Swiss watch product managers have a problem on their wrist

Swiss watch product managers have a problem on their wrist
Image Credit: @NickMKE

Do you wear a watch? I would suspect that the answer for most of us is a “yes” (we’ll forget for just a moment the kids who no longer wear a watch because they use their cell phones for everything!) Now, what kind of watch do you wear? Is it a Patek Philippe? I suspect not. However, there is a market for the very expensive Swiss watches. That market is currently struggling and it is not the fault of the Swiss watch product managers. Whatever shall they do?

What Happened To The Market For Swiss Watches

As product managers we are equipped to deal with changes in our markets. Yes, there will always be new competitors, new features that customers just must have, and the like. However, in the case of the Swiss watch product managers, events have occurred in their market that they had no control over. In fact, there really was no possible way for them to forecast what was going to happen and so now they find themselves in a unique and unenviable position.

The event that happened which turned the market for Swiss watches upside down occurred when the Swiss government decided to change the exchange rate restrictions that had been in place. Without getting too financially complicated on you, what the Swiss government did was to stop making sure that the exchange rate was 1.20 Swiss francs to a euro. This means that the exchange rate is now free to go up and down. The end result of this is that Swiss watches just got a lot more expensive overnight.

As though that wasn’t bad enough, it turns out that the recent political turmoil in Hong Kong didn’t do the Swiss watch product managers any favors either. For three months protesters shut down parts of Hong Kong’s downtown district. Unfortunately for Swiss watch makers this is a key path that their watches take in order to get purchased by wealthy Chinese visitors. Clearly there were no watch sales taking place while the demonstrators were camped outside of the stores.

How Swiss Watch Product Managers Can Survive

Take a look at your product development definition and I suspect that you’ll discover that it does not mention how to handle either of these market changing conditions. It can be all too easy to sit back and say “there is nothing that I can do about this” – sorta an “act of God” type of attitude. However, we always need to be thinking about our product manager resume and so that means that even when the unexpected occurs, we need to be ready to take action.

The change in the exchange rate of the Swiss franc is going to have an immediate impact on the bottom line of the Swiss watch makers. One initial thought might be to move some or all of the production of the watches to a country where labor rates would be cheaper than Switzerland. However, it turns out that if a watch manufacturer wants to put the highly desirable “Swiss Made” label on their watch, then they need to have at least 60% of the watch actually made in Switzerland.

Instead, what the Swiss watch product managers are probably going to have to end up doing is raising their prices. The more desirable a watch is, the more viable this strategy is. However, for some of the smaller brands or for brands that have fallen out of favor with customers, they are going to have to look for other options. These options may include considering merging with another watch maker in order to create a single, stronger brand that can better defend its market.

What All Of This Means For You

Although I have heard that Switzerland is a very beautiful place to live, I’m not quite sure if I’d really like to be a product manager there right now. The Swiss government’s decision to allow their currency to “float” in relation to other currencies has caused a great deal of turmoil in the high-priced world of Swiss watches.

The Swiss product managers have been hit with two significant changes to their markets: the company’s bottom line has been negatively impacted by the newly floating Swiss franc and protesters in Hong Kong shut down a key sales channel for three months. In order to deal with these challenges, the Swiss watch product managers need to consider raising the price of their product. If they can’t do this, then they may need to start searching for other firms with which to merge.

As product managers we like to think that we are in control of both our product and our market. However, as the Swiss watch product managers have shown us, this is not always the case. However, what we do need to be able to do is to quickly adapt to changes in our markets. The ability to do this should be a part of every product manager job description. The Swiss watch product managers have an opportunity to do this right now. Let’s watch (so to speak) and see how all of this turns out…!

- Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills™

Question For You: If you were a smaller Swiss watch maker, would you try to merge with another watch maker or someone else?

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What We’ll Be Talking About Next Time

Let’s face it, McDonald’s won the battle for breakfast a long time ago. For McDonald’s, breakfast is a big part of where they make their money: 25% of their sales come from breakfast. However, what seemed to be a done deal is starting to look anything like that now. Over at Taco Bell, a new breakfast menu featuring a Waffle Taco has been widely covered by the media and is meeting with positive reviews. Clearly this battle is not over. It may be time for the McDonald’s product managers to start to make changes to their breakfast product development definition. The product managers at McDonald’s need to get creative…

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Wendy's Product Managers Have Made A Mobile App Mistake

Wendy’s Product Managers Have Made A Mobile App Mistake
Image Credit: Huffington Post

In the U.S. the Wendy’s fast food chain is well known. They may not be as large as McDonalds or have as many restaurants, but they do all right and I for one really like their salads. However, the product managers at Wendy’s recently got bitten by the mobile application (app) bug and decided to update their product development definition and create and app that would make it easy for repeat customers to buy food. The problem is that they did a bad job of this. Perhaps we can learn from their mistake…

The Starbucks Card

Starbucks has done the loyalty card right. Starbucks rolled their cards out in 2011 (the My Starbucks Rewards™ card) and it has been a big hit ever since. Starbucks has made it easy for customers of any Starbucks brand (i.e. Starbucks, Teavana, La Boulange) to use their preloaded loyalty cards or mobile apps to shop and earn rewards interchangeably. There is a great deal of flexibility of this so-called currency across channels. For example, a customer can earn “stars” (rewards points, in the Starbucks parlance) by purchasing packaged Starbucks coffee at a local grocery store. Clearly this is something that the Starbucks product managers can add to their product manager resume.

If you’ve never used a Starbucks card, then you don’t know how easy it is to use. You can either use a physical card or load the Starbucks app on your Android or IOS phone. When you come into a store, you can display the bar code on the card to the cashier, they scan it, and your purchase is paid for. If you are using the mobile phone app, it will show you how much money you still have loaded on your card both before and after your purchase.

Starbucks got the card thing right because they made it easy to use. Nobody gives paying for food using their Starbucks card a second thought. When the card runs out of money, it is very easy to reload it and then you don’t have to think about using real money at a Starbucks until it is once again all gone.

What Wendy’s Product Managers Did Wrong

Over at Wendy’s, the product managers saw what Starbucks had done with some jealousy. They wanted to make purchasing food at Wendy’s just as easy. The other benefit to getting Wendy’s customers to use a loyalty card would be that they would no longer be as sensitive to how much things cost because they would not be using “real money” to make purchases.

However, the loyalty card that the Wendy’s product managers have rolled out appears to have missed the mark. The new Wendy’s program suffers from two fatal flaws: it’s too hard to use and it does not reward customers for using it.

The Starbucks card, both the physical card and the mobile phone app, work by displaying a bar code that gets scanned at the store. The Wendy’s system works by providing the customer with a 6-digit code that they have to tell to the cashier. This is much less convenient. The Wendy’s product managers said that they chose this method because they thought that it would be too inconvenient for customers to get their cell phones scanned while in the drive-through where 70% of all Wendy’s orders are filled. The problem that I have with this thinking is that I see Starbucks customers using their bar-code loyalty cards in the drive-through every day.

The other problem that the Wendy’s product managers have created is that there is not enough of an incentive for their customers to use their new loyalty cards. Over at Starbucks they have the concept of “stars” that you earn by using the card. Earn enough stars and you get a “gold card”. You can also get discounted or free food items if you use your Starbucks card enough. Wendy’s currently does not have a similar program. Why would anyone use the Wendy’s card?

What All Of This Means For You

There’s no denying it, mobile apps are all the rage right now and have been added to just about every product manager job description out there.. In the restaurant industry everyone has watched with jealously just how successfully Starbucks has leveraged their loyalty / payment card to boost sales. Over at Wendy’s, their product managers decided that they wanted to see if they could duplicate Starbucks success with their own app.

It is looking like the Wendy’s product managers have dropped the ball. Their mobile app, despite having the example of the Starbucks app, does not look like it is going to meet their customer’s expectations. The use of a 4 digit confirmation code instead of a scanable bar code is going to make things more complicated. They tried to optimize their app for the drive through lane, but just ended up making it too hard to use.

The thing that makes this such a sad story is that the Wendy’s product managers had a great example of a customer loyalty card that worked: Starbucks. No, they couldn’t copy it exactly, but also they wouldn’t have because a Wendy’s restaurant is different from a Starbucks. However, they didn’t seem to understand how their customers make purchases and their app does not make this easier. Hopefully the programmers who developed the app are still around because they are going to have some changes to make !

- Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills™

Question For You: How should Wendy’s have optimized their app for the drive through lane?

Click here to get automatic updates when
The Accidental Product Manager Blog is updated.

P.S.: Free subscriptions to The Accidental Product Manager Newsletter are now available. It’s your product – it’s your career. Subscribe now: Click Here!

What We’ll Be Talking About Next Time

Just about everyone out there has heard about Twitter. It’s the company that invented the 140 character “tweet” micro-blogging platform. TV shows, journalists, and celebrities all seem to be using this service all the time. The problem is that regular people don’t seem to be using it. Basically, Twitter has a product development definition problem – their customers don’t understand the product. It sure looks like Twitter needs some product management help…

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