NORTH SOUTH UNIVERSITY

Term Paper on “Omega SA”

Submitted to:

Professor Dr. M. Mahmodul HasanFaculty of MBA Program.

Marketing Management (BUS 620)North South University

Submitted by:

JEENER BADSHA

Section: 04

Date of Submission:

2oth December, 2014

NORTH SOUTH UNIVERSITY

Term Paper on “Omega SA”

Submitted to:

Professor Dr. M. Mahmodul HasanFaculty of MBA Program.

Marketing Management (BUS 620), Section: 04

Submitted by:

SL NAME ID SIGNATURE

1. ABDULLA AL AMIN 141-1794-060

2. RAKIBUL ALAM 141-1797-060

3. EMRUL SHAHED MOON 133-0567-060

4. ISTIAQUE AHMED 133-0973-060

Date of Submission:

2oth December, 2014

Letter of Transmittal

December 20, 2014

Professor Dr. M. Mahmodul Hasan

Bus620, MBA Program

North South University- 1229.

Subject: Submission of the Term Paper on ‘Omega SA’

Dear Sir,

It has been a great pleasure for us to work on this report on

‘Omega SA. This report has been prepared by a group of 4 people

as a part of the course (Marketing Management, BUS620)

requirement. It is prepared after having extensive overall

analysis of this Swiss watch company. We have tried our level

best to follow your guidelines in every aspects of preparing this

project.

The report has given us an opportunity to apply theoretical

knowledge in real world. It also has given us a glimpse of our

individual understanding and skills in various situations. We

sincerely hope that you will admire our teamwork.

Sincerely yours,

SL NAME ID SIGNATURE

1. ABDULLA AL AMIN 141-1794-060

2. RAKIBUL ALAM 141-1797-060

3. EMRUL SHAHED MOON 133-0567-060

4. ISTIAQUE AHMED 133-0973-060

Acknowledge

One of the most pleasant parts of submitting a report is the

opportunity to thank those who have contributed to it.

Unfortunately, the list of expression of thanks- no matter how

extensive is always incomplete and inadequate. These

acknowledgements are no exception.

Our first acknowledge goes to the almighty Allah for bestowing us

the patience and courage to finish this huge task within its

deadline.

Acknowledgments must go to the team members, whose unflagging

patience and astounding capacity for creative work, and long

hours made the project both possible and successful – under the

pressure of knocking deadline.

At last, we sincerely acknowledge our debt to Professor Dr. M.

Mahmodul Hasan, our honorable faculty, for his valuable

counseling towards the improvement of the project. Without his

encouragement, this would have been impossible.

Executive Summary

Omega, which lends his name from the 24th and last letter of the

Greek alphabet, signifies accomplishment and follows also a

multiple celebrity endorsement strategy that makes its

outstanding brand awareness around the world. A very interesting

case of a brand who succeeded to follow at the same time a cost

leadership and differentiation strategy is Omega. When the Omega

was launched on the market, the Swiss watchmaking industry was

struggling against Japanese competition and the quartz

technology. The Omega was an incredible innovation because, when

it was launched, manager focused at the same time on

differentiation with the other Japanese watches and cost

leadership to achieve comparable prices than the Japanese

watches. They endorse celebrity to promote their brand in

advertisements. Besides all the promotions, they are also

involved in events, sponsoring, campaigns, public relations,

total quality management, corporate social responsibility etc.

which add huge value to strengthen the brand. Their dedicated

Apps of shopping both for smart phones and tablet have just made

everything even easier for customers than before. Their financial

position is also satisfactory, which is favorable for the

stakeholders as well. In 2014, their investments and money value

was quite well than the last year; they achieved the breakeven

value quiet easily. So, they are surely going to achieve more

success in the future with its superior quality, innovation and

differentiation.

Table of Content

Contents1. Definition of Marketing Management:...............................8

1.1 Definition of Marketing Management (Theory 2000 – 2011).........8

1.2 Definition of Marketing Management (Theory 2012 – 2016 ±).......8

2. Mission of Omega SA...............................................9

3. Vision of Omega SA................................................9

4. Business Plan of Omega SA........................................10

5. SWOT Analysis of Omega SA........................................11

6. PESTEL Analysis of Omega SA......................................12

6.1 Political......................................................12

6.2 Economic.......................................................12

6.3 Social and Cultural............................................13

6.4 Technological..................................................13

6.5 Environmental..................................................13

6.6 Legal..........................................................13

7. Michael Porter's Five Forces...................................14

8. Core Marketing Concept, Market Segmentation & Marketing Strategy. 21

8.1 Core Marketing Concept.........................................21

8.2 Marketing Segmentation.........................................21

8.3 Marketing Strategies...........................................24

PROMOTION/CAMPAIGN STRATEGY:........................................24

Positioning.........................................................24

• High-end luxury brand that is the ultimate aspiration of the consumer............................................................24

• Fashionable alternative to using a cell phone to tell time........24

• Status symbol.....................................................24

ADVERTISING:........................................................24

TRADITIONAL MEDIA...................................................24

Magazine Advertisements- Omega SA places ads in men’s magazines such as Maxim and GQ. Ads cater to the target market and attempt to educatethem on the value of wristwatches as rewards and alternatives to cell phones to tell time. Billboards- Ads are placed on billboards in majorcities, mainly in affluent areas to hit the target market. Both traditional and digital billboards will be utilized.................24

