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Competitive Strategy In The Luxury Watchmaking IndustryMarketing EssayNeed help? 0115 966 7955

This report will analyse Rolex and itscompetitors, in particular f ocussing on

The importance of strategicmarketingWithout 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 analysisThe Swiss luxury watch-making industry is a very lucrative market and the many barriers make it extremelydif f icult f or new entrants. Established companies such as Rolex maintain strong relationships with theirdistributors but are able to be very selective when it comes to choosing distributors to maintain thecompanys image and market posit ion.

Regarding substitutes products, no serious or close substitute threatens the industry even thoughcounterf eits are, like f or the entire luxury industry, a problem.

Competitive strategy in the luxury watchmaking industryMichael Porter uses the criteria of strategic advantage and strategic target to def ine three competit ivestrategies 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 bythe others

Table 1:

Strategic Advantage

Uniqueness Perceived

by the customer

Low cost posit ion

Industry wide DIFFERENTIATION

OVERALL

COST LEADERSHIP

Strategic Target

Particular

Segment Only

FOCUS

Table 3: Three Generic Strategies, Michael Porter

2.0 The story so far situational analysis

2.1 The CompanyArguably one of the most f amous brands of all t ime, Rolex has a long history steeped in innovation andexcellence, and a strong association to prestige, mystique and accomplishment in the minds of itscustomers.

Established in 1905 by Hans Wilsdorf and his brother in law, the London based company - originally namedWilsdorf & Davis - specialised in watch distribution. In 1908, Wilsdorf decided to create a new name f or thecompany that was pronounceable in all languages and concise enough to display on the dial of its watches and the super-brand Rolex was born. The companys headquarters relocated to Geneva, Switzerland in1910 and remain a major contributor to the economic system today by employing more than 3300employees.

Ironically, the company is as hermetic as its renowned Oyster case. Wilsdorf an heireless widow at hisdeath in 1960 lef t Rolex to the f amily Wilsdorf Trust so Rolex could never be sold and ensuring Rolexwas able to stay true to Wilsdorf s values and long-term vision of excellence and prestige withoutinterf erence f rom shareholders. This unique posit ion also means that Rolex does not publish f inancial orsales data and theref ore the f igures contained in the remainder of the report are estimations unlessotherwise specif iced/ref erenced.

Annual production of Rolex watches are estimated at 750,000 per year a key f eature of Rolexs strategyis to ensure that demand is always higher than supply.

The loyalty to the brand is also clearly evidenced by the 5-year waiting list f or it s stainless steel Daytonamodel.

CompetitorsThe brands main competitors are OMEGA, TAG Heuer and Breit ling who compete in similar marketsegments f or watches which f orm f ollows f unction,

Rolex remains the market leader with its competit ive advantage of almost a century of sporting, innovativebreakthroughs as described below.

2.1.1 Key achievements

It can be argued that Rolexs innovative achievements aresecond to none and unmatched by any rival competing in theluxury segment:

Among the company's innovations are:

Unlike it s competitors, Rolex is in a strong strategic posit ion its f ounder Hans Wilsdorf ensured that the company can neverbe sold and it today belongs to the Wilsdorf trust. Rolex does not have to deal with the pressure ofshareholders 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 thecompany to improve distribution and af ter-sale services and to increase research and development. What ismore, 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. They 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 OfferingRolex produces only round watches since more than 40 years. The brand encompasses only

two collections: the Oyster that represents around 140 models and 80% of the sales and the

Cellini. The 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 approachesCelebrity endorsement:

Conservatism and tradit ion 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 competit ive advantage over the years. The 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 cult ivate

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. The

next sections are discussing these points.

2.9 Target Market

Market segmentation

2.11 SWOT Analysis

3.0 A Broader Context - market analysis3.1 Market Overview

3.2 Direct Competit ion

3.3 Indirect Competit ion

3.4 Market Analysis

3.5 Changing Market and Future Trends

3.6 Marketing Mix

3.7 Opportunity Exploration

4.0 Future Strategy - Proposal4.1 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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Competitive Strategy In The Luxury Watchmaking Industry Marketing EssayThe importance of strategic marketing1.2 An industry analysisCompetitive strategy in the luxury watchmaking industry2.0 The story so far situational analysis2.1 The CompanyCompetitors2.6 Product OfferingCurrent strategic approaches3.0 A Broader Context - market analysis4.0 Future Strategy - ProposalShare This EssayRequest RemovalMore from UK EssaysNeed help with your essay?