Want to know more about marketing strategy of Rolex? This essay analyses the famous watchmaker’s brand positioning, Rolex target market, consumer demographics, and distribution strategy.
Introduction
Marketing strategy of a company, in practice and theory, is often replete with gaps. Often, marketers have deviated from the theoretical principles to develop their own set of rules that they have dubbed more useful in marketing and selling their product. This paper is a case study analysis of Rolex.
The main objective of the paper is to ascertain the gap in the marketing strategy and principles adopted by Rolex with that of the theoretical marketing framework presented by McDonald in his ten world class marketing principles (WCM). Further analysis of the marketing practices of the company and a comparative case analysis are presented in the paper. The paper begins with a brief discussion of the company background.
Rolex Case Study: the Background
Hans Wilsdorf founded the Rolex Company in the early twentieth century. The company was registered in the name of Rolex in 1908. The watches made by the company were well known for their accuracy, durability, and dearness. The company hails from Switzerland. It has often been credited for making wristwatches a popular fashion.
Rolex is also the company that is credited for making the first dustproof, airtight, and waterproof watches. The company is often associated with their luxury branded watches and are sold only through authorized retail stores. The watches are found in gold, silver, and platinum and are often studded with diamond or other precious stones.
They also make other kinds of timepieces like clocks, stopwatches, and pocket watches. Today Rolex is the largest luxury watchmaker in the world. The company was formerly known as Montres Rolex S.A and is based in Geneva, Switzerland .
With this background of the company, we move further on to the present state of the company. In the next section, we will discuss the financial and marketing strategy of the company in brief before discussing them in detail. The financial data of the company is not publicly available for Rolex as it is a privately owned company. However, the other aspect of the company i.e. marketing aspect can be discussed in details.
Marketing Strategy of Rolex
Rolex is a luxury watchmaker. The products that are made and sold by Rolex are Rolex and Tudor. Rolex markets its watches as luxury brands. The company is well known for its unique targeting, segmenting, and positioning of their product, which many believe has helped them to maintain their position as a leader over such as long period.
However, with the change in the generations and ushering of the new generation who is more inclined towards new fast moving technology than a timeless timepiece, Rolex faces a challenge as to how they can attract these new emerging customers. In this section, we will first discuss the marketing strategy of Rolex before moving on to enumerate the differences they have with the world class marketing principles of McDonald .
Rolex Target Market & Consumer Demographics
The marketing efforts of the company demonstrate the kid of customers the products are aimed at. The marketing strategy helps companies identify the customer needs and helps firms formulate strategy to satisfy them. The marketing success of a company lies in its success in identifying the customer needs.
Usually understanding customer needs and tapping on them usually takes painstaking planning and strategy formulation. Usually companies carry out extensive research and analysis before formulating the four Ps of marketing – price, promotion strategy, place, and product.
A careful analysis of the marketing mix of the company enables us to determine the market that the company is trying to pursue. Similarly, we undertake a thorough research of the marketing strategy and mix of Rolex.
The target of Rolex is both men and women. Rolex makes watches to suit the taste of both men and women and are preferred by both the sexes. The market segment that the company has placed its product in is the luxury market, and the prices are high as they are placed in the luxury market.
In order to maintain their status related to the four Ps, the company has positioned its product as a luxury item and for this specific reason, they have strove to maintain a very high quality for their products. The accuracy of the Rolex watches is one area that puts them ahead of any other watchmaker.
Before positioning the product, the first analysis the company does is to identify the characters of its products that makes it stand apart. Creating a group of target audience is the key to creating the target audience. Brand positioning, as any practitioner and academician would know, is based on the perception of the customer.
First, the company decides the kind of customers they want to address i.e. identifying their base customers. In case of Rolex, it is clearly a luxury product targeted the affluent economic strata of the society. Consequently, the advertisements and the events, which are sponsored by the product, are those that are usually associated with the rich.
The target customers for Rolex are both male and female. Targeting both the demographic section is advantageous and helps the company to spread its market. Rolex’s advertising strategy entails celebrity endorsements. Rolex advertises its products with both male and female endorsements. Rolex positions its products as a symbol of excellence and passion.
