Omega Ladymatic Market Analysis - Essay Example

? Omega Ladymatic market analysis Executive summary Luxury wrist watch market has been growing since the 1990’s because of improved income levels among populations in America, Europe and Asia. This brand of watches range from replicas that are an imitation of luxury watches to ultra-luxury models having components made of gold, diamonds and other high value substances. Omega Ladymatic watches started off bearing characteristics of typical women watches including small size and less comprehensive design detail. However, the rise of corporate women who are just as aggressive as their male counterparts has led to design alterations that have increased the size of the dials. This makes them feel more masculine. This report undertakes a comprehensive study of marketing analysis of the luxury wrist watch line of products. It will provide an opportunity to study client’s psychographic needs. This is very vital information as it provides an opportunity for Swatch Group to develop a plan for satisfying customer’s unique needs. A comprehensive analysis report gives information about challenges and opportunities in this market that can be explored by Swatch Group, through its Omega brand, to increase Ladymatic’s market presence. This also helps the company make adjustments on short and long term marketing initiatives and other promotional activities to ensure company resources are utilized in the most cost effective manner. Introduction Ladymatic wrist watch was first released to the market in 1955. Its sales has had a steady growth through the years; only affected by economic slumps experienced in 1970 and 2008. Increased income levels meant a higher chunk of its market could afford acquiring this high end device. It was Omega Company’s first brand of self-winding devices for the modern lady; it is also small and light hence the wearer can easily move around having it on. Its design was revolutionized after Swatch Group acquired Omega brand in the late 20th century. Continuous development of this brand as the company responds to consumer needs has led to improved sales. In 2010, the original design was improved by giving it a chic feel to make it more feminine. It was also fitted with a new hand movement with a co-axial escapement. The findings of a market evaluation were that there are several other company brands that pose as a challenge to Omega Ladymatic’s penetration to other markets; at the same time, they are capable of eating into its market. These brands include: Chopard, Citizen, Rolex and Guess. Market intelligence This is developed using three main sources of information: conducting a scrutiny of the company’s internal records and other external sources of information to establish a linkage between marketing initiatives and overall brand performance. Secondly, having a study on market intelligence gives information on changes and developments within the market in terms of consumer tastes and preferences that aid Omega managers plan their marketing drives. Lastly, marketing research is conducted to monitor problems and opportunities within the marketplace; this helps in improving performance after having an understanding of its characteristics. Swatch Group and other major wrist watch manufacturers have weak distribution networks which hinders penetration to new markets. This is according to information received from clients through customer service reports complaining about late deliveries. Market penetration is difficult for smaller manufacturers due to minimal capital might. Huge investment in distribution is needed to attract the right expertise and conduct market surveys for a particular market. This however forms a good competitive advantage for bigger industry players like Swatch Group whose Omega brand has remained big on the global scene. The returns on investment (ROI) realised so far has improved its capital base substantially. 1.0 Situational analysis/Current Marketing Mix This gives a brief on both market analysis and competitive analysis. Market Situation analysis Swatch Group falls within the huge Swiss luxury watch industry; this industry started commercial production of these gadgets back in the 16th century. The 1967 introduction of the quartz watches brought a revolution to the industry as high precision watches were commercially produced for the local and overseas markets (Ro?ssler 2008, 285). After the Swiss invented the quartz technology, many other countries including Japan and Hong Kong adopted it and began producing cheaper options because of low labour costs in these countries. This coupled with deep recession experienced in the 1970’s through to the succeeding year resulted to stiff competition and dwindling sales. Figure 1: Main watch exporting countries (in million units) Economic recovery in America and Europe and emergence of new economies including China, Asian Tigers and Latin America resulted to increased sales of these luxury models (Chadha and Husband 2006, 92). 2011 was the best year for Swiss watch manufacturing companies as exports reached the highest levels in history. This was both in their value and volume terms as clients developed appetite for both luxurious and middle class consumer watches. According to company records, the brand has had a strong market presence in the Chinese and Asian market. This is attributed to the fact that the brand’s ambassadors are aiding improve its image among women and men alike. The new model called Omega Co-Axial 8520/8521 is the driving force behind improved sales volumes; this is a women’s only watch which is fitted with silicon springs that makes it have visible internal movements. According to production and distribution reports, in November 2010, the company opened 9 branches in North America to scale up distribution due to high demand. Figure 2: Total values of Swiss watch exports in 2008 