THE DIGITAL WATCH MARKET Digital watches came into vogue in the early 1970s, when companies first learned to produce highly accurate, relatively expensive timepieces using modern semi conductor technology. The market exploded in 1976 when Texas Instruments Incorporated introduced a plastic-cased model for $20. Within a few months, the price was slashed to $10. The race was on. Following Texas Instruments' example, Jackson introduced a line of low priced digitals and quickly carried out a comfortable 20 percent share of the market. But the good times were not to last for long. The Japanese and Swiss quickly came on the market with their own lines and began working through highly versatile watch assemblers in Hong Kong. Jackson saw these plants as a special threat to its own niche in the market because of their ability to rival its low production costs. As competitive situation evolved, the relative share of digitals over mechanical watches continued to rise, as shown in the table below. But the casualty rate among American companies was high. Such notables as Fairchild, Camera and Instrument, Intent, Litronix and Motorala were forced to abandon the digital market. Jackson saw its own share slip steadily from a high of 20 percent in 1977 to a low of 14 percent in 1980. Jayne Carlton estimated that the continuing increase in the competition from Hong Kong assemblers would accelerate this slide. World Watch Consumption (in thousands)

2007 2008 2009 2010 Digital 34,900 45,700 59,300 61,500 Quarts Analog 11,900 15,100 18,800 24,00 Mechanical 201,300 200,200 195,200 144,400 Total 248,100 261,100 273,300 230,000 Required a) Analyze at five major environmental challenges that might be faced by companies operating in the digital watch market. (10marks) b) Using the BCG matrix, analyze the DWM product portfolios with regards to its market growth and relative market share explaining five strategic implication for each SBU. (10marks). c) You are a marketing consultant hired by Swatch Watch Company in the digital watch market (DWM) to help it build its market base.