IV. Digitalization & the TAG Heuer Case

Question 1

TAG Heuer Case background

Answer 1

• Japanese companies had large market share for quartz watches and where jeopardizing the reputation of swiss as watch cluster
• Quartz watches are the weak point of Swiss watchmaking industry
• Reviving Blancpain name lead to introduction of Omega quartz which was a success
• Redirected consumer attention on high-end brands
• Now Apple watch is threatening market again, what to do?

Question 2

Evolution of the watch

Answer 2

• 1. Pure time piece
• 2. Cheaper & improved time machine (E.G. Seiko/ Timex)
• 3. Fashion item (E.G. Gucci/ Calvin Klein)

Question 3

Should TAG Heuer enter the market

Answer 3

• Yes = High growth market/ Rejuvenate (Verjüngern) brand/ First mover advantage/ Acquire new customer segments
• No = No market research/ Loss of customers/ Quality issues/ Hard to keep “Swiss made label”/ Loss of craftmanship heritage

Question 4

Does TAG Heuer have capabilities to be successful in the smart watches market?- No

Answer 4

• Swiss made label incompatible with smart watches
• Loss of luxury price position if no label
• No know-how, technology, team capabilities
• Risk of losing core competency (Watchmaking not technology)
• Risk of dependency on suppliers and partners (Geographical distance)
• No marketing experience for tech-based products

Question 5

Does TAG Heuer have capabilities to be successful in the smart watches market?- Yes

Answer 5

• Brand image reflecting modernity
• Coherent with price positioning
• Experienced management team
• Ability to create innovating watches
• Positive impact on culture (Speed, Flexibility)
• Radical change provides opportunity to rethink the managing direction

Question 6

What are the challenges for TAG Heuer?

Answer 6

• Can a sector that is built on tradition embrace technology?
• How to respect heritage and start to be modern and contemporary?

Question 7

TAG Heuers solutions to manage the tension between heritage & digitalization

Answer 7

• Highlight the fact that they are still Swiss made
• Selection of excellent partners
• Loyalty to traditional brand and design
• Use of USP = Exchange outdated connected watch for a classic timepiece??

Question 8

TAG Heuer key take-aways

Answer 8

• Importance of location issues = Clusters of know-how/ Capabilities and resources/ Certification “made in” label
• How to integrate digital in luxury business model
• How to deal with digital disruption in a conservative industry