Brief information about Rolex and its products:
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- date of creation – 1905;
- creator – Hans Wilsdorf;
- producing country – the UK and Switzerland;
- The Rolex name was chosen for the following reasons: it is rather easy to remember and pronounce in all languages of Europe and is ideally short to be placed on the dials;
- Oyster Datejust (1945) became the first model to automatically display time;
- Rolex still produces its own products manually, scrupulously monitoring its quality.
The philosophy of the company can be formulated as follows: outstanding quality for the maximum value. The watches of this company became a household name: if a person wears Rolex, then he or she is undoubtedly rich and successful. It is this brand that serves as the business card of a successful person. Perhaps, it is not the most expensive, but certainly, the most famous watch brand in the world. In today’s world, a certain number of retailers sell watches of this famous brand.
For many years, Rolex has reduced the number of retail networks of its own products. As a result, many traders ceased to be interested in the watches produced by this brand, artificially creating an agiotage for the products of this brand and subsequently raising their value. As a rule, people bought and continue to buy Rolex now to emphasize their successful social status and level of financial well-being.
To achieve the set goals, it is necessary to develop a marketing plan, allowing them to organize effective communications with customers based on existing problems. In the development of a marketing plan, one may distinguish between the three directions corresponding to the elements of marketing: product, promotion, and price. The product recommendations are related to the modification of the assortment policy, in particular, the expansion of specific brands. The promotion activities are aimed at creating awareness of the company and the brand value, attracting the audience, and creating a new image. In their turn, the activities in the field of pricing are mainly related to conducting price diversification.
To formulate problems and set goals, an analysis of the company’s micro and macro environment was conducted. The SWOT analysis showed that the key direction of the company’s development is the maintenance of quality as well as increased awareness of the assortment. Summing up, it should be noted that according to predictive calculations, the proposed plan of measures allows achieving the set goals. Consequently, the developed marketing plan can be considered effective.
The brand of Rolex is not just a popular watch brand, since it is a synonym of the highest quality, elegant style, and refinement. The glory of Rolex is inextricably linked with famous people and events. Today Rolex products are preferred by wealthy businessmen, movie stars, politicians, and various celebrities: “worn by luminaries, visionaries, champions … it tells history” (Samiei). The Rolex brand is one of the hundreds most expensive all over the world.
This is the only company that belongs to the world of luxury, producing up to 2000 watches a day. It also owns such famous watch brands as Cellini and Tudor. Nevertheless, the necessity to maintain an effective company remains. Considering the rapidly developing technology, the emergence of other brands, and the reduced use of watches, it becomes evident that elaborate marketing will serve as the key to the company’s success in the future.
Rolex can be regarded as a rather successful watch brand that is quite accurate and valued all over the globe. This section of the marketing plan will focus on how Rolex achieves and supports its high positions, how it communicates its values, what are its target groups, etc.
- Target markets
- Underwater research;
- Luxury market.
Such factors as geographic, demographics, and behavior will be used to characterize a typical Rolex customer.
- Geographic. There is no particular geography target as the company is oriented to operate all over the globe. The watches produced under the Rolex brand symbolize success, luxury, and wealth for the whole global society. The status of Rolex in the world watch market is comparable to that of Mercedes in the automotive industry. Both these brands indicate prestige and wealth, but, at the same time, are accessible to a fairly wide range of customers and enjoy worldwide popularity. From wealthy people who have achieved success in business and life, one can hear this phrase: “I went from torn jeans to golden Rolex” (Samiei). Watches of this brand have become a symbol of success and wealth all over the world. Everyone knows about Rolex, even those who do not need to delve into the specifics of the exclusive watch market. It should be noted that approximately 50 percent of the company’s target market is located in the US, France, Singapore, and Hong Kong.
- Demographic. Rolex primarily focuses on male customers, yet some products are devoted to women. As a rule, people aged between 21 and 35 who recently received a good job or another financial promotion. They are seeking for high-quality and exclusivity inspired by their achievements and want to show their upgraded status to others. A buyer of Rolex is the one who has the opportunity to purchase wristwatches from $ 5,000 to $ 100,000. Another target customer of Rolex is aged between 18 and 24 – the child of wealthy parents who want to encourage their child to develop and achieve success in what they are engaged in as professionals or amateurs.
