Blancpain is well recognized watch-making brand that has dominated this market for approximately 400 years. Being part of the influential swatch group, the company has always pride itself with the ability to uniquely create mechanical watches. However, changes in both the internal and external business operating environment has called for marketing strategy adjustments.
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Therefore after successful analysis of the current market situation, this report suggests that the brand should target a single market segment. The decision to singularly focus on high-end consumer was arrived through the application of demographic segmentation. Since the above group of customer are very specific in what they desire, a concentrated target strategy is proposed. This strategy allows Blancpain to focus more on the need of the consumer while at the same time utilizing the limited resource.
Also very important to note is that all promotion effort should be directed towards fostering great client relationship. Therefore sufficient effort should be placed on public relationship. Finally at all time Blackpain should act as a quality leader. Unique product feature, rich history and heritage, high craftsmanship, are some of the factors marketers of this Brand should use to justify the high prices.
Blancpain is global reputable brand that was founded by Jehan-Jaques in 1735. The company that is own by the Swatch group, a respected industry leader, pride itself with an experience of about 400 years in creating mechanically watches (Blancpain). However, technology has enabled creation of gadget such as cell phones and laptops which already have in-built clocks.
Similarly, electronically made watches are considered cheaper and accurate in telling. As result consumers no longer need to buy additional time telling machines. However, the need to create a desirable status quo has lead to a certain group of consumers searching for a status symbol. Wristwatch is one of gadget that is proving to satisfy this need (Bewes & Andreasen 17). If Blancpain is to retain its market position, it has to find ways appealing to this consumer need.
Current Market Situation
A marketing audit was conducted to establish the situation currently in the market. Important tools of analysis and auditing such as SWOT and PESTLE were employed.
External (Macro) Environment
SWOT is an acronym of Strength, Weakness, Opportunities and Threats.Analysis of opportunities and threats shed some light on the external business operating environment. Similarly, the understanding of this environment was further enhanced by conducting the PESTLE analysis. A pestle analysis involves scrutinizing the external environment paying particular attention to the Political, External, Social, Technology, Legal and finally Environmental factors (Kats & Shapiro 60).
Political development affecting the watch-making industry particularly wrist watch can act either as threats or opportunities. Blancpain produces wrist watches with a global appeal. The brand is especially popular in Russia, Asian, USA and other European markets (Blancpain). Therefore, any political aspect in these markets that is affecting the performance of the company is considered.
After the Global financial crisis, Governments were pressurize by citizens to put strict regulations that would check the personal spending habits of executives and other prominent persons holding public offices.
This in turn has affected the uptake of luxury goods in markets such as the USA (Bewes & Andreasen 16). Although Blancpain is yet to be adversely affected, if the trend continues there is a potential threat of losing out on sales volume. On the other side, Asian markets were not adversely affected and therefore have been providing diversifying opportunity.
The political governance and structure of China for instance did not only insulate the country from the adverse effect of the crisis but also ensured economic growth. Currently, the country’s economy is the second largest in the world. As result, the purchasing power of the consumers has increased. The country is now an important wrist watch export destination as indicated by figures from the Swatch group. To be precise, export sale of wristwatch in the country increased by 58.8 %(Bewes & Andreasen 18).
However, allegation of political interference and manipulation of the Chinese yen act as threat (Bewes & Andreasen 18). This factor coupled with another threat of increase competition from china domestic watch makers could result in making Blancpain less competitive. Nonetheless, Blancpain can still capitalize on the opportunity created by political goodwill in Russia. The current prime minister is recognized for setting fashion trend when it comes to wearing of wristwatch (Blancpain).
Evidently he prefers Blancpain brand and as result the brand is experiencing sufficient demand in this region. Another important fact is that this nation is somewhat shielded from the pressure associated with luxury spending. Despite 17% of the citizen living below the poverty line, luxury spending on watches is more acceptable especially when compared with the USA and other European countries (Bewes & Andreasen 23)
A strong economy creates an opportunity for the brand while a weak economy poses potential threats. As mentioned earlier, the global financial crisis has been the greatest challenge to luxury makers. Even without government interventions, most consumers opted to abandon their extravagant spending.
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The influential Swiss watch industry, which more often than not act as a global indicator of the situation at hand, experience a 22.3% drop in sales revenue. However currently there have been some sign of recovery, but still things have not returned to way they used to be prior to the crisis (Bewes & Andreasen 33)
Additionally, the current Europe financial crisis poses a significant threat. Even though the most affected countries are Spain, Greece, Ireland and Portuguese, there are fears that it might spill over to other European zones. Possibly it might eventually destabilize the frail global economy.
