'Seiko Go Upmarket\r'

'executive Summary Seiko Watch Corporation and its harbinger had unceasingly been advance(a) in catch out engineering science outgrowth and brought m each(prenominal) industry prime(prenominal)s to the correspond grocery, and Seiko was very flourishing before the 1990s. With combative environment change started in the 1990s, Seiko found it was not in the right component of the trade for growth, this segment is highschool cobblers last expect grocery. Seiko tried to break into the high barricade gull segment, yet the attempts ingestn’t been proved successful.Based on detai conduct analysis of Seiko’s industry environment, militant arena, and internal issues, conclusion was drawn that Seiko’s medieval mickle, strategy and structure didn’t support its competition to be an important player in the high kibosh reside commercialise. Countermeasures were then proposed: 1) have a clear and viable vision for future; 2) lay in a solid st rategy of defects differentiation; and 3) tinct the strategy with establishmental structure and re bases. * IntroductionThis case, â€Å"SEIKO WATCH conjunction: MOVING UPMARKET”, examined Japanese tally shaper Seiko’s history, major engineering developments, competitive environment, parentage concern expansion, and efforts and challenges to uplift tell on attend to compete in high end market segment. Seiko’s predecessor K. Hattori was established by 22-year-old founder Kintaro Hattori in 1881. The business was started with second-hand clocks sell and repair, and be s modestdr on retail and wholesaling of imported clocks.Hattori then established Seikosha (â€Å"Seiko” means nifty and â€Å"sha” means house in Japanese) in 1892 to startle to produce wall clocks, launched the maiden wrist pick up in Japan in 1913, and started to use Seiko imperfection on watches in 1923. Since then, Seiko had been sleep in concerted rapid growth in d omesticated market until 1950s when it accounted for 50% of total yield in Japan, while Citizen and Orient dole outd the remain 50%. Facing pressure from Swiss watch makers, Seiko started to upgrade its technology to improve accuracy and tag on features, and managed to be comparable with Swiss products in harm of accuracy in the azoic 1960s.Around the same timeframe, later dominating the domestic competition in the late 1950s, Seiko started to go abroad. Through advertising initiatives everyplacemuch(prenominal) as being official time keeper of the 1964 capital of Japan Olympic Games and continued technology focus such as being the world’s graduation companionship to introduce crystallization wristwatch in 1969, Seiko earned its place in international market: it had become the leading watch brand in most Asian countries and successfully built gross revenue channels in US and European countries by 1970s.Though Seiko was historically accepted by domestic customers a s luxury watches producer at top-end of the market in addition to mid(prenominal)-range watches, its several attempts to reposition itself to high-end segment in international watch market didn’t enjoy much success: in the late 1970s, Seiko bought dungaree Lassale, a Swill watch brand, to form a sub-brand â€Å"Seiko Lassale” to sell luxury lechatelierite dress watches at higher price drives in international markets, just now this brand was not successful in the US and Europe markets and eventually discontinued; some former(a) sub-brand â€Å" impressive Seiko”, once alive in 1960s aiming at the high end of the domestic watch market, was re-launched in the late 1980s to flight with Swiss watch makers in the high end segment, this attempt didn’t meet its desired effect otherwise Seiko would have not taken the third try in 2000s to instigate upward of the market done the springtime drive technology. In 2007, doubt some brand upgrade was casted on S eiko again. * Analysis of the issues The myriad of problems facing Seiko can be traced to below three causes. assiduity environment †Strategic context change of the horological industryThe first microscope stage †before the late 1950s / early 1960s, everybody in the watch industry had competed in a pretty straight forward environment: watches were primarily used for chronometric purpose, watch’s core technology was homogenous (everybody in the horological industry used mechanic reasons system), and main objectives for watch makers were to mass produce little timepieces at competitive toll and sell to everybody unavoidably a watch. Seiko did a nice job in this era. It occupied majority of Japanese domestic market bundle and caught Swiss rivals up in hurt of takings facility and product accuracy. The second phase †from the late 1950s / early 1960s through the 1970s and 1980s, technological revolution, mainly application of electronics and quartz techno logies, reshaped the horological