Ads at sporting events- Ads are strategically placed at sporting events that young men attend including, but not limited to, basketball, football and hockey games...............................24

Sponsorship of music concerts- Omega sponsors concerts that are popular with the target market. Ads are placed throughout the concert venues as well as in the programs. The logo and name are included all over the concerts promotional materials.............................24

9. Marketing Mix (7P + 4C)..........................................25

9.1 Product........................................................25

9.2 Price..........................................................25

9.3 Place (distribution)...........................................25

9.4 Promotion......................................................25

9.5 Physical evidence..............................................26

9.6 Process........................................................26

9.7 people.........................................................26

10. Value Chain Model...............................................29

11. Total Quality Management........................................29

12. Customer Loyalty................................................30

13. Brand and Branding of OMEGA (SA)................................31

14. Box Analysis of Brand Elements (6 Categories)...................32

15. Brand Dynamic Pyramid...........................................33

16. Five M’s of Advertising for Omega SA............................34

17. Mass Communication..............................................35

17.1 Advertising Budget and Campaign Cost..........................35

17.2 Sales Promotion and Budget....................................36

17.3 Events & Experiences/Sponsors.................................37

17.4 Public relation/government lobbying...........................38

17.5 Corporate social responsibility...............................39

18. Marketing Budget and Expenditure................................39

19. Pricing Strategies..............................................40

20. Break Even Analysis.............................................42

21. Recommendation..................................................44

22. Conclusion......................................................44

1. Definition of Marketing Management:

1.1 Definition of Marketing Management (Theory 2000 – 2011)Marketing management is the art and science of choosing target

markets and getting, keeping, and growing customers through

creating, delivering, and communicating superior customer value.

1.2 Definition of Marketing Management (Theory 2012 – 2016 ±)Marketing management depends on the size of the business and the

industry in which the business operates. Effective marketing

management will use a company's resources to increase its

customer base, improve customer opinions of the company's

products and services, and increase the company's perceived

value.

Omega SA surely follows this latest definition where they

increase their target audience by using own resources and

conduct research to improve the product. Thus they create

value proposition. They believe in competition and hugely

expend money on promotional activities.

Omega SA also wants to capture market share from Rolex and

Cartier and establish Omega as the number one luxury watch brand

by 2015.

2. Mission of Omega SA To manufacture, distribute and service high-quality

wristwatches.

To continue the long tradition of excellence that the Omega

name represents.

Educate the younger market on the value of wristwatches.

Create a social media strategy that will encourage users to

interact with the brand as well as extend the message to a

larger audience.

Promote the purchase of wrist watches as a “reward” for key

successes in a young man’s life.

3. Vision of Omega SA

Our Vision is to strengthen our leading position in the

industry by providing the most advanced products to facilitate

contemporary lifestyle.

4. Business Plan of Omega SA

Stephen Urquhart, president of Omega expects its sales will

increase in future compare to earlier and they want to be

the number one wristwatch brand in the world.

OMEGA wants to provide an innovative, virtual avenue to

Omega products that will deepen and broaden its relationship

with consumers.

Swatch Group intends to build a new trusted name space for

the .omega string. It will become a secure channel where it

will be able to consolidate its intellectual property

activities. Secure purchasing facilities will be offered and

counterfeiting will be eliminated. Swatch will seek the

highest standards to achieve these aims. Consumers will come

to understand that the exclusive nature of the registry

means it can be fully trusted.

This company also has the intension to engage more is

activities related to social benefits. They believe this

process will help them to expand more in efficient manner.

5. SWOT Analysis of Omega SA

SWOT Analysis (OMEGA)

Strength

1. Omega has an image of high quality substantiated with long warranty periods2. Official time keeper of most sporting events likeOlympics and Golf tournaments leading to its association as an accurate watch brand 3. Known for its Co-axial technology4. International celebrities represent Omega as brand ambassadors.5. Part of the Swatch group that has 28,000 employees across 50 countries with 250 boutiques’ locations across the world

Weakness

1. The positioning of Brand Omega is not as strong and differentiated as compared to its competitors2. Limited market share growth due to competition3.  Imitations of branded watches hurt brand image and sales4. The brand is dependent highly on its brand ambassadors for its marketing and advertising campaigns

Opportunity

1.The brand can expand into new categories of watches furthering its image of being pioneers2.Growth opportunities are high in the luxury segment in developing and emerging economies in the world

Threats

1. Competition from other brands in the having a stronger positioning than Omega2. Fluctuating economies means limited spending on luxury items3. Fake/cheap imitations cause damage to brand4.Apple iWatch

6. PESTEL Analysis of Omega SA

The PESTEL model was first conceived by Gillespie (2007) as a

means of analyzing the external macro environment for an

organization.

6.1 PoliticalThe Swiss watch industry is subject to high levels of import

duties in its key markets. For example, China is an increasingly

important market with some 12.5 % of Swiss being exported to that

country. The average import tax levied in China for Swiss watches

is currently 15% with an additional 20% for luxury products such

as Omega (Allen, 2010).

6.2 EconomicThe ongoing worldwide economic recession impacted sales of luxury

watches in 2007/8/9. However, this sector of the watch market

appears to be recovering better than other sectors.