- Behavior. It should be noted that the majority of people who are striving for success dream about these watches. Becoming a symbol of a high fashion watch, Rolex is not one of the many houses that can afford simultaneous long-term strategy based on the continuous improvement of their collections and on the continuous development of new models. Rolex customers want to emphasize their social and economic status by wearing these watches, thus using them as an indicator of stability, self-confidence, and responsibility. The brand positioning and reputation that are excellent throughout the history of the company cause such behavior of customers.
Quality craftsmanship. At the enterprises of this company, six thousand employees produce about half a million watches per year. The turnover of Rolex is about 3 billion dollars a year that makes this company one of the most successful Swiss watch and accessory manufacturers. The price of Rolex is directly related to the technical perfection of its mechanisms, along with the use of precious stones and metal. It is generally accepted that Rolex is an example of technical perfection, and it is difficult to find equal analogs. It is not without reason that when they are manufactured, the labor of very expensive specialists is used, even in seemingly quite ordinary operations. In other watch companies, ordinary masters perform such work.
Innovations introduced by Rolex made this company the ancestor of the formation and development of today’s watch industry. High-quality designs and the best modern technologies – this is how the company’s products have always been positioned on the market, creating a recognizable brand with a positive image for any consumer worldwide. The Rolex brand gave the produced watches exclusivity and high status of the attributes of very successful and wealthy people. A note on the official website of the company:
“Pioneer of the wristwatch since 1905, Rolex is at the origin of landmark innovations in watchmaking, including the first waterproof wristwatch – the Oyster – and the Perpetual rotor self-winding mechanism. For over a century, Rolex watches have accompanied explorers and achievers around the world, from the top of the highest mountains to the deepest reaches of the ocean”. (Rolex)
A real Rolex watch can be distinguished from a counterfeit by the course of a second hand. On the originals, it does not tick yet moves smoothly. The bracelet of Rolex watches is fixed, not on the pins, but is made as a single unit with the body. This makes the bracelet very comfortable. It is also equipped with a safety clasp. Rolex watches are known to be waterproof. One can perform deep-sea diving in the sea, and the clock will work even after exiting the water.
They can be forgotten to take off and swim safely since they are waterproof. Neither rain nor sleet will harm the Rolex watch. For the production of Rolex, manufacturers use solid steel that is a rather durable material. The high-quality finish, maybe blue, green, or black, and the bracelet can be made of steel or in combination with other materials, even gilding. Finishing is done beautifully and remains as it is for several years. The watch glass is made of sapphire since this crystal is durable and resistant to scratches. Rolex watches are quite resistant to wear so that scratches on the glass usually do not appear.
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Rolex values its customers’ needs and expectations and strives to make the best efforts to satisfy them. To service its watches, Rolex has created an extensive network of service centers and official distributors that are carefully selected according to the criteria of experience and unimpeachable professionalism. Rolex representatives can also help clients to choose a watch or use a necessary service.
The Rolex service schedule is aimed at returning the original aesthetics and functionality to the Rolex watches passed through a service center that is why during the service period, the watch mechanism is completely switched over. The watch body and the bracelet are carefully processed, which returns the old gloss. The accuracy of the watch and its water-resistance are thoroughly tested to ensure the expected Rolex quality and reliability.
With the advent of smartwatches from Apple and the Swatch Group this year, the manufacturers of mechanical watches are frightened by the fact that these new devices may suppress the classic watch market. The new technologies are more attractive than the prestige and brand name. After the release of “smart” watches, including AppleWatch, plenty of customers decided to replace the classic watch with multifunction watches (“Global Watch Market – Market Analysis 2015-2019”).
Meanwhile, the development of complex watchmaking continues in two directions: the invention of new materials that increase the precision, consistency, and comfort of watches as well as the accomplishment of long-term solutions and technologies. More and more refined and sophisticated become the decoration and shape of the watches, which are facilitated by the creation of new techniques and technologies.