Therefore, most of the advertisements that are shown by Rolex usually feature sports personalities like Tiger Woods or Roger Federer who are the best in their respective sports. In addition, the advertisements with women in them feature sports women or actors like Ana Ivanovic.
Further, in order to cater to a certain economic class the company meticulously positions itself targeting the rich and the ones who crave for “class” rather than “beauty” this is evident from the taglines used in previous Rolex advertisements such as “Class is forever”, “Some people want more than just a pretty face” or “Live for Greatness”.
These taglines demonstrate that the appeal that the company makes for its brands ensures that the products are sold to those who strive not only for beauty of the product, which even a fake Rolex watch can deliver, but rather the pristine class of wearing a watch that is hand crafted.
The company strives to make Rolex a symbol of excellence. For instance older advertisement campaigns of the company had tag lines like “If you were looking for lost empires here tomorrow you’d wear a Rolex”, or “If you were flying the Concord tomorrow you’d wear a Rolex” or “If you were sailing alone round Cape Horn tomorrow you’d wear a Rolex” .
In another landmark tagline for a Rolex advertisement, the positioning is made further clear, “A Rolex will never change the world. We leave that to the people who wear them.” Thus, the positioning of Rolex is clearly represented through the advertisements that they promote.
The tag used in their website to describe the products of Rolex is resonant of the positioning approach of the company. It describes Rolex watches as “Symbols of excellence, performance, prestige, and innovation” . Therefore, the positioning strategy of the company is to project the product as luxury brand that strived for excellence.
Rolex Brand Positioning
The products that are presently marketed by Rolex can be broadly divided into three collections – Oyster collection, new 2013 collection, and Cellini Collection. The oyster collection boasts of “elegance and prestige” and has twenty models in the collection. The description of the product states that the products are “Crafted from the finest raw materials and assembled with scrupulous attention to detail” .
This clearly demonstrates the attention to quality that the company has on each product it makes. Then the description moves on to describe the latest technology that is added to the age-old class of Rolex – “Oyster Perpetual watches benefit from Rolex’s cutting-edge technology and extensive expertise.
In addition, each individual Rolex watch undergoes stringent examination and testing.” The repeated stress on quality and style enhances the brand value of the product and helps positioning the product as luxury brand. The oyster perpetual watches are made in oyster cases, and the bracelet is made of silver, oyster, and gold.
The second collection is the new 2013 collection of Rolex is a new collection of chronometers with cutting age technology instilled in them to attract the new generations and retaining their old classiness.
This collection has just six models and each are designed depicting a different style and taste. Mostly these watches are fitted with precious gems and stones and others are crafted in platinum and oyster. The raw material used in designing the models makes them so valuable.
The third collection is the Cellini collection. The collection named after the Renaissance sculptor and artist Benvenuto Cellini aims at demonstrating “quintessence of elegance” . Masters of various arts sculpted each timepiece and each come in gold or platinum cases and dials of sapphire or mother of pearl .
The products of Rolex truly demonstrate the positioning of the product being successful, as they have loaded their products with beautiful and expensive metals, and stones to carve out the perfect watch. Rolex watches, truly, are a blend of art and technology.
The watches sold by Rolex are priced high. The pricing strategy goes with their promotion and positioning strategy. Further, as their products are made with very expensive raw material and they happen to be fitted with the best quality technology. The high price is equivalent to the positioning of the product as a luxury item.
Distribution
Promotion plays an important role in describing the product. It is almost a means by which one can delineate to the customers what the product has to offer. What they must understand by the product and they are to expect when they buy the product. Therefore, it helps in setting a mood of expectation and anticipation apart from creating a space in the mind of the customers for the product.
Promotions help companies to familiarize their products to the customers. However, what is promotion to a luxury brand like Rolex? Obviously, customers are aware of the brand – Rolex and the rich history of the company’s past. The promotional strategy of Rolex is to sell the idea of the class that Rolex attaches to itself. Rolex is not promoted as just a brand, but as a way of life, as class, as society.
