Product
Elegance, timelessness, and untraditional are just a few words that can be found on the front page of Rolex’s main website that are used to describe their product. The “Rolex Way,” as they like to describe it, is Rolex’s own form of creating their well-known image of luxury through finely crafted watches – different than any other and especially seen as an art rather than just any simple watch-crafting. Rolex’s main and only product will forever be watches. This is no mystery to anyone as they make it very clear to all, – “the way we make watches, the only thing we will ever make” (“About Rolex,” 2014).
This is a main reason as to why Rolex has such a strong retention of its customers. Their product is one that is very simple but also one that is constantly being made to a better and higher quality than the one before. The thrill of purchasing a Rolex isn’t in having a new watch, rather having a Rolex watch.
One that has been sculpted, painted, and designed with such delicacy and precision that carries its own stigma of luxury and riches. The start of Rolex began in 1905 by Londoner Hans Wilsdorf who at the age of 24 wanted to create a more precise wristwatch that was not only elegant but also reliable. Rolex’s first quest in defining their product came from concentrating on the quality movements of the watch. By 1910, Rolex had created a new name for itself, one that no other watchmaker would hold – being the first wristwatch in the world to have chronometric precision. From here on out, the name Rolex was now synonymous with not only reliability, but precision as well. Rolex soon after in 1926 came to hold a significant title to their name for creating the first waterproof watch.
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In proving this, the Rolex Oyster (the name of the waterproof watch) crossed the English Channel by English swimmer Mercedes Gletize. At the end of the 10 hour swim the watch remained in perfect working condition thus creating world-wide news and adding to the company’s value. Then after in 1931, Rolex created the world’s first self-winding mechanism which today holds as the heart of every automatic watch. This accomplishment in itself solidified the true art of the Rolex watch and the innovation qualities the company holds. After these few of the many accomplishments of Rolex, it was clear to all that this watch would be alongside the men and women who would themselves be creating world-renowned accomplishments.
From being the “perfect partner on the land or in the sea” by reaching the summits of Mount Everest and depths of 10,916 meters into the Mariana Trench, the Rolex watch would be an item of true reliance, accountability, and performance (“1905-1910,” 2014).
These handcrafted timepieces continue to increase the name of Rolex by currently hold a brand value of $7.7 Billion and also consistently appearing on the top 100 list of most value brands in the world (“Rolex,” 2014).
Place
Being a product that holds such high prestige and that is worth so much, the placement as to where and how these items are sold is extremely important for the company. Rolex watches cannot be found at any convenient jewelry shop. The company carefully selects each jeweler who can sell its watches. In order to continue the image of owning a unique specialty watch, the places at which these watches can be purchased must also hold similar standards. Both in the U.S. and internationally, Rolex watches are sold in stores that will assure the buyer that they are getting an authentic Rolex watch. For this reason, any Rolex watch cannot be found in department stores or online. Ones that are found online are usually being directly sold by the previous owner or have the high probability of being fake. A main difference between Rolex and other watch brand companies is that Rolex does not seek to provide purchasing convenience to its customers.
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Having this limited availability of places to go out and purchase an authentic Rolex watch makes their watches seem more rare, unique, and appealing. By doing this Rolex emphasizes their brand and status to all. Currently, Rolex sells its products to over 100 different countries keeping a progressive movement towards a large global trend. In the state of Missouri, only seven jewelers are certified to sell their watches in six different cities. In the city of St. Louis, there is only one certified jeweler. Just from this statistic alone, one can see the scarcity in locations available to purchase one of their watches.
Rolex’s main reasoning for having only few selective retailers is to assure that the buyers will receive the best service from those who have the necessary skills and special equipment to maintain and take care of their watches (“Authorized Rolex Dealers,” 2014).
Due to this high quality assurance and the care that goes into handcrafting each watch, Rolex is selling a symbol of status and power alongside its watches. As stated on some of Rolex’s retailers webpages, “Owning a Rolex watch is an accomplishment that shows success and achievement” (“Official…Simon Jewelers,” 2014).
