On Saturday, I sat on the toilette deciding if it was worth it to make a long queue to get the new Omega x Swatch Moonwatch. The watch was only available at some stores. In Barcelona, the Swatch shop from El Corte Inglés in Plaça Catalunya was the selected one. I read on YouTube comments that ~500 people were queuing, and the store had ~100 pieces available. After checking my phone, reading comments and seeing the queues worldwide, I decided to wait until things went back to a calm state.
Brands are everything. Take a Swatch plastic watch, rename plastic as bioceramic, write Omega on it, and you can sell it for 250 euros. The design is beautiful because it's based on the mythical Omega Speedmaster that stepped on the moon in the late 60s, but this watch has a quartz movement, and the materials are terrible. Even the watch strap looks stiff and cheap. I wonder how much profit they make on each sale; I bet that the fabrication cost is lower than 5 euros.
Watches have a show status component on the purchase decision. Like designer bags or cars, people buy them because, among other things, they want to signal how wealthy or well-positioned they are in society. This Omega x Swatch is a product that gives you that high status feeling for an affordable price. Now, the masses can wear an Omega for the first time.
This same strategy is working well in the car industry. A few years ago, German car manufacturers launched an entry line to attract young people to buy their first car. Think about the BMW Series 1, the A-Class Mercedes or the Audi A3.
In the short term, profits and sales skyrocket for the Swatch group. In the long run, two options might happen:
The marketing strategy is brilliant if a combination of both options take place. The Swatch group compensates for the pain of the first option by attracting lots of young folks and, at the same time, using them to promote both brands: Swatch and Omega.