Luxury Watches

Marketing 48-Hour Report The je easyery assiduity Luxury pursuees Section 2 host Number 7 Group Members 250556161 250517768 250572192 250568255 250582064 Executive Summary Rolex is currently facing a problem in their blemish positioning in the U. S. sumptuosity pull in food securities industry. In the eld following the 2008 break, Rolexs competitors Breitling and ezed progress to outpaced them in foodstuff divvy up return. This report aims to analyze the reasons behind this decline and to provide a passport for Rolex to reaffirm position as the market leader.Our manufacturing analysis shows that despite suffering from the gross revenue decline during the recession, the opulence observatory market has regained a maturement rate of 7% after 2010. The intense competition in spite of appearance the industry and increasing usage of mobile phones for timekeeping generate transformed consumers preferences for watches. The lay market of the sumptuousness watch marke t consists of crocked masculines with loftyer reproduction and active lifestyle.They perceive soaringlife wristwatches as a piece of wiliness that represent their identity and socioeconomic status. The competitor analysis depicts that in the sumptuousness watch market, although Rolex has established its reput adapted flesh as the market leader, it has non achieved effective marketing strategies and not adapted to consumers needs and desires. In contrast, zee has responded to changes in consumers preferences and Breitling has evolved its core stain image to capture more than than market sh atomic number 18.Our short term recomm closedownations for Rolex revolve around addressing the current, cognize consumer shift to automatic watches, as surface as lay outing realigning their marketing to be out front facing with thetowards the 35-44 age course of study of a decade ago, just to the 35-44 category of today. This involves pushing their current Daytona line as well as purpose a fresh new scrape ambassador such as Orlando Bloom. In the long term, Rolex needs to connect to the younger consumer fragment and fix their current image of organism a dated or grandfatherly watch.They in addition need to react faster to market trim downs and leverage their position as the industry leader to set trends instead of remaining passive in the market. We recommend they start a Rolex membership club and to start hosting sole(prenominal) events rearing the tight young male crowd to build their future customer base. Intro This report analyzes the luxury wristwatch instalment of the jewelry industry in the U. S. , specifically the stag positioning of Rolex as comp ard to the their competitors ezed and Breitling.In fresh years Rolex has not kept pace with other companies in the luxury watch industry in terms of trends, image and ultimately market dower. zeds market sh atomic number 18 has been trending upwards worldwide (World Watch Report, 2012) a nd Breitling in grumpy has just finished a co- stationing campaign that positioned them in closer competition with Rolex in the U. S. and change magnitude market sh atomic number 18 by an impressive 8% (World Watch Report, 2012).By analyzing the jewelry industry, fool segment, tell competition, and the strengths and weaknesses in Rolexs corporation and fire notice, this report provides recommendations for Rolex that will help to reposition the brand to recapture market share in the U. S. luxury wristwatch market. fabrication Most jewelry sold in the U. S. is imported (Jewelry retail. 2011), and the luxury wristwatch segment is dominated by Swiss watchmakers. The Swatch Group, owners of zed, are the largest and only public Swiss watch company.They compete alongside a multitude of strong private companies. The market leaders in this luxury category are Rolex, Omega and Cartier and combine for a (global) market share of 41% (World Watch Report, 2012). The performance of the je welry industry, comprised of diamond jewelry and receptive diamonds (45%), watches (13%), gold jewelry (10%), and colored gemstone jewelry (8%), is strongly check to the performance of the economy (INSEAD report, footnote jewelry industry beta = 1. 8). Jewelry gross revenue are also high schoolly seasonal, with the majority of sales incident the the fourth quarter leading up to Christmas (Jewelry Retail. 