These innovative and beautifully crafted timepieces hold a status all to its own. In owning a Rolex watch with all of its quality, innovation, and design comes preparing to pay for all of the attributes and features of it. The price of the watches can most definitely reflect the status and quality behind them.
Price
A Rolex watch is commonly known to be one of the most expensive watches available today. The prices of the individual watches vary greatly depending on the age, condition, material, and model. However, a new Rolex on the cheaper side commonly sells for nearly $2000, while many will cost the consumer over $20,000. Rolex’s highest priced watch to ever be produced from a Rolex factory is the GMT Ice reference 116769TBR, with a retail price of $485,350. Many companies would seek to gain more customers by striving to keep their product’s retail price down at a reasonable level, while still making the best profit they can. However, Rolex operates from a different perspective than most. They set their prices with little regard to their competitor’s prices such as Cartier or Audemars Piquet, but rather price their watches according to their own judgment (“Marketing Mix,” 2013).
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It is the fact that they hold such a strong and solidified position and image within the market that allows them to operate with this mindset. Many other watchmakers price their products in accordance to the standard set by Rolex. Rolex has built their entire brand around watches of extremely high quality that signify high-status and premium luxury. Because of these attributes, the main pricing strategy that Rolex uses is a strategy commonly referred to as “skimming.” Under this approach to product pricing, Rolex sets the prices of their watches extremely high and ignores any typical price “anchors” or “bumps” of their competitors (O’Farrell, 2014).
They do this to send the message to the consumer that a Rolex watch is of a completely different and higher class than the watches of competing companies.
Because their product is a luxury product, with very few, if any, similar competing products, they can get away with charging the much higher prices. This strategy is yet another way that Rolex seeks to set itself apart from its competition. It is interesting to note that Rolex prices have increased dramatically over time. Rolex watches, while decades ago were priced more as high-end timekeeping tools, are now priced more as premier luxury items. The prices of Rolex watches over time have been driven up due to inflation, as well as certain quality and design improvements and innovations. But the value of a Rolex watch has increased not only in dollar amounts, but in the proportion of the average household’s income as well. Consider the graph below. http://www.ablogtowatch.com/rolex-prices-past-60-years-revealing-analysis/ According to the article, “How and Why Rolex Prices Have Increased Over Time,” written by David Bredan on July 20, 2014 that can be found on the online editorial A Blog To Watch, there exists a large difference between the valuation of a Rolex decades ago, and the valuation of a Rolex today.
This graph analyzes one particular model of a Rolex watch, the Submariner. The black line demonstrates how the price of a Rolex Submariner has increased from the year 1957, to the year 2014. Starting at a retail price of $150 in the year 1957, the price of a Rolex Submariner has risen to a price of $7,500 by the year 2014. Now in comparison, the red line on the above graph demonstrates how much the price would have increased since 1957 had it only changed for monetary inflation. Again, the price started in 1957 at $150, which when adjusted for inflation and converted to 2014 dollars, that same watch would cost $1,265 in the year of 2014. This data suggests that while a Submariner is priced at $7,500 today, if it was valued the same amount as it was in 1957, and then it would be priced at $1,265 dollars today.
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One can see how the increase in value that has taken place over the past few decades has affected Rolex’s prices, even despite the obvious increase in inflation. Bredan’s article also notes that in 1957, the average yearly income in the United States was $13,591 (when converted into 2012 dollars after adjusting for inflation), and that the price of the Submariner watch would have been $1,225 (in 2012 dollars).
This means that using the entire average yearly household income in 1957, a person could have purchased eleven of the Rolex Submariner watches. However, in 2012 when the “average per capita income in the United States was $42,693 and the same model cost $7,500” (Bredan, 2014), a person spending an entire average yearly income could only afford less than six Rolex Submariner watches. This information tells us that the Rolex watch has not only increased in the numerical dollar amount of its price, but has also became less affordable and thus has increased its perceived value as well.
Promotion
The watches Rolex offers are high-end and luxurious, but many are also designed for use for outdoor adventuring such as deep-sea diving, boat racing, aviation, or mountain climbing. Rolex chooses to present these watches with a sports centered approach. Some of their more popular models are presented with names such as “Sea Dweller,” “Yacht-Master,” or “Daytona.” The company does not tend to use many of the more conventional forms of advertising such as national television, or radio commercials (“Marketing Mix,” 2013).
