Unless things turned around quickly for Swatch, the division, not the parent, it’s in danger of going extinct due to the collapse of the lower end of the market. They had to do something. It’s important because the Hayek family built their entire empire on the Swatch brand. There’s no way Jr. would let the Swatch brand die under his watch. So, this entire scheme was built on the idea of leveraging the Omega brand in order to save the Swatch brand. It will work great for Swatch but not so great for Omega. Sure, it may lead to a bit more sales for Omega as some will graduate to the real deal but Swatch will benefit far more than Omega.
I think that in the short term the release will benefit Swatch and in the long term be of benefit to Omega.
Short term: No-one are buying these instead of an Omega Speedmaster (at least, I would be extremely surprised to hear so...), so no cannibalising of that brand. New customers includes people who would never have looked twice on a watch in this segment, both existing enthusiasts across the income spread and people otherwise not bothered/looking for a gateway into the "hobby". On the other hand, a few non-MoonSwatch Swatch sales are probably being converted to MoonSwatch sales, which however carries a premium and likely a slightly better profit margin due to the known technology and fairly low cost of market entry, which normally eats up profits. On top of that comes the raised awareness of the Swatch brand and spill-over effect to other lines (likely to be fairly small). Net result is a increase of new customers with little to no loss of prospective sales of existing lines, a fairly small marketing effort and little change in the supply chain. Increased brand awareness too, for both Omega and Swatch.
A massive win in the short term, both in marketing and sales.
Long term: This is where it gets down to speculation and reading tea leaves. My take is that the negative association - if there is a such - is fairly contained due to the sales structure and careful division of technology/conceptualisation/design/values/branding between Omega and Swatch. On one hand you might say that some customers will have a negative perception of the watch due to the basic movement (cheap quartz), light weight of the watch, basic packaging, etc. On the other hand, some will say that the Speedmaster brand gets a lot of air time, that a lot of people will aspire to one day owning an Omega, etc. I am in the camp that claims that the second part outweighs the first, but I am unsure by how much. I don't think that it will have a major impact on future sales/brand perception, but I am fairly certain that it will be a net positive.
It should be evident that Omega lends only two things to this partnership - the name and the design. The technology, user interface, materials, packaging, production, sales and warranty structure, price level and other parts that make up this coorporation are supplied by Swatch. Most importantly,
this is all very evident. This is not a Swatch that is being marketed as an Omega and you will find this dynamic in all low/high-end collaborations. The only time this dynamic was really challenged was with the initial marketing phase, where both brands had ambiguous marketing campaigns, but the speculation brought on by that should have been laid to rest. The result is that if you have a poor/not exiting experience with any parts of the watch other than the design, it all falls back on Swatch. And they are okay with this - it is more or less the same product they are selling in droves anyway. If you dislike the design, chances are that you wouldn't end up buying a $7,000 Speedmaster anyway!
My take on the long term customer behaviour:
Bad/not good experience with a MoonSwatch: very likely to not purchase another Swatch, large risk of negative perception of Swatch. Slight risk of negative perception of Omega.
Good/not bad experience with a MoonSwatch: some likelyhood of purchasing another Swatch, large chance of positive perception of Swatch. Large chance of positive perception of Omega.
Does this translate into more sales further down the line? Time will tell, but I feel that it might well do so. I agree that there are risks of poorer perception of the Omega brand, but I feel that this has been mitigated by the efforts in separating what each brand brings to the table. I have a hard time believing that price retention etc. is really influenced by the collaboration, but I will add that I couldn't give two hoots if it were. If you're into watches because they are investments, you and I live in two separate worlds. If you don't like the MoonSwatch because of aesthetics, the flimsy feeling or have other issues, no worries. I dislike most of the new Omegas for my own reasons and there should be room for expressing that on OF
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I'll end this with saying that I am genuinely happy with this release though I am not in the target audience and unlikely to ever own one of these. I feel that it taps in excellently with the core values of both Omega and Swatch and I really hope that people will love their new watches!