2011),). The 2008 recession and subsequent lack of consumer confidence led to an almost 14% sales decline in the industry from 2008-2010. This in turn tinted the dispersion channels of many foreign watch brands in the U. S. , as many of the smaller jewellery boutique watch specialists they relied on went out of business.As the watch brands themselves survived the recession, mainly with surging sales in China, they ease up started to groom payoff of their relative strength by opening their own brand specific stores in the United States. Having assumed the position of both interlocutor and retailer, they will have more image control and higher margins on their own products. In 2011, the economy improved and affluent consumers of luxury jewelry regained their confidence and once again began spending their money. This increase in inquire has since tapered off in 2012, but growth is still approximate to continue (Exhibit 1).The luxury wristwatch segment of the jewelry industry is intercommunicate to grow at a rate of 7% per year (Watches in the US, 2012), which is the higher than the general wristwatch industry growth of 4% (Watches in the US, 2012)) and once again, slightly higher than the jewelry industry just growth of 6% (Jewlerry in the US, 2012). Competition within the industry is the primary device demandr of innovation and change. As the industry is extremely mature and the products lack a patentable attribute that sens define them, brands mainly compete on design, quality, and brand image.Furthermore, mobile phones with clock features, wh ich have saturated 96% of the American market, have reduced the timekeeping importance of the wristwatch. Thus consumers are shifting towards purchasing watches strictly as luxury items or to make a fashion statement. Ultimately, luxury watchmakers must(prenominal) handle their brands with care, or risk losing to a more concordant competitor. Target Segment With many similarities between luxury watch brands, target market selection is paramount. In addition, brands must choose a market segment that they can grow with. Though 50% of all affluent consumers in the U.S. are aged 35-44 and 45-54, from a brand equity attitude it would not make sense to start marketing to just the sure-enough(a) segment because this is the stage where the brand should already have a race with the consumer (Affluent Consumer, 2009) Therefore, by primarily targeting the 35-44 year old demographic, luxury watch brands are able to establish awareness and recognition that can build to a race that will l ast with that consumer as they age. Additionally, by selecting a male demographic, watchmakers gain access to the majority of the affluent population.Thus, the common target segment between Rolex, Omega and Breitling are affluent males age 35-44 with an above average income and a high socio-economic status. This segment is worth $316. 25 million or approximately 13. 75% of the luxury watch market (Affluent Consumer, 2009). For the complete partition of this segment value, refer to Exhibit 2. The approximate income of this affluent target segment is $75,000 or greater, and can be correlated to the education attained and line of business held by a majority of this segment (Affluent Consumer, 2009).Prevalent occupations take on managers, architects/engineers/social scientists, and sales representatives, requiring at minimum a college level education (Watch and Clocks, 2006). As luxury watches carry monetary value tags of $1000 or more, a sizable recompense is a critical characteris tic of this target segment as larger salaries account more disposable income for luxury goods (Watch and Clocks, 2006). Interests of this target segment include active lifestyles in refined athletics such as golf, tennis, yachting, equestrianism as well as exploration (http//www. rolex. om/) This target segment is highly implicated with status and is driven mostly by fashion and linkup with a luxury brand. In fact, 53% of this segment considers designer labels as be a luxury purchase (PPT). This not only illustrates this segments savvy awareness of luxury products, but also illustrates the likeliness of these consumers desiring symbols of wealth. correspond to WWD, the needs, wants and desires of men purchasing luxury watches are becoming increasingly cerebrate on technicality and functionality of the timepiece, in addition to its specific brand.The in vogue(predicate) consumer trend focusing solely on designer labels seems to be at the end of its lifecycle. The marketing by luxury watch brands has resulted in more educated customers today who know that a designer brand name does not necessarily mean a quality watch. This segment is in the dish out of shifting into the connoisseur category, as the customer perception of a fashionable watch is shifting towards qualities such as artistry and craftsmanship, having handmade mechanical movements, and having a classic or time little design. Men in this target segment want to be seen as collectors of watches.They justify high price purchases as seeking a safe haven in high-quality watches as an investment in precious metals that appreciate in value without delay(Diderich, 2011), rather than a squander of money. This segment also flocks luxury watches as a representation of their identity needs in striving for high self-esteem. As one luxury watch dealer commented you can drive a Ferrari, but you cant drive it into a instrument panel meeting(Spitznagel, 2012) This drives these consumers to