Brand Management for Rolex - Essay Example

Brand Management for Rolex (A Case of Study) Table of Contents Brand Management for Rolex (A Case of Study Table of Contents 2 Introduction 4Literature Review 5 Brand Management 5 Brand Positioning of Rolex 5 Brand Awareness of Rolex 5 Branding Strategy of Rolex 6 Statement of Research Problem and Proposed Research Methods 8 Research Methods 9 Data Collection 9 Explanation of Research Process Undertaken and Description of Findings 10 Analysis of Findings 10 Brand Strategy of Rolex 11 Analysis of Branding Strategy of Rolex 14 Analysis of Brand Value of Rolex 17 Analysis of Business Performance of Rolex 18 Analysis of Brand Management of Rolex 19 Conclusion 21 Introduction Brand management helps to develop a strong long-term emotional relationship between a brand and customer. Brand management represents a company product at the market. Branding can reveal about the company, its products and services to the world. Thus, brand management is an important marketing tool for any company which helps to create brand awareness and image of the brand towards customers. The case study will explain the brand management strategy developed by Rolex in the international market. Rolex has followed certain branding strategies to maintain its good image in the international market and enhanced its brand value significantly. This case will analyse the strategies that has made Rolex a famous brand. It is a descriptive case study. In this case study, qualitative method has been followed. The data that is used in this case study is secondary data and it has been collected through websites and books. The case study consists of six chapters. The first chapter describes the brief overview about the overall case study. The second chapter is the literature review. In this chapter, the details about the research topic have been explained to generate in-depth understanding of the research problem. The third chapter consists of statement of research problem and the research methods where the main research problem has been identified and the methods of conducting the case study have been stated. The fourth chapter will describe the research process i.e. what has been done to perform the case study analysis. In the fifth chapter, the secondary data will be analysed with regard to the research problem and the literature review. The final chapter is the conclusion where the actual findings of the research will be described on the basis of analysis of the findings. The basis of the case study is brand management of Rolex. Literature Review Rolex is one of the dominating deluxe wristwatch manufacturing companies. It is a multinational company which operates their business in excess of 100 countries. Rolex is renowned for its good business performance and high status (Rolex, n.d.). Brand Management Brand management is about developing an image of a brand and also maintaining it. Brand management helps a company to define any product, position the product, and deliver it to the customer. It is an ability to generate and sustain the brand. A strong brand is an asset for a company which discriminates any product from other alternative products. It can set an additional image to the product of the company (Management Study Guide, 2011). Brand Positioning of Rolex With regard to establishing brand image, Rolex always prefers to use certain traveller or singer or other stylish person for advertisement purposes. Rolex seeks selective media for advertising their products which can help to form the image of the brand as well as control the advertisement cost. Rolex is extremely elegant to accomplish multiple factors while spending least amount of money which can help to maintain the balance between optimal cost and profit. Through their good marketing skills, Rolex successfully increases their fans and earn the honour and faith of Rolex users (Fairy, 2010). Brand Awareness of Rolex From early 1930s, Rolex focuses on product quality. The advertisement of Rolex was limited to just product level and made by using verbal statements and graphics. Rolex depicted that its products are targeted to only high class customers and it is out of reach of ordinary people. In the period of 1950s and 1960s, the global economy started to improve and the number of middle class standard people had increased. Rolex started to enhance and develop the brand to fulfil the requirements of consumers. Rolex has developed their advertising by using a number of sports and other successful persons for their promotions and has made progress in establishing the brand. In the year 1970, Rolex’s rival Quartz had reduced the product price and as a result almost half of the watch companies started to sell quartz products. To counter against the Quartz strategy, Rolex had implemented quartz technology in their products to improve the competitiveness of the company. Rolex put much effort to form a brand image and targeted its product for successful person and upper class people. The use of Rolex watch in James Bond character had further increased the brand image. In the 1980s Rolex’s competitor, Patek Philippe followed unique branding strategy to target its product to the young customers. Piaget tried to target their products to woman customers who pursue their