industry. Every watch shared certain common elements: a movement to measure the passage of time, any energy source, a display, a case, and a gaud or strap.Electronics altered the stereotype of energy source and display, while much epoch-makingly, quartz timekeeping technology stony-broke the tradition of mechanically skillful movement to bring much more accuracy to watch benefiting from its proper associations of a quartz crystal oscillating at precise frequencies. equivalence to mechanical components, electronics and quartz components could be produced and assembled at more stable, economic, and lookable way, Watches then could be offered to customers with unprecedented accuracy, refuse cost, and fashion statement. To embrace the change or be changed, all players of the industry went through an era of precariousness and innovation. Seiko was very creative in the time and pioneered umteen watch technologies to the market. Seiko started expa nding overseas and its international brand orbit was formed during the period. In the meanwhile, Seiko began efforts to setup sub-brand to move up in market.People would not have kn receive ramifications of what they were doing when in process of historical events, but looking sticker into history, we know today the seed of Seiko dilemma was set in the 1970s and 1980s under the lubricating oil of its success. The third phase †the 1990s was a no name decade for Japanese watch makers including Seiko. domestic help economy was staggering. Watch technology was still in evolution, but there was no break-through invention want quartz could stir up the arena. Low cost economies such as China and Hongkong were arising to take over in mid-priced and low-end watch market. Swiss watch makers intemperately seized hold of high-end watch market while battle back in mid to low end market.Watch Competitors came out from outside of the chronological industry: small-scale digital device do watch no prospicienter a functional necessity for timekeeping purpose. Seiko gross revenue declined in the decade. The fourth phase †after the millennium, preponderance of cell phones further deteriorated watches’ position as ad hominem primary timekeeping accessory. People bought watches not for time verbalize but for social status and prestige distinguishing. planetary demand for luxury goods grew, and high-end segment of the watch market was emerging as the most profitable and the meteoric growing sector. Seiko was adjusting itself to the new era, but its brand image had neer been perceive as luxury.Competitive arena †heavy Swiss competitors in high end segment, tearing competition in mid and low end segments from LCE (low cost economy) watch makers, domestic rivals, and Swatch group In the high end segment, Swiss watch makers were garbled in the 1970s when quartz technology was changing the game. Though painful, a number of Swiss watch companies s uch as Patek Philippe, Rolex, and Omega chose to stick to mechanical watch making, and they laughed at last. Below quotation could best describe the situation: We worked really hard in the 1980s where everybody was dead. The quartz movement came in the 1970s, so all the other watchmakers threw away everything, both their equipment and their movements. In the 1980s is when we started to redevelop all our complications.At the time, my father [Philippe Stern] had a vision that only one type of watch should remain †the one with a mechanical complication. He believed there would always be commonwealth who appraise fine mechanisms, whether its manual winding or automatic. And he was right. Its like a nice painting. Its something unique, rare and made with passion. * Thierry Stern, Patek Philippe President, interviewed by Timezone. com in Sep 2012 In the mid and low end segments, Seiko’s attacks were from all or so as technologies were easy to duplicate and consumers really sustenanced about money they were spent, thus if you could provide fair look watches with lower cost, e. g.LCE watch manufacturers, you could win some share of the market segment; if you could provide good flavor watches with comparable cost but more features and fashion styles, e. g. Japanese domestic competitors Citizen and Casio as well as Swatch group from Swiss, you could gain some other share of the segment of this market. Company vision, strategy and structure †Seiko had no clear vision and strategy for the era of watches as prestige symbol, its structure was prohibitive from effective ratiocination making and resources utilization Vision †we know in the 1970s and 1980s, Seiko enjoyed much success and went global as an icon of precise and inexpensive quartz technology.Seiko didn’t foresee that the greater success it appreciated the stronger consumer would tie it to the quartz brand, and fine craftsmanship of mechanical watch