'Luxury Watches\r'

'Marketing 48-Hour incubate: The je healthfulery Industry †Luxury Watches Section 2 †Group Number 7 Group Members: 250556161 250517768 250572192 250568255 250582064 executive Summary Rolex is authoritatively facing a trouble in their tarnish lay in the U. S. high life catch foodstuff. In the years following the 2008 recession, Rolex’s competitors Breitling and izzard gravel outpaced them in mart trade evolution. This report aims to analyze the reasons behind this decline and to issue a recommendation for Rolex to reaffirm position as the martplace loss leader.Our industry analysis shows that despite ache from the sales decline during the recession, the highlife read market  has regained a nurtureth rate of 7% afterward 2010. The intense competition deep down the industry and change magnitude usage of mobile ph anes for timekeeping stand transformed consumers’ preferences for picturees. The backside market of the highlife entranc e market consists of stiff viriles with high facts of life  and active lifestyle.They perceive extravagance wrist realizees as a piece of craftsmanship that spiel their identity and socioeconomic stance. The competitor analysis depicts that in the opulence surveil market, although Rolex has established its reputable characterisation as the market leader, it has non achieved effective trade strategies and non adapted to consumers’ require and desires. In contrast, omega has responded to changes in consumers’ preferences and Breitling has evolved its means check watch to acquire more market plow.Our short term recommendations for Rolex flap around addressing the topical, kn induce consumer rouse to mechanical watches, as tumesce as fixing realigning their market to be forward facing with thetowards the 35-44 age category of a decade ago, but to the 35-44 category of today. This involves pushing their current Daytona line as well as determina tion a fresh parvenu stag ambassador such as Orlando Bloom. In the long term, Rolex inevitably to connect to the younger consumer constituent and fix their current image of being a dated or grandfatherly watch.They as well as need to react faster to market trends and leverage their position as the industry leader to set trends instead of remaining passive in the market. We recommend they mother a Rolex membership ramble of magnitude and to start hosting exclusive events guideing the pixilated young male crowd to figure their future customer base. launching This report analyzes the highlife wrist watch fraction of the jewelry industry in the U. S. , specifically the gull positioning of Rolex as comp bed to the their competitors ezed and Breitling.In recent years Rolex has non kept pace with other companies in the opulence watch industry in terms of trends, image and ultimately market lot. izzard’s market sh ar has been trending upwards worldwide (World Wa tch Report, 2012) and Breitling in particular has just finished a co- soiling fight that positioned them in closer competition with Rolex in the U. S. and change magnitude market share by an impressive 8% (World Watch Report, 2012).By analyzing the jewelry industry, backside discussion section, direct competition, and the strengths and weaknesses in Rolex’s company and deformity, this report provides recommendations for Rolex that will avail to reposition the station to recapture market share in the U. S. opulence wristwatch market. Industry: around jewelry sold in the U. S. is imported (â€Å" jewelry Retail”. 2011), and the opulence wristwatch piece is henpecked by Swiss watchmakers. The Swatch Group, owners of ezed, are the largest and only normal Swiss watch company.They compete alongside a multitude of strong closed-door companies. The market jumper cable in this lavishness category are Rolex, Omega and Cartier and combine for a (global) market sh are of 41% (World Watch Report, 2012). The performance of the jewelry industry, comprised of diamond jewelry and loose diamonds (45%), watches (13%), gold jewelry (10%), and colored jewel jewelry (8%), is strongly tally to the performance of the de defyry (INSEAD report, footnote jewelry industry beta = 1. 8). Jewelry sales are also highly seasonal, with the legal age of sales happening the the fourth quarter leading up to Christmas (â€Å"Jewelry Retail”. 2011),). The 2008 recession and later(prenominal) lack of consumer confidence led to an al some 14% sales decline in the industry from 2008-2010. This in turn impacted the distribution channels of galore(postnominal) foreign watch fools in the U. S. , as numerous of the smaller jewellery boutique watch specialists they relied on went out of business.As the watch brands themselves survived the recession, mainly through surge sales in China, they have started to take reinforcement of their relative strength by openi ng their own brand specific stores in the United States. Having delusive the position of both wholesaler and retailer, they will have more image control and higher margins on their own products. In 2011, the economy improved and plenteous consumers of luxury jewelry regained their confidence and once once again began outlay their money. This increase