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Competitive Strategy In The Luxury Watchmaking Industry Marketing Essay

Need help? 0115 966 7955 T his report will analyse Rolex and its competitors, in particular f ocussing on

The importance of strategic marketing

Without doubt, marketing is the single most customer orientated department within an organisation. Without the customer there is no company. Marketing is the process carried out to identif y, this report analyses the current marketing situation

1.2 An industry analysis

T he Swiss luxury watch-making industry is a very lucrative market and the many barriers make it extremely dif f icult f or new entrants. Established companies such as Rolex maintain strong relationships with their distributors but are able to be very selective when it comes to choosing distributors to maintain the companys image and market position. Regarding substitutes products, no serious or close substitute threatens the industry even though counterf eits are, like f or the entire luxury industry, a problem.

Competitive strategy in the luxury watchmaking industry

Michael Porter uses the criteria of strategic advantage and strategic target to def ine three competitive strategies f or outperf orming rivals in the long-term.. Table 1 shows Porters three generic strategies: dif f erentiation, overall cost leadership and f ocus although a company may place emphasis on one strategy, they are nearly always inf luenced in some way by the others Table 1: Strategic Advantage Uniqueness Perceived by the customer Low cost position Industry wide DIFFERENT IAT ION OVERALL COST LEADERSHIP Strategic Target

Particular Segment Only FOCUS Table 3: T hree Generic Strategies, Michael Porter

2.0 The story so f ar situational analysis 2.1 The Company

Arguably one of the most f amous brands of all time, Rolex has a long history steeped in innovation and excellence, and a strong association to prestige, mystique and accomplishment in the minds of its customers. Established in 1905 by Hans Wilsdorf and his brother in law, the London based company - originally named Wilsdorf & Davis - specialised in watch distribution. In 1908, Wilsdorf decided to create a new name f or the company that was pronounceable in all languages and concise enough to display on the dial of its watches and the super-brand Rolex was born. T he companys headquarters relocated to Geneva, Switzerland in 1910 and remain a major contributor to the economic system today by employing more than 3300 employees. Ironically, the company is as hermetic as its renowned Oyster case. Wilsdorf an heireless widow at his death in 1960 lef t Rolex to the f amily Wilsdorf Trust so Rolex could never be sold and ensuring Rolex was able to stay true to Wilsdorf s values and long-term vision of excellence and prestige without interf erence f rom shareholders. T his unique position also means that Rolex does not publish f inancial or sales data and theref ore the f igures contained in the remainder of the report are estimations unless otherwise specif iced/ref erenced. Annual production of Rolex watches are estimated at 750,000 per year a key f eature of Rolexs strategy is to ensure that demand is always higher than supply. T he loyalty to the brand is also clearly evidenced by the 5-year waiting list f or its stainless steel Daytona model.

Competitors
T he brands main competitors are OMEGA, TAG Heuer and Breitling who compete in similar market segments f or watches which f orm f ollows f unction, Rolex remains the market leader with its competitive advantage of almost a century of sporting, innovative breakthroughs as described below. 2.1.1 Key achievements It can be argued that Rolexs innovative achievements are second to none and unmatched by any rival competing in the luxury segment: Among the company's innovations are: Unlike its competitors, Rolex is in a strong strategic position its f ounder Hans Wilsdorf ensured that the company can never be sold and it today belongs to the Wilsdorf trust. Rolex does not have to deal with the pressure of shareholders who require short term benef its in order to show a prof it f rom their investments through the

redistribution of dividends. On the contrary, Rolex has the opportunity to reinvest the benef its in the company to improve distribution and af ter-sale services and to increase research and development. What is more, they are not pressured to f ollow the general trends of the industry to please shareholders. To date, Rolex is the only luxury watch brand not f ollowing a multi-brand strategy. 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. T hey are selling around 750000 watches each year f or an estimated turnover included between 2.5 and 3 billions CHF. As Annex III: : Top 20 watch brands (sales) shows, Rolex is the f irst brand of the luxury watch industry in term of sales (f actory price). Moreover, Rolex possesses 22 subsidiaries companies spread all over the world

2.6 Product Of f ering

Rolex produces only round watches since more than 40 years. T he brand encompasses only two collections: the Oyster that represents around 140 models and 80% of the sales and the Cellini. T he design has always been very conservative and the only radical innovation was brought in 2000 with the launch of a colorf ul Oyster Daytona.

Current strategic approaches

Celebrity endorsement: Conservatism and tradition are the credos of Rolex strategy: same product and same communication in the last decades. Its unique communication strategy and dif f erentiation enabled the company to gain a sustainable competitive advantage over the years. T he brand embodied achievement and keep nurturing this myth thanks to successf ul celebrity endorsement. Rolex also maintains a part of mystery around its brand in order to cultivate the legend. Rolex has been considered a long time as a male watch; they are trying to get the woman to like it to. Another important theme of the strategy is the backward vertical integration in order to secure f uture supply and def initely loose dependence on competitor groups. Finally, emerging market represent also a priority due to its f oreseen potential. T he next sections are discussing these points. 2.9 Target Market Market segmentation 2.11 SWOT Analysis

3.0 A Broader Context - market analysis

3.1 Market Overview

3.2 Direct Competition 3.3 Indirect Competition 3.4 Market Analysis 3.5 Changing Market and Future Trends 3.6 Marketing Mix 3.7 Opportunity Exploration

4.0 Future Strategy - Proposal

4.1 Overall Aim 4.2 Objectives - Channel Strategy to achieve aim. 4.3 Market Analysis - Distributor Overview 4.4 Potential Stakeholders 4.5 Marketing Mix

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