In 2015, for the first time since 2009, there was a decline in sales: the export value of the watch industry amounted to 21.5 billion francs, which is 3.3 percent lower than in 2014 (Rolex). The manufacturers of Rolex noticed some extent of the decrease as well. For example, “in the US, almost all watch and jewelry retailers experienced a tough year due to a slowdown in consumption ahead of the presidential election; watch retailers highlighted the resilience of the Rolex brand in the price category of $3,000 and above” (Balyozyan).
Rolex remains the bestselling watch brand in the world, but Omega cuts back quite quickly. Omega, which patented its own antimagnetic alloy, thanks to which the machine does not react to magnetic fields up to 15 000 gausses, has developed a new certification mechanism for these watches (in conjunction with the Swiss Metals Institute METAS) from eight stages. Each Omega Master Chronometer watch will be assigned a unique number, according to which the watch owner will be able to find out what results in they showed on the tests.
Rolex responded by developing a new automatic caliber 3255, to which the company received 14 patents. At the mechanism of 3255, the full kinematic chain was modernized – from an oscillator that ensures the accuracy of the stroke to automatic winding. According to the company, the new movement of the chronology mechanism allows to increase the efficiency of the mechanism by 15 percent and thus increase the stock of the 3255 calibers by almost half (Rolex).
More to the point, more and more customers are attracted by specific offerings made by the brand. For example, Rolex Yacht Master 40 is an example of how one can competently combine the triumph of colors with the ultimate functionality. The case is 40 mm in diameter and is made of eve rose pink-gold alloy. The company’s huge bezel is encrusted with multi-colored sapphires, green grossularite, and triangle-cut diamond.
Another example is, perhaps, known to any yachtsman due to the accuracy of time measurement followed by the Rolex watch house ten years ago, creating a chronograph for the regatta Oyster Perpetual Yacht-Master II, based on the 4161 caliber with a programmable countdown timer from 1 to 10 minutes synchronized “on the fly” and a mechanical memory. The model of this year, costing 17.8 thousand CHF, is equipped with an updated dial with arrows that increase the clarity of readability of the watches (“Global Watch Market – Market Analysis 2015-2019”).
The following analysis clearly presents strengths, weaknesses, opportunities, and threats of Rolex company.
- Brand awareness. As a strong brand, Rolex has the global brand awareness as it is famous in every country and region. The latter is created by high quality of products as well as focus on luxury markets.
- Preservation of traditions. This is the only luxury brand in the world that manages to remain such with millions of volumes of production. On the one hand, this is the name, and, on the other, it is traditionalism in appearance. As noted by Wolff-Mann, “one of the reasons for Rolex’s success in value retention, according to Adams, is that it has kept the product line small, enabling many of these watches to become household names”. Even though it may seem that the brand does not fit into the growing trend of demand for original things that become quite popular nowadays, the fact that Rolex adheres to the conventional style makes it valued by the target audience.
- Elaborate PR. In an attempt to expand its philosophy, Rolex supports various types of sports. It largely contributes to the public’s interest in adventure and extreme research, the peak of which fell in the 20th century. The names of the pioneers and conquerors of peaks and depths rattled around the world, and on their hands were the brand new Rolex. The company makes every effort to ensure Rolex’s reputation for a solid watch ideally suited for all kinds of sports, including extreme ones. At the same time, Rolex is also oriented on those who do not dive into the ocean depths and conquer mountain peaks. People bought Rolex to feel their involvement in the circle of the elect, dangers, and adventures, and, most importantly, to be sure that the quality of Rolex would never fail them.
- Design and endurance. Over time, Rolex watches became more popular in various layers of society. Due to reasonably priced products and widespread distribution through the network of official dealers, the company ensures their available to almost all well-off buyers who want to have them. In addition, the design of watches was deliberately made the so that they could be recognized from afar by a unique combination of a wide circular dial with a proprietary metallic ribbed ring.
- Investment opportunity (Wolff-Mann). Rolex will always be in trend, and one may sell his or her watches even for higher price after, for example, 50 years, since it is likely to be regarded as rarity.
- High price;
- High switching costs;
- The lack of individuality since production rates are too high to make Rolex something unique;
- Insufficient presence in media. Despite the convenience and prevalence of online trading, Rolex watch is not sold via the Internet. On the official website of the company, one may find only information about the products, announcements of new collections of watches, but there is no “buy” function. The purchase of Rolex products on the Internet is possible only in some countries through dealers offering online sales through their points. However, the company encourages its customers to go to the stores. This is done so that a client has the opportunity to try the clock, touch it, and consider over his or her choice. Nevertheless, the company considers this strategic decision to reach the target audience.