Silverstein and Fiske (2003) believe that the market for luxury

goods, particularly in the USA, has expanded due to significant

changes in the disposable incomes of consumers since the

1970s.Also rising incomes in emerging markets, such as India and

Brazil, have led to a new category of affluent young

professionals with high purchasing power. These countries have

become a potential opportunity for ultra expensive watch

manufacturers (Global Watch Market Report, 2010)

6.3 Social and CulturalThe trend in consumer behavior is towards an increasing desire

for luxury products. This desire is often driven by the need for

‘status’, which fulfils the need of certain consumers need for

recognition of their career success and their associated wealth.

There is a direct correlation between status and the ownership of

luxury brands like Omega (Hines and Bruce, p.142, 2007).

In the USA the status motive is particularly prevalent amongst

males and can manifest itself in the ownership of multiples of

the same luxury products, such as expensive watches.

Changing consumer tastes and preferences have created a demand

for higher quality products than used to exist.

6.4 TechnologicalThe Swiss watch industry is characterized by technological

innovation. Omega has been at the forefront of this as evidenced

by innovations such as the production of the first deep-sea

divers watch.

6.5 EnvironmentalThere is a growing demand for more corporate social

responsibility especially from multinational organizations like

the Swatch Group. It is possible that pressure from consumers may

lead to a more rigorous legal framework for the future protection

of the global environment. This may include, for example,

stricter rules on the use of certain materials in the watch

making process and tighter controls on emissions from production

facilities

6.6 LegalAs well as being aware of environmental protection law (see

above), the Swatch group has to monitor changes in intellectual

property and patent laws, which are subject to constant change.

Perhaps the most serious problem for Omega is one that afflicts

most luxury products i.e. counterfeiting. Whilst trademark laws

are supposed to protect brands in reality the rate of

counterfeiting is increasing. The global counterfeit market is

currently worth about $538 billion a year and the counterfeit

market in watches about $1 billion a year (Havascope, 2009)

Counterfeit luxury goods are even being inadvertently displayed

and sold in reputable outlets such as the up market New York

department store ‘Daffy’s, which unintentionally purchased and

displayed 600 fake Gucci handbags (Goodman, 2004).

7. Michael Porter's Five Forces

SUPPLIER POWER:

Suppliers of movements

Watchmakers’ training

.

7.1 Threat of new entrants

The first force that is examined is the threat of new entrants.

In fact, not only incumbent competitors represent a thread but

potential new entrants are also a threat for actual players on a

market. The presence of profits in an industry will attract new

firms willing to take advantage of these profits. Over time, too

many new entrants will drive down these profits, decreasing at

the same time the attractiveness of the industry. The presence of

THREAT OF NEW ENTRANTS:

Capital requirement: A new brand entering the market is compelled to invest in huge advertising campaigns to get fame and identification from the public.Brand recognition

Distribution

- Strict Government Policies for security purposes.- Access to distribution/ resources by the existing market players. - Require economies of scale & established Brand identity.

THREAT OF SUBSTITUTE:

Counterfeits

Luxury products

Apple watch

Others wearable

BUYER POWER:

Established brand: Established brands can pressure retailers when it comes about new entrants in order to hinder them to be distributed.Newcomers

DEGREE OF RIVALRY:

Advertising Battle Equally balanced competitors

Low exit barriers

High strategic stakes

Slow industry growth

RIVALY

various barriers to entry can minimize this threat. The world of

luxury watch making possesses numerous barriers that cannot be

overcome very easily. The main barriers have been identified as

the need of important financial capabilities, the difficulty to

build a brand capital and finally the complicatedness to be

distributed in top retail stores. Each of these barriers is

thoroughly explained thereafter.

7.1.1 Capital requirement

In order to be considered as luxury, a watch needs a brand that

is recognized and considered by everybody as belonging to the

world of luxury. Therefore, a new brand entering the market is

compelled to invest in huge advertising campaigns in order to get

fame and identification from the public. What is more, at first,

a campaign to penetrate the luxury market should target a very

large audience: an object possesses the title of exceptional and

luxury only if everybody knows the brand and accepts it as a

luxury object. Finally, recognition can also be a guarantee for

quality. In fact, very few people would pay thousands of francs

for an unknown brand. The dramatic and particularly dangerous

point is that those costs are unrecoverable. If a new entrant

fails in its attempt to conquer the market, he will face an

unrecoverable loss.

7.1.2 Brand recognition

This barrier is tightly tied to the first one ... basically it is

where the money goes. Luxury watch making relies heavily on

differentiation strategies which require lots of investments in

advertising and public relation (PR) events. Objectively, the

product is, from a design point of view, very similar from one

brand to another even though most companies claim their product

is unique. It would be more correct to say that the brand and its

communication bring life to the product, give it its identity and

maybe has the potential to make it unique. “A product is

something that is made in a factory; a brand is something that is

bought by a customer. A product can be copied by a competitor; a

brand is unique. A product can be quickly outdated, a successful

brand is timeless.” (Stephen King from WPP Group).