in (CHF billions) Competitive analysis Omega Ladymatic watches has a women’s market segment; this gives it a narrower competitive field since this is a developing industry because of increasing sophistication of the modern woman. The main competitors to the brand are also major companies offering specialty watch products. However, Omega Ladymatic is credited for having a favorable brand image because of good market presence. This image is enhanced by effective branding by using influential brand ambassadors. In this respect, Nicole Kidman is Ladymatic’s brand ambassador; this has given the brand some exclusivity. ‘My Choice’ campaigns conducted on rotational basis across major cities has also resulted to improved business. Current Marketing mix This is a combination of a number of ideas and concepts that is followed by a company when promoting their product. This is done to create considerable market presence thus increasing sales volumes. 6Ps analysis aids in comprehensively analyzing the challenges and opportunities available to the marketers. 1.1 Current Product The key qualities that clients are looking for in these luxury watches include ultra-high quality, elite, good creativity, precision and high pricing. Omega Ladymatic can use these considerations to package their products well. In meeting these requirements, the brand has packaged their models in ways that addresses that gives their clients their value for money. Precision has been ensured by the use of silicon balance spring to control internal movements; this makes it a very accurate device. Its quality is ensured by use of heat and water resistant materials which enables owners to wear them comfortably in any environment. It can be used in deep waters to depths of over 100 meters without developing mechanical problems. In order to provide a variety of products for different consumer groups but within the same high end segment, the company offers products in different types. The latest one is the Omega Ladymatic Co-Axial 8520/8521. This brand has mechanical and aesthetic improvements that add on to its appeal to the modern woman. 1.2. Current Pricing Omega Ladymatic watches is available in a variety of prices ranging from $5000 for the old designs to $30,000 on the new models. This widens its market base because consumers from different income groups can afford one. However, this is potentially damaging as many high end consumers who care more about brand image can shy away from purchasing one because of low prices needed to acquire low quality watches. 1.3 Current Distribution The company has several distribution networks in its major markets; in 2010, it opened over 100 outlets in America to aggressively enter the market. It also has a strong presence in traditional markets including China, Europe and Japan. A lot of effort should be directed towards improving distribution efficiencies as there are emerging economies which are experiencing rising income levels among the citizens. The company thus should direct its resources to the new areas to stay ahead of competition. 1.4 Current. Promotion Due to the high attachment customers have on brand image, most luxury watch manufacturers engage in expensive campaigns to keep their product at the top. The most utilized channel by Ladymatic’s competitors is TV ads as they create a lasting impression on viewers. However, this is an overused medium and Omega has enhanced its brand by tying the product to influential ambassadors. These include Nicole Kidman and Chinese actress Zhang Ziyi (Kapferer and Bastien 2009, 91). It also sponsors women empowerment programs on major cable news channels for instance, the ‘Leading Women’ program aired on CNN and beamed all over the world (Tehrani 2008, 81). It is also currently a major sponsor and watch supplier for the London Olympics. 2.0 Brand Positioning Positioning of a brand is the process of identifying and talking about the unique features of a product. The Ladymatic brand focuses on the high income woman segment as it is smaller hence easier to analyze and respond to their requirements. Promotional activities are directed at making the product known in this segment. This can be done by for instance, sponsoring various women empowerment programs. After segmenting the market, the brand is positioned by simply selecting one or more segments which offer the best potential clientele for the Omega Ladymatic watch. This is because it is wasteful to direct marketing and other promotional activities to those who are not willing to purchase the product (Tehrani 2008, 73). The segments that are already being served by other companies offering similar products are also avoided. This is because it is difficult to change attitudes and tastes of luxury watch clients as they have high brand loyalty levels. 3.0 Target Market Identification This is the use of several parameters to determine the attractiveness of a particular market. This also gives insights into the short and long term prospects available for the Ladymatic collections of Omega watches. Segmentation This is the identification of different client segments with their respective requirements in this industry. In the luxury watches market, the various customer needs could be associated with its price, level of sophistication and originality. Segmentation of Ladymatic’s markets is geographic, demographic, psychographic and behavioural. 3.1 Geographic Segmentation: most clients are concentrated in major cities across Europe, China and North America. After segmenting the market, targeting is conducted which simply means selecting one or more segments which offer the best potential clientele for the Omega Ladymatic watch. This is because it is wasteful to direct marketing and other promotional activities to those who are not willing to purchase the product (Tehrani 2008, 73). The segments that are already being served by other companies offering similar products are also avoided. This is because it is difficult to change attitudes and tastes of luxury watch clients as they have high brand loyalty levels. The projected volumes moved are bound to increase by close to 10% as the market is opening up. Turnover will eventually increase because of the high unit cost for a single watch. 