dreams. But, in 1990s, the economy had changed and rich people become richer and they got plenty of money to spend. This type of people tries to increase their collection and prefer to travel more. The watch production had experienced change and diamond, gem, gold and other expensive materials became one of the contents of watch. Rolex put much effort to develop fashionable and stylish watches for wealthy and younger customer. Innovation became a major strength of Rolex. The globalisation made many top brands to enter into the global watch market. In 1990s, when Rolex penetrated into the Chinese market it began to initiate many advertising to develop the brand and enhance the brand awareness. In 21st century Rolex selected Brad Pitt for advertisement of Rolex. Rolex had developed its brand as classic as well as fashionable watches and successfully differentiate its products. The Rolex brand has became symbol of luxury watches. Through good brand management Rolex has developed a successful image for their brand (Rolexshow, 2011). Branding Strategy of Rolex Nowadays, the market for luxurious products is increasing internationally. For example, in America, almost 2.2 million people have liquid collection worth 1 million USD. The luxurious product market is different than other markets. This type of market does not depend on the usefulness of product rather it is dependent on people’s psychology about the product. Thus, in order to remain in a competitive position in the luxurious market a company must focus on choosy type of customers and attract them to pay more prices for any particular product. Thus, there is a need for good branding strategy for luxurious company such as Rolex, because good branding helps to motivate people to spend more on any product (Liebeskind, 2004). Over the years, Rolex have maintained strong position in the luxurious watch market. It has countered other competitors and at present it is known as an independent deluxe watch brand internationally. Unlike other watch companies, Rolex focuses on brand purity, fashion, business performance and stability. These are the major strategies that have made Rolex one of the top watch brands (Liebeskind, 2004). At the time of World War II, Rolex started to develop its reputation for good business performance. In the year 1926, Rolex had first developed the water proof wristwatch named Oyster. Rolex uses Mercedes Gleitze for the advertisement of Oyster, where she swims while putting on the water proof wrist watch of Rolex. To further improve their brand, Rolex had replaced their products without any cost for the British Pilots at the time of World War II. By positioning their products in the European market, Rolex successfully developed brand awareness among the US servicemen. It helps Rolex to enter in the productive market of America. Through good business performance Rolex gained good status in the watch industry. In the year 1945, Rolex had developed watch with automatic date changing device. Rolex had continued to develop their product by integrating new features in the watch. It had implemented pressure resistant system, height and time measuring device in the watch. Thus, Rolex watch became a major tool for calculating the time in any sporting events (Liebeskind, 2004). In the year 1950, Timex had introduced pin–lever system which helps to develop cost-effective watches. In the year 1968, when Quartz technology had come out, it permitted both analog and digital time and invented new functions in watch products. But, Rolex was unenthusiastic about implementing the Quartz technology. Despite the risk of inexpensive watches, Rolex stuck to its strategy towards improving its brand position in the luxurious watch market and continued to highlight on product quality. When the era of precision and reliability of watches had finished in the quality watches, Rolex successfully developed its brand image through ranges of products. It started producing watches by using expensive materials such as platinum, gold, diamond and continuously injected new facilities in watches, for example ability to show date, week, world time and others. As a result, when Quartz had only maximum 100 components in their products, a typical Oyster consisted of almost 220 components (Liebeskind, 2004). Rolex had kept its brand image by preventive production strategy. Rolex does not increase its production even in the condition of high demand because in case of luxurious products the scarcity of any product can increase its value. Thus, high demand of luxurious product helps Rolex to charge premium rate (Liebeskind, 2004). Rolex is focused on maintaining the brand clarity. While a few companies use its primary product to increase the sales of other luxurious product, Rolex had attached with only producing watches. Unlike other companies, Rolex had never licensed its brand name to the other manufacturing companies to show its brand clarity. Rolex maintains its brand clarity by fighting the fraudster. There are many companies which produce fraudulent products that are similar to Rolex watches. Rolex invests more money to regulate fake product compared to other brands (Liebeskind, 2004). Another branding strategy of Rolex is the availability of products. Rolex’s products are sold in suitable location only. Rolex