Marketing of Rolex
Sadly orphaned by the age of 12, he continued on with a full education at a leading boarding school in Switzerland and after leaving secured his first job as an apprentice in a large firm of pearl importers. However, it was due to friendship, struck while at school, that would see Mr.. Wilsdorf enter the world of watches.
His friend turned to him one day and said: “When we’re finished with all this school business, you’d better come and join us. We export watches all over the world” So it was that Hans Wilsdorf, at an age of 19, started work as an English correspondent and clerk with the firm of Messrs. Cuno Korten in La Chaux-de-Fonds, Switzerland. His friend earlier comment had been no idle boast, as this firm was a very large exporter of watches with a turnover of nearly Frs1m a year. It was in this position that Mr.. Wilsdorf interest in watches was undoubtedly sparked.
As he commented: “… it provided an excellent opportunity to study the watch making industry closely and examine every type of watch produced both in Switzerland and abroad” The Move to London: By 1903 Mr.. Wilsdorf had settled in London working for another watch making firm. After gaining experience from this and his previous employment and growing in self confidence he set about to established his own firm. With financial help from his brother-in-law, Alfred Davis, the company known as ‘Wilsdorf and Davis’ was founded.
The firm did not initially produce wristwatches because wristwatches were not thought masculine by the public and also the technical difficulties that many watch makers believed existed in trying to make this type of timepiece. Such problems as the difficulty of producing a movement small enough to be housed in a case to be worn on the wrist and the likely hood of moisture and dust entering this case and thereby ruining movement were cited. However, unlike other producers of wristwatches, this was not to deter Mr. Wilsdorf. The first stumbling block was surmounted with the acquaintance of Hermann Aegler.
While working in La Chaux-de-Fonds Mr. Wilsdorf had come to hear of this gentlemen and his ability to produce rough movements that would be small and cheap enough to be used in the production of wristwatches. In 1905, Mr. Wilsdorf, full of conviction of the possibilities of the wrist watch, placed an order worth several hundred thousand French Francs for these movements, an order which at this time was the largest ever booked. The second difficulty in producing this type of watch, a case impenetrable to moisture and dust, was not to be achieved for another twenty years.
But, in the meantime, one of the major events in Rolex history occurred. What’s in a Name? Although the firm was very successful being known as Wilsdorf and Davis, Mr. Wilsdorf sought to establish a trade name that would identify the company and the products that it made. Therefore, on 2nd July 1908 the now famous name of ‘Rolex’ was coined. There are many speculations as to the precise meaning of this name, to which I will not add, but what is known is that this name was chosen for very sound reasons. Mr. Wilsdorf wanted a name that was.
Short, yet significant, not cumbersome on the dial (thus leaving room enough for the inscription of the English traders name) and above all a word easy enough to memorize, with a pleasant sound and have its pronunciation unchanged whatever European language it is spoken” The picture shows the patented Rolex vacuum device, used to test the waterproofness of an ‘Oyster’ case. The watch is immersed in the water and by expelling air a vacuum is created. If there are any leaks in the case, small air bubbles will be seen escaping and rising to the surface.
However, using the manufactures trade name on the dial of a watch was going against the accepted practice of the time. Historically it was the importers name and not the manufactures that was displayed on the watch dial. It was to take time, money and a major technical innovation to break this tradition. Initially Rolex were successful in having 1 watch in every 6 carrying their trade name, but by 1925 this had only increased to 3 in 6. Therefore tiring of the slow progress, Mr. Wilsdorf took an enlightened step. He spent ?
12,000 a year, a huge amount for that time, to publicize the Rolex name and heighten public awareness of the brand. This action helped to increase the watches supplied with the Rolex trade name to 5 in 6. Yet it was not until the invention of the ‘Oyster’ case that Rolex could dictate to the importers that every watch supplied by them was to carry the Rolex name. For many years Mr. Wilsdorf and his assistants had been working to produce: “… A watch case so tight that our movements will be permanently guaranteed against damage caused by dust, perspiration, water, heat and cold.