For instance, the Oyster models of Rolex was first introduced in 1926 as the first waterproof watches and since then has clad the wrists of many famous personalities but as timeless is the brand the essence of the clean, utilitarian design of Rolex has not lost its edge .
Many believe that Rolex need not have posted any more advertisements to educate its customers for they are already advertisement with the many utilities and preciousness of the watch. This is a very true observation. Hence, Rolex has shifted its promotional strategy from educating to creating an image of luxury, class, and sophistication around its brand.
Rolex is no longer just a luxury watch but a product that is timeless. Hence, they have started projecting their products more in line of diamond (as done by DeBeers for diamonds) and not as any other products.
Further, Rolex categorically targets the sports or trade they want to target and have the best in the class to endorse their products. For instance, Rolex associates itself with sports like tennis, golf, yachting, mountaineers, diving, etc. In other forms of occupation, Rolex has endorsers who are actors, artists, dramatists, dancers, etc.
The promotional strategy of Rolex can be categorized into following classes –
- Advertisements in televisions
- Print advertisements in magazines and newspapers.
- Sponsors of gaming events like Wimbledon
- Embedded advertisements in movies like those of James Bond
The television advertisements where the advertisements are placed are usually lifestyle channels or sports channels showing major sporting events like tennis and golf. Usually Rolex advertisements accompany airing of James Bond movies.
Hence, the promotions are placed in such a way that they reach the target customers. Further, print advertisements of Rolex can be seen in major business magazines, newspapers, sports magazines, and high-end luxury and lifestyle magazines. This also demonstrates that Rolex sticks to the target customer and promotes their products accordingly.
Further, Rolex sponsors gaming events like, golf and tennis, which easily makes it, attract the target customers. The association of the brand with the James Bond franchise has helped the company to create a character for the brand as dashing and adventurous despite being classy and sophisticated.
The question that arises is why does Rolex follow a niche promotional strategy? The answer to the question is simple – Rolex’s product and positioning does not support and/or demand a mass-marketing strategy.
Niche promotional strategy is apt for a brand like Rolex that sells only luxury items and that too, to a niche target market. Clearly, the promotional strategy for Rolex has worked so far, as it has tried to approach to a niche set of customer base and the promotional strategy they have employed has successfully helped them to reach to that group.
The constant message that is ever-present in Rolex’s promotional campaigns is that of high-achieving, aspiring, luxury product that is crafted for few who are successful. The watches are projected for those who are achievers and consequently rich and therefore the target and positioning of the product are clearly depicted in the advertisements of Rolex.
The understanding of the marketing mix of Rolex helped us to appreciate that marketing strategy the company has employed so far. In the next section, we will try to delineate how the marketing strategy of Rolex adheres to or does not adhere to the 10-point model of McDonald.
Rolex Marketing Strategy Analysis
This analysis is done using the 10 points of world class marketing developed by Malcolm McDonald. The first point shows the market orientation of the company. The first point entails that it is the work of the company. It is the job of the top management to instill among its employees the ideal of customer orientation.
In other words, customer orientation has to be enhanced in order to ensure greater possibility of creating products that would satisfy the customers. In case of Rolex, the company has historically paid a lot of attention to the product that they create. As the company sells luxury product, it makes sure that all the qualities of luxury are presented in the watches crafted by the company.
Further, the customers should be made a vehicle for promotion. This can be attained only by making high quality products. A high quality product that satisfies the customers exceedingly would ensure that he/she promotes it to his/her peers. Rolex has achieved this through its quality and brand name.
The name of Rolex is associated with luxury and precision of technology and therefore, the brand no longer requires educating its customers of its worth. It has created itself as a sign of prestige and position to own a Rolex watch. Thus, the first point of McDonald has been satisfied by Rolex’s marketing strategy.
The second point as enumerated by McDonald is to understand the sources of competitive advantage for the brand. McDonald has segregated this into three categories – superior position, skills, and resources. Superior position entails niche products with high degree of differentiation and concentration on pricing.
