Customer Value Curves
10/18/10
Customer Value Curves - The Swatch Revolution
Swatch represented a strategic business model innovation for the watchmaking industry. In essence, its introduction reconceptualised what the business was about by converting a functional product into an emotional one. This in turn, increased the total pie of value available for the watchmaking industry; consumers now desired watches for both functional and fashionable purposes. Making watches fashionable and fun unearthed a potential in watches to become an impulse-buy and a dressing accessory, which resulted in consumers owning more than one watch and sales increasing for the industry as a whole.
Swatch’s solution for fighting high costs in the production process of low priced watches was automation. To achieve this goal, they reduced the number of parts in a watch and used precise injection-moulded plastic technology to create their cases. These changes not only successfully positioned them as a low cost producer, but also gave them the flexibility to increase their selection. Down the road, it would also provide them with the ability to easily produce different types of watches that would cater to different fashion and artistic trends. This obviously changed the nature of the rivalry within the industry. Watchmakers would now have to develop new competitive advantages other than just producing a good product that could tell time. On this front, Swatch was now at the forefront
As the value curve highlights, Swatch reduced the quality of the casing material which in turn allowed them to offer a low-priced product with a wider selection. Even though these dimensions positioned them in line with the Asian quartz watch producers, they were able to accentuate their unique resource, and significant barrier to entry, which was providing consumers with their own little “piece of Swiss engineering”. More importantly, Swatch introduced a new dimension into the value curve which was the
Customer Value Curves - The Swatch Revolution
Swatch represented a strategic business model innovation for the watchmaking industry. In essence, its introduction reconceptualised what the business was about by converting a functional product into an emotional one. This in turn, increased the total pie of value available for the watchmaking industry; consumers now desired watches for both functional and fashionable purposes. Making watches fashionable and fun unearthed a potential in watches to become an impulse-buy and a dressing accessory, which resulted in consumers owning more than one watch and sales increasing for the industry as a whole.
Swatch’s solution for fighting high costs in the production process of low priced watches was automation. To achieve this goal, they reduced the number of parts in a watch and used precise injection-moulded plastic technology to create their cases. These changes not only successfully positioned them as a low cost producer, but also gave them the flexibility to increase their selection. Down the road, it would also provide them with the ability to easily produce different types of watches that would cater to different fashion and artistic trends. This obviously changed the nature of the rivalry within the industry. Watchmakers would now have to develop new competitive advantages other than just producing a good product that could tell time. On this front, Swatch was now at the forefront
As the value curve highlights, Swatch reduced the quality of the casing material which in turn allowed them to offer a low-priced product with a wider selection. Even though these dimensions positioned them in line with the Asian quartz watch producers, they were able to accentuate their unique resource, and significant barrier to entry, which was providing consumers with their own little “piece of Swiss engineering”. More importantly, Swatch introduced a new dimension into the value curve which was the