seeks for appropriate deal with good image and its products is available on large retail outlets at attractive places. Rolex is too cautious about its brand image and it can be found when Rolex engaged in a dispute with one of its retailers, Tiffany for imposing its name on Rolex watches. As a result, Rolex had plunged Tiffany as its dealer. In order to control its sales, Rolex had cancelled deals with almost 100 dealers (Liebeskind, 2004). Statement of Research Problem and Proposed Research Methods This case study research will address the brand management of Rolex and the impact of the branding strategies over the success of Rolex. The main research problem is to see that whether its branding strategy is successful or not. In the literature review, it has been seen that Rolex had put much emphasis on branding than any other activities of marketing. Rolex had maintained unique branding strategies which are different from other luxurious watches company. It had maintained its distribution, production and focuses on product quality and brand image instead of increasing the sales volume. At present, Rolex is counted as one of the top luxurious brands and it has strong brand value. Research Methods Analytical method will be followed in this research because the data which will be used in the research is already available and accordingly it has been used for exploration and evaluation of the research problem. This case study will explore the brand management and evaluate its impact on the brand image of Rolex. Qualitative methods has been used in this research as this research will explore the issues regarding brand management of Rolex and try to understand the events related with it and thus develop clear understanding about the research problem. This case study will be done on the basis of unstructured information. As it is a single case study the population is global luxurious watch industry and the sample is Rolex Company. The reason for choosing Rolex is that it is a strong brand which produces luxurious watches and has good business performance since its establishment. Data Collection The secondary data has been used in this research by external sources. The reason for using secondary data is that it is easy to collect and secondary data is sufficient to conduct this case study research. In secondary data, vast amount of information can be collected which may not be possible in primary data and thus it can help to increase the knowledge about research problem. The following methods have been used for collecting secondary information for the research problem: Website: Secondary information has been collected from the company website and other appropriate internet databases. As internet is quite useful and provides vast information with less time and effort it is useful for conducting this case study research. Information regarding various branding techniques of Rolex brand has been collected from various internet sources. Books: Books had been used in this case study research because books are the most reliable sources and it can help to understand the theoretical as well as practical understanding regarding the research problem. Information regarding brand management and its application has been collected from books. Explanation of Research Process Undertaken and Description of Findings To conduct this case study, first the research problem has been identified. Through study of literature review the basic knowledge about the research problem has been established. The secondary sources have been used to analyse the findings of the research. To conduct this research appropriately all possible factors regarding the research problem has been considered. The secondary data has been collected by using external secondary sources which are internet databases and books. All information which has been taken is related to the case study. As the research is unstructured in nature the data that had collected was arranged orderly to analyse it with the research problem. The data is analysed by using broad approach and the findings has been matched with the literature review. The major problem faced in conducting this research is that analysing the unstructured information was a bit confusing to understand it was quite much time consuming. Finding exact information relating to the case study problem was another difficulty in this research because certain information did not match with the research problem. Further, as secondary data is being used so there is no control over the accuracy of the information. The finding has been made by analysing the secondary data. The finding is related to the literature review and there is resemblance between the findings and literature review. Analysis of Findings At present, Rolex has successfully developed its brand image in the international market. Unlike other factors of marketing, Rolex has focused mainly on branding its products. It has many competitors in the international watch and jewellery market. By maintaining good relationship with top musicians, artists, travellers and athletes Rolex has improved its brand image exclusively. In the year 2003, Rolex had spent almost 32.4 million USD for advertisement in magazine. It helped Rolex to preserve the status of its brand. By applying premium