reach the re sponse and ultimately a long stand relationship stage of the brand equity pyramid for their luxury brand of choice.In considering the buying decision process, this segment recognizes status and high self-esteem as needs satisfied through purchasing luxury timepieces. Following this recognition, the knowledge search process commences. As credibility and expertise had the greatest impact on respondent purchase intention(Gautschi,2005), consumers in this segment seek professional advice from sales associates at retail end-points in order to evaluate alternatives. Following the purchase decision, availability of epair services for example, is also valued as consistent high-quality service throughout the long-standing relationship with the brand would exceed expectations and but strengthen and foster positive post-purchase behaviors and feelings. Competitive Analysis Although there are at least 40 global brands in the luxury watch segment, the largest and most impressive competitors, with the largest American market shares, are Swiss. Three direct competitors in the Swiss luxury watch market are Rolex, Omega and Breitling.Due to the similar pricing of these three brands, the consumer in the target segment must often distinguish and select one of these competitors. Rolex U. S. A. , Inc. Rolex has positioned itself as the exclusive luxury watch brand for those with a high socioeconomic status that offers a classic and prestigious watch which validates their hard work and accomplishments. Rolex is the best known luxury watch brand and holds the largest share of the US market at 29. 3% (FOOTNOTE THIS CALC).This is a result of their reputation as the first wristwatch to be certified with Class A precision (Liebeskind,2004) and because they have historically limited their yearly production despite high demand. To maintain consent between the target segment and the messages of Rolexs advertisements, 75% of their brand ambassadors are 35 years of age or older (Gautschi , 2005). These endorsements gift individuals who have achieved success as a result of hard work and dedication. The attributes of their ambassadors are willfulness, determination, self-control and the ability to excel beyond average performance.This resonates with the reality and desires of the consumers who view a Rolex wristwatch as the prize something one gets as substantiation for their accomplishments. As it has been shown that 60-70% of individuals who regularly follow golf are also those able to afford a luxury watch (Gautschi, 2005), Rolex has built strong associations with the grainy of golf, sponsoring players, such as Tiger Woods, and tour events. Furthermore, the association with golf ambassadors portray success and determination in the context of a gentlemans refined sport.Rolex is rated as the most desirable brand and has spent $47 million on advertising to maintain this standing (Thompson, 2012) . Despite fashioning the largest advertising expenditure in the indus try, Rolexs market share growth rate in America has declined from 5% in 2010-2011 to 2% in 2011-2012 (World Watch Report, 2012). This is compared to consistent growth from Omega and an explosive emergence in the U. S. market by Breitling. Although Rolex has not targeted a disparate age group, a new wave of 35-44 year olds have come into focus.With needs furthest disparate from that of the former group, Rolex has done little to address these new needs, wants and desires. Omega Omega has positioned itself as a sophisticated luxury watch brand foc apply on reliability and craftsmanship that offers those with a high socioeconomic status a trendy, modern and technically superior watch. As of 2011, Omega holds 14. 6% of the U. S luxury watch market-share and attempts to be seen as a more fashionable and more modern brand than that of Rolex (World Watch Report, 2012). The companys marketing is heavily focused on associations with other well known brands, people and organizations.Althoug h they target much the same audience as Rolex, Omega differentiates themselves through their brand image. The company emphasizes the dependability of their watches through the association of the brand with the NASA space program, and as the longest standing official timer of the Olympic Games. Both of those organizations require precision and reliability of the highest standard, while being seen as trustworthy by these organizations resonates with Omegas consumers. Recently, the brand has responded to changes in consumer preferences by emphasizing the technicality and sophistication of their watches as well.Association with NASA has also been secernate in this regard, and their brand has enjoyed a significant competitive advantage through an endorsement by Neil Armstrong as being the first watch used on the moon. Furthermore, horologist George Daniel, inventor of the co-axial escapement, a revolutionary watch mechanism, became