Another notion that is often discussed at the same time as

economies of scope is the idea of economies of scale. Luxury

watch making doesn’t benefit from it since the fixed costs are

not very high; in fact, the size of a company doesn’t directly

influence the cost structure of the firm. The repeated appearance

of “fashion brands” in the watch making industry has newly

brought along this idea of economies of scope. These brands use

the recognition they have in other luxury branches to expand in

the watch making business. It doesn’t prevent them from investing

heavily in advertising but it already ensures the recognition of

the brand, which is a “good start”. This creates a competitive

advantage for those firms who are first good in marketing and

communication and makes it more difficult for totally new brands

to differentiate themselves in a market that is becoming more and

more saturated.

7.1.3 Distribution

Last but not least, distribution is also an important issue for a

new company willing to penetrate the market. The distributor is

taking an important financial risk if he decides to supply a

brand that is still unknown or that cannot ensure a certain

amount of spending in marketing and communication to promote its

products. The distributor has to pay for the products he buys and

if he doesn’t sell them he is the one supporting the net loss.

Fortunately reality is not always that hard: even though there

are usually no rules or written arrangements regarding this, in

practice, companies sometimes do take back the unsold goods in

order to preserve both the image of the brand and the financial

capacities of the distributor. This kind of measure is usually

taken when a model is a failure and does not work at all to

prevent the distributor from taking measures such as discounting

the product. But of course, this is difficult to apply for a new

company. Even if the new watch brand can offer securities,

distributors will be cautious before

buying it because if the company goes

bankrupt, the distributor’s

investments will be lost no matter

what has been decided. Finally, actors

that have been present on this market

for a long time have built strong

relationships with the distributors

and they often have the power to

pressure their suppliers in order to hinder them to distribute

competitive brands. And a watch which is not seen by the customer

just does not exist.

7.2 Bargaining power of buyers

In the Swiss luxury watch industry, even though companies tend to

open more and more their own point of sales, the jewelers are

still the main buyers. Luxury watch brands try to be presented in

top jewelers stores in the best locations all over the world. But

on the other hand, top jewelers also need to present top brands

in their stores. Therefore, their bargaining power can be

separated into two very distinct cases: the watch brand is an

established player in the industry or the watch brand is a new

entrant, still unknown by the final customer.

7.2.1 Established brand

If the brand is very famous, successful and appealing to

customers, there is no obvious difficulty for distributors to

sell the products: the marketing and communication efforts done

by the brand will drive customers easily into the jeweler’s

shops. In this case, the bargaining power of the buyers is pretty

low: he wants the product in order to sell it and gain benefits

on the sales. Of course, the jewelers can influence the final

customer’s choice. But usually, for luxury consumption, final

customers are knowledgeable about the different brands and

already have a clue of what they want. Established brands can

pressure retailers when it comes about new entrants in order to

hinder them to be distributed. What is more, the strength of a

big watch making group should not be neglected: a group offering

ten different brands that wish to have one more distributed is

not likely to be refused.

Nevertheless, except in the rare cases mentioned here above, the

parties involved consider their relationship more or less like a

partnership. No one is seriously threatening to integrate

backward (the jewelers) or forward (the brands) and each of the

parties will win of a stable and even relationship. The

distributor is the person in contact with the final customer and

to some extent representing the brand but he knows that if the

brand is a hit, he can make big profits on the sales. Watch

companies know that the better the image of the store in which it

is sold, the better the overall evaluation of the final customer.

They also fear to see retailers discounting their products and

therefore privilege honest and trustful relationships.

7.2.2 Newcomers

The situation is totally different for new entrants. Jewelers are

usually not especially risk takers and if they have no guarantee

that the brand is a hit and will be easily sold, then one might

have a hard time trying to convince them to buy ones products.

All the power is in the hands of the distributors; with no

distributors, the way to the customers is locked. What is more,

distributors might be pressured by actual players to refuse to

distribute new brands. Therefore, as we mentioned earlier,

distribution is an important barrier to entry.

7.3 Bargaining power of suppliers

The third force examined is the bargaining power of suppliers. A

watch usually includes, as main components, a movement, hands, a

case, a dial, a crystal glass and a bracelet. The Swatch Group12

is an important movement supplier thanks to its company ETA and

many other small ateliers supply the brands with some of the

other components. Their power can vary depending on the company

they are supplying. Actually, there is hardly any company that is

fully autonomous. The only ones we could name are Rolex and the

Swatch Group taken as a whole. They are highly vertically

integrated and masters the entire value chain, in other words

they are able to manufacture every single piece of a watch.

7.3.1 Watchmakers’ training

Watchmakers do not exactly enter the definition of suppliers

since they are not external to the company. And even though it

might be a challenge for companies to find enough qualified

manpower this cannot be considered as a barrier to entry because

it is much a lesser problem than the other barriers cited.

Nevertheless, to avoid shortage of qualified watchmakers, some

companies also invest in training. For example, Rolex has an

internal research and development department but is also involved

in various external projects. Rolex is a shareholder of the

CESEM15 and it issues mandates to universities and polytechnic

schools.

7.4 Threat of substitute products

The fourth force presented is the threat of substitute product.

It is difficult to talk, in a narrow and legal sense of close

substitutes like it is meant when butter and margarine are

compared. Nevertheless, counterfeit is a phenomenon that needs to

be mentioned because it represents a non negligible threat for

the luxury watch industry. Secondly, in a larger sense, other

luxury products can also be considered as a substitute. These two

elements are succinctly presented hereafter.