pricing method Rolex tries to differentiate its product from other competitors. The basic price of Rolex watches start from 2500 USD and can go up to 200000 USD depending on the material used in the watches. Rolex never trades its products through internet; its products are spread internationally through 60000 official dealers (Keller, 2008). Figure: 1 Table showing Rolex Brand Ambassadors Source: (Keller, 2008). Brand Strategy of Rolex Brand Equity is the most important part of the branding strategy of Rolex. Rolex provides its customers certain benefits which are superior quality, craftsmanship and creativity. The premium cost and limited availability has made the brand so strong. Thus, at present when anyone carries a Rolex wristwatch it makes people to pay attention to it. Figure: 2 Rolex’s Brand Strategy Source: (Keller, 2008). By analysing the branding strategy of Rolex it has been seen that Rolex brand focuses on its business performance, brand image, customer and sport. Rolex has sponsored a variety of sporting events for positioning its brand, for example, US Open Championship, Rolex Trans-Atlantic Challenge, Ryder Cup, Wimbledon, and others. Rolex’s customer base is quite strong than other competitors. The strong branding image helps Rolex to enjoy customer loyalty and they tend to purchase the products of Rolex repeatedly (Keller, 2008). Fig: 3 Rolex Brand Positioning Source: (Keller, 2008). Analysis of Branding Strategy of Rolex There are a range of strategies that the company employs for branding their products. For example, product brand, range brand, line brand, umbrella brand, source brand and endorsing brand. Among all the strategies, Rolex has followed the umbrella branding strategies. In this strategy each product continues to support its own base name under the same brand (Sharma & Et. Al., 2010). In umbrella strategy, the Rolex brand covers several product categories. Fig: 4 Rolex Umbrella Branding Strategy Rolex Brand Source: (Komonosky & Et. Al., 2005). Analysis of Brand Value of Rolex Interbrand, which is an organisation that examines international brands, had ranked Rolex at the 68th position among 100 top brands in the year 2009. Company whose brand value is above 1 billion USD falls under the Interbrand’s “Best Global Brand” list. Interbrand had showed the brand value of Rolex to be worth 3.6 billion USD in the year 2000, which was 47% more than 1999 (Europa Star, 2000). According to the ranking of Business Week on “Global Brand Value”, Rolex was placed at 71st position in the year 2007. Rolex’s brand value was calculated as about 4.5 billion USD and the growth rate was 8% per year (Helmer, 2007). In the year 2011, brand value of Rolex has become 5.53 billion USD and it has captured 6th position in the “Global top 10 Brand” list (Louboutin, 2011). Fig: 5 Table showing the brand ranking of Rolex from 2007 – 2011 Type of Ranking Ranking Category By Year Rank Brantz Top 100 Brand Brand Value Milward Brown 2007 100 Best Global Brand Brand Value Interbrand 2007 71 Top 20 Cool Brands Brand Popularity CoolBrands 2008 9 Top 20 Cool Brands Brand Popularity CoolBrands 2009 19 Top 100 Mentioned Brands on Twitter Social Media Brand Republic News 2009 85 Luxury Brand by Digital IQ Brand Performance L2 ThinkTank 2009 14 Luxury Brand Brand Value Milward Brown 2009 5 Engagement Scores for Worlds Top 100 Brands Social Media Wetpaint and Altimeter 2009 59 Best Global Brand Brand value Interbrand 2009 68 Luxury Brand by Digital IQ Brand Performance L2 ThinkTank 2010 48 Top 100 Official Consumer Superbrand Brand Popularity The Center for Brand Analysis 2010 2 The 100 Most Desired Brand Customer Satisfaction Clear 2011 17 Top 100 Consumer Superbrand Brand Popularity The Center for Brand Analysis 2011 2 Source: (SyncForce, 2011). Analysis of Business Performance of Rolex The sales of Rolex’s luxurious watches have also increased considerably. In the year 2001, the annual sales of Rolex were calculated as 25,840 USD. Rolex captured the highest market share of luxurious watch. Fig: 6 Annual Sales of Rolex in Comparison with other brands in the year 2001 Source: (Komonosky & Et. Al., 2005). In the year 2008, one of the top newspapers of Geneva had showed that Rolex’s annual sales were 770,000 per annum. The sales amount of Rolex was 4.9 billion USD. The production volume was calculated as 33% more than 1999. In the European market and Asian market the growth rate of Rolex has increased considerably. It was estimated that the sales of Rolex will increase to almost 1 million wristwatches per year i.e. 30% growth. For increasing its business performance Rolex had implemented ‘cut–throat marketing strategy’ to compete in the Asian luxurious wristwatch market (Helmer, 2007). Analysis of Brand Management of Rolex The success factor of Rolex was its brand management which makes it one of the top ‘international luxurious brands’. In this era, the marketing is the principal force of international business and brand is valuable intellectual property which is more worthy than other things for a company. A strong brand helps a company to earn more and maintain its customer loyalty. Unlike other strong brands, Rolex’s brand management focuses on product detail, brand image and supreme quality. Thus, any person who wears Rolex watches can feel