Seiko watch corporation - TIME LINE

Established in 1892

1st Seiko watch

launched in 1923

Grand Seiko line

launched in 1960

Leading watch

brand in Asian

markets by 1970

International spotlight via

event association from 1970 onwards

1st ever quartz

wristwatch launched in

1969

1st appearance of Spring

Drive watches in

1999

Limited edition launch

of Seiko Spring drive

in 2005

PROBLEM STATEMENT

Can Seiko position itself in luxury watch segment ahead of already established Swiss crafted timepieces?

Whether to launch the new Spring Drive Technology watches under the Seiko brand-name or as entirely separate brand?

In what way can Seiko attract the customers of the international market as against the traditional luxury watch leaders?"

Would relying only on Spring Drive Technology suffice to reach their sales target?

Current SITUATION

95% of its luxury watches sold in Japan ; 5% in other Asian countries

Many budget-price models and failed to attract affluent watch enthusiasts

Highest growth was seen in the price range that exceeded US$5,000

Consumers placed Seiko watches higher than mid-range brands like Bulova and Citizen but lower than all the Swiss brands

Seiko’s largest markets by value : US, Japan, South East Asia, Europe

Current situation

50%28%

20%

1% 1%

Luxury Watch Market (2003)

AsiaEuropeThe Amer-icasOceaniaAfrica

Country Units Avg Unit Price (USD) Total Value (USD)

Japan 712 mn 21 15 bnSwitzerland 25 mn 360 9 bn

Export of Watches - 2004

Annual Retails Sales

$150+ mn

Seiko TAG Heuer(Swiss)

Rolex(Swiss)

MSRP US$ 150-500 US$ 1500-5000 US$ 5000+

US Watch Market - 2005

Rank Unit Sales Dollar Sales

1 Citizen Rolex

2 Seiko Citizen

- Rolex (9th) Seiko (3rd)

US Watch Sales - 2005

Current Situation: Analysis

Leading brand in Asia and Japan

Reliable but unremarkable brand outside Asia

Strategy focused on differentiation via

innovation and product development

Distributors given autonomy on marketing and distribution

strategies leading to varied perceptions around the world Price competition in

low-end watches led to shifting labor

intensive operations to China

EXPLANATION USING TRICOMPONENT MODELSwiss Watch Brands

CognitionSwiss origin watches were a luxury brand;

precision watches

AffectWatches used mores as a Status symbol rather

than for its functionality

ConationAutomatically positive due to positive cognition

and affect

Seiko Watches

CognitionRecognized as a reliable brand

AffectMore focus on precision and accuracy when

customers wanted luxury

ConationThe mismatch between what the customer

wants and gets doesn’t lead to purchase

COGNITIVE DISSONANCE

Value demanded Status enhancement

Value offeredAccuracy and reliability

at low price

Cognitive DissonanceProduct rejected

Product EvaluationLow price (not premium)

Why not others buy?

WHAT LED TO THE CURRENT SITUATION? (CONTD.)

Seiko: Initially focus on the lower end of the segment Selling at any price point, compromising on exclusivity.

Competition in lower end of the market on price Shifting of units to china

Focus on technology and accuracy did not meet with the hedonic needs of the target consumers.

Spring Drive Technology – Mechantronics

Combination of mechanical & quartz technologies

200 patents, theoretical paper – Swiss Society of chronometry

Elimination of escapement, “natural & continuous motion of time”

Accuracy of +/- 1sec per day

2 models exhibited @ 2005 Basel watch fair

Exclusive distribution – technical know how, quality customer service

Watch of the year 2005 from TimeZone.com

EGO DEFENSIVE FUNCTION

Position Spring Drive watches as a luxury which appeals to the ego and the ideal-self of consumers

Create an image of refinement for Seiko Spring Drive similar to that of Swiss brand watches

Use of compelling and fairly repetitive advertising to weaken established attitudes towards Swiss watches

Introducing a brand ambassador with a refined outlook and global appeal may lead to positive response

KNOWLEDGE FUNCTION

Strengthening of consumer’s cognition towards Seiko brand by informing them about Spring Drive

Informing consumers about Seiko’s legacy – Recognitions, Timekeeping, mechanical intricacy, patents etc.

Replacing previously held notions about with favorable opinion by exploiting consumer curiosity

Informational and product centric press conferences by Seiko team can also be undertaken

CHANGING ATTITUDE - BASIC MOTIVATIONAL FUNCTION

CHANGING CONSUMER attitude – advertisements

Mass media advertising

Instrumental in changing the brand beliefs of consumers towards Seiko and reducing cognitive dissonance

Highly compelling and frequent ads which appeal to consumer’s ideal self and weaken their resistance

Print media

Articles or ads of Seiko in popular magazines and widely published newspapers to build consumer cognition

Event Association

Official timekeeping in major sporting events (F1, Tennis, Golf etc.) and building long term relationships

Sponsorship to events with wide appeal to increase visibility and eliminate cognitive dissonance

Association with social causes which creates a positive “affect” towards brand Seiko among consumers

Direct marketing

Distributing highly informative catalogue describing the product and benefits to consumers (ego-defensive)

CHANGING CONSUMER attitude – advertisements (CONTD.)

Brand Ambassador Global appeal required to align the positioning in the

domestic and international market

Likeable and credible ambassador can create a positive “affect” leading to better attitude and conation

Internet A growing trend and a strong platform to leverage

upon for increasing information availability

Sharing free and informative content can create more consumer awareness about Spring drive and Seiko

S

C E

CHANGINg attitude – altering components of multiattribute model

Changing the relative evaluation of attributes

Need to make consumers value technological advancement of watches besides the mechanical intricacy

Overall, focus should be on “refined” appeal and slightly on “innovation” for additional differentiation

Changing beliefs about competitors’ brands

“Not only we are the most refined and luxurious, but also the most advanced and innovative” approach

Adding an Attribute

Spring Drive being a new high for innovation can be leveraged to contrast with Swiss brands (less innovative)

Focus must still be towards the “luxury” and “refinement” appeal as the main attraction

Changing Brand beliefs

Compelling advertisements and ensuring high exposure and informative content for consumers

CHANGINg consumer attitude – Other measures

Changing the Overall brand rating

Inform target consumers about glory and legacy of the brand which emphasises brand achievements

“The most advanced and luxurious brand”, “The leading watch manufacturer in Asia” approach

Shifting to exclusive distribution for Spring Drive watches

Since dealing with high-end market, intensive distribution not required

Highly informed and passionate store staff and traditional outlook may be preferred

Focus on achieving best consumer experience and service

Modifying price points

Price could be significantly higher than the limited edition sales price of $3500 (due to great response)

Developing product line further

Depending on response, new variants at par or higher price points can be introduced later

recommendations

Launch Spring Drive technology as a separate brand but not under Grand Seiko

Change the attitude towards Seiko watches by positioning their watches as luxurious coupled with innovation and

technological advancement

Focus the high-end market instead of competing in middle to low-end segments

Sell only through exclusive stores to maintain uniformity in prices and customer buying experience

Choose retailers having good knowledge of the Spring Drive technology

Educate consumers about superiority of Seiko watches through print and electronic media

Try to have more association with international events like F1 and FIFA etc.