- Investment. This watch brand has long been known as a good investment, since they have high durability, so they always have a buyer. Due to the perception of the Rolex consumer as a symbol of success and the oldest brand that has proved its excellent quality, this brand is likely to be always be positioned as an attribute of the well-off and happy people who occupy a high social position. It invariably takes the best positions in the nominations of the world’s best and most expensive brands in luxury industry (Wolff-Mann).
- Contracts with testimonees. Rolex generally rarely makes contracts with celebrities to promote the brand, but the partners of the brand are called testimonees. As a rule, the partners of the company are famous scientists, travelers, or sportsmen – people with impeccable personal and irreproachable reputation, to whom the company is rather responsible. Among them, there are professional golfer Tiger Woods, famous tennis player Roger Federer, and director James Cameron. The creator of the Titanic and Terminator-2 admitted that he has been using Rolex products for more than twenty years.
- Development of social media advertising;
- Attraction of young people as a new target audience;
- Production of some limited series to facilitate uniqueness.
- Cell phones and smart watches may substitute traditional watches;
- Younger generation is not interested in status indication via wristwatches;
- High-end competition.
- Inflow of counterfeits. The popularity of Rolex is so high that the number of counterfeits created exceeds all conceivable limits. They are actively traded both in various shops and on the Internet. It is interesting that in some cases the quality of fakes is so high that only specialists can distinguish them from the originals only after opening the case and inspecting the mechanism.
Speaking of the competing companies, one may note, for example, Omega that releases quality watches to the lesser cost. Nevertheless, in the minds of customers, Omega cannot create such a romantically unattainable and desirable image of «status» watches as Rolex does. Such an image makes the brand recognizable even in that consumer sector that cannot afford such luxury purchases. The creativity of the owners of the company is that real customers can increase their social and consumer status, and they have known about the prestigious watches for a long time.
Another brand that needs to be mentioned in the context of luxury watches is, perhaps, the great Patek Philippe that is deservedly considered by many to be the watch brand number one. Just like Rolex, it is a private manufactory with a continuous history long before it became a watch grandee (“Global Watch Market – Market Analysis 2015-2019”). And if Rolex, in most cases, presents the simplicity of the three hands and a relatively “cheap” admission ticket, then Patek is actually expensive and difficult as it consists of annual and perpetual calendars, repeater, tourbillion, split-chronograph, time equation, etc.
The newly developed smart watches, for example, Apple Watch presents one more competitive product that may seriously affect effectiveness of Rolex.
One of the texts advertises a luxury item and is aimed at wealthy people, so advertising focuses on ensuring confidence and comfort. In particular, such phrases as “perfectly designed”, “without sacrificing reliability”, and “will always be a perfect fit” by contrasting with an unpleasant situation that occurs when wearing watches (“may cause your wrists to expand”) create a sense of reliability in customers. The slogan “Comfort is a matter of millimeters”, which can be translated according to the concept of normative content compliance without any loss of sense of the message, contributes to the enhancement of the sense of comfort. The use of the possessive pronoun “your” in the phrase “your Rolex” makes the impression on clients that this watch is already theirs and they can buy only them.
Rolex designers perfectly know their target audience and try to ensure that the appearance of their watches fully satisfies all the desires of the customers and sympathizers of the brand. In addition, it seems that those who purchase Rolex watches want to announce to the world about their increased well-being. Rolex watches are the most golden hours in the world: according to statistics, Rolex is the main consumer of gold in Switzerland.
Keys to Success
Among the core principles of success, one may emphasize the following points:
- Excellent quality. The company pays great attention to this indicator, from the very beginning of its activity. To emphasize the quality of the products, the experimental sample was tested in a Swiss laboratory, where numerous tests confirmed its excellent accuracy;
- Competent strategy. Rolex artificially stimulated demand for its own products, making it less common. Only some merchants involved in the retail trade of such goods are entitled to the sale of brand products. More to the point, Rolex is unavailable for online sale that makes it even more attractive.
