Swiss Army: Diversifying into the Fragrance Business
(5 pages of text)
In 2005, Victorinox, the original producer of the Swiss Army Knife, acquired Wenger, including the fragrance label “Swiss Army Fragrance.” The acquisition of Wenger allowed Victorinox to become the only producer of the famous Swiss Army Knife as well as the key player in Swiss Army watches. Victorinox’s head of marketing was asked to design a business strategy that would successfully allow the company to enter the fragrance industry. How should Victorinox diversify into the fragrance business? Should it aim to transfer its existing brand attributes to fragrance products? Or should it adopt a strategy that would include the use of another brand to market the perfumes? The head of marketing had to present a plan to the CEO of Victorinox on how best to brand and position the product, and how to compete in the fragrance industry.
This is a marketing and branding case with emphasis on the process of diversification. It can be used in undergraduate and graduate courses in international marketing, international business, business operations and business strategy to illustrate branding, positioning and other competitive strategies. It highlights the challenges and processes related to new product development, pricing, distribution, promotion of new products and the complexity of identifying market opportunities in an established industry. Students will:
- Generate options for the fragrance business and evaluate the advantages and disadvantages of undertaking the new business.
- Analyze the different branding options for the fragrance business using a branding model strategy.
- Use Porter’s Five Forces to evaluate the balance of power within the industry.
- Use the Herfindahl-Hirschman index (HHI) and CR4 to measure the concentration of the industry and propose appropriate strategies to be competitive.
- Recommend marketing strategies useful to transfer the attributes of the brand to fragrances; use the marketing mix to develop positioning strategies for the new product; and perform a PEST analysis on the global fragrance environment.
Switzerland, Large, 2003
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