Even the Asian continent and particularly China has shown some signs of being susceptible to this particular crisis. Some of its market indices lost some points due to the release of negative news. Consumers are now more caution and therefore such news result in reduced spending (Bewes & Andreasen 38)
The strengthening Swiss currency is also another threat that is affecting negatively the sale revenue. Since most transactions are transacted in US dollar, a stronger Swiss Franc is a major disadvantage.
However, the brand has the opportunity of riding on the reputation of Switzerland as a global and almost monopoly in making luxury watches. The economic policies, such as the monetary and fiscal policies are very conducive. A good example is the tax policies which is one of the lowest among the OECD nation (Bewes & Andreasen 17).
Most purchases of Blancpain wristwatch are physiological driven. The consumer always aims at fulfilling a certain social need. That is the reason most board members of high-profile organization are most likely going to choose this Brand over others. Therefore, this Brand has the opportunity of increasing it market share by focusing on such factors (Blancpain).
For example, political goodwill in Russia is not the only reason why the Brand appears to be doing well in the market. Also, the cultural tendency of showing off one’s wealth through purchasing of luxury item, has contributed significantly (Bewes & Andreasen 22).
Similarly, for over two century it has been the culture of the rich and elite Chinese citizens to purchase expensive luxury. Predominantly, the most elegant gift that the rich of this country offer during weddings is wristwatches. This has propelled most wristwatch makers to fasten their effort of increasing the market share in the region.
With the era of cheap labour coming to an end in this country and most Chinese expected to enjoy an increase disposable income, there is a high probability most will turn to luxury spending. In fact, already the country is experiencing a 30% annual increase in demand for luxury goods (Bewes & Andreasen 23)
For a company that boast on its ability to develop and maintain traditional mechanical watches, advancement in technology can prove to be a threat. The early 1930 gave birth to a new technology which enabled the development of quartz watches. Electronic quartz watches pose great challenge since they are considered to be more accurate, relatively easy and cheap to produce.
As result their sale price is relatively cheaper. On the other hand, mechanical are complicated and expensive to produce. In addition, they are considered to be less accurate and it is only natural for them to enjoy relatively smaller market share (Blancpain).
A case in point is the comparison between the Japanese quartz wrist watch and Swiss, which Blancpain belong to, mechanically luxury wrist watch. The Japanese wrist watch is more accurate and can retain battery charge for over ten years, it still command relatively minimum retail price of approximately 50$.
On other hand, the Swiss is less accurate, it power reserve is only for a week and therefore requires continuous maintenance, yet still it command a huge retail price of approximately $ 25,000. As mention in the Blancpain philosophy, there are so many complications involved in creating mechanical wrist watch. Perhaps this is the reason 2003 figures indicate that annually Switzerland only produced 2% of globally produced wristwatches.
However when it comes to the values, the country earned approximately EURO 9 billion which is equivalent to 65% of the total value. Definitely new technology, such as quartz watch and in-built clock in electronic media such as laptops and phones, pose a threat. Nevertheless the brand can capitalize on the appeal associate with its year of experience and traditional craftsmanship (Bewes & Andreasen 25).
The fact Blancpain operates in a global arena makes it susceptible to a number legal factors and regulations. To begin with it must comply with the watch certification of the countries it focuses on. This regulation are aimed at ensuring that the watches are of high quality and do not present any risk to the consumer.
Blancpain must also complain with the Swiss law in order to be labelled as Swiss made watch. From thereon it can capitalize on good reputation of Switzerland craftsmanship. The global directive towards the restriction of any unsafe manufacturing material has resulted in increasing the cost of manufacturing by approximately 16%. This cost is incurred during the process of testing whether the finished product comply with this directive (Bewes & Andreasen 24).
Since Blancpain produces mechanical wristwatch, it has been able to avoid environmental degradation that is a society with electrical gadgets. It does not depend on electrical power, a factor that is currently playing a big part in affecting the environment adversely. The price tag that come with Blancpain wrist brand ensure customers are attached to it and therefore can not carelessly dispose it, hence reducing that amount of un-recycled waste in the environment (Blancpain).
Internal (Micro) environment
Strength and Weakness part of the swot analysis were used to analyse the internal factors affecting the organization (Kats & Shapiro).
Strength and Weakness
Blancpain is a reputable and well known brand, it belong to the swatch group which is a Swiss company and a favourite of the high end consumer. Similarly it has a heritage of approximately 400 years and therefore it credited with having vast experienced in its specialized field. Another important factor is its team of qualified workers. Its top management are well renowned for their contribution in the industry (Blancpain).
However one major weakness surrounding this company its inability to produce a large volume of products to satisfy the customers need. In addition the cost of manufacturing its products is relatively expensive as compared to electrical quartz watch.
Similarly, ultra flat style which is a feature of Blancpain products is very delicate and requires handling with extra care. Also the negative publicity that followed major top management change did little justice to this brand. Allegations were that these changes were as result of hard economic times and an effort to maintain family control within the business (Blancpain).