As an established brand, the critical issue to Rolex is to maintain its success by supporting the current customers and attracting new ones. The consideration of modern technology and its implementation into the products of the company seem to be also essential. Ultimately, continuous monitoring of customer satisfaction along with competitors’ performance will benefit the company as well.
The market of luxury goods is not homogeneous as it involves several segments. Firstly, it is actually luxury goods. These are brands such as Rolex, Louiss Vuitton, Cartier, and others. They represent the highest point of skill of their creators and possess the highest degree of customer loyalty, which is not significantly influenced by various external trends. Focusing on Rolex, the key issue is to continue the excellence of the brand.
The mission for the further development of Rolex can be identified as follows: to manufacture and service wristwatches of the outstanding quality. This can be accomplished via the preservation of an impeccable reputation as the industry leader as among the world’s leading businessmen, sportsmen, and among a huge number of fans of sports. It is important to understand that the core strength and key to success is a huge experience in creating elite wristwatches combined with continuous investments in research and development of innovative technologies that the company uses to create the best products in the given area.
- To develop a set of measures to improve the company’s promotion system.
- To educate younger audience on the role of Rolex wristwatches. Focusing on Rolex as a reward for one’s success, it is critical to create interest in young people.
- Create social media strategy.
- Decrease customer acquisition costs by 1.5 percent per quarter.
Based on the company review and analysis of its current performance, the following financial aspects and objectives can be specified:
- The price policy of the company determines its position in the upper price segment;
- Prices are differentiated according to the positioning of a particular collection (price segmentation of the market);
- Rolex uses the toolkit of discounts and sales;
- Prices for Rolex products as a whole are in touch with willingness to pay the top segment of customers.
The company’s pricing policy was attributed to the important advantages of the brand in the framework of SWOT analysis.
If one discusses the financial objectives of the company as a whole, then, perhaps, he or she should not consider the option of raising prices to solve the issue of increasing the prestige or brand recognition because these factors are already sufficient. The only point that should, perhaps, be noted is the more accurate use of discounts and sales for the brand promotion. It goes without saying that these actions allow increasing sales, disposing of the old collections, but to some extent, they harm the positioning of the brand as an elite product (for example, Armani and Brioni use the mentioned tools more carefully).
Thus, it is possible to propose the company to adhere to the following recommendations in the field of financial goals:
- Adhere to the current pricing policy;
- Approach the issue of organizing discounts and sales more carefully;
- Changing the price strategy for new collections, thus maintaining customers’ loyalty and brand recognition.
The existing target markets will be covered in terms of implementing the marketing plan. In particular, men and women from 24 to 55 years with high income as people who value comfort and quality will compose the first target audience. They are familiar with different brands and have some favorites among manufacturers. For them, the wristwatches are an element of image and status.
Young people between 18 and 24 years of age who do not have a permanent large stable income, but tend to look stylish will be the second target audience. They lead an active lifestyle, and their preferences often change with fashion. The consumers can purchase watches for themselves or as a gift. Thus, parents aiming to encourage and motivate their children by presenting them Rolex watches will support the second target audience.
Positioning affects the price of the products. Rolex has created a premium position and achieved leadership in the field of watches, releasing an exclusive product in the high-price segment. Let us formulate the main results of the analysis of the company’s marketing policy revealed earlier in this paper:
- The company implements the strategy of expansion of the sales network;
- The key focus is on sales in single-brand and multi-brand stores;
- The presence of a closely located dealership centers is valued by consumers as an important advantage of the brand.
The sales policy of the company as a whole can be considered successful. As shown by the conducted marketing analysis, customers prefer to buy brand watches offline, and this is the main focus of this sales direction. At the same time, a group of customers is ready to purchase products via the Internet. However, the above need cannot be satisfied due to the absence of the online store. This is caused by Rolex’s pursuit of high quality. Moreover, the analysis shows that the brand products are generally available to customers of the highest price category (Bredman). Therefore, one may assume that the company has the resources for the further expansion of the network. At the same time, this expansion is primarily understood as coming to new locations with effective demand, but not expanding the network in those cities where the brand is already represented. In this connection, one can distinguish the following measures in the field of improving the marketing positioning:
- Further expansion of the retail network while maintaining a high level of service in stores, which will help to enhance brand awareness;
- Consideration of the online store advantages such as convenience, speed, and the opportunity to provide the immediate response to customers.