These forms of advertising lend themselves to a product that is as common as their particular advertising mediums are, which is not something that Rolex seeks to promote. Not to mention, advertisements that seek to reach as many consumers as possible would be wasting resources reaching many consumers that are not wealthy enough to be apart of the Rolex target market. Instead, Rolex uses a more selective marketing approach designed to target a very specific kind of consumer, typically wealthy men who are interested in both luxury and status.
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Rolex advertisements can be found in certain men’s magazines such as Maxim and GQ, as well as on select billboards that can be found in certain more affluent locations. Rolex will also strategically advertise at certain sporting events and sponsor certain concerts where they expect there to be mass exposure to their particular target market (Plopan, 2013).
The use of cultural icons such as tennis player Roger Federer, and golfer Tiger Woods, to promote Rolex via certain advertisements and commercials has been another way Rolex has chosen to market their brand. The company looks for icons whose reputation and characteristics go hand-in-hand with how they want their own brand to be perceived (Epstein, 2014).
More recently, Rolex has decided to make greater use of social media in order to promote the brand.
The company had made the conscious decision to stay away from social media in the earlier years of social media’s impactful growth. They believed that with the already heavily solidified brand position that they already held, waiting awhile to enter the social media realm would not be detrimental, but in some ways helpful. The company began its jump into social media with a YouTube launch in 2012 (Epstein, 2014).
They then went on to introduce their first official Facebook page.
Both of these platforms are used to publish only very specific, and well thought-out content, designed to give consumers an even better understanding of the brand (Epstein, 2014).
The company prides itself on using the consumer’s comments that are posted on the social media platforms in order to gain better insight into what the consumers want. This kind of company-to-consumer communication allows for Rolex to hear feedback from the consumers that make up its target market, an essential element to the company’s success.
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Target Market
The target market for Rolex has remained relatively consistent since its inception over one hundred years ago. Rolex is a sign of a luxury lifestyle, so the Rolex watch is marketed to those wealthy consumers who are interested in displaying their fortune and success. Typically, this consumer is the adult male between age twenty-five and forty, but this does not mean that Rolex does not offer watches for women as well. However, traditionally, the focus has been on the wealthy male businessman or celebrity. Rolex has always been focused on being available for wealthy clientele, and shows no sign of straying from tradition in a new projected market in the future. Through years of building the brand famous for the luxury watch, they have reached a point where the watch essentially sells itself. They are present in the market that they want to be in, and do not need to spend time trying to market to those outside of their narrowly defined consumer type.
Fifty percent of this market can be found in the United States, Hong Kong, China, Singapore, and France. Rolex is so successful because instead of marketing to everyone who may not be interested in their luxury watch, they market to a small group and do it very well. Rolex is able to maintain brand loyalty from these customers because of their dedication to high quality. The key to Rolex’s success is their brand positioning, or reason to buy its brand rather than others. Although Rolex is a in the luxury watch market, the brand strategy is the reputation-elegance, class, and an upscale lifestyle.
As stated as part of their history on their website, “Rolex watches have long been associated with those who have, over time, guided the destiny of the world (Rolex 1).” Rolex stands for the highest quality at a high price. As described on its website, the Rolex Way is: “A way of doing things unlike any other. The way we make watches, the only thing we will ever make. ‘Precise’ is too imprecise for our attention to detail. ‘Tradition’ is too conventional of the innovation we undertake. We sculpt, paint and explore. But sculptors, painters and explorers we are not. There is no word for what we do. There is only a way. The Rolex Way (Rolex 1).”
Brand Positioning
Rolex delivers on this brand strategy by designing, developing, and producing its products in-house to ensure the highest quality. Rolex watches are extensively tested for shock resistance, waterproofness, depth testing, and age testing. After being tested, these watches are given the “red seal” to officially certify them all as chronometers, which only six percent of all watches produced in Switzerland qualify as. In addition to ensuring the quality of its products before selling them, Rolex also has a very strict selection of retail partners that are allowed to trade its products only to companies with a certain image. In addition, these companies are expected to provide clients with various special services such as engraving one’s name on the back of his new Rolex. One of the final ways Rolex maintains its status and quality is that it does not allow the sale of its watches online. This helps to prevent counterfeiting which can cause it to lose its sterling reputation.