Superior skill involves quality of product, specialized knowledge, technical expertise, and flexible organization. superior resources implies advantages pertaining to economies of scale, financial structure, global reach, etc. in case of Rolex, the company follows a superior position strategy. The products are positioned in a niche market as luxury brand with high pricing.
They are not considered as products with superior skill as they do not offer a product that is unique to the brand. The competition that Rolex faces in the luxury watch market has become stiff with other companies like Omega, Longines, Cartier, Chanel, Patek Philippe, etc.
Therefore, in such a competitive market to have competitive advantage in technical skill is difficult as all these product similar quality of products. In case of Rolex, it has to be done in terms of the positioning.
Understanding the environment of the company has a specific implication on the marketing strategy of the company. An analysis of the macro and the microenvironment helps to ascertain the threats and opportunities that are present for the brand in the market. In case of Rolex, the threat is the aging demographics of the target market of the brand.
With aging population, the taste and preference of people are changing considerably, which has inculcated a threat to the organization’s product demand . Thus, the aim of Rolex should be to target younger target market However, there remains a ray of opportunity for the product. Luxury brands have swept over to the emerging economies.
All marketers of different luxury items from automobiles to wristwatches have started targeting the developing, emerging market of the Asian giants like China and India . According to the predictions of analysts by 2018, Asia Pacific will be biggest market for luxury goods . This presents a unique opportunity for luxury watch brands with a long-standing brand name to make its presence felt in the emerging economies.
The fourth point that is enumerated is to understand one’s competition. The company should categorically understand who the direct and potential competitors are. Further, they should also be aware of the substitutes, backward and forwards integration competitions, and be aware of the competitor’s strength and weaknesses.
The major potential of Rolex is that it is in the luxury brand market, which is highly driven by brand loyalty and recognition.
The direct competitors of Rolex are other brands like Omega, Longines, Cartier, Chanel, Patek Philippe, etc. the potential competitors are other fashion brands that have started making accessories and watches like Tag Heuer, Breitling, Panerai, Tissot etc. Further, Rolex faces the threat of fake products in the market. This provides a stiff competition in price sensitive Asian markets.
The fifth is to understand the market segment. The market segment that the company has placed its product in is the luxury market, and the prices are high as they are placed in the luxury market. In order to maintain their status related to the four Ps, the company has positioned its product as a luxury item and for this specific reason, they have strove to maintain a very high quality for their products.
The accuracy of the Rolex watches is one area that puts them ahead of any other watchmaker. Before positioning the product, the first analysis the company does is to identify the characters of its products that makes it stand apart. The market segment that the brand targets are clear; it caters in the luxury market for watches. Hence, the positioning of the product is unambiguous.
The company strives to make Rolex a symbol of excellence. For instance older advertisement campaigns of the company had tag lines like “If you were looking for lost empires here tomorrow you’d wear a Rolex”, or “If you were flying the Concord tomorrow you’d wear a Rolex” or “If you were sailing alone round Cape Horn tomorrow you’d wear a Rolex” . The positioning of the products is that of excellence and symbol of success.
The sixth point is ascertaining the strength and weakness of the brand. In this case, Rolex’s strength is its unique style and product positioning. The weakness of the brand is its present appeal to the older target customers, and inability to target newer generations.
The seventh point is to understand the dynamic market for the product, i.e. to conduct a life cycle analysis. Life cycle analysis helps in ascertaining the position in the life cycle where the product lies. In case of Rolex it is clear that the product is in its mature stage but without any further impetus to the marketing strategy, the sale of the product my fall down.
The eighth point suggested by McDonald is to have a strong portfolio of products. The products that are offered by Rolex are unique and timeless. Their appeal is great as each are made differently with different features and crafted in different styles.
The ninth point shows that a company should formulate a strategic marketing policy and stick to it. In case of Rolex, the company has adhered to its niche marketing strategy since the beginning and therefore its charm and demand has not faltered.
The last point presented appeals to the companies to maintain a professional attitude in promoting and marketing its products. It is important for the company to understand all the above marketing tools and continually evaluate its products using these tools in order to make predictions of any impending changes in future.
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