What Features Does Rolex Introduce to Meet Customers' Requirements - Research Proposal Example

Marketing Strategy Table of Contents Introduction 2 The World Watch Market 2 Investigation and Analysis 4 Portfolio Analysis 4 Market Segmentation 5 Environmental Analysis 5 New Product Development 6 Competitors Analysis 7 Recommendations 9 Conclusion 11 References 13 Introduction The brand of wristwatch chosen for the project is Rolex. It is a Swiss watch producer primarily known for its quality of products (Watch Info, 2006). The marketing strategy begins by identifying the needs of the customers and finding out what they require. The project makes an analysis of the marketing strategy that has been applied by the company to meet the requirements of the customers. Firstly, it presents the current situation of the world of luxury watch brands. This primarily comprises of the market share of the luxury brands of the world. Then it makes an analysis of the various product lines of the brand. A discussion of the way in which the market is segmented by the brand and the purpose of such segmentation have been presented. The environmental analysis of the brand presents the nature of external environment in which the company operates. Then a competitive analysis has been provided to identify the brands which have been posing threat to the brand. This has been done using the contemporary tools and techniques of marketing. Having done this the project proposes suitable recommendations or changes in its marketing strategies. This includes the market segment that the brand should target, the introduction of new styles and designs, the use of technology and the use of best price. This has been done keeping in view the future welfare of the company and the ensuring the welfare of the stakeholders. The World Watch Market The number of millionaires in the world has doubled since 1996. The increase in spending of the customers has resulted in the rise in prices of all kinds of commodities. The luxurious consumer demonstrates a high growth in their propensity of spending. “In 2006 the typical consumer's spending on luxury items rose 6.6% to reach $56,065, following an increase of 3.8% in spending in 2005” (Aginsky, 2008). USA comprises of a major portion of the market for luxury brands and is expected to expand even further. The following figure shows the market shares of the premium brands of watches in the world. Figure 1: Market Share of the luxury brands of watches of the world (Source: Europa Star, 2005) The number of watches sold in Shanghai amounts to 1.5 million approximately in a year. The sale amounts to 55 million euro. However, 45% of the sales comprises of imports. Although Shanghai’s production of watches remain high, even then the city’s demand for foreign watches remain substantially high. This reflects the reason for the growth of the watch markets in the world. The people’s growing concern for design, style and image constitutes the main reason behind the success of the luxury watch brands of the world. Watches are considered to be fashion accessories and style symbols (Europa Star, 2005). Omega is one of the most popular brands among the high income individuals of the world. “In the mid-range, Longines, Titoni and Oris lead the field” (Europa Star, 2005). Domestic brands like Casio and Swatch have also grown in demand recently. Another place where the watch market has progressed considerably is Russia. The rise in sales of luxury watches was 39% in the year 2007. This time was considered to be most valuable time for the progress of the watch market. In fact the sale of Swiss watches had increased considerably during the same time. Research reveals that the market conditions of the world was phenomenal and served as the most promising factor towards the flourish of the luxury brands market. The demand for luxury watches rose substantially in Russia, Asia, Middle East, and in America (Aginsky, 2008). Investigation and Analysis Portfolio Analysis Launching of new product lines at different points of time have been the key strategic moves made by the brand. In 2009, Rolex launched a number of new product lines at prices unbeatable. It has also made watches available at discount prices. Rolex Submarine is one of its product lines which have been made available at very low prices. However, it has been able to capture a substantial share of the market. The Swiss Wrist has been providing used Rolex models and other Swiss watches. One of these brands is Rolex Datejust. The company has a huge network of dealers, clients and collectors across the world who have been delivering the customers with the best used Rolex models and designs at the wholesale prices (Get a Rolex, 2010). Watches designed for different styles and fashion comprises of the portfolio of Rolex. Few of these watches are Rolex Oyster Perpetual Watches, Rolex Professional Watches and Rolex Cellini Watches. Market Segmentation The sole purpose of market segmentation is to allow the sales program to attend to those prospects which are most likely to purchase the offerings of the company. It must be done judiciously because it ensures the best returns on the marketing and sales expenditures. The primary concern of the customers who use Rolex watches is to satisfy their social esteem and pleasure. Rolex tries to focus on its customers’ emotional requirements. It adds to the esteem of the customer. The watch tries to maintain its use as status symbol for the wealthy, refined and the dynamic society. The focus is to reach those customers who are rich and esteemed highly in society. The watch is not just required for the purpose of meeting the customers’ functional requirements like that of Timex and Titan (Business Plans, 2011). Rolex watches meet the desire of customers who use them for the purpose of dignity and self esteem. Environmental Analysis The most important threat that the brand is confronting is imitation of its looks. People would love to have a taste of luxury watches but cannot afford them. That is why a number of new brands have arrived which have been able to imitate the fashion, style and design of the watches. It is alarming to see that these watches have been able to gain much of the popularity. In fact a number of fake Rolex watches have also emerged in the market. This had a damaging effect on the brand by spoiling its goodwill (Watch Beef-a, 2010). It is possible that such fake watches would take away a major proportion if the market for Rolex watches. They are obviously available at cheaper prices and consequently their demand would also be high. New Product Development Rolex decided to launch a new brand of watch called Rolex Submarine. It was considered to be “the quintessential divers’ watch” (Watch Beef-b, 2010). This was meant to capture a completely different segment of the market. The divers were chosen as the best market segment for the brand. This segment was different from the conventional type of customers that the brand used to target. The idea was to bring about a completely new kind of watch for a new set of customer base. This move was seen as a proactive step in which the company’s resources were allocated towards growing its share of the market using a new approach. This is considered to be strategic move on the part of the brand because the market was submarine watches had not been fully tapped. It would have a large untapped market for the watch. However the brand retained its luxury factor. It was a display of technological engineering and “a range of technological improvements” (Live Trading News, 2010). Introducing this watch was a strategic move of meeting the requirement of those customers who were more technology savvy and preferred less glamour. As the quality of the watches of Rolex is extremely high, so is the price. That is why Rolex watches are considered to be a symbol of the rich celebrities. Initially the company had targeted the women belonging to the high class of society. Later on it target segment expanded to the men as well. The aim was to make people realise that watches are not only meant for the women. It is apparent that the company targets a very niche market segment consisting only of the rich people in society. Competitors Analysis A new set of brands have been flooding the markets recently. They are likely to pose severe competition for the Rolex. Some of the names worth mentioning are “Montblanc Star Worldtimer Automatic”, “Richard Mille”, “Maurice Lacroix Masterpiece” and “Roue Carrée Seconde” (Watch Luxus, 2007). All luxury brand watches have been competing with each other to deliver the mist innovative models. The brands are adopting new technologies like hi-tech coatings and robots. A noticeable change has been witnessed where the watchmakers are making use of the fashion brands to design new models for their watches (PR Log-b, 2009). New materials are increasingly being used by the luxury brands. Presently, the Swiss watches are completely dominating the world of luxury watches. They are contributing almost 100 percent to the share market. Swiss watches are exported to most of the developing countries of the world. However, incomes have increased across the world. This has created a group of affluent and young professionals whose purchasing power remains high. These countries prove to create potential opportunities for the expensive watch makers of the world (PR Log-b, 2009). The Swiss companies are the most important dominating this market at present. The largest share of the market is captured by Richemont, Rