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…