at a high status because he had chosen to obtain the most valuable brand globally. When a brand can successfully generate impression of unique quality in a person that he cannot get in other brands becomes a strong brand. Rolex had successfully developed good impression of genuineness and special traits through their good brand management strategies (WordPress, 2011). In the year 1999, Rolex was one of the top payers for branding and it took 1st position in terms of spending for improving the band. At that time, Rolex had increased its expenditure on advertising to 13.33 million USD i.e. almost 12%. It has been seen that Rolex’s branding strategy was different than any other company. Whereas, other luxurious watch brands had introduced new models Rolex had developed strong watches with excellent progress. In certain stage, Rolex fell behind other competitors. However, Rolex was deeply focused on maintaining its brand image and marketing policies. Rolex believed on basic automatic progress in business which is quite consistent and accurate. Rolex had strict control over its distribution and production. From the marketing perspective, Rolex differs from other watch companies. Thus, good branding is one of the ways of success in today’s business and Rolex has successfully utilised its branding strategies (National Jeweler, 2001). Fig: 7 Table Showing Top Luxury Dream Brands in Japan, U.S. and Europe in the year 2003 Source: (Chevalier & Mazzalovo, 2008). Conclusion From the above analysis it has been found that the brand management of Rolex was unique from other luxurious watch manufacturers and it makes Rolex one of the most precious brands in the world. From the above table in figure 7, it can be seen that Rolex is the common brand in all three countries (Japan, Europe, and the US) in terms of most luxurious dream brand. This is the result of Rolex’s good brand management. The success of any brand can be judged by its ability to sell its product with premium price compared to other similar products. Thus, a brand plays a major part in characterising the level of recognition of a product in front of potential customers. Brand management aims at attracting the interest of people towards the product in contrast to other competitor brands. It is based on consumer awareness. Before positioning any brand the customer base must be identified first and then a company can employ the branding strategy accordingly. In case of Rolex, it had decided to target the rich customer segment for its products and thus made its branding step accordingly. From figure 1 it can be seen that Rolex only uses famous artists, travellers, players and equestrians for advertisement of its Brand. It helps to enhance its brand image. Rolex never loses control of its production. Even in times of high demand Rolex stick to its production policy. Rolex never spends money unnecessarily. It maintains its brand image as well as controls the operating cost. The channel of distribution of Rolex brand is different than others. Unlike other brands, Rolex brand is available only in large retail outlets at an attractive venue which suits its brand image. To maintain its product quality and fight against fake products Rolex had cancelled many dealerships with retailers, globally. Thus, it can be seen that there is a huge demand of Rolex watches than its supply. It never sells its watches through online marketing. In term of price, Rolex never reduces its price to certain limit; otherwise it can damage the brand image. At present, Rolex is recognised internationally and successfully maintains its brand image whereas other competitors have been comparatively unsuccessful to do so. The success of Rolex brand is not only due to its branding but also due to its inflexible quality and creativity. Besides, maintaining brand image Rolex had made series of innovative products such as Oyster, the first water proof wrist watch, automatic date time mechanism, pressure resistant system, and time measuring device in its watches. The brand management has made Rolex’s products different from other mass products. It has improved its brand image to such extent that the brand ‘speaks for itself’. Rolex has always adjusted its marketing strategy to improve its brand image. From figure 5 it is quite apparent that Rolex has maintained its brand image among the top ranking brands in the world. Thus, it can be said that Rolex has proved itself to be one of the world’s best supreme wristwatches manufacturer and its brand strategy has been successful. References Chevalier, M. & Mazzalovo, G., 2008. Luxury Brand Management: A World of Privilege. John Wiley and Sons. Europa Star, 2000. Rolex Deemed “Most Valuable Watch Brand”. Nielsen Business Media. [Online] Available at: http://www.allbusiness.com/retail-trade/general-merchandise-stores/4167440-1.html [Accessed May 27, 2011]. Fairy, F., 2010. Rolexs Brand Strategy. Articlecat. [Online] Available at: http://www.articlecat.com/Article/Rolex-s-brand-strategy/426074 [Accessed May 27, 2011]. Helmer, J., 2007. Privatizing Rolex – The fake Tells A Truer Tale. Dances With Bears. [Online] Available at: http://johnhelmer.net/?p=4958 [Accessed May 27, 2011]. Keller, K. L., 2008. Strategic Brand Management, 3/E. 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