Does Tissot need a strategy rethink?

While many Chinese enterprises believe large advertising volumes on TV bring high sales, Tissot has been maintaining a low-budget marketing campaign. But still, last year it sold almost 200,000 pieces in China, becoming the largest brand among the medium-end Swiss-made watches.

The Swatch Group, as the world's largest watch group, has 18 brands. Tissot is a medium-priced one. The top brand within Swatch is Breguet, followed by luxury brands such as Omega, Longines and Rado.

Tissot has stuck to a simple strategy for over 100 years: provide the best value for money.

In Switzerland, Tissot is a household name. When it entered China in 1992, it found Chinese customers wanted to buy a real Swiss watch but not spend too much on it. So Tissot positioned itself as a product that's not expensive and yet is a status symbol.

It's retailed between 2,000 and 6,000 yuan. Reinforcing its Swiss background and century-long history, Tissot has successfully made itself a very desirable brand.

According to statistics from Tissot, its sales in 2004 was about 100,000 pieces, which grew to 150,000 in 2005. But despite the rapid growth in sales, its marketing cost amounted to only 2 percent of its total revenue. Last year, the brand's retail revenue exceeded 500 million yuan and its marketing cost was only 10 million yuan.

Under its limited budget, Tissot aims at high brand loyalty and word of mouth instead of brand awareness.

Low-budget marketing means an enterprise abandons the traditional way and makes use of innovative methods to inject small amounts of money but create a large and prolonged effect.

Tissot's motto was to create the best value for money, which is exactly what Chinese consumers seek. To position the brand, it appoints brand ambassadors, maintains a high-end profile at distribution channel terminals, and resorts to sports marketing.

In 2000, when Tissot China noticed the brand's loyalty and recognition were high but the brand awareness was comparatively low, it decided to use British football player Michael Owen as its brand ambassador in the Chinese market.

The suggestion was immediately rejected by the headquarters because they felt Owen was not an internationally well-known player. How could he represent Tissot, which has over 150 years of history? But the China subsidiary believed Owen was popular in China, especially among youngsters.

The move proved correct. Its sales skyrocketed 60 percent in 2001, compared with the same period of 2000, and the brand's awareness was largely enhanced.

Instead of buying expensive TV spots, Tissot aims at developing a high-end profile at distribution terminals. It has built up flagship stores and boutiques at commercial areas, ensuring its visibility among customers.

More and more enterprises are spending a fortune on sports marketing, including sponsoring sports events and inviting athletes to be brand ambassadors. Tissot has been actively supporting sports. It has been a sponsor in the 13th Asian Games, Formula 1, the world cycling championship and 2000 Sydney Olympics.

In spite of its achievements, it remains to be seen if the low-budget marketing strategy will continue to work since many enterprises are following Tissot's example. Will Tissot be able to stick to its marketing strategy or will it be forced to use TV commercials?

By the end of last June, China's Internet users reached 123 million, accounting for almost one-tenth of the total population. The number of Internet users worldwide is 713 million. This shows China has entered the digital era, when shopping is just a click away.

However, when we search for Tissot's Chinese website, we can hardly find anything. Tissot has been in China for more than a decade but it is hard to find any information on the products in Chinese, not to mention a Chinese website. Clearly, there's a case for Tissot to upgrade its strategy.

The author is a professor with the Business College of Jiangxi Normal University

(China Daily 08/09/2007 page15)