To achieve a competitive advantage a company can either adopt a cost leadership strategy or take a differentiation approach (Kats & Shapiro 68). Blancpain cannot adopt the first strategy since it is difficult for it to cut down cost and still produce the exact product features it wishes.
Therefore the organization has adopted a differentiation strategy by formulating more than one unique selling preposition. The prepositions are found on the company philosophy and emphasize on; the years of operation, traditional and unique method of manufacturing the clock, attentive to details, and inclusion of high craftsmanship (Blancpain).
After conducting a situation analysis the next step involved market segmentation. This is the process of identifying and classifying markets portion depending on various attributes that differentiate them (Kats & Shapiro 79).
The cost of manufacturing a mechanical watch is tedious and expensive and therefore Blancpain should only focus on high-end consumer segment. Demographic attributes such as consumer life cycle stage, income, Gender, lifestyle and social class should be given special attention while identifying this group of consumers.
The possibility of enjoying increase profitability and high rate of return, the capability of the Brand to satisfy the needs of this group, and the fact that these consumers have a common needs and therefore react to marketing messages in same way, confirmed the choice of the segment. This segment considers wristwatch to be more of a fashion statement as oppose to time telling device. As result Blancpain will be able to avoid competition from quartz watches.
Target Market Strategy
Concentrated target market strategy is the most appropriate in this situation. This is because this strategy allows the organization to focus on a single selected segment and hence apply only a single marketing mix (Kats & Shapiro 81). With this strategy Blancpain will now be able specialize in creating mechanical watches more efficiently, focusing on needs and desires of its sophisticated consumers. Considering the human talent required to create the desired watch is limited, this approach allow for effective utilization of this scarce resource.
As established the targeted buyers value sophistication and excellence, they want to differentiate themselves from the rest of the crowd. Therefore, Blancpain should never be tempted to position itself as an impressionist. Therefore very little change is proposed here since its unique selling preposition creates a positive perception on the minds of the consumer.
However the fact that consumer has to read almost the entire company philosophy in order to establish these preposition is a weakness by itself. For that reason this position strategy that focuses on the features and benefit of the product, can be improved by developing a single statement that describe the unique selling preposition.
Marketing Goals and Objectives
Blancplain profitability is not through increase sale volume but rather by emphasizing on the quality of its wristwatch. Therefore the objectives should be driven towards justify the high sale prices. As a result, the goals and objective of this Brand should be:
- To increase its quality leadership by 20% annually.
- To increase product awareness by 30% annually.
- To strengthen the business to customer relationship within the first 4 month of the implementation of the plan.
Marketing Strategies and Programs
The above goals and objectives can only be achieved by adopting an appropriate marketing programs and strategies. Choosing the right strategies and programs involves making fundamental marketing decision relating to the marketing mix (Kats & Shapiro 88).
Marketing Mix decision
The first decision is to define the product by emphasizing that it is a highly sophisticated mechanically wrist watch brand. Secondly, customer should be well aware that it is a refined luxury product and as result it is expected to charge premium prices. Over the four P’s in the market strategy, the price will be very important to this brand.
This is because the company aims to maintain quality leadership by using high prices to signal the quality of its product. A skimming strategy therefore would be appropriate for such a segment which is relatively less price sensitive (Kats & Shapiro 96). The prices will psychologically stimulate the targeted market to purchase the product.
To achieve our third objective, channel of distribution are going to be minimized as much as possible. Only retailers who are licensed by Blancpain as result of meeting specified qualification should be allowed to sell this Brand. However, middle men are going to be reduced considerably through the use of internet. Auctioning through the internet will provide the consumer with a number of benefits including sufficient time to bid, gauge demand for product and set reasonable bid price.
The adopted promotion strategy will aim to create a good public relation. Media releases are going to be used to tell the story about the company’s heritage and culture of excellence. They shall be followed by events which are organized with the aim of pointing out the unique product features. In addition these events are expected to create good networks that are going to be maintained through follow-ups for future promotions.
Definitely by narrowing down its focus to particular specified segment, Blancpain is bound to enjoy a number of benefits. First and foremost, it will be able to utilize it resources more efficiently and manage the cost of manufacturing. Secondly, it is most likely going to tackle the weakness of being unable to meet the current demand. Also very important is the fact that it will stand a chance of building an effective customer relationship. Hence in the process point out to the unique product features that justify the high selling price.
Bewes, Gilligan & Andreasen Richard. “The luxury Watch Industry, Swiss watch Domination” industry watch report 19.32 (2008): 15-40. Print.
Blancpain. Blancpain Manufacture, 2009. Website. 10th December 2009.
Kats, Gabriel, & Shapiro Hollans. Principles of Effective Strategic Marketing. Burlington: Elsevier, 2008. Print.