Only then will the perfect accuracy of the Rolex be secured. ” History: In 1905, Hans Wilsdorf18, a German citizen, establishes with his brother in law a firm called Wilsdorf & Davis and specializing in the distribution of watches. Then in 1908, he makes up A logo and a name that is easy to pronounce in every language and short enough to figure on the dial of the watch: it is the birth of Rolex. At that time, Swiss workshops produced mostly pocket watches as it was still difficult to manufacture small enough movements that could be used in a wristwatch.
Thanks to its perseverance, in 1910, Rolex obtains in Switzerland the first official chronometer certification ever awarded to a wristwatch. In 1927, Wilsdorf achieved, when he launched the Oyster, what could be called Rolex first big marketing coup. The use of testimonials, that is now a key success factor of the Rolex communication strategy, had already been used at that time with Mercedes Gleitze, one of the first women who swam across the English Channel. Wilsdorf had the idea to ask her to wear the Oyster, Rolex’s water-resistant wristwatch, while realizing this achievement.
After 14 hours and 15 minutes of immersion, her Oyster was still in perfect condition. The next morning, Wilsdorf reserved the first page of the Daily Mail and advertised the watch as being the “Wonder Watch that Defies the Elements”. This is the start of the famous Rolex testimonial advertisement campaign that continues to this day. Hans Wilsdorf was born on the 22nd of March 1881. Orphaned at the age of 12, he received an education at a leading boarding school in Switzerland.
Then, Rolex was continuously associated with some of the most extreme achievements; the companion of Sir Edmund Hillary and Tenzing Norgay when they became the first to summit Mt Everest in 1953 as well as the witness of the depth of the sea with Jacques Picard. This last unprecedented achievement was pretty amazing: the watch was attached to the outside of a submarine and went down to a depth of 3048 meter. At least two times deeper that the deepest rated sports watch made today can descend to advertisement in the Daily Mail advertisement mentioning the Everest and
the Picard achievement. In 1960, at his death, Hans Wilsdorf, an heirless widow, created a private trust run by a board of director to insure the company would never be sold. Two years later the board of director appointed 41 years old Andre Heiniger, who worked under Wilsdorf during 12 years, as Rolex new managing director. Then, the quartz boom of the late 1960s and early 1970s nearly killed the mechanical watch industry. After the storm calm down, more than half of Geneva watch manufacturers have gone bankruptcy.
Fortunately, Rolex survive the crisis staying faithful to its conviction: quartz model did not represent more than 7% of the production and now this figure dropped to 2%. In 1992, Patrick Heiniger is succeeding its father and became the third managing director in nearly one century. In 1992, Patrick Heiniger is succeeding its father and became the third managing director in nearly one century. The “Oyster” Finally, in 1926, this objective was achieved with the now patented ‘Oyster’ case, so known, as it was as impenetrable as an oyster!
Although this invention was initially thought of with skepticism and took some notable events to break this thought, it is now a standard to which nearly all sports watches are measured. The last major innovation that was to create the basis for the Sports watch that we know this day took place 5 years later, in 1931. Up to this date, watches required winding by the wearer to give them the energy needed to function. The aim was to do away with this dependence and seek a system that would require no intervention by the wearer.
The idea was not a new one, but it was Rolex that finally perfected and patented the perpetual self winding mechanism. It operates by a semicircular rotor weight that pivots around its axis and winds the watch at the slightest movement of the wrist. Now the scene was set. Rolex were now producing a watch small enough to be worn on the wrist, impervious to outside elements and required no winding from the wearer; the Rolex Oyster Perpetual. Company Profile: Rolex has a very particular status; it belongs to the Wilsdorf trust and therefore cannot be sold. Thanks to this organization, Rolex has always had the ability to privilege a long term development strategy.
They do not have to deal with the pressure of shareholders who require short term benefits in order to show a profit from their investments through the redistribution of dividends. On the contrary, Rolex has the opportunity to reinvest the benefits in the company to improve distribution and after-sale services and to increase research and development. What is more, they are not pressured to follow the general trends of the industry in order to content shareholders. As an example, Rolex is the only big player that is not following a multibrand strategy.
Another particularity of Rolex, partially linked to the previous one, is that the company is as hermetic as its main model, the Oyster. In fact, due to its organization, the company does not have to publish financial information and top executives are usually very discrete and do not give interviews. As a result the company is extremely secretive and all the numbers presented hereafter are only estimations. Rolex employs about 6000 persons worldwide … of whom 3300 employees are based in Geneva; setting Rolex as one of the main employers and tax payers of Geneva.