3.2 Demographic Segmentation: Cities also have places with low human living index characterized with meager income levels. Suburbs thus form the right market for locating an outlet due to high income levels and general affluence. Gender is also a consideration since the watch is mostly worn by women. The brand focuses on the high income woman segment as it is smaller hence easier to analyze and respond to their requirements. Promotional activities are directed at making the product known in this segment. This can be done by for instance, sponsoring various women empowerment programs. 3.3 Psychographic Segmentation; the modern career woman who has an obsession for luxury items is the major market for this device. Special attention is drawn to the current marketing initiatives used to market Ladymatic and those used by its competitors. The channels of distribution used to take the product to the customers are also analyzed from a psychological perspective. From the evidence, only major competitors like Chopard, Citizen, Rolex and Guess had the financial muscle to open a number of branded distribution outlets that alter the psychological needs of consumer with regards to luxury watches. This means that luxury women watch industry has the above mentioned barrier to entry that hinders smaller companies getting to this market. Generally, the ladies wanted a wrist watch whose mechanical components match its aesthetic appeal. This is because the modern woman also exhibits the fierceness seen in men hence requires watch brands that are of good performance to add on to its sleek and aesthetic qualities (Chevalier and Mazzalovo 2012, 271). It is therefore recommended that the company maintains its latest product specifications that combine both features of feminism and masculinity to appeal to the modern and aggressive woman. A market research and industry analysis conducted to look into the brand’s competitiveness among other brands in this market segment found out that existing clients minded about both its interior and external designs. 3.4 Behavioral Segmentation What is bought as an indulgence rather than an important necessity is classified as a luxury item. These items are acquired at a high cost and only high-end consumers are able to purchase them. This fact does not make its existing or potential markets any smaller characterized with weak demand. Demand for luxury products has been going up at an average of 9% since early 1990’s, it only experienced a slump during the financial crisis experienced in 2008 through to 2009. However, it has now shot up with China leading in terms of demand for luxury watches specifically. Luxury watch sales were previously concentrated in America, Japan, France and Switzerland which are considered high end markets. Brand image is a vital consideration when choosing on a product to purchase for high-end consumers. They tend to associate themselves with the best labels in terms of aesthetics and mechanical components; this is why manufacturers are using expensive minerals as part of watches’ structure including diamond, rubies and gold. According to Hoyer and MacInnis (2008,118), Swatch Group upon acquisition of the Omega brand started designing their marketing campaigns and distribution approaches in a way that depicted them as both trendy and collectible. They are doing this by restricting some wrist watch designs to particular geographical areas; this makes some consumers purchase different watches as they visit these luxurious towns. High end consumers are now moving around looking for models not available in stores at their places of residence. The women, who are the clients of Omega Ladymatic purchase different models to match their wardrobe (Weinbaum 2008, 74). This is because they are available in different colors, mechanics and shade. In order to beat competition that was rife in this industry, Swatch Group made Omega Ladymatic an extremely high-end chronological device. This made it a preserve for the rich and hence avoided competition from other Japanese watchmakers offering theirs at comparatively lower prices. By doing this, it segmented its market and thus could cater for their specific needs. This makes the brand a darling for high end women clients. According to Chevalier and Mazzalovo (2012, 318), luxury brands are that whose ration of functional utility to relative cost is low while that of intangible utility to price is high. 4.0 Bibliography Kapferer, Jean-Noel, and Vincent Bastien. 2009. The Luxury Strategy Break the Rules of Marketing to Build Luxury Brand. London: Kogan Page. http://public.eblib.com/EBLPublic/PublicView.do?ptiID=557061. Hoyer, Wayne D., and Deborah J. MacInnis. 2008. Consumer behavior. Mason, OH: South- Western. Chevalier, Michel, and Gerald Mazzalovo. 2012. Luxury brand management a world of privilege. Hoboken: John Wiley & Sons. http://public.eblib.com/EBLPublic/PublicView.do?ptiID=922165. Tehrani, Nik. 2008. Contemporary marketing mix for the digital era. Bloomington: AuthorHouse. Ro?ssler, Manfred. 2008. Zenith. [Bologna]: Damiani. Chadha, Radha, and Paul Husband. 2006. The cult of the luxury brand: inside Asia's love affair with luxury. London [u.a.]: Brealey. Weinbaum, Alys Eve. 2008. The modern girl around the world: consumption, modernity, and globalization. Durham: Duke University Press. Jefferys, James B., Margaret Maccoll, and G. L. Levett. 2011. The distribution of consumer goods: a factual study of methods and costs in the United Kingdom in 1938. Cambridge: Cambridge University Press. Read More