech diamond ceramic,
the Rado collection is almost incomplete without the V10K. V10K stands for Vickers
10,000. Vickers is a measure of hardness with the scale ranging from 0 to 10,000 which
is the ultimate value only diamonds can attain. The face of the watch is a curved scratch
proof sapphire crystal with an engraved Rado logo. The logo is metalized and soldered.
It has an ultra-precise Swiss Quartz crownless movement.

Product Placement of Rado among its Competitors

A simple guideline to correctly place Rado in the market could be seen in the
table below:

Customer
Strategy
Female Male

Fashion Image building, Brand reinforcement, No technical

Fashion
details

Customer
Strategy
Female Male

Newcomer Quality & Style Convince of technical capability

Craftsmanship
Tradition Status Symbol, Excellence, Exclusivity

The product strategy of Rado can therefore be summed up as that of one with focus on
excellent craftsmanship together with use of innovative materials and less than conventional
design. This is the distinctive brand image that Rado has developed for itself and therefore a
popular luxury brand among young and old and traditional and modern. Due to its many
watches with diamonds and other precious stones used in it, they are also very popular among
women as pieces of jewelry.

The Cost of Ownership of Pristine Time Keepers

Needless to say that Rado being a luxury item is priced accordingly as well. The price of a Rado
is dependent on model, age and materials used. The cheapest Rado in India is at approx. Rs.
19,000. Models that include pave dials of diamonds and baguette diamonds can cost
approximately 1 lac – 4 lacs.

The pricing strategy of Rado is clear and simple. Rado places itself as a brand with high
aspiration value and as a status symbol to many. Thus the pricing of its models together with
factors like the cost of materials tends to be on the expensive side.

One of the good things about luxury items is that price competitiveness is not usually a factor
when it comes to such goods. Prospective buyers are okay with paying a little extra till the
products and services offered have the desired level of exclusivity and
efficiency desired.

The Communication Strategy of Rado

The usual method adopted by luxury watch brands with focus on tradition is that of making
their presence felt in Trade Exhibitions and Fairs. Rado is no different in that aspect and always
is present in all major watch and jewelry exhibitions.

One such exhibition is BASELWORLD which is the leading event for the watch and jewellery
industry held anually in Basel. Rado in March 2010 had launched the brand-new Sintra
Skeleton Automatic which is its first timepiece equipped with the customized movement. The
wristwatch selects the most representative black as the main color and was produced in limited
edition of 111 pieces.

The Communication Strategy Positioning

A Simple guideline to effectively market the watch can be seen here below.

Following this guideline and keeping in mind the unconventional and a little less than traditional
design concept followed by Rado, It can be placed in the quadrant shown below.
Distribution Strategy of Rado
With a total Staff of 470 people in 31 countries, it is obvious that Rado distribution strategy is
heavily dependent on its 5900 retailers worldwide. Rado also benefits from Swatch Group
Distribution network which was formed in 2001 with the objective of providing worldwide
support to Swatch Group companies in their efforts to supply customers with products in a
more rapid, reliable and cost-effective way.