The success of the Swatch empire is largely down to Nicolas Hayek’s innovative marketing, which transformed the industry, say specialists.
Launched in 1983, the Swatch has gone on to become a global phenomenon. The inexpensive, classic wristwatch, produced in endless bright, snazzy designs, has even become a cult collectors' item.
Hayek, the Swatch founder who died of heart failure on June 28 at the age of 82, was known to wear several timepieces on each wrist, including Swatches and luxury brands like Breguet and Blancpain, which are all made by the Swatch Group he presided over.
But the “small little plastic watch” was the one that enabled him to buy all the others, he used to claim.
Swatch was a technical breakthrough. Each one had 51 parts, as opposed to nearly 100 needed to make a traditional wristwatch, making it 80 per cent cheaper to produce by fully automating assembly.
But its success was mainly driven by unrivalled, innovative marketing strategies, orchestrated by Hayek, say Swatch watchers.
“I think Swatch’s success is almost entirely down to marketing,” said economic journalist Jürg Wegelin, who wrote a biography about Hayek that will hit the shelves in English this summer.
Jean-Marc Grand, director of the Swiss Marketing Institute, agreed: “In Switzerland it was all about marketing. The Swiss traditionally saw watches as functional articles, but with Swatch people started buying multiple items to go with their mood or activity.
“The marketing strategy was brilliant. He changed things radically.”
In the late 1970s-early 1980s the Swiss watch industry was struggling to compete with digital watches, like Seiko, made in the Far East.
“Engineers dominated the [Swiss watch] industry and thought people would like everything they produced,” Wegelin told swissinfo.ch.
With the technical and design concept of the new Swatch underway, Hayek brought in proven marketing skills from outside the industry to build an identity around a low-cost, stylish, trendy, youthful, provocative brand.
“The launch of Swatch is a case study of how to get it right by touching all the right levers at the same time,” said Pedro Simko, chairman of Saatchi & Saatchi Switzerland.
Hayek radically changed watch marketing with a consumer-focused approach, he added.
“In 1983 most marketers had no idea who was buying their products. Long before the internet Hayek said, ‘we should know who we are selling to and bring them together as they have something in common’,”said Simko.
But he wasn’t dogmatic, said Wegelin.
“He didn’t follow marketing theory taught at university, which he was suspicious of,” said the writer, adding that his marketing approach involved a great deal of ‘trial and error’ and money.
To sell Swatch in the test American market the company hired Jacques Irniger, a top marketing director from Colgate-Palmolive. An aggressive advertising campaign created by the McCann Erickson agency in Switzerland used Swatch’s modern, trendy mystique to quickly seize market share.
“The US was amazed to find an inexpensive product with brilliant design made in Switzerland. That combination was a goldmine,” said Simko.
Hayek ensured that Swatch messages were driven by a strong brand identity. For its launch in Germany, Japan and Spain, Swatch hung giant 165-metre watches from city skyscrapers.
Sponsorship has been carefully crafted to build on its youthful image. Swatch supports snowboarding, skateboarding, skiing, motocross, beach volleyball and break dancing. It has backed avant-garde musicians, fashion events and art exhibitions, and partnered with artists like Keith Haring.
Brand loyalty and awareness were built via a Swatch members club and have become so strong that limited-edition models are now collector’s items, demanding high prices at auction.
The company also vertically integrated by setting up and running hundreds of Swatch outlets focusing on the travel retail sector.
“A lot of these were Hayek’s ideas,” said Simko. “But this is the downside of Swatch’s success, as in later years the brand has lost some of its glamour. In the consumer’s mind it’s not such a hot product.”
“Swatch stands for positive provocation. That’s an idea you need to keep going. It’s normal that at some point one man will run out of ideas.”
Grand agreed: “Swatch’s real heyday is over.”
But Hayek’s genius is that he realised that you cannot rely on one brand and have to diversify, said the marketing director.
The Swatch Group, which now includes up-market brands Breguet, Calvin Klein, Longines and Omega and manufactures mechanical parts for other firms, is expected to record gross sales of more than SFr6 billion this year from SFr5.42 billion in 2009.
Simon Bradley, swissinfo.ch
NICOLAS G. HAYEK
Born in Beirut in 1928, Nicolas G. Hayek emigrated to France in 1940, and then to Switzerland nine years later. In the 1950s he led various companies, including his ailing father-in-law’s firm, which produced brake pads for trains.
In 1957 he founded Hayek Engineering, which today has offices in Zurich as well as Germany and France.
Hayek played a decisive role in reorganising and merging the ASUAG and SSIH watch groups at the beginning of the 1980s when the Swiss watch industry was in crisis.
With a group of investors he took over a majority shareholding in what is now the Swatch Group in 1985.
Over the years, Hayek has been presented with a number of prestigious academic and public awards.
He was made an officer of the Légion d'Honneur of France at the end of 2003.
In 2008 Hayek became an honorary citizen of the watch-making town of Biel and was cited as the saviour of the Swiss watch industry.
The Swatch Group
The Swatch Group is the world's number one manufacturer of finished watches.
Among the group's brands are: Swatch, Omega, Tissot, Longines and Breguet.
The group's annual turnover is more than SFr5 billion ($4.6 billion). It has 24,000 employees.