7.4.1 Counterfeits

According to the FH – Federation of the Swiss watch industry -

counterfeit causes a damage of 800 billion to Swiss watchmakers.

The fight against this illegal business is getting more intense

but the business is so lucrative that it is attracting new

individuals. In fact, very recently, millions of spasm offering

luxury watches for prices comprises between 200 and 300 dollars

are filling email boxes. Unfortunately, it is very difficult to

fight that kind of business because it is very difficult to find

out who is behind the website. The web registers are easy to

falsify and emails can be sent from a server in a country with no

law or week law enforcement regarding cyber criminality (China).

According to the Swiss newspaper Le Temps, this illegal activity

could be even more profitable than drug traffic and less risky

because it is considered as a minor crime. For some brands the

number of counterfeits on the market is larger than the number of

original pieces.

Beside the traditional counterfeits, high-end counterfeit is

becoming a worrying topic as well: in fact famous watchmakers or

manufactures use authentic and counterfeit components in their

products. The result can be so impressive that even the real

manufacturer could sometimes be misled.

7.4.2 Luxury products

Now if we think about a legal substitute, which could be fought

with conventional marketing weapons, the issue is more

complicated. First, it is important to notice that the

utilitarian aspect of the watch is not the most important

feature, its luxurious and fashionable aspects are. Therefore,

any other object showing the time is not necessarily a

competitor. For example, a cell phone and / or a personal digital

assistant do not replace a nice Blancpain complication. But if

the cell phone belongs to the category of high end cell phone,

then the reasoning is not the same anymore

7.5 Intensity of rivalry among existing competitors

Last but not least, the fifth force discussed here is the one

presented in the center of Michael Porter’s model: the intensity

of rivalry among existing competitors. Concerning the large

trends, the past years, big groups were fighting over brands:

each group wanted to increase its brand portfolio by taking over

independent brands.

Equally balanced competitors: no group is clearly leading by far the

others. Therefore, each one has still the feeling he can become

the leader if he shouts louder than the others.

Slow industry growth: Western Europe represents 30% of luxury watch

market. Swatch Group and Richmond are the most exposed to Western

Europe.

Low exit barriers: no competitors are seriously stressed by the

presence of exit barriers; anyone can easily leave the industry.

Therefore, from the viewpoint of industry profits, luxury watch

making belongs to the best category: entry barriers deter

potential newcomers and unsuccessful companies just leave the

market. Thus, established corporations benefit from high and

stable profits. High exit barriers would mean that companies will

stay and fight and therefore, returns will be more risky.

8. Core Marketing Concept, Market Segmentation &Marketing Strategy

8.1 Core Marketing ConceptAll customer segments seek attractive and quality watches that

will represent themselves. However, feature preferences vary in

between the segments. Some people may want simple watches with

low price whereas some want better quality no matter what it

costs. They want the quality at reasonable price. People want the

watches that will meet their purpose and at the same time the

product have to be fashionable.

8.2 Marketing Segmentation

Marketing segmentation is to divide the customer base in cluster

groups with different needs and behaviors in order to create

different and appropriate marketing proposition. Omega SA has

segments in major bases: geographic, demographic, psychographic

and behavioral.

Geographic:

Segmentation is done on the basis of regions, market density

and different socio-economic classes. Regions covered: Mainly Europe, North America and middle-

east.

Demographic:

Bases are- Income level (High & medium income level), ethnic

background, life cycle, occupation, education, social class

(Medium to upper class), generation. Separate model & designs for different age & income groups:

Offers specific design for youths; premium design for

business executives and professionals. Example: Watch for movie stars, sportsmen.

Psychographic:

In growth stage, Omega SA finds it suitable to segment the

market by observing people’s psychology which has changed by

technological evolution. Based on one’s lifestyle, personality, beliefs, values,

occupation etc. Main bases on VALs Framework:

o Believers: Literal, Loyal. (Professionals, executives,

aged, Business).o Experiencers: Impulsive, variety seeking. (Young

people).

Behavioral:

Usage rates can be found. (High or Low).

Study showed that aged groups are highly loyal; young users

have split loyalty.

Positive attitude groups are found in the market.

Marketing Channels:

Communication channels: Newspapers, Billboards, Television,

Internet, Mail, Posters.

Distribution channels: Distributors, Agents, Retailers.

Service channels: Customer cares, sales service.

8.3 Marketing Strategies

PROMOTION/CAMPAIGN STRATEGY:

P OSITIONING

• High-end luxury brand that is the ultimate aspiration of the

consumer.

• Fashionable alternative to using a cell phone to tell time.

• Status symbol.

ADVERTISING:

TRADITIONAL MEDIA

Magazine Advertisements- Omega SA

places ads in men’s magazines such as

Maxim and GQ. Ads cater to the target

market and attempt to educate them on

the value of wristwatches as rewards

and alternatives to cell phones to

tell time. Billboards- Ads are placed

on billboards in major cities, mainly

in affluent areas to hit the target

market. Both traditional and digital

billboards will be utilized.

Ads at sporting events- Ads are strategically placed at sporting

events that young men attend including, but not limited to,

basketball, and football and hockey games.

Sponsorship of music concerts- Omega sponsors concerts that are

popular with the target market. Ads are placed throughout the

concert venues as well as in the programs. The logo and name are

included all over the concerts promotional materials.

