Marketing strategy of Rolex Evaluation

Essay
TABLE OF CONTENTS
1. Introduction
2. Rolex – Company Background
3. Marketing of Rolex
4. Marketing Mix of Rolex
5. Products
6. Price
7. Promotion
8. WCM
9. References

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 – Company 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 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 .

Marketing Mix of Rolex

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.

Products
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.
Price
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.

Promotion
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 –

1. Advertisements in televisions
2. Print advertisements in magazines and newspapers.
3. Sponsors of gaming events like Wimbledon
4. 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.

WCM
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.

Product in the Marketing mix of Rolex

Rolex has the distinction of having many “firsts” /

innovative products launched due to its R&D and manufacturing of unique
and timeless watches. It was the first watch company that received a
chronometer certificate, first to have automatic date changers, first to have
a winding rotor that was oscillating and most importantly first wristwatch
that was waterproof.  Rolex offers nine varieties of watches for men’s
collection and six models for women’s collection. They have also
introduced five new models like the Yatch-Master II. The series of Rolex
products are as follows

 ALL
 CELLINI
 DAY-DATE
 DAYTONA
 AIR-KING
 DATEJUST
 DAY-DATE II
 DEEPSEA
 EXPLORAR II
 EXPLORAR
 GMT-MASTER
 OYSTER PRECISION
 MILGAUSS
 PEARLMASTER

Segmentation, targeting, positioning in the Marketing strategy of Rolex –

Psychographic segmentation is used by the company to understand the

changing needs of the customers and be ahead of other companies in the
industry.

Since the Rolex watches are meant for the high-income group individuals,

therefore it uses undifferentiated targeting strategy.

A brand which stood for more than 100 years and still is a symbol
of prestige, classic design and lavishness have been positioned based on
value-based positioning strategy.

Competitive advantage in the Marketing strategy of Rolex –

Brand Image: Rolex since its inception has created a niche segment of

customers who wear a watch as a prestige. The luxury watch manufacturer
has been a pioneer in bringing new age technologically advanced watches
in all these years.
Global Presence: Rolex has been present in more than 100 countries
around the globe and has very limited number of company-owned outlets.

BCG Matrix in the Marketing strategy of Rolex –

Rolex has a limited number of watch models. BCG matrix helps in

understanding the competitive position of the brand in the industry it is
operating. In the BCG matrix, Rolex watches hold stars position due to
its demand and advanced technological & sleek design.

Distribution strategy in the Marketing strategy of Rolex –

Rolex has very limited number of exclusive stores around the world. It
distributes its watches and accessories through owned stores, multi-brand
stores and e-commerce sites. Approximately 2000 watches are being
manufactured by Rolex every day.

Competitive analysis in the Marketing strategy of Rolex –

The presence of counterfeit products & changing buying patterns of

customers in the emerging economies, the presence of a large number of
me-too brands in the market and imitation is affecting the industry as a
whole. Without much focusing on the competition, Rolex is continuously
driving the technological advancement and state of art designing to be
ahead in the industry.

Market analysis in the Marketing strategy of Rolex –

Changing lifestyle, changing consumption patterns, increasing disposable

income, developing nations & purchasing power, changing aspiration and
motivation level of people to follow their dreams, and migration to urban
areas are the driving force for the success of the luxury goods industry. The
luxury goods industry is the fastest growing industry in the recent time,
especially in the developing nations.

Customer analysis in the Marketing strategy of Rolex –

Customers of Rolex are upper-class income group individuals who have an

inclination towards the luxury goods and live a lavish life. These are the
customers either are from higher income strata of the society (irrespective
of any age group) or are from the business family in the age group of 30-60
years.