In the branding of Rolex, every detail is important. For example, the signs of all the shops where the company’s products are sold are decorated with a recognizable crystal prism, and the status of an official Rolex dealer is the legitimate pride of the company that deserved the right to own this sign. Rolex conducts the strictest selection of retail partners, allowing trading its products only to companies with a certain image and large-area stores located in the most prestigious areas. In addition, partners are expected to provide customers with a number of special services, for example, engraving the name of a buyer on the back of the watchcase.
Rolex is rather sensitive to its brand. If other manufacturers of prestigious brands sometimes conclude licensing agreements with suppliers of other products, putting their logo on sunglasses, bags, or fashion accessories, or they independently expand the range of products under their brands, then Rolex sells only watches and nothing else. The development of communication channels with the target audiences seems to be one of the most essential aspects of Rolex’s future strategy.
The communication strategy of Rolex should be considered as the paramount tool for resolving such an issue as increasing the brand recognition as well as its perception as a product of elitism. At the same time, it is obvious that it is necessary not only to facilitate the volume of the brand’s presence in the advertising space (this will lead to a maximum of brand awareness), but also to carefully approach the issue of choosing advertising media (Bredman). As shown by the conducted marketing research, most of the information customers receive from their relatives and friends, the Internet, and fashion magazines. Obviously, it is these sources that need to be given more attention.
It is also noteworthy to state that Rolex is associated with a certain lifestyle and an idea of success. This can be regarded as an important advantage in positioning the brand. Since the brand is elite, the major task of communication strategy can be the creation of the necessary associations with famous and wealthy people, important events, etc. and maintenance of the existing images.
One can suggest the following activities to solve the mentioned issues:
- More detailed study of the general style of the brand (for example, it may be not just a successful business man, but, let us say, an entrepreneur or a highly qualified office employee, etc.);
- Transformation of this image to advertising media by creating appropriate videos, photos, etc. At this point, the image to be created should be relatively easy to guess by brand consumers, since time of contact with the advertising message is limited;
- Identification of those goods and brand styles that the target audience buys and the subsequent development of cooperation with the companies-owners of these goods and brands;
- Brand sponsoring of events that will include representatives of the target audience;
- Collaboration with celebrities, whose image converges with the promoted image of the brand.
Perhaps, it is the communication strategy that should be given special attention in the issues of brand promotion. This is due to the fact that media focus is identified in the course of the research as the key disadvantages of the marketing positioning of the brand under investigation.
This marketing program will focus on the essentials of pricing, distribution, advertising, promotion, and customer service.
Promotion activities should be aimed not only at attracting new segments of customers, but also to create consumer awareness about the brands presented in the shops and dealer centers. As it was mentioned earlier, the company has an image rather expensive one, and most of clients are familiar with some other luxury brands. To attract attention to Rolex, the following measures may be applied: sponsorship, promotion in social networks, and sales promotion.
Most importantly, promotion in social networks today is an integral part of marketing activities of companies. This is due to the popularization of social networks not only among young people, but also among the older generation. On the basis of these platforms, companies can communicate with their customers, notify of the most significant events, acquaint them with the novelties of the assortment, and discuss discounts (“Global Watch Market – Market Analysis 2015-2019”).
For social networks, it is proposed to create a daily rubric devoted to the assortment of the company. For example, focus on luxury brands overviews and trends. This will attract attention of the audience most influenced by fashion. Besides, this will pay attention to certain products, attract buyers who are interested in their appearance. To stimulate sales, it is proposed to provide buyers with installments for three months, since some consumers may refuse to purchase, having insufficient funds. Creating the possibility to pay for the purchase partially will gradually enable buyers to find the desired product. In addition, installments do not require increase in the amount of payment by interest.
One of the basic principles Rolex puts on the top is its pricing regulation. The company independently without looking back at other manufacturers sets prices for its products. As a result, the prices for Rolex watches become a benchmark for other companies. Rolex does not like sales, rarely offers discounts, and does not give discount cards to regular customers. The exception to this rule relates to the cases when the dealers of the company make discounts due to their own financial decisions.