in demand has since tapering off in 2012, but growth is quiet expected to continue (Exhibit 1).The luxury wristwatch fraction of the jewelry industry is projected to grow at a rate of 7% per year (Watches in the US, 2012), which is the higher than the popular wristwatch industry growth of 4% (Watches in the US, 2012)) and once again, slightly higher than the jewelry industry medium growth of 6% (Jewlerry in the US, 2012). Competition within the industry is the special amazer of innovation and change. As the industry is super mature and the products lack a patentable attribute that crumb define them, brands mainly compete on design, quality, and brand image. go onmore, mobile phones with clock features, which have saturated 96% of the American market, have reduced the timekeeping importance of the wristwatch. therefore consumers are shifting towards purchasing watches strictly as luxury items or to make a form statement. Ultimately, luxury watchmakers must(prenominal) handle their brands with care, or insecurity losing to a more consistent competitor. Target component: With many similarities between luxury watch brands, nates market selection is paramount. In addition, brands must conduct 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 right perspective it would not make sense to start marketing to just the older segment beca ingestion this is the coif where the brand should already have a kindred with the consumer (Affluent Consumer, 2009) Therefore, by primarily targeting the 35-44 year old demographic, luxury watch brands are able to establish cognizance and recognition that can build to a kinship that will pop off 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 come income and a high socio-economic status. This segment is worth $316. 25 billion or approximately 13. 75% of the luxury watch market (Affluent Consumer, 2009). For the complete breakdown of this segment comfort, 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 occupation held by a majority of this segment (Affluent Consumer, 2009).Prevalent occupations include managers, architects/engineers/social scientists, and sales representatives, requiring at minimum a college level education (Watch and Clocks, 2006). As luxu ry watches carry impairment tags of $ curtilage or more, a sizable salary is a critical characteristic 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 concerned with status and is dign generally by fashion and association with a luxury brand. In fact, 53% of this segment considers designer labels as defining a luxury get (PPT). This not only illustrates this segment’s savvy awareness of luxury products, but also illustrates the likeliness of these consumers desiring symbols of wealth. match to WWD, the take, lacks and desires of men purchasing luxury watches are fair increasingly focused on technicality and functionality of the timepiece, in addition to its specific brand.The â€Å"fashionable consum er” trend counsel 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 cognise that a designer brand name does not necessarily mean a quality watch. This segment is in the process of shifting into the connoisseur category, as the customer perception of a fashionable watch is shifting towards qualities such as artistry and craftsmanship, having overhand mechanical movements, and having a innocent or ever-living design. Men in this target segment want to be seen as collectors of watches.They justify high price purchases as â€Å"seeking a safe harbor in high-quality watches”; as an investment in laughable metals that â€Å"appreciate in value instantly”(Diderich, 2011), sort of than a squander of money. This segment also views luxury watches as a representation of their identity needs in striving for high self-esteem. As one luxury watch dealer commented: à ¢â‚¬Å" you can drive a Ferrari, but you can’t drive it into a board meeting”(Spitznagel, 2012) This drives these consumers to reach the ‘ answer’ and ultimately a long standing ‘ kinship’ 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 genial through purchasing luxury timepieces. Following this recognition, the culture search process commences. As â€Å"credibility and expertness had the greatest impact on respondent purchase intention”(Gautschi,2005), consumers in this segment seek lord advice from sales associates at retail end-points in order to evaluate alternatives. Following the purchase decision, availability of epair go for example, is also valued as consistent high-quality run throughout the long-standing relationship with the brand would exceed expectations and barely strengthen and foster positive p ost-purchase behaviors and feelings. Competitive compendium: Although there are at least 40 global brands in the luxury watch segment, the largest and close to 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 price 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 take up 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 offset printing wristwatch to be certified with Class A preciseness (Liebeskind,2004) and because they have historically limited th eir yearly production despite high demand. To maintain consistency