Over time, Rolex has been able to maintain consistency within its brand and with its delivery of the utmost quality because of its capitalization on its strengths and opportunities for growth and strategies to overcome weaknesses and threats to the Rolex brand. What would a product be if there were no marketing strategies behind it? It would be a product with a purpose that was being wasted. Anyone can create a successful product but the way a product is sold is just as important as the product itself. There are three emotions that will ruin a product’s chance at investment success and those are: hope, greed and fear. Rolex is a strong company that works away from those emotions especially by implementing a solid marketing strategy. Marketing used to be much easier, with only a couple of TV channels, radio stations and magazines. Nowadays marketing would not be as easy or successful without the help of technology. There are four steps to marketing with technology these days.
Those steps include primarily clarifying the business objectives of the market, understanding the market a company is entering, keeping on their toes to update strategies, and lastly creating a compelling campaign consumers cannot resist (Satell, 2013).
Clarifying the business objectives of Rolex is the starting point. Rolex attracts somewhat of a younger target market between the ages of twenty-five and forty-year-old males. Therefore, implementing the market strategy by first educating the younger market on the value that the wristwatches contain is vital. A better understanding of any product for that matter makes the product more of a need, rather than a want. A Rolex watch can typically be seen worn by someone of a higher income than most, this is because a Rolex tends to be sold at a higher price than the average watch. Since this is the case, showing that a Rolex is a fashionable alternative to using a cell phone to tell time is a key strategy that should be imposed.
This fashionable alternative is also known worldwide as a status symbol and is attractive to the public eye, which proves that Rolex understands the market it is entering. Rolex constantly comes out with different styles and prices so that it can be purchased by more than just the target market. Rolex segments a couple of their watches due to the fashion trends that are popular at the specific point in time. The Rolex DayDate is more for youth, Rolex DateJust is more for professionals and the Rolex Cellini is geared towards elders (Plopan, 2014).
Lastly, these four steps, including creating a compelling campaign, can be met by advertising the product with traditional media such as magazine advertisements, billboards, ads at sporting events or even music concerts.
Creating a social media or visual strategy that will encourage users to interact with the brand as well as extend the message to a larger audience is a tactic Rolex has been staying on top. As previously mentioned, Rolex kick started its media campaign with a YouTube launch in 2012; shortly afterward their first official Facebook page was created. Rolex quickly starting using ethos as a key marketing strategy and currently attracts the attention of many with the endorsement from many popular celebrities such as Roger Federer and David Doubilet. Rolex can now be found on twitter, ads on websites and pinterest! “If time is money, should I go buy a Rolex?”
SWOT Analysis
Rolex’s brand strategy plays a very integral part in the SWOT analysis of the company. While all SWOT analyses are unique, I would argue that Rolex has the most interesting and unique analysis of any company. Since we have already seen Rolex’s brand strategy it is pretty easy to see why this is the case. With a luxury brand, the company must have a way to separate itself from the rest of the competition. Strengths, weaknesses, opportunities and threats are all necessary to review when looking at a company’s brand. First the strengths will be analyzed. Rolex is not only sold in the United States. It is an international company with an international presence. The company as a whole has products in nearly every country. It is rated by Forbes as the 72nd most recognizable brand, and the only watchmaker in the top 100. This allows for the company to be extremely recognizable. In looking at the brand strategy we can see that the company puts a very large emphasis on quality.
When someone thinks quality watches, Rolex is certainly at the top of the list due to their global presence, brand recognition, and quality. Rolex has extremely high standards for their watches and will not compromise this for anything. The next important aspect to look at with Rolex is its weaknesses. Rolex’s weaknesses are very closely related to its strengths. Rolex is only a watchmaker. This makes puts them into a single market, rather than many markets. This also explains why they are not higher on Forbes most recognizable companies list. Rolex is satisfied making watches and only watches. They have said it before, and it will be said again that the company does not intend to go into any other markets. The other weakness is that watches are beginning to be replaced by phones.