Nevertheless, customers of Rolex are willing to pay the fixed price for these products even during periods of economic crises, which are clearly demonstrated by market indicators. The distribution network of Rolex consists only of a relatively small number of jewelry stores located mainly in prestigious areas and possessing an impeccable reputation. Thus, some limited access to products is also a strategic decision of the company.
Another direction in which Rolex marketing does not work is mass advertising. The company’s products are almost not advertised on the radio, TV, and team sports. According to the representatives of the company, their target audience is simply not watching the latter. A typical customer of Rolex is the one who has the opportunity to buy wrist watches from $ 5,000 to $ 100,000. For this reason, the company’s products are advertised in tennis and golf tournaments, yachtsmen competitions, Formula 1 races, horse races, and ski competitions. In addition, promotional actions of new chronometers are conducted in honor of the launch of new sports cars.
As for the service option, a range of issues should also be noted. First, personal communication between consumers plays a crucial role in promoting. Often, one or the other product becomes commercially successful and without serious marketing costs, information about it passes by word of mouth. Secondly, there is no need to achieve maximum awareness of the population about the brand. For a customer belonging to a high-income group of the population, it is by no means necessary that all people understand and share his or her status.
It is more important for customers that this status is clear to the people of their environment, which is to be one of the focus points of the marketing complex. Therefore, such channels of communication that are available to highly profitable groups of the population should be chosen (fashion magazines, prestigious theatrical productions, expensive social events, etc.).
Thirdly, the company representatives should tell customers about the product in as much detail as possible. The purchase of elite products is characterized by a high level of involvement, and it takes a fairly long period. In other words, a person should prepare for such a purchase, understand the need for it, and what it is he or she overpays for. It should be noted that not all people are ready to admit that they overpay for the status as they are ready to justify buying it with a higher quality of the goods, level of service, and their own needs. In this regard, when promoting, it is necessary to convince customers and sometimes people from their environment who also influence their choice in the quality and relevance of Rolex wristwatches.
Rolex will continue its research in such fields as sports, science, and technology. At the same time, it is proposed to establish contacts with famous persons, so that their use of the brand and image will attract more customers. The latter is likely to provide valuable feedback and clearly show customers the level of quality and responsibility held by the company.
A special place in marketing planning is the calculation of costs and budget for marketing. This is necessary in order to reveal the effect of the recommended activities and analyze their feasibility.
The break-even analysis indicates that $ 1 825,750 will be required in monthly sales revenue to reach the break-even point (See Table 1 for details).
|Monthly Units Break-Even||588|
|Monthly Sales Break-Even||$ 1 825,750|
|Average Per-Unit Revenue||$ 968,78|
|Average Per-Unit Variable Cost||$ 52, 896|
|Estimated Monthly Fixed Cost||$ 1 259, 477|
Table 1. Rolex Break-Even Analysis.
Under the impact of new marketing strategy, sales will steadily grow. The table 2 shows the details regarding the financial indicators regarding sales forecast. Considering the recent economic crisis is an extra reason to think about the true value of things, and for consumers, it is an occasion to reflect on what is real luxury, and to re-evaluate their values. Nowadays when luxury means more than just expensive things, consumers are looking for authenticity, experience, and longevity. They are looking for something exclusive and designed specifically for them. Thus, this is the main recipe for improvement – to offering customers exactly what they expect based on the best quality and service.
|Month 1||Month 4||Month 7|
|Income B4 Taxes||0,72||0,71||0,78|
|Increase 32 %|
Table 2. Rolex Sales Forecast.
Let us analyze the economic efficiency of the proposed measures to promote Rolex. To analyze the effectiveness, it is appropriate to consider the three main variants of the development of events, including negative, most probable, and positive ones. The negative option assumes that the conduct of the event in question will not affect the sales of the analyzed organization in any way, and the sales level will change in accordance with the average growth rate, which was recorded in the previous three years.
The probability of this option can be estimated at a rate of 25 percent. The most likely scenario suggests that as a result of the event, the growth rate of sales will be higher by two percent. One may estimate the probability of this option at a rate of 50 percent. Ultimately, the positive variant assumes that as a result of the event, the growth rate of sales will be 4 percent higher than expected with the probability of this option at 25 percent. Thus, according to the forecast, the implemented measures allow to fully achieve the set goals.