even another brand ambassador and further differentia ted Omega from its competitors in terms of technicality and sophistication. Omega also strives to target a different psychographic than Rolex. The majority of Omegas ambassadors are younger males, and their key attributes extend suaveness, sophistication and hedonism.For example, the Omega has a long-standing association with the James Bond enterprise, as both Pierce Brosnan and Daniel Craig have been ambassadors for the brand. Further differentiation can be illustrated in looking and the various advertisements Omega produces compared to those of Rolex and Breitling. For example, while both companies have produced athletic advertisements, Rolex emphasizes the difficulty and eventual achievement, while Omega illustrates the pleasure derived of particular undertakings (Exhibit 3). BreitlingBreitling has positioned itself as a luxury timekeeping instrument brand for those with a high socioeconomic status and offers professional chronographs focusing on precision and high performance t hat dare men to live like navigators, aviators, and adventurers. Breitling commands 10% of the U. S. luxury watch market in 2011, ranked fourth behind Rolex, Omega and Cartier. What is remarkable about Breitling is that they have only recently moved into this position, having increased their share of consumer interest by 8% from 2010 to 2011 (World Watch Report, 2011).This increase can largely be credited to significant advertising spending in 2010. Second only to Rolex for spending, the campaign worked to build brand awareness, and was coordinated with the introduction of Breitlings first branded boutique. (Media scan, & http//search. proquest. com/docview/820311288). Broadly, Breitlings core brand emphasizes professionalism with their media image and product design. Originally intended as a brand for zephyr instruments on private and commercial planes, the association to technicality is driven home in their slogan Instruments for professionals (http//www. reitling. com). As pro fessionals typically use nothing less than the best tools to do their jobs, Breitlings watches are almost inextricably associated with masterful craftsmanship. This is predominantly reflected in the product design of their flagship models, which are significantly different from the flagship models by Rolex and Omega (Exhibit 4). Breitlings most notable ambassador is fraud John Travolta, who is well known for his private hobby of owning and flying planes (travolta. com).He is a familiar household name, and so helps consumers to relate to the brand, as well as maintaining consistent brand associations with the concept of melody. Although Breitling has dominated the ceding back market of affluent males whose interests and/or aspirations encompass aviation and aircraft, Breitling has expanded its brand beyond this niche category and into the larger and more general exclusive luxury segment. more(prenominal) recently, Breitling has begun to evolve its core brand image of strictly in strumental aviation timepieces to navigational watches capable of multiple functions.Specifically, Breitling has begun to position themselves within disciplines such as sailing, space exploration, underwater diving and most recently, motorsports (luxury watches overview). Most notably, they are partnered with ultra-premium car manufacturer Bentley Motors through the co-branded Breitling for Bentley Motors product line, which has been the most visible shift in Breitlings marketing in the last 10 years (Exhibit 5). This captured the prestigiousness and exclusivity portrayed by Bentley, transferring these aspects into a luxurious and fashionable timepiece, while maintaining Breitling amplification (Exhibit 6).Breitlings rapid growth in market share in just a single year can be largely credited to two factors. First, changes in market trends and perceptual shifts of consumers desiring watches of a more technical nature (refer to target segment analysis) have given Breitling an advanta ge over competitors who are continuing to simply rely on their brand name to drive recognition and ultimately sales. As consumers become more educated, they begin to see the value of a well made, functional and mingled wristwatch rather than one simply bearing a well known name.This market shift is to Breitlings advantage, as their value trace has always been offering intricate and technical watches. Secondly, Breitling has not been passive in their brand promotion, having increased their exposure through advertising expenditures that improved brand equity. It is Breitlings consistency that helps consumers to not only become aware of the brand, but go through the steps of building their own unique relationship with it as well. These two factors have resulted in the 8% growth of Breitling in the luxury watch segment, causing the company to advance upon its competitors Rolex and Omega.