PPBM

Presentation
CASE 3 | Swiss Army : Diversifying into Fragrance Business

Submitted by Group 7
 Timeline for Victorinox

1884 1989

Karl Elsener opens a cutlery The Victorinox USA enters the watch
workshop in Ibach-Schwyz business in the US under Swiss Army
Brand

1992
Victorinox expands its watch
business and enters into a 1999
partnership with TRG Group. It Victorinox opens its own sales subsidiary in Japan
then enters international travel
gear market

2001 2005

The company launches fashion line Victorinox acquires its

in the US and opens its first store in American competitor
Soho District of New York Wenger NA including its
fragrance label ‘Swiss
Army Fragrance’

Swiss Army Knives,
Professional Cutlery
• Product category includes
Swiss Army Knives,
household and professional
cutlery
• Innovative and high
functionality model like
Swiss Champ and
SwissFlash USB pocket knife
• 540 types of high quality
cutlery model for
household and professional
chefs
Victorinox Product Portfolio
Watches Luggage (travel Fashion
gear)
• A major player in watch • Luggage range included
• Range included male and
market, Victorinox was lifestyle bags, business
female collections
known for high quality, cases, travel accessories
• Customers were active
innovative watches and backpacks
and engaged in nature
• High brand awareness for • Products were
and demanded quality
Victorinox watches in US characterized by high
and flexibility
• Watches primarily targeted technology, functionality
• Collections were
dynamic, luxury oriented and durability
characterized by
customers demanding • Travel gear range was sold
functional design, durable
high performance and in 90+ countries
material and innovative
functionality
designs
 An Overview of
Fragrance Industry
• The global fragrance industry generated revenues of around
$23.5 bn in 2005, out of which premium category accounted
for about 64%
• Nature of industry was highly competitive and matured
• Department and speciality stores were major distribution
channels of fragrances capturing over 50% of total sales
• Companies used competitive pricing, promotion and
distribution strategies and innovative packaging to attract
customers to capture larger market share
• No global standards for fragrances, hence, slightly unregulated
in nature

Major Challenges:

• High initial fund requirement

• Difficulty faced by new and medium sized companies to
establish relationship with distributors and consumers
• Ensuring quality ingredients was a challenges as there were
few and small suppliers of primary material
 Perfume Industry Analysis
through PESTEL

Political Economic

› No global standards defined for perfume industry, › Unemployment, rise in prices of oils, chemicals and
companies had to abide by local rules and other raw materials affected perfume industry
regulations negatively

› Wars and political instability would affect perfume › Rise in propensity to spend, disposable income and
industry negatively improvement in lifestyle increased demand for
fragrances

Social Technological
› Need for consumers to present better self image › Moderate level of technology and high innovation
gave rise to brand conscious consumers for perfumes was required due to maturity of industry

› Perfumes were mainly perceived as luxury and non- › Wide range of chemicals were used for production
necessary items

Legal- Patent and Trademarks would play a major role in protecting a particular fragrance from getting copied
 Competitor Analysis

Fragrance Market is a mature market and it is dominated by Key market players such as L’Oréal, Coty,
Porter & Gamble, Avon and LVMH which had captured almost 40 percent of the global market.

These are the most serious competitive threats for Victorinox to enter the fragrance market because
they already have their brand awareness for fragrance products and customer loyalty.

These market giants already set a premium price for their products.

There are also many small niche market players such as Liz Claiborne, Mary Kay, Revlon and Bulgari.

A Good thing about fragrance market is that people tend to try new and fresh smells and it will give
Victorinox this opportunity to enter the market with a new high quality product.

The diversity in this group implies that always there is room for one more player in the market.
 Alternatives about the Fragrance business

Do not enter the Fragrance Business Enter the Fragrance Business with Wenger SA

• Highly competitive players with 40% market PROS CONS

taken by major players
• High costs of entering into the industry
• Existing brands have strong brand recall &
associations with customers
• Use business relations & production
establishments across other businesses
Focus on Existing product lines & evolve
them to produce better products
• No diversification costs as
people already associate Wenger
with fragrance
• Not leveraging strong brand
recall of Swiss Amy brand which
has already diversified
successfully into other products
• Geographic limitations
towards brand recall
• Not leveraging strong
brand recall of Swiss Amy
brand which has already
diversified successfully
into other products

Entering the Fragrance market under the “Swiss Army” Brand Name – Unrelated Product Diversification

• Low perceived Risks • Baggage of existing brand attributes

CONS
PROS

• High brand recall/association • Clinging to the same single-dimension

• Diversification helps in expansion brand image
• Additional Costs involved
 Brand Name: Swiss Army can use its existing brand name to introduce perfumes – Brand (Category)
extension
Why use existing brand name for Brand Extension?

Improve Brand Image: Based on the existing brand’s image, consumers form similar inferences about its performance

Reduce Risk Perceived: Brand’s established reputation for introducing high-quality products will reduce risk for
consumers

Increase Promotional Efficiency: Introductory campaign does not have to create awareness of both the brand and new
product but instead only on the new product.

Avoid cost of developing new brand: We can save on the costs for designing high-quality brand names, logos,
symbols, packages etc.

Packaging and Labelling efficiencies: Similar or identical labels for extensions can result in lower production costs and
more prominence in the retail store.

Better Distribution: Since customers would already be aware of the parent brand, the retailers will be convinced to
stock and promote the products.

Permit subsequent extensions: One benefit of a successful extension – especially a category extension is that it may
serve as the basis for subsequent extensions.
How could they best compete and position themselves in this mature and competitive industry in which they had no
previous experience or brand awareness?

Segmentation
Targeting
• Primarily premium
• Expansion in Current
Positioning
segment • Exotic Fragrances from the
market
• Both Men & Women Swiss army brand you trust
• Emerging markets(BRICS)

Marketing Mix – 4P’s

Promotion
• Celebrity
Place: Endorsements
• Tap existing • Ad Campaign
Price: distribution • Leverage Brand
• Premium Only channels Awareness
Product: • Premium
• Quality at
• Unique Product Reasonable retailers
• Exotic Fragrance Cost • E-Sales Channel
• Premium
Packaging
Thank You