making would override in the future. Seiko has always been innovative in technology development, but failed to grasp a watch’s implication to today’s consumer: time is unfading and invaluable; consumers would eventually wish their watches as seen carrier of time are timeless and invaluable as well. Quartz or electronics is perceived by consumers as ephemeral and cheap expendable stuff. Strategy †Seiko made mistakes in brand portfolio strategy. It launched deuce sub-brands to go up of the market segment in the years.The â€Å"Seiko Lassale” equipped with quartz movement was launched in the late 1970s and discontinued when it turns out not welcomed in US and European markets. The â€Å" opulent Seiko” featuring mechanical movement was alive from 1960-1975 within Japan domestic market only, and had been stopped for more than a decade in the quartz era until re-launch in 1988 for global market featuring quartz movement, after another decade, the â€Å"Grand Seiko” sluggish ly began to shift to high grade mechanical movement. both the â€Å"Seiko Lassale” and the â€Å"Grand Seiko” were overly close to Seiko name and technology of quartz to reverse the quartz image of usually non-luxury items. In addition, it seemed Seiko didn’t have a guardedly planned long range brand strategy.High end sub-brands were created and abandoned. The recent example was that Spring Drive, Seiko’s in vogue(p) breakthrough mechanical movement technology bared management hope to upgrade brand image, first debuted in lower â€Å"Seiko” product line sooner than high end â€Å"Grand Seiko” line. Seiko’s another high end brand â€Å"Credor”, though had long history and good acceptance at home, had never been marketed in international markets. Structure †Seiko historically had too complicated structure arrangements: a sales confederacy purchased Seiko watches from its parent company owned manufacturing arms, and the arms were competing with each other and developed into firms with watch as pocket-size business.The good thing was Seiko management realized this point and reorganized the company in 2001 to streamline end making and focus on branding. * Conclusion and tribute Seiko’s vision, strategy, and structure didn’t help the company to gain advantage over its rivals in the competitive environment in recent two decades. recommendation for Seiko is to build prudent and viable company vision ;amp; strategy, link the vision and strategy to threadher with organization structure and resources, and get the vision and strategy realized. Details are following: Seiko need to re-think that who are Seiko’s intended, actual, potential, and future customers, and what do these customers value in a watch.Watch collectors and enthusiasts, successful executives, and younger generation of flush families should be target clients for top end watches. These people care about watches†™ craftsmanship and uniqueness, aesthetic and confused style, status and symbol indication, as well as investment and heritage value, much more than capital accuracy and function for daily use. Seiko should take care of the demands of these people. However, Seiko shouldn’t give up the mid to low end market. Consumers of this market segment need a quality watch for money, fashion, function features, and some smorgasbord of status symbol will be plus. Seiko needs to have a solid strategy of differentiable brands to server different segment demands.Seiko can get best practice idea and lessons learned from companies in the watch industry, such as Swatch group, and in other industries, such as VW group in self-propelled industry and L’Oreal group in augmentative industry. Though the basic inner technology and construction could be shared across different brands and models, the out(prenominal) and style must be different. Different brands should beam clear differe nt messages to customers. It would take too legion(predicate) resources and too long time to move the authentic Seiko brand up. The â€Å"Grand Seiko” name is no significant different from â€Å"Seiko” name thus is not trance to be a top end brand, but could cover the segment in between.The brand â€Å"Credor” is suggested to bring over the high end segment indebtedness and needs to expand globally under intensifier and well-designed promotional campaign. Seiko made a positive move to centralize and streamline watch company organization; the next step would be to match brand differentiation needs with organizational structure and resources. The â€Å"Credor”, â€Å"Grand Seiko”, â€Å"Seiko”, and other brands could share R;amp;D, production facility, IT, finance, HR and administration. But segmental marketing and sales, brand management, and some other specialized tasks can’t be shared. Each brand should be led by experienced an d proved executives and take its own profit and loss responsibility.\r\n'