Luxury watch brands

The Case The difference between mass market watches and luxury watches is the quality of materials used in the manufacture of the watch and bracelet, and the quality of workmanship at all stages of the manufacturing process. In addition, luxury watches normally sell for more than 500. Sales of luxury watches in the UK have increased steadily since 1996 and they reached an estimated 360m in 2001. In terms of the number of watches sold this only represents 3% but in terms of the value of all watches sold, this is equivalent to 54%. Therefore, luxury watches are an important part of the total market. The luxury watch manufacturers or watch houses, vary considerably in size and outlook. The market is characterised by the individuality of the houses in terms of their preferred style and design, house philosophy, level of craftsmanship and approach to branding and marketing communications. Large watch houses are able to exercise marketing expertise and economies of scale in their communication activities. Smaller houses are able to position themselves in terms of technical complexity, mechanical expertise and innovative design and styling. The Swatch Group is one of five organisations that dominate the market. Like the others it has a portfolio of brands to meet the needs of different segments. Omega, with a 4% market share is the main luxury brand within the Swatch Group. The Omega brand has developed a reputation for high quality and its marketing communications have been based upon the development of a clear identity and association with a range of sports activities and personalities. For example, tennis (Anna Kournikova), golf (Ernie Els), motor sport (Michael Schumacher) and events, such as the Olympic Games and the Americas Cup. The Longines brand, with a 2% share, is the second largest Swatch Group brand. The Longines brand is associated with design, class and elegance and its marketing communications reflect this in their use of brand ambassadors, such as actors from the 1950s and 1960s (eg Audrey Hepburn and Humphrey Bogart). The use of personalities to endorse and support a brand is an important part of the branding process and if used correctly can provide a strong point of differentiation and source credibility. For example, the Tag Heuer brand use the Formula 1 racing driver David Coulthard and Tissot use the Liverpool and England footballer Michael Owen. In contrast to this approach Rolex, the market leader with a 12% share, uses a testimonial campaign that shows real individuals explaining how they use their Rolex in everyday life. Rolex are in many ways the industry standard for luxury watches and are often used as a statement for success. The high profile that the Rolex brand sustains is reflected in the 1.7m adspend and their sponsorship activities in association with the British Open (golf), Wimbledon (tennis) and their support for many charities. Retailers are important to the distribution process in this market because of the need to provide high levels of product knowledge and customer service. Increasingly watch houses have been improving their relationships with the different types of retailers. Although high quality websites are used there is very little online purchase activity in the luxury sector. 1

Luxury watch brands

Luxury watches are regarded by many as a fashion accessory and consumers appreciate the quality of design, their style and manufacture. These watches provide users with a means of projecting their own personal identity and self-image, and often use different watches for different occasions. Men aged 45-54 have the strongest positive attitudes towards owning a luxury watch whilst younger consumers, who may not be able to afford one, express aspirations to owning one. The market is characterised by the strong emotional relationship that can arise between buyers (57% men) and their watches. Sales to women are increasing as their lifestyle changes and wealth increases, witnessed by several watch houses designing watches specifically for women. Year Sales m Adspend m 1997 285 10.79 1998 305 10.56 1999 325 11.96 2000 345 14.72 2001 360 15.88 Table 7 : Sales Value of luxury Watches in the UK and the Total Adspe'hd Above-the-line spend is directed towards print media with lifestyle magazines such as Vogue, Harper's and GQ dominating. Some broadsheet newspapers are also used. Also popular are in-flight magazines and international publications (e.g. Time), all of which help to reach the more affluent target audiences. In 2000, Swatch invested 1.1m advertising the Omega brand and 514,000 to support the Longines brand.

Luxury watch brands

Public relations and sponsorship activities are important parts of the promotional mix. Public relations and even watch house museums are used to reach the media and members of the marketing channels in order to build good relationships. Targeted sponsorship is used to reflect the brand identity, reinforce brand values and to support the above-the-line spend. Dedicated showrooms, brochures, websites and trade shows are important secondary promotional activities.

Required As the marketing communications manager for a watch house, prepare answers to the following questions, in anticipation of preparing a promotional strategy. 1. Evaluate the advantages and disadvantages of the different marketing communications strategies in relation to the luxury watch market. a)Push

b)

Pull

2. Explain why luxury watch houses use sports stars and celebrities to promote their brands. 3. Suggest reasons why watch houses might encourage word-of-mouth communications.

