The Swiss Watch Industry

2172 Words9 Pages
The Swiss watch industry is again in the midst of a technology revolution, which threatens to be comparable to the “quartz crisis” (Refer Appendix A). Led by organizations such as FitBit, Samsung and now more recently Apple, the wearable technology and smartwatch industry is expected to reach market revenue of US$32.9 Billion by 2020. Swiss watch makers, guilty of ruling the smartwatch market as a “fad” until recently, are now beginning to see the threat to their business. TAG Heuer (herewith referred to as TAG), a leading Swiss watchmaker, and part of the LVMH Group, has recognised this threat and will be entering the smartwatch market in Quarter 4 2015. TAG will release the "TAG smartwatch" in a partnership with technology giants Intel and Google. This paper has identified that TAG has a significant opportunity to enter, carve out a niche, and be profitable in the luxury smartwatch market. TAG has the necessary business strengths, and is able to sufficiently address its weaknesses, and threats, in their chosen market segment. The forecasts for the TAG smartwatch are positive, with revenues of $257.9M in year one, rising to $426.5M in year three. Profit forecasts are equally strong, totalling $154.7M in year one, rising to $255.9M in year three. `This paper provides the information necessary for TAG to produce a marketing plan for their smartwatch, it focuses on core marketing concepts including the current marketing situation, overview of marketing objectives, market analysis through SWOT analysis, and overview of the marketing strategy. As the TAG smartwatch is yet to come to market, and full details of the product are yet to be released, this report will make assumptions around pricing, market share and profit. Table... ... middle of paper ... ...ents a relatively low percentage of the total market space, TAG have identified an opportunity to enter this market by targeting a niche customer in the luxury smartwatch space, and expect to capture represent 25% of the niche segment. Further, as a luxury watchmaker, the new smartwatch product will provide a significant addition to the TAG revenue stream, and represent a significant portion of the growth capability for the company. 5.4 Profit Targets TAGs pricing model is based on the Perceived-Value Pricing (Kotler et al 2013), and returns a good margin. TAG have forecasted gross profit margin on their smartwatches business as being 60% on each device sold in 2015/16, and an improvement to 65% in 2017/2018 due to efficiencies in overall production, with gross profits of $154.7M in 2015, rising to $290.4M in 2018. Refer to the Appendix C for further detail.

More about The Swiss Watch Industry

Open Document