ONLINE MEDIA

Website- A section of Omegawatches.com is developed that caters

to the target market and conveys the benefits and value of

wristwatches.

• The website includes links that are prominently displayed on

the homepage including Twitter, Face book and YouTube. The user

can then easily connect with Rolex’s social media sites with one

simple click.

SOCIAL MEDIA

Twitter- An official Omega account is created and verified. This

account is managed by a social media team that will tweet daily

to educate the audience as well as respond to comments and

concerns of their followers.

Face book- An official Omega page is created and monitored by a

social media team. Information is updated on a regular basis and

the team will interact with Face book fans.

YouTube- An official YouTube channel is established and that

includes videos and advertisements that cater to the target

market. Each week there is a new video that educates users on

different features of Omega watches.

9. Marketing Mix (7P + 4C)

9.1 Product Omega produces a range of luxury ladies and means watches that

have a worldwide reputation for their innovation, quality and

precision.

9.2 Price

Most of the Omega brand’s watch sales are in the $4,000 to $8,000

price bracket (Donville and Muller, 2010). Omega operates a ‘high

price’ strategy based on a ‘narrow scope, differentiation

position’.

9.3 Place (distribution)

Omega watches are distributed through an established global

distribution network of authorized retailers and an expanding

network of wholly owned boutique retail outlets.

9.4 Promotion Omega’s promotional mix includes:

Sponsorship of prestigious events such as the Winter

Olympics 2010, the European Masters and World Cup of golf,

and the 40th anniversary of the first moon landings.

Trade Fairs – Basel world Trade Fair.

Celebrity Ambassadors and Endorsement - Olympian Michael

Phelps opened the Omega the Omega Boutique in New York City

opened on Fifth Avenue Model

Advertising in Lifestyle magazines.

Own Website and presence on face book social network.

9.5 Physical evidenceFriendly environment at sell and service center and that ensures

the customer satisfaction. Omega also has highly quality

management who always work hard to do better. They also have

strong supply chain system.

9.6 ProcessWhile manufacturing the watch the company follows automated

system to ensure the quality. All the departments maintain a good

relationship or create a network to work effectively. Omega is

well known for its high quality design in all over the world.

9.7 peopleOmega SA has a bunch of high quality stuff with experience. The

staffs are also trained heavily so that they can perform better

and better. This bunch of staffs are maintained and operated by

high quality management.

7P of Omega SA

Product/Service:

Omega produces a range

of luxury ladies and

means watches that

have a worldwide

reputation for their

innovation, quality

Price:

Omega brand’s watch sales arein the $4,000 to $8,000 pricebracket. Omega operates a ‘high price’ strategy based

Promotion:

Sponsorship of prestigious events, advertising in Lifestyle magazines, celebrity ambassadors and

Place:

Omega watches

are

distributed

through an

established

global

distribution

network of

authorized

Physical evidence:

Friendly environment at sell and service center;highlyinnovative and quality management;

Marketing Mix

People:

Talented, trained and experienced staffs from all over the world; Excellent Leadership;

Process:

Automated; Information Technology; Servers and networks; high

4C of Omega SA

10. Value Chain ModelSupporting

ActivitiesMulti-

stakeholders

infrastructure

Customers’ networkmanagement and HR

Improvingtechnologi

calinfrastruc

ture

Developmentand

procurement

PrimaryActivities

Sourcing andInput

materials

suppliers

Processand

Operations

Outputdistribut

ion

Salesand

Marketing

Aftersales

serviceand

customerinsight

11. Total Quality Management

Total Quality Management (TQM) philosophy constitutes a new

paradigm of management. It is a way to continuously improve

performance at every level of operation, in every functional area

of organization through integration of people and systems. This

M

A

R

G

I

N

embodies provision of supporting environment based on senior

management explicit commitment, developing employees’ competency,

collaboration with stakeholders and change of organizational

culture. The ultimate objective is customer satisfaction.

(Brocka&Brocka, 1992; Mohanty& Lakhe,2002). Implementation of

fundamentals of total quality management has been introduced and

practiced in individual firms in India for quite some time.

Wilkinson and Witcher (1993) summarized TQM as having three major

requirements as follow:

1. Total: Functional integration and teamwork at all levels in

the organization through institutional management.

2. Quality: Strict adherence to the requirements specified by

customers ensuring use of appropriate tools, techniques and

processes.

3. Management: Creation of enabling environment, commitment of

senior management and provisioning of adequate support

facilities.

In view of the above, Omega SA, as a leading watch manufacturing

company of the world, asserts customer focus, innovations and

excellence in smarter and stylish products and services,

empowerment and development of employees, partnership with

suppliers and other stakeholders as its strategic priorities to

achieve excellence through Total Quality Management. The main

focus of these quality management practices is to develop a

knowledge base and long-term partnership for sustained

excellence. The mobile phone company put customers focus as its

strategic priority. The customer focus at the company is guided

by performance excellence, respect, accountability, and integrity

at all levels. Regular customer feedback is sought with a view to

align the company’s quality objectives to customers’ needs.

12. Customer Loyalty

"Customer loyalty is when an organization receives the ultimate

reward for the way it interacts with its customers. Loyal

customers buy more, buy longer and tell more people - that's true

customer loyalty." Competitive advantage can be achieved through

customer loyalty. This is the way to gain the best kind of

customers, repeat customers. Repeat customers tend to spend more

money and provide the best word-of-mouth advertising.