Luxury watch brands

Possible answers to the questions 1. All marketing falls into two categories: push marketing and pull marketing. To marketers, it's as

basic as breathing in and out. Pull marketing is where you develop advertising and promotional strategies that are meant to entice the prospect to buy your product or service. Some classic examples are "half off!" or "bring in this coupon to save 25%" or "buy one get one free", etc. With pull marketing, you are trying to create a sense of increased, time limited value so that the customer will come into your store to buy. Push marketing is where you develop advertising and promotional strategies geared toward your marketing and distribution channels to entice them in promoting your product. As consumers, you rarely see this type of marketing when it is directed to the distributors. It might include wholesale discounts, kickbacks, bonuses, and other types of support. It's all designed to have the retailer promote your product to the end users over a different product. Concerning the Luxury watch market, push Strategy is adopted when the product is unfamiliar and it is new to the industry. Even though product is familiar, customers may delay their purchasing decision. Hence, Company should always persuade the customer to purchase its product. However the pull strategy cannot be neglected, and in the case of luxury watch market it might be more effective since people are attracted to offers and discounts, and above all the pull strategy is better used when talking about watches since most of people have loyalty to such product. So, as a conclusion, a combination of both, Push and Pull strategies should be implemented for benefiting the manufactures and the customers. Maybe one could be used in higher rates, but mixing both is better and more profitable since it can increase the level of awareness in the mind of customers.

2.

Celebrity endorsement of luxury fashion is hardly a new phenomenon, as it has been around for

several centuries. Charles Worth, the man who invented haute couture in Paris in the nineteenth century, understood the importance of linking celebrities to brands, even before this was recognized as an important marketing communications tool. To promote his fashion house La Maison Worth, he sought a high society lady and an influencer of the court fashions, Princess Von Metternich, wife of the then Austrias ambassador to France and close friend of Napoleons wife Empress Eugenie. This celebritys 4

Luxury watch brands

patronage and connection with La Maison Worth contributed immensely to the success and status of this couture house as the most influential in the world at its time. Celebrities are extremely important and valuable to brands, especially in the luxury fashion sector. There is no argument about it. They wield enormous power in fashion circles and can contribute to making and breaking brands. Fashion designers pamper them and brand managers recognize their potential to brands and utilize this effectively. Celebrity endorsement does not however begin and end with shooting and printing the photo of a beautiful model in a fashion magazine. There are several factors and dimensions involved in choosing a celebrity to endorse a brand. It is however worthwhile to understand what the true value of celebrity endorsement is. Celebrities are people that exert significant influence in several facets of society, ranging from arts, music, movies and television, sports, culture, politics and even religion. They range from film and television stars to musicians, sports personalities, royals, politicians, and even socialites who have no defined careers apart from looking beautiful and attending the right events. In the fashion world, the list of celebrities would include designers, their muses, models, photographers, and any prominent person involved in the artistic aspects of fashion such as make-up artists and fashion consultants. The celebrities that are most utilized in the promotion of luxury fashion brands are those in the film and music industries as a result of the major role that fashion plays in these entertainment sectors. According to recent research statistics, the number of celebrity advertisements has doubled in the past ten years. One in four adverts features celebrities now as opposed to one in eight in 1995. Although this statistic is related to consumer goods and services, there has also been an increase in the use of celebrities in the brand message communications among luxury brands. Italian luxury brand Versace has used music icon Madonna and Hollywood stars Demi Moore and Halle Berry in its print adverts between 2005 and 2006. Likewise Julia Roberts appears in Gianfranco Ferres adverts, Sharon Stone in Dior and Jennifer Lopez, Scarlett Johansson, and Uma Thurman in Vuitton ads. Also, non-luxury brand Gap has used television star Sarah Jessica Parker to promote its brand in the recent past. The reasons that these personalities are used in brand communications include making the brands message stand out among the clutter of advertising from competitors and convincing customers of the credibility of the brands offerings. In addition to these, celebrity endorsement is important to luxury brands for the many reasons. 1. Celebrity endorsement is a great brand awareness creation tool for new luxury brands. 5

Luxury watch brands

2. Endorsement by celebrities helps to position and re-position existing brands. 3. Celebrities are used to revive and revitalize staid brands. 4. Celebrities are used to create global brand awareness. 5. Celebrities promote a brands products and appeal. There are several ways that celebrities can be used to either endorse a luxury fashion brand or show an association with the brand. The classic and most widely utilized method is the paid-for media advertisement mostly found in fashion magazines and on television. This is where a celebrity is photographed or filmed with an often appealing product of the brand in question. The themes of these advertisements often vary but the underlying message is uniform and that is an indication of a direct connection between the brand, its products and the celebrity. Additional ways that celebrities are used to endorse brands include the following.

3.

Word-of-Mouth (WOM) is a social communication between consumers or between businesses about

a product, service or brand. WOM is a very credible source of information because it is from close contacts, often friends and family members. Both positive WOM and negative WOM can benefit the consumers and companies, depending on the situation. So, in the case of luxury watches WOM must be encouraged because paying huge amount on buying a watch deserves a perfect quality to be gained in return. WOM is one of the best forms of advertising because it is very effective both in terms of cost and conversion into purchases. When consumers have a strong affection for a product, they become avid users. Potentially, it can become their missions to educate and convince their friends to buy and use the same product. They can spend their time and effort even without any direct compensation from the company. Thus, it is free advertising for the company. Additionally, a decline of trust in commercial organizations strengthens the importance of WOM, since consumers become more aware of different tactics employed by marketers, organic marketing approaches are amongst the few credible sources left. WOM facilitates a faster product introduction and adoption process, it also serves as an indicator for the success or failure of the product.

Luxury watch brands