They are selling around 750000 watches each year for an estimated turnover included between 2. 5 and 3 billions CHF. As Annex III: : Top 20 watch brands (sales) shows, Rolex is the first brand of the luxury watch industry in term of sales (factory price). Moreover, Rolex possesses 22 subsidiaries companies spread all over the world. It is not all, Rolex also distinct itself from the others because, as we already mentioned, it is one of the last group that is not pursuing a multi brand portfolio. In fact, it has a long tradition of “one brand and one product” that has always, nearly been respected.
The only exception to this rule is the “Tudor” brand, Rolex’s second brand, positioned as a “cheaper” Rolex. Rumor has it that the brand is performing really well but it is difficult to confirm this statement due to the lack of information concerning Tudor. But even though Rolex possesses a second brand it cannot be compared to the frenetic takeovers that modified the watch making world in 1991. In the same idea, Rolex has not, so far, diversified its name away in the production of parallel products. Finally, Rolex is not only an empire of watches.
The holding also invested in real estate and financial assets (banks –Union of Bank of Switzerland-, chemicals and insurances). Chapter 2: Marketing Strategy of Rolex The Power Of The Rolex Marketing Strategy Over The Years…. When you think about luxury watches, the first brand that always comes to mind is Rolex. While there are a few other luxury watch brands that are actually priced at a level or two higher than Rolex watches with have tighter production outputs, if you ask anyone they would probably prefer a Rolex watch.
Such is the success behind the marketing of Rolex as a brand. There are so many key selling points that drive the sales figures of Rolex watches that it is no wonder they are recognized the world over. And while there are other more exclusive brands, hardly any average consumers will recognize their names. Now we see how effective Rolex has been at marketing itself, with even non-targeted consumers who are less privileged having reason to covet these watches. There are a few key points that the marketing team focuses on.
The fact that the brand is associated with words like history, tradition, sophistication, and a few others is no accident. These are all things people look for in a luxury watch, and in all cases Rolex delivers. They have long been an innovator in technology that is still seen in today’s modern timepieces. Although Rolex was beaten to introducing the first self-winding watch, what they did was innovate on the 1923 design, resulting in the standard self-winding mechanism we see on today’s watches.
In 1960, explorer Jacques Piccard strapped a Rolex Sea Dweller Deep-Sea Special to the side of his submersible, which then went down 10,916 feet into the depths of the Marianas Trench, which of course, Rolex wasn’t shy telling the world about when the watch still told perfect time. And of course, there is also the fact that every single watch they make can be considered a status symbol for its exclusivity and limited production outputs. Probably one of the main advantages behind Rolex’s marketing strategy is that owning such a watch is a sort of achievable luxury, while other luxury brands can’t seem to associate themselves with that idea.
Instead of only targeting consumers within their targeted market who are able to afford a Rolex, or any other exclusive brand for that matter, they have also created a brand awareness that goes beyond and reaches to the masses. Of course, this doesn’t mean in any way that Rolex will eventually become more affordable to the average person, even if they are only slightly less privileged than your typical Rolex buyer. Actually, what it does is make sure the consumer thinks about Rolex first, more than anything else, once they come into the financial means to afford this kind of watch.
It is easy to grasp the concept. So if a law firm decides to promote one of the junior associates to the position of senior associate, the first gift that person is likely to get himself is a Rolex. Current Positioning In The Marketplace: Conservatism and tradition are the credos of Rolex strategy: same product and same communication in the last decades. Its unique communication strategy and differentiation enabled the company to gain a sustainable competitive advantage over the years. The brand embodied achievement and keep nurturing this myth thanks to successful celebrity endorsement.
Rolex also maintains a part of mystery around its brand in order to cultivate the legend. Communication strategy The communication strategy of Rolex is very elaborated and specific. The key points of their strategy rely on the use of sponsorship and particularly celebrity endorsement and the emphasis on being a mysterious brand. Celebrity endorsement: The use of testimonials has always played a key role in Rolex communication strategy. Since the first advertisement in 1927 showing a testimonial, Mercedes Gleitze, and the watch, Rolex has always been faithful to this concept.