between the target segment and the messages of Rolex’s advertisements, 75% of their brand ambassadors are 35 years of age or older (Gautschi, 2005). These ss pose 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 validation 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 game 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 gentleman’s â₠¬Å"refined” sport.Rolex is rated as the most desirable brand and has spent $47 million on announce to maintain this standing (Thompson, 2012) . despite making the largest advertising expenditure in the industry, Rolex’s 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 volatile emergence in the U. S. market by Breitling. Although Rolex has not targeted a different age group, a new wave of 35-44 year olds have come into focus.With needs far different from that of the former group, Rolex has done forgetful to address these new needs, wants and desires. Omega Omega has positioned itself as a sophisticated luxury watch brand focused on reliability and craftsmanship that offers those with a high socioeconomic status a trendy, sophisticated and technically superior watch. As of 2011, Omega holds 14. 6% of the U. S luxury watch market-share and attempt s to be seen as a more fashionable and more advance(a) brand than that of Rolex (World Watch Report, 2012). The company’s marketing is heavily focused on associations with other well known brands, people and organizations.Although they target much the said(prenominal) 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 functionary timekeeper of the Olympic Games. Both of those organizations require preciseness and reliability of the highest standard, while being seen as honest by these organizations resonates with Omega’s consumers. Recently, the brand has responded to changes in consumer preferences by emphasizing the technicality and ordinariness of their watches as well.Association with NASA has also been key in this regard, and their brand has enjoyed a significant competitive advantag e 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 yet another brand ambassador and further differentiated Omega from its competitors in terms of technicality and sophistication. Omega also strives to target a different psychographic than Rolex. The majority of Omega’s ambassadors are younger males, and their key attributes encompass suaveness, sophistication and hedonism.For example, the Omega has a long-standing association with the James draw enterprise, as both Pierce Brosnan and Daniel Craig have been ambassadors for the brand. Further differentiation can be illustrated in tone 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 that 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 of late moved into this position, having increased their share of consumer interest by 8% from 2010 to 2011 (World Watch Report, 2011).This increase can more often than not be ascribe to significant advertising spending in 2010. Second only to Rolex for spending, the campaign worked to build brand awareness, and was coordinated with the launch of Breitling’s first branded boutique. (Media scan, & http://search. proquest. com/docview/820311288). Broadly, Breitling’s core bra nd emphasizes professionalism with their media image and product design. Originally intended as a brand for airwave instruments on private and commercial planes, the association to technicality is driven cornerstone in their slogan: â€Å"Instruments for professionals” (http://www. reitling. com). As professionals typically use nothing less than the best tools to do their jobs, Breitling’s 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). Breitling’s most notable ambassador is actor 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 excogitation of aviation. Although Breitling has dominated the niche 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 recently, Breitling has begun to evolve its core brand image of strictly instrumental aviation timepieces to navigational watches capable of multiple functions.Specifically, Breitling has begun to position themselves within disciplines such as sailing, space exploration, underwater come down and most recently, motorsports (luxury watches overview). Most notably, they are partnered with ultra-premium car maker Bentley Motors through the co-branded ‘Breitling for Bentley Motors’ product line, which has been the most visible shift in Breitling’s marketing in the last 10 years (Exhibit 5). This captured the prestige and exclusivity portrayed by Bentley, transferring these aspects into a luxurious and fashionable timepiece, whil e maintaining Breitling expansion (Exhibit 6).Breitling’s rapid growth in market share in just a exclusive 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 advantage 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 intricate wristwatch rather than one simply bearing a well known name.This market shift is to Breitling’s advantage, as their value proposition has always been fling 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 Breitling’s consistency that helps consumers to not only become †Å"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.\r\n'