All parts of Omega SA are involved in creating loyal customers:

those who produce and deliver your products or services, reliably

day in and day out, as well as those who create and bring to

market new offerings that delight the customer. Treat them all as

members of the same team...the Customer Loyalty Team...and you

will reap the benefits well into the future.

Management of Omega states that - “We appreciate your decision to invest in

an OMEGA watch. Customer satisfaction motivates everyone at OMEGA in order to

provide you excellent service throughout the entire life of your treasured OMEGA

timepiece”. This statement ensures the loyalty of customers to

Omega and it ensured more quality product and service from the

company.

13. Brand and Branding of OMEGA (SA)

1894 -the year the revolutionary Omega movement was created -- to

the modern day and the development of OMEGA's state-of-the-

industry Co-Axial calibre 9300. The original OMEGA factory is

brought back to life in black and white imagery and a watchmaker

carrying a tray of 19th century calibres evolves into a vivid,

full-color descendent in the blink of an eye. That early calibre

was the first truly industrialized Swiss mechanical watch

movement and in 1903, its name - Omega - was given to the entire

company.

Omega always gives names to the things that really matter. When a

mechanical watch movement created in 1894, changed this industry

forever. People called it Omega- a word synonymous with

excellence, accomplishment and achievement. In 1903, founder of

Omega gave a name to the entire company and well over a century

later, Omega remained committed to the name and all that it

stands for. In 2007, Omega’s exclusive Co-axial calibre signaled

another revaluation in watch making, redefining the potential of

the mechanical movement. This dedicated production line

represents a seamless blend of human ingenuity and automated

perfection. For this company, which got its name from a movement

in 1903, quality and innovation is the central to every timepiece

they produce. Omega- the name itself says it all.

14. Box Analysis of Brand Elements (6 Categories)

Memorable Meaningful

Likable Transferable

Adaptable Protectable

Brand elements are devices, which can be trademarked, that

identify and differentiate the brand. In our case with Omega SA

the company uses its trade name. It legitimizes the company with

its vast reputation while the latter individualize the product

and gives it a sense of identity. Omega SA can be categorized

under Memorable, Meaningful and Protectable brand elements. The reason

for such classification is elaborated below:

1. Memorable: The logo is based on the Greek letter “Omega”

which is very much memorable and it distinguishes the brand

from other brands. It gives a vivid impact to customers mind

reflecting the luxurious design and quality of omega.

2. Meaningful: The name Omega itself suggest a sense of trust,

dedication sincerity: a brand that you can rely on. The name

Omega gives an appropriate identity on what the customers

are expected to get the quality and satisfaction.

3. Protectable: Omega SA is a company trade mark and has

patented its entire brand. Therefore the brand and its

elements such as logo and other significant to the brand are

protectable.

15. Brand Dynamic PyramidStrong Relationship

Weak Relationship

16. Five M’s of Advertising for Omega SA

Message

Omega – “Exacttime for life"

Omega SA

17. Mass Communication

17.1 Advertising Budget and Campaign CostA typical advertising budget will take into account all

advertising costs. These are:

Advertising agency commissions cost

Mission

To manufacture high-quality wristwatches and continue the long tradition of

Money

CHF 180 million

Media

ElectronicMedia

Celebrity endorsement

TV Commercial

Outdoor

Measurement

Customers find it classy & feelintangible satisfaction using it for its quality

Purchasing all advertising and promotion media,

including internet, newspaper, TV etc.

Outdoor advertising cost

Collateral material cost (Brochures, mailing pieces,

catalogs, etc.)

Media Advertising cost 35%

Collateral Material cost 5%

Public Relation 20%

Event & Sponsorship 20%

Campaign cost 20%

Print Media 5%

Electronic Media 15%

Outdoor Media 10%

Internet 5%

17.2 Sales Promotion and BudgetSales promotion:

Omega target the higher socio-economic group

Offering quality watches with luxurious and classy designs

Premium service

Strong logistic and supply chain

Targeting executive level personnel

Sponsor of big sport events like Olympic

Sponsor for famous actors and movie stars

17.3 Events & Experiences/Sponsors

Omega has frequently been the official timekeeper for the

Olympics, beginning with the 1932 Summer Olympics. It was the

official timekeeper for the 2006 Winter Olympics and for the 2008

Summer Olympics, and did the same for the 2010 Winter

Olympics. For the 2008 Olympics, Omega brought out an Olympic

edition with its logo on the second hand. Olympic swimmer and

multiple gold medalist Michael Phelps is an Omega Ambassador and

wears the Sea master Planet Ocean. Omega is also the official

timekeeper for the 2012 Summer Olympic Games.

Providing support to Emirates Team New Zealand and representing

the team's official watch, in 2007 Omega introduced the Sea

master NZL-32 chronograph, with the name suggested by the name of

the boat that won the America's Cup in 1995. The watch was

developed in cooperation with Dean Barker, skipper of Team New

Zealand and Omega Ambassador.

On July 1, 2011 Omega became the official timekeeper of PGA of

America through the signing of a five year agreement that will

carry through 2016. In 2014 Omega became the official timekeeper

of the 2014 Sochi Winter Olympic Games.

