marketing BRAND MANAGEMENT
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brand_focus_8.docxBRAND FOCUS 8.0
Rolex Brand Audit
BACKGROUND
History
Rolex was founded in 1905 by a German named Hans Wilsdorf and his brother-in-law, William Davis, as a watch-making com- pany, Wilsdorf & Davis, with headquarters in London, England. Wilsdorf, a self-proclaimed perfectionist, set out to improve the mainstream pocket watch right from the start. By 1908, he had created a timepiece that kept accurate time but was small enough to be worn on the wrist. That same year, Wilsdorf trademarked the name “Rolex” because he thought it sounded like the noise a watch made when it was wound. Rolex was also easy to pronounce in many different languages.
In 1912, Rolex moved its headquarters to Geneva, Switzerland, and started working on improving the reliability of its watches. Back then, dust and moisture could enter the watch case and cause damage to the movement or internal mechanism of the watch. As a result, Wilsdorf invented a screw crown and waterproof casebook mechanism that revolutionized the watch industry. In 1914, the Rolex wristwatch obtained the first Kew “A” certificate after passing the world’s toughest timing test, which included testing the watch at extreme temperature levels.
Twelve years later, Wilsdorf developed and patented the now famous Oyster waterproof case and screw crown. This mechanism became the first true protection against water, dust, and dirt. To generate publicity for the watch, jewelry stores displayed fish tanks in their windows with the Oyster watch
completely submerged in it. The Oyster was put to the test on October 7, 1927, when Mercedes Gleitze swam the English Channel wearing one. She emerged 15 hours later with the watch functioning perfectly, much to the amazement of the media and public. Gleitze became the first of a long list of “am- bassadors” that Rolex has used to promote its wristwatches.
Over the years, Rolex has pushed innovation in watches to new levels. In 1931, the firm introduced the Perpetual self- winding rotor mechanism, eliminating the need to wind a watch. In 1945, the company invented the first watch to dis- play a number date at the 3 o’clock position and named it the Datejust. In 1953, Rolex launched the Submariner—the first diving watch that was water-resistant and pressure-resistant to 100 meters. The sporty watch appeared in various James Bond movies in the 1950s and became an instant symbol of prestige and durability.
For decades, Swiss-made watches owned the middle and high-end markets, remaining virtually unrivaled until the in- vention of the quartz watch in 1969. Quartz watches kept more accurate time, were less expensive to make, and quickly dominated the middle market. Within 10 years, quartz watches made up approximately half of all watch sales worldwide.28 Joe Thompson, editor of Modern Jeweler, a U.S. trade publication, explained, “By 1980, people thought the mechanical watch was dead.”29
Rolex proved the experts wrong. The company would not give in to the quartz watch rage. In order to survive, how- ever, Rolex was forced to move into the high-end market exclusively—leaving the middle to the quartz people—and cre- ate a strategy to defend and build its position there.
Private Ownership
Rolex is a privately owned company and has been controlled by only three people in its 100-year history. Before Wilsdorf died, he set up the Hans Wilsdorf Foundation, ensuring that some of the company’s income would go to charity and that control of the company lay with the foundation.30 This move was a criti- cal step toward the long-term success of Rolex as a high-end brand. Over the years, many luxury brands have been forced to affiliate with conglomerates in order to compete, but by staying an independent entity, Rolex has remained focused on its core business. André Heiniger, managing chairman of Rolex through the 1980s, explained, “Rolex’s strategy is oriented to marketing, maintaining quality, and staying out of fields where we are not prepared to compete effectively.”
Brand Portfolio
Rolex includes three family brands of wristwatches, called “col- lections”; each has a subset of brands (see Figure 8-7).
· The Professional Collection targets specific athletic and ad- venturer user groups through its features and imagery. The Oyster Professional Collection includes seven sub-brands.
· The Cellini Collection focuses on formal occasions through its elegant designs, and encompasses seven sub-brands. These watches incorporate fashion and style features like colored leather bands and an extensive use of diamonds. In addition to the three collections, Rolex owns a sepa- rate “fighter” brand called Tudor, developed in 1946 to stave off competition from mid-range watches such as Tag Heuer, Citizen, and Rado. Tudor has its own range of family brands, or collections, namely Prince, Princess, Monarch, and Sport, each of which encompasses a number of sub-brands. Tudor watches are sold at own-brand specialty stores and through the network of exclusive Rolex dealers. Although they are no longer for sale in the United States, there are many outlets in Europe and Asia. Tudor targets younger consumers and offers watches at a lower price range. The brand is distinctly separate, and the Rolex name does not appear on Tudor watches.
· BRAND EXPLORATORY
· Consumer Knowledge
· Rolex has successfully leveraged its history and tradition of ex- cellence along with innovation to become the most powerful and recognized watchmaker in the world. Some positive con- sumer brand associations for Rolex might be “sophisticated,” “prestigious,” “exclusive,” “powerful,” “elegant,” “high qual- ity.” Some negative brand associations that some consum- ers may link to the brand, however, could include “flashy” or “snobby.” Figure 8-9 displays a hypothetical Rolex mental map.
· In one report by the Luxury Institute research group in New York, consumers had positive attitudes in terms of purchase in- tent toward Rolex. Wealthy people said they were more likely to buy a Rolex than any other brand for their next watch. The Rolex brand was far more recognizable (84 percent knew it) than Bulgari (39 percent) and even Cartier (63 percent), although sev- eral rivals outranked Rolex for perceived quality and exclusivity.40
· A 2008 Mintel survey on the watch industry revealed that “women are still likely to view watches as an accessory, with many buyers choosing their watch based on looks alone. How- ever, at the top end of the luxury market there is a growing number of women who are interested in mechanical watches. The study also found that women are increasingly choosing an- drogynous or unisex watches.”41
· Many older, affluent people place a high value on own- ing a Rolex, whether new or collectible. In 2011, a Rolex sold for $1 million for the first time. The watch—an oversized stainless-steel split-second chronograph wristwatch manufac- tured in 1942—was purchased at Christie’s Geneva auction for $1,163,340, an all-time high price paid for any Rolex.42
· While the brand and product line seem to resonant well with older, wealthy individuals, Rolex struggles somewhat to connect with younger consumers. In a NPD Group poll, 36 per- cent of people under the age of 25 didn’t wear a watch.43 Another study by Piper Jaffray revealed that 59 percent of teen- agers said they never wear a watch and 82 percent said they didn’t plan to buy one in the next six months.
· Brand Resonance Pyramid
· The Rolex brand resonance model pyramid (see Chapter 3) is equally strong on the left-hand and right-hand sides. There is great synergy between the two sides of the pyramid; the
· FIGURE 8-9
· Rolex Mental Map
· functional and emotional benefits Rolex strives to deliver are in harmony with consumers’ imagery and feelings about the brand. The pyramid is also strong from bottom to top, enjoying the high- est brand awareness of any luxury brand as well as high repeat purchase rates and high customer loyalty. Rolex has successfully focused on both the superior product attributes and the imagery associated with owning and wearing a Rolex. Figure 8-10 high- lights some key aspects of the Rolex brand resonance pyramid.
· Competitive Analysis
· Rolex has many competitors in the $26.5 billion watch industry; however, only a few brands compete in the very high-end mar- ket.44 Through its pricing and distribution strategies, Rolex has positioned itself as a high-end luxury watch brand. On the lower end of the spectrum it competes with companies such as TAG Heuer and OMEGA, and on the high end with brands such as Patek Philippe, maker of the world’s most expensive wristwatch.