Even today since a decade now the star tennis ace Roger Federer has been the brand ambassador of Rolex Watches. He being a winner and a person who loves making all big records in the game, being a symbol of Rolex people bend more towards the brand. Of course the strategy has evolved but the association of a successful personality to the brand is still the heart of the communication. In the first years, the ambassador task was to use the watch in extreme conditions and prove that the product was robust and worked under exceptional conditions. The ambassador was a guarantee of the quality and reliability of the product.
Rolex tries to exalt individual success choosing strong personalities, representing their time and their discipline. From dance choreographer Maurice Bejart, ice skater Peggy Fleming, photographer Helmut Newton, opera singer Placido Domingo and golf player Arnold Palmer to the explorer Sir Edmond Hillary, Rolex has always chosen the best people of their category to represent them. The idea is not to transfer the fame from a super star (pop singer, actor, top model, etc) to the brand quickly but to choose people who have achieved something and that are or will be a part of history, so that Rolex can join them writing it.
Chapter 3: Various Dimensions of Marketing Salient Dimensions: Depth of brand awareness Rolex is the most valuable watch brand in the world and the fifth most valuable luxury brand (Behind Louis Vuitton, Hermes, Gucci, and Chanel). You do not have to be a watch enthusiast to know about Rolex watches. If you have ever seen a gangster movie or even if you are just a normal movie watcher, you would have heard of them. Other than probably Timex and Swiss watches, Rolex is the most well known watch to man and one of the most expensive.
Breadth of brand awareness Rolex manufactures the best product in the luxury segment. Whenever we want to buy luxurious watch we go for Rolex. Though Rolex is priced higher, it can afford to keep it high and inaccessible to most people, just to keep the exclusivity and appeal in place. Performance Dimension Primary characteristics & supplementary features Product reliability, durability, and serviceability Rolex watched are made from highest quality materials, whether they are metal or precious stones.
It is a waterproof watch and a very reliable one; besides, the Oyster model was the first waterproof watch model in the world, though the technology is continually changing and more extreme conditions can be faced by nowadays models. The special locking device that screws the back onto the oyster case ensures that the watch is tight and protected against the environment. The knob used to wind the watch is conceived so that the seal around it revents water and dust from entering it. Service effectiveness, efficiency, and empathy. Rolex watches have exception customer service.
Rolex’s in-house movement has always gotten top marks for being accurate and hardy, and nothing has changed there. Each model is a certified Chronometer. I’ve been told by a number of watch repair people that they prefer working on Rolex movements for being simple and easy to get parts for. Rolex does a good job at making a world-class mass produced movement and watch. Style and design Rolex watch is the embodiment of style and class, magnificent quality and guaranteed enjoyment to the customer for years to come. Price Rolex manufactures the best product in the luxury segment.
The kind of time and resources that are involved in making a Rolex watch significantly increase the pricing, but as it is a luxury brand, Rolex can afford to keep it high and inaccessible to most people, just to keep the exclusivity and appeal in place. Imagery Dimensions User profiles : Rolex’s image campaign emphasizes male consumers to a greater extend. Rolex watch style are largely aimed at male with its larger and bulky dial. It shows crown as its symbol signifying king. Purchase & usage situations Buying online from a trusted source can be the best way to purchase a pre-owned Rolex.
Stores online such as www. bestoftime. com acquire pre-owned timepieces from collectors and other jewelry stores, and are able to lower prices far below retail jewelry stores. History, heritage, & experiences. Judgment Dimensions Brand quality – As many people know, Rolex watches usually maintain their value or even add more value as the years go by. This partially contributes to the Rolex brand to maintain its status as the most powerful watch brand in this planet. In many cases, it is true that some people, when buying a Rolex watch, they ?