17.4 Public relation/government lobbyingIt is proposed that a specialist lobbying agency be retained to

formulate and implement a strategy to lobby the appropriate

regulators and trade bodies on Omega’s behalf. The key issue for

lobbying activity has been identified as counterfeiting but there

is also a case for using lobbying to inform and persuade key

stakeholders and influencers about Omega’s ‘green credentials in

the light of its proposed CSR activity.

Lobbying will help to position Omega as a good global corporate

citizen, and re-enforce its ‘green credentials'. Also, if Omega

is seen to be at the forefront of the fight against counterfeit

luxury watches then its brand equity and reputation can only be

enhanced. In addition, of course, effective lobbying can

ultimately lead to changes in the business environment for Omega

that can have a positive impact on sales.

17.5 Corporate social responsibility

Corporate Social Responsibility (CSR) is the term used for

businesses that employ marketing strategies that promote products

by focusing on the positive nature of their environmental

attributes and/or on the socially responsible policies and

procedures of the organizations which produce and distribute them

(Prakash, 2002). Internationally, organizations such as Honda

Cars and Hewlett Packard have led the way in ‘green marketing’ in

response to growing consumer demand for products that are more

environmentally friendly.

CSR is now an important element in the advertising and marketing

planning of many of the world’s top businesses. In view of the

Omega’s position as a highly reputable, worldwide brand it is

recommended that it incorporates CSR elements into all of its

promotional activity as well as developing CSR initiatives around

all of its worldwide production facilities in order to enhance

relationships with local communities.

18. Pricing Strategies

Steps in Setting Price

Steps 1: Selecting the Pricing Objectives :

While selecting the price objective Omega SA follows the market –

Skimming Pricing. They follow this strategy due to the high

quality of product and innovation. They offer innovative, stylish

and quality product. As a result customers don’t bother that much

about pricing.

Step 2: Determine Demand:

Select the price Objective

Determine demand

Estimate Cost

Analyze Competitor price Mix

Select Pricing Method

Select Final Price

Customer of watch industry looks for the high quality product and

that need to be stylish as well. Omega SA clearly understood the

demand of the customers and provide according to that.

Step3: Estimate Cost:

Before setting up final price of product Omega SA analyze their

overall cost of producing the product.

Step4: Analyze Competitor Price Mix:

It is very important for all the company to consider price mix of

the rival before setting price of product. Omega SA has some

strong rival like Rolex, Rossini, Casio, Rado and others. So

Omega SA analyzes the pricing strategy of those rival firms and

decides the final price of their stylish products.

Step 5: Select Pricing Method:

According to competitors price Omega SA always try to set price

lower than the other watch company.

Step 6: Select Final Price:

While select the price the low price offering is not the only way

to grab the market. Omega SA believes in good quality and style

of the products that satisfy customers. All these factors are

considered before setting up the final price of products.

19. Break Even AnalysisAn analysis to determine the point at which revenue received

equals the costs associated with receiving the revenue. For a

simple breakeven analysis for service companies, the formula is

given below:

Breakeven Sales = Fixed Costs / (1 – Variable Cost/ Sales)

Breakeven Sales = Fixed Costs / (1 – Variable Cost / Sales)

=.50/{1-(4/9)}

=01 Billion

20. Recommendation

The recommendations below will help to secure the long term

future of Omega’s highly valued employees and deliver year-on-

year sales and profitability growth for the Omega brand.

Omega SA should conduct more research to know the need and

wants of the customers.

This company should bring more variation to their product

line so that the customers will have more option to choose.

Omega SA should sponsor some more sports like football and

cricket other than golf, swimming.

Omega SA should target mass people segment by introducing

low price range watches.

Need to focus on quality and come up with more luxurious

design with more campaign and program which will give them

competitive edge over the close competitors.

21. Conclusion

The future seems very bright for Omega. They have the opportunity

to expand geographically as well as on the women segment. As it

has already being mentioned earlier, the brand has a strong

symbolic consumption value. If we put this in light with the very

strong emergence of India, Russia and especially China as major

purchasing entity, it becomes clear that the brand has still an

important margin of development available especially knowing that

symbolic consumption is widely spread in emerging markets. Women

also represent a segment in which Omega could expand. The aging

of population could also represent an increased market size. In

fact, these people has an increased purchasing power (the

children are grown up) and know the brand best. What is more, the

notoriety of the brand could enable it to diversify in other

fields (jewellery, etc). Nevertheless, Omega has to increase

efforts in order to be recognized by the young generation.

Management of the brand identity should also be stricter and more

controlled in order to avoid extending furthermore the image of a

“new rich who need to show off their money” watch.

23 References

1. Marketing Management – A South Asian Perspective – 13the edition

by Philip Kotler, Kevin Lane Keller, Abraham Koshy and

Mithileshwar Jha; Pearson Prentice Hall.

2. Website of Omega

http://www.omegawatches.com/

3. Brocka, B., & Brocka, M.S.(1992). Quality Management:

Implementing the Best Ideas of the Masters, Richard D. Irwin,

Homewood, IL.

4. Mohanty R.P., & Lakhe R.R.(2002), TQM in Service Sector, Jaico

Publishing House, Mumbai,India.

5. Wilkinson, A., & Witcher, B. (1993). Holistic Total Quality

Management must take account of political processes. Total

Quality Management, 4(1), 47-55.