Among the expenses on the implementation of this marketing plan, one may note advertising, website, print media, etc. (Table 3).
|Month 1||Month 4||Month 7|
|Website||$ 30, 000||$ 10, 000||$ 10, 000|
|Advertising||$ 15,000||$ 18, 000||$ 27, 000|
|Printed Material||$ 11, 000||$ 15, 000||$ 21, 000|
|Total Sales and Marketing Expenses||$ 56, 000||$ 43, 000||$ 58, 000|
|Percent of Sales||5 %||7 %||10 %|
|Contribution Margin||400 %||500 %||600 %|
|Contribution Margin / Sales||75 %||79 %||81 %|
Table 3. Expense Budget.
The effectiveness of marketing planning depends not only on the competent implementation of the plan, but also on the control measures that will assess the implementation of marketing plan, eliminate or prevent errors, and adjust the plan in accordance with changing environmental conditions.
To assess the economic effect, it is advisable to use such an indicator as income on invested capital calculated as ratios received profit to the invested funds. To assess the effectiveness of individual measures, one can analyze the dynamics of sales volume and patency. However, this estimate is not completely precise, because it is impossible to reliably estimate whether changes in indicators are the result of activities or whether other factors have influenced them.
In addition, it is important to assess the change in public opinion and the level of awareness after the implementation of the specified communicative goals. As a research method, questioning of customers at the point of sale and in social networks is acceptable. The comparison of the indicators obtained before the implementation of measures and after their implementation will reveal any change in attitude towards the company, awareness of brands, and ongoing activities. It is advisable to monitor the results after the completion of the planning period, since the developed marketing plan is of a short-term nature.
The company’s CEO and management will be responsible for the marketing organization. Advertising and promotion may be selected to provide marketing organization. With the relative stability of the preferred advertising media, the watchmakers are in the process of reconfiguring the instruments used, seeking to improve the efficiency of the budgets used. Estimating the general dynamics of the watch advertising market, it should be noted that there is a slight but still a decrease in volumes.
It is also important to note that none of the leaders of the segment went abandoned the placement completely, and new names, with the exception of interior L’Epee, did not appear. Advertising in the social media continues to be the most popular, and therefore, the effective channel for communication between watchmakers and customers.
Marketing risks refer to the probability of occurrence of losses or incomplete income in comparison with the forecasted variants of marketing actions. In this case, the risks are characterized by uncertainties in the internal environment (for example, the problems of developing a new marketing strategy) and the external environment (for example, changing the needs of the company’s customers).
Difficulties and Risks
Among the potential difficulties and risks, there may be systematic and non-systematic ones. The systematic risks are risks that cannot be influenced by the impact of management of the company. They include political risks (political instability, socio-economic changes), natural and environmental risks (natural disasters), legal risks (instability and imperfection of legislation), economic risks (sharp fluctuations in exchange rates, government measures in the sphere of taxation, restrictions or expansion of export-import, currency legislation, etc.).
The magnitude of systematic risks is determined not by the specifics of a single project, but by the general situation on the market. Non-systematic risks are risks that can be eliminated partially or completely as a result of the impact of management. In particular, Rolex may encounter financial risks (risk of non-receipt of expected income from the project, risk of insufficient liquidity) and market risks (changes in market conditions, loss of market positions, price changes).
The risk of loss of revenue as a result of failing the planned sales volume or reducing the selling price relative to the planned one is the critical one. It will be considered the worst-case risk. Since the profit of the project that is determined by revenue identifies its effectiveness, marketing risks are key design risks. To reduce the mentioned risks, it is necessary to thoroughly study the market, identify key factors that can affect the project, forecast their occurrence or amplification as well as ways to neutralize the negative impact of these factors.
The possible factors: involve the following points: changing the market conditions, increasing competition, losing market positions, reducing or lack of demand for project products, and reducing market capacity or prices for products, etc. If the probability of implementing a particular risk is high, if possible, additional measures are provided to neutralize the negative consequences with respect to the project. It is also possible to develop scenarios for the implementation of the plan with regards to external conditions.
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