Brand credibility Among the company’s innovations are the first waterproof watch case, the first wristwatch with a date on the dial, the first watch to show two time zones at once, and the first watchmakers to earn chronometer certification for a wristwatch. Resistant to fashion trend Rolex holds for almost a century a unique symbol of prestige. Brand consideration. It is most likely when somebody want to buy of gift luxury watch, Rolex will be the recommended brand. Brand superiority:
Points of Parity Points of differentiation Durable Innovation in Design, features (time zone) AccurateCentury unique symbol of prestige AttractiveDistribution History and heritage Feelings Dimensions Wearing a Rolex watch gives feeling of success and high social status. A sense of social approval and self-respect. Resonance Dimensions Behavioral loyalty – Rolex watches may hold their value greatly with their initial purchase and actually in some cases increase in value over time, as the watches become collector’s items and are passed on through generations.
Attitudinal attachment of Wearing a Rolex. Sense of community I identify this brand and associate it with my favorite film stars, athletes such as Roger Federer, Sachin Tendulkar, Hrithik Roshan, Amitabh Bachchan, Amir Khan. Chapter 4: SWOT Analysis of Rolex SWOT Analysis of Rolex Strengths:- Financial Rolex has huge financial capabilities. Many signs portray that their financial capacities are pretty good. For example Rolex inaugurated, by the end of 2004 a new 42000 m2 industrial complex worth 1 billion Swiss francs and that is entirely self-financed.
As it has already been mentioned, many takeovers took place and has always been self financed. What is more, the takeover of Rolex Bienne might enable them to increase profitability and by the way their financial capacities. Brand Awareness The figure shows that Rolex has an awareness of 97%. As it has already been mentioned several times, the Rolex brand value is very high and the name is known all over the world. Ambassadors and event The quality and diversity of Role’s ambassadors is difficult to imitate for its competitors.
Rolex is not only sponsoring events in order to have their name and logo placed on the event’s location, it also uses these events on paper advertisement in order to increase their association with some precise field or sports (sailing, golf, etc). Weaknesses:- Prisoner of its strategy The strategy has been so well defined that it would be difficult for the company to change radically its strategy or be more innovative. It might be difficult to explain a new strategy to the actual customer without confusing them. The disadvantage is that it could leave some unattainable segments on the market that Rolex will not be able to win.
For example, if the fashion goes to square watches, Rolex might be penalized because even if they decide to product square watches, everybody expects a Rolex to be round. In this case, it would be difficult to get a market share of “square watches” market. Furthermore, Rolex„s name is very strongly associated with luxury watches; some people often say “They are not making watches, they are making Rolex”. Difficulty to control the brand It seems that sometimes, Rolex is losing the control of its brand identity. Rolex is a brand that is loved and cherished.
The problem arises when communication is maybe misunderstood or distorted and if the company does not try to rectify the alteration to its brand identity with a calibrated communication. In this case, a company might slowly lose its brand while the customer is taking control. It seems that Rolex has not always been fully in control: its name is often associated with “showing off” and “arrogant”. The customers who like Rolex for its refinement, simplicity and traditional design might be confused to see the last hot rapper wearing the same watch than him. Threats:- Counterfeiting: a threat to equity
Counterfeiting Rolex watches has become a sophisticated industry with sales exceeding $1. 8 billion per year. A counterfeit damage the company’s brand equity and presents a huge risk to the brand. Youth does not recognize the brand Rolex does not appeal to the youth. It is unlikely that young customer’s attitude towards luxury goods will evolve in the same manner as their parents?. Opportunities:- There are vast opportunities available to Rolex. Given below are a few recommendations as to how Rolex can exploit these opportunities and further leverage its brand equity.
Diversification Rolex brand name is extremely valuable. It seems that it could be diversified in related fields like jewelry. The takeover of Gay Freres gives Rolex the capabilities to produce jewelry. The only problem they might encounter is that their name is too strongly associated with watch. In this case they could create a new brand in order to avoid dilution of the actual brand, but this would mean that they abandon all the advantages linked to the brand capital. Strengthen position in emerging markets
Rolex can research the potential opportunities in the emerging Chinese and Asian markets and exploit them. Building brand community The creation of a brand community can increase the loyalty to a brand and by the same way customer retention. According to McAlexander, “a brand community from a customer experiential perspective is a fabric of relationships in which the customer is situated. Crucial relationships include those between the customer and the brand, between the customer and the firm, between the customer and the product in use, and among fellow customers.
Famous example of successful brand community building includes Ferrari and Harley Davidson. Associate youth with Rolex Rolex purposely ignoring the fashion trends with the result that the younger generation does not recognize the brand. What is more, this strong reliance on tradition can also be perceived as a lack of idea and innovation. Rolex should research the current tastes of the many younger customers who are already in the market for Rolex watches. Its marketers should consider tailoring campaigns and watch designs for younger customers. Connect with Female Customers
Rolex has always had more of a “male” identity and sells a majority of their watches to men. Its image campaigns also emphasize males to a greater extent. Research indicates that women make majority of the jewelry and watch purchases. Mechanical watches are usually designed for male with the idea that “women do not understand technology anyway” and that quartz watch with a nice design were more appropriate for them. This tendency is slowly changing and women also want to buy technological timepieces. The opportunity of increasing their presence on the female segment should be exploited.
It can do so by: Employing more female ambassadors and presenting them in its advertising and communication Joint Venture with De Beers and target females with an exclusive watch. More sponsorship of female attended sporting events, like ice skating, tennis, etc. Consider raising its profile with female sports enthusiasts and fans. Introduce family of female watches only. In addition to the above recommendations, Rolex can further leverage its secondary associations in the following ways: Corporate Social Responsibility Rolex can raise awareness on environmental issues and sustainable development.
This can be achieved by creating awareness how the steel used by Rolex is specially manipulated to reduce wastages, special alloys which can reduce the use of natural resources and at the same time provide the consumer with the same quality and experience that they expect out of Rolex products. Joint Venture to Support a Cause An example of a cause can be fighting against preventable blindness. A special campaign can be launched and a unique watch can be designed to celebrate the partnership.
The proceeds of the watch would be donated to the cause. Such an organization can deliver eye care to some of the world’s remote and less developed countries. Rolex iPhone App This application would put the entire world of Rolex at the fingertips of the customers. They can browse collections; locate Rolex retailers, stay informed about news and events around the world and much more. Rolex Maritime Quarterly Magazine Rolex can launch a magazine featuring articles, photographs, news, events, updates, collections, etc. It can also dedicate editions to special events, for example Wimbledon or even James Bond. Rolex Maritime Quarterly on Ipad This can be made available at no cost to users.
The digital edition of the magazine will present the full content of the print edition in addition to various interactive features. Rolex should specially develop an easily navigable custom-designed interface to create a totally new experience for its readers. Attacking the counterfeit industry Counterfeiting damages the company’s brand equity and presents a huge risk to the brand. Take for example the case of Evance, a Japanese distributor, hired Brad Pitt for 5 millions us dollars in order to endorse the Rolex brand in Japan. Apparently, Evance does not even have a license to sell Rolex watches.
Therefore, they buy watches abroad on the grey market or even send their employees abroad in order to buy watches and resell them in their store. It shows the magnitude of the recognition of Rolex in Japan. Rolex needs to dedicate extensive resources to fight the illegal use of its brand name and also consider building an exclusive online store, or an exclusive distribution site from which all official e-retailers must link. Chapter 5: What makes Rolex Tick??? What makes Rolex Tick?? The market for luxury goods is booming – locally and globally. In the U. S. alone, 2.2 million individuals have liquid portfolios of over $1 million.
And tens of millions of less well-heeled consumers routinely splurge on high-end products. But the market relies more on psychology than sheer consumer utility. In order for luxury goods makers to crack the market and maintain a hold on finicky consumers, they have to convince people to pay far more for something – a pair of shoes, a bottle of wine, or a watch – than they need to. After all, why would otherwise economically rational people spend thousands on a watch when one that costs only $10 tells time just as accurately? High Performance:
The company that would eventually become Rolex was founded in London in 1905 by a 24-year old Bavarian who was orphaned at age 12. Hans Wilsdorf founded the company with his brother-in-law, William Davis, and coined the brand name Rolex. He felt the name sounded like the noise a watch made when it was being wound. It was also easily pronounceable in different languages and short enough to fit on the face of his watches. Wilsdorf ultimately moved his company to Geneva in 1919. The period between the two World Wars was a difficult one for Swiss watchmakers, as they had to contend with successive economic and political crises.
But in this period, Rolex began to build its reputation for performance. In 1914, a Rolex watch was awarded a Class A precision certificate from the British Kew Observatory, an honor previously reserved exclusively for marine chronometers. In 1926, Wilsdorf developed and patented the first truly water-resistant watch, the Oyster. The watch was strapped to the wrist of Mercedes Gleitze as she made her pioneering 15-hour swim across the English Channel. Rolex capitalized on the event by using it in advertisements, and by building displays in jewelers’ windows that featured a watch submerged in a small tank of water.
By World War II, the Rolex brand had gained such prestige that British Royal Air Force pilots bought them to replace the inferior watches that were issued to them. Pilots captured as prisoners of war frequently had their Rolexes confiscated, but when pilots wrote to the company describing their experiences, Rolex replaced the watches free of charge. American servicemen learned of Rolex while stationed in Europe, thus helping to open the lucrative U. S. market to the company. In the post-war era, as the company set its sights on expansion, Rolex continued to build its high-performance reputation.
In 1945, Rolex introduced the Date just model, the first chronometer with an automatic date changing mechanism. Eight years later came the Submariner, which was both water-resistant and pressure-resistant to a depth of 330 feet. And Rolex continued to find even more dramatic opportunities to demonstrate its unique performance characteristics. Sir Edmund Hillary wore a Rolex when he climbed Mt. Everest in 1953. The watch became the key instrument to measure time at sporting events. Continuity amid Change :
Before his death in 1960, Hans Wilsdorf placed ownership of Rolex in the hands of the Wilsdorf Foundation, which would assure the company’s independence. In 1962, Rolex’s board appointed 41-year-old Andre Heiniger, who had worked for Wilsdorf for 12 years, as managing director. In 1992, Patrick Heiniger, a 32-year-old lawyer, who had served the company for six years as marketing director, succeeded his father. Andre stayed on as chairman until 1997, when he became chairman emeritus. In Rolex history, there have been only three managing directors. In the post-war years, watches became both cheaper and more reliable.
In 1950, a Norwegian born engineer, Joakim Lehmkuhl devised a more dependable inexpensive watch by making significant improvements to pin-lever technology. It was marketed under the brand name Timex. In 1968, prototype quartz crystal watches were introduced. These time pieces were extremely accurate and eventually would be inexpensive to produce. The new quartz technology allowed for both analog and digital readouts, and opened the door to new functions like calculators. By the end of the 1970s, about half of the watches sold worldwide were based on quartz technology, and Hong Kong had emerged as a major center for watch production.
Rolex was reluctant to join the quartz wave, but did come out with a limited number of models. In spite of threatening new technologies, a proliferation of low-cost producers in the Far East, and economic ups and downs, most of the luxury brands survived in one way or another. But Rolex thrived in the face of disruptive technologies. In an era when accuracy and dependability were no longer the exclusive province of premium products, Rolex developed a series of attitudes toward defending and building its position in the high-end market. Even as watches became mass-produced commodities, Rolex continued to emphasize craftsmanship and quality.
It used materials such as gold, platinum, and jewels. And it continually improved its movements and added new functions to its watches: the ability to tell the date, the day of the week, and the time in different time zones. As a result of this greater complexity, Rolex’s watches were made with a greater sense of old-fashioned craft. An inexpensive quartz watch produced with a great deal of automation has between 50 and 100 parts; a Rolex Oyster chronometer has 220 parts. Maintaining Demand : Rolex also maintained its brand image by limiting production, even as demand rose.
For luxury goods, scarcity in the marketplace can influence value, spur demand, and contribute to collectability and long-term appreciation. And a company that can pitch its product as an investment can frequently charge a premium. Finely-made luxury watches tend to appreciate in value over time. The Complete Price Guide to Watches (2004 edition) lists the value of a 1936 Patek Philippe Calatrava in 18-karat gold at $700,000. Rolex watches have held their value well, too. Price guides for collectors indicate that almost all older Rolex models are valued above their initial selling price.
Most collectible Rolexes sell in a range of between $1,500 and $20,000. Rolex has also taken pains to ensure that its watches are sold only in appropriate venues. The crystal prism that indicates a store is an “Official Rolex Dealer” is highly prized. Rolex looks for dealers with high-end images, relatively large stores, and attractive locations that can provide outstanding service – such as Tourneau. At one point, Rolex got into a dispute with Tiffany because the venerable retailer was imprinting its name on the Rolex watches it was selling.
When Tiffany refused to stop, Rolex dropped Tiffany as an official jeweler. In the 1990s, as part of an effort to control sales of their goods in the so-called gray market, Rolex cancelled agreements with about 100 dealers. Rolex has also focused on maintaining the purity of its brand. Many luxury-goods makers have used their original product as a springboard. Cartier and Mont Blanc, for example, have bet that the equity of their brand built on a single product will pull sales for a variety of luxury goods.
And some brands have licensed their brand to other manufacturers, thus ceding some control over the products appearing under their name. But Rolex makes only watches, and it has never licensed its name. What’s more, many watch brands have responded to competition by merging into conglomerates over the last few decades. LVMH Moet Hennessy Louis Vuitton, the world’s largest luxury goods company, with annual sales of more than $15 billion, includes venerable watch brands such as Tag Heuer, Zenith, and Dior Watches.
Compagnie Financiere Richemont, the world’s third largest luxury goods maker, owns watch brands such as Cartier, Baume & Mercier, Piaget, Jaeger-LeCoultre, and Officine Panerai. Well-known brands Movado, Patek Philippe, and Breitling remain essentially independent. By placing control of the company in the hands of a foundation, Wilsdorf guaranteed that Rolex would have the means to withstand the pressure to affiliate with a larger company that has a range of interests and markets. Rolex also maintains its brand purity by combating counterfeiters.
Today, many copies are so good that only an expert can tell the difference. And while connoisseurs will certainly note the difference between a $5,000 Rolex and a $25 knock-off, the existence of large number of counterfeits inevitably affects demand at some level. Rolex likely spends more money policing fakes than any other brand. In the future Rolex will no doubt face stiffer competition as innovative entrepreneurs search for new ways to attack its markets. And the large luxury goods conglomerates enjoy certain advantages over an independent firm like Rolex.
They have restructured operations to take advantage of size and significantly reduce cost, enjoy synergies in advertising and marketing, and are more willing to engage in open discussions in trade associations to learn from the competition. The conglomerates may also be more willing to source from Asia, where labor costs are considerably lower than Switzerland. Mystery Rolex is certainly the most mysterious brand in the watch-making world, not only due to its particular status and the lack of financial information but also thanks to some key points of its communication strategy.
First, Rolex tells great stories that feed the brand identity and build inspiration. The celebrity/event advertisements always start with a catching sentence followed by a short text presenting the achievement of the celebrity/event: “You have 100 days to travel 3924 km on foot. By the way you are in Antarctica. Rolex is not boring its customer with the same perpetual old story. In fact, they can use so many celebrities and events that the reader feels like each story is always a new one. Even the story concerning an ambassador usually evolves with its career and therefore is renewed.
As an example, every time that an ambassador wins a competition, Rolex publishes a “congratulation” advertisement that describes the success of the celebrity at this occasion. Rolex does not rely only on great stories but also on great pictures. Rolex strategy results in an impressive commitment or “loyalty beyond reason” from customers waiting up to five years for an Oyster Daytona. The Oyster Daytona, probably the most easily recognized and highly sought after watch, is one of the most wanted by Rolex enthusiasts all over the world. This is not only the watch of collectors but also the watch of speculators.
Conclusion I would like to conclude with what seems to be the future of Rolex. The future seems very bright for Rolex. They have the opportunity to expand geographically as well as on the women segment. Rolex has a strong symbolic consumption value. If we put this in light with the very strong emergence of India, Russia and especially China as major purchasing entity, it becomes clear that the brand has still an important margin of development available especially knowing that symbolic consumption is widely spread in emerging markets.
Women also represent a segment in which Rolex could expand. The aging of population could also represent an increased market size. In fact, these people have an increased purchasing power and know the brand best. What is more, the notoriety of the brand could enable it to diversify in other fields (jewelry, etc). The ambassador campaign is also a valuable asset, which cannot be copied by competitors and therefore can protect Rolex from its competitors. Regarding its internal organization, Rolex seems to be very stable: top management, product design and communication strategy do not change much. The backward vertical integration might enable them to increase their margin and will enable the company to be fully independent in term of components supply.