People are using phones to tell time now rather than watches. With watches coming out that connect to phones, it can only be assumed that this will continue to have an impact on the way that Rolex moves forward. With these weaknesses come opportunities. Rolex’s opportunities are ways that the company can continue its strengths and continue to be a top international company. The first opportunity is appealing to the younger markets. With young people growing up around technology, this is only going to become more and more of an importance for Rolex. The new generations are going to be more and more tech savy and more and more interested in watches that can do more than just tell time. There will always be traditionalists, however the company should look to differentiate between phones and watches, and continue to be the luxury brand that they are today. Another opportunity for Rolex is on the other end of the spectrum and that is dealing with the ultra-rich. Rolex doesn’t have a line for the less wealthy, and similarly so they do not have a line for the ultra-rich.
One way the company could grow would be to create a line of watches for the ultra-rich. Rolex has been doing things the way that they have done them for years, the likelihood of something changing is very slim, but these would be a start. The last part of the SWOT analysis are things that Rolex should continue to monitor, their threats. The biggest threat is competition. With the market for luxury watches relatively small, it is necessary to monitor all competition and make sure that they stay on top of any competition that might arise. Since Rolex is such a highly regarded and expensive brand, they need to monitor counterfeits from cheap producers and make sure to separate themselves from the fake rolex watches. The final threat to Rolex is the economy and recessions. The first thing that people give up during times of financial hardships are things that are unnecessary or luxury, and with a watch falling in that category it makes Rolex vulnerable during a recession or other mass financial hardships.
Companies that have a high brand recognition similar to Rolex have more of an impact in the world than just their products. Rolex is no different. Rolex started a campaign in 2002 called Mentor and Protege Arts. Rolex Mentor and Protege Arts works to encourage artistic individuals. It pairs a well known mentor in the art field with a young protege to encourage growth and creativity in their artistic discipline. This allows for young people who would otherwise be discouraged to share their ideas, to formulate their ideas with professionals and work to improve themselves. Rolex also has awards they call The Rolex Awards which were created to recognize people who are creating solutions to the world’s problems.
This gives rolex the opportunity to both give and receive recognition for solutions to problems that many people face. Finally, Rolex has partnered with many organizations from sports, to schools to sponsor their events and be the official timekeeper for the organization. This allows for people to interact with Rolex employees as well as their products. As you can see Rolex has a rather diverse societal impact from awards and recognitions, to education and empowerment to interactions and relationships. Because of these impacts, we can more easily see why Rolex has, and most likely will continue to be the most prefered luxury watch company in the world.
Recommendations
Overall, Rolex continues to be an extremely successful company in which holds its stigma of luxury and high-quality value to its customers while still maintaining a high consumer retention rate. Most all Rolex customers are satisfied with the purchase, rather investment, of their product and remain extremely loyal to the company. With the care that consumers know is going into creating and caring for the product, the purchase of one of these timeless wristwatches creates an exceptional relationship with the company. While the company seems to be doing very well for itself, our group has come up with a couple possible recommendations for Rolex to keep its consumer base loyalty. One way Rolex can do this is by offering their products to more retailers rather than just one or two per major city. Although Rolex bases most of its sales off of this by making its products seem rare and almost unattainable, making them available to a couple more certified Rolex retailers could potentially allow them to gain more customers, thus increasing revenues.
We feel as if this is a rather easy and quick way to gain more customers and more sales for Rolex while still keeping those qualities of rare and unique. Another recommendation we have is to offer watches to become customizable by Rolex’s customers. In making as large of an investment to purchase a Rolex watch, most of these watches will be passed down generations. If Rolex made it possible to customize one’s watch by adding certain gems or engraving something along the back of the watch, we feel this would be an attractive addition to the Rolex brand and attract many new and current customers. This customization and personalization of watches could then create a more emotional attachment to the product thus keeping that customer loyalty and also increasing sales.
References
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