In order to have a competitive product in the price on the marketand at the same time profitable for the company,

it was necessary to rethink the productive systems and the strategies. The choice to produce these components revealed to be very profitable; currently, in fact, the chips are used in other equipments such as: hearing aid, pacemaker, cellular telephones... The receipts for the sales of the chips from 1.5 volts come for over the50% from external fields to those of the clockwork, allowing to maintain high volumes and low costs. The marks have the complete control on the design, the marketing and thecommunication. But they have a role decidedly limited in the production and the assemblage. For this reason they must negotiatewith the technological branch and that one of the production of Smh. A productive organization of crucial importance is Eta, which constructs all the quartz movements of Smh. 7. STRATEGIC AND PRODUCTIVE CHOICES OF Swatch : In order to have a competitive product in the price on the marketand at the same time profitable for the company, it was necessaryto rethink the productive systems and the strategies. Smh is astrongly integrated enterprise vertically, this for being able toconserve strategic independence and freedom of maneuver in themarket. The single marks do not build more their clocks, becausethe production is totally cetralized with the use of parts the moststandardized the possible and is moreover strongly automated. Thechoice of a wide vertical integration was due to the fact that theonly producers of movements besides the Swiss were the Japaneseof the Citizen and the Seiko. If the Swiss producers had decided toacquire the mechanics for their clocks from the companies of the rising Sun they would surely be exposed to political obstruction. Infact, in case of particular success of a Swiss clock, the Japaneseenterprises would have suspended the production or have raisedthe costs of their mechanisms. In order to avoid whicheverinterference from part of other companies, Smh chose to producealso the chip to 1.5 volt, necessary for the production of its clocks;this brought the company to massive investments from more partsthought excessive. The choice to produce these componentsrevealed to be veryprofitable; currently, in fact, the chips are usedin other equipments such as: hearing aid, pacemaker, cellulartelephones and even the switch of monitoring for ABS systems. Thereceipts for the sales of the chips from 1.5 volts come for over the50% from external fields to those of the clockwork, allowing tomaintain high volumes and low costs. When Smh entered themarket of the quartz movements it created a remarkable reductionof the prices of the same ones, and began to resupply thecompanies that assemble clocks to Hong Kong and in Japan also. The corporate structure, differently from the production, is the mostpossible decentralized. The Smh has 9 main marks on a world-widescale: Blancpain, Omega, Longines, Rado, Tissot, Certina, Hamilton,Swatch and Flik Flak. Every brand has its own organization,

itsmanagement, and even its own buildings. The marks have thecomplete control on the design, the marketing and thecommunication. But they have a role decidedly limited in theproduction and the assemblage. For this reason they must negotiatewith the technological branch and that one of the production of Smh. A productive organization of crucial importance is Eta, whichconstructs all the quartz movements of Smh. Eta that has center toGrenchen, 20 minutes to the south of the home office of Smh toBiel, has the responsibility of all the research on the electronicmovements and of all their production and the assemblage. Eta is aproductive empire. It allows to work to gigantic factories buildingmovements 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: Smhmarks. Therefore are always in course negotiations on the style inrelation to the quality, on the design in relation to the feasibility, thespeed in relation to the cost. These rigid borders and theselaborious negotiations let Smh to reduce the general costs at thebottom.

11. THE MARKETING - MIX

The marketing mix developed from Smh is based on a product of low cost and high quality, bearer of a message, with a packagingformed from one simple box in a transparent plastic, distributeddirectly through own stores, and customary channels of sale(jewelrys shop, department stores) with a price of approximately 40dollars. The promotion was carried out beyond that with the usualtelevision advertising campaigns and on the printed publication

paper, also with the creation of own events (festivity to Zermatt forthe one hundred-milion produced clock) and with the presentationof particular models in places appointed for other uses (Triptyconmodel with a decoration regarding the feeding, introduced in thefruit and vegetable markets) beyond to the sponsorship of initiativesat a high technological and ecological content which the World SolarChallenge (competition for vehicles moving with solar energy that iscarried out in Australia). The marketing mix developed initially fromthe Smh for the Swatch, based on the intensive development and astrategy of penetration in the market, evolved becoming onemarketing mix centralized on the diversified development. Theproduct is passed from an only typology and only a price (simpleclock) to one series of models from the various prices, able tosatisfy different requirements. It was passed from the 50000 Liras of the classic model to beyond 100000 Liras of the models moreevolved. The Swatch comes therefore oriented towards severalsegments, as an example it has been

placed greater attention tothe feminine public creating smaller models (series Lady Lady), ortowards more tradizionalist clients inserting into market clocks andchronographes with case in metal (Irony series), diversifying thepackaging in accordance with the models (box covered in feint skinfor the Irony series). The purchase process differs remarkablly fromthat one of other products: thanks to its low cost and the plurality of messages of which it is bearer it seems more to approach itself tothe purchases defined of impulse. In fact, the phases related to thecollection of information and appraisal of the alternatives arecompletely jumped. From a point of view regarding the cycle of lifeof the product we could assert that it finds itself in a phase of maturity and it does not seem to have undertaken the phase of thedecline. For Smh the Swatch represents an authentication cash cow,it guarantees a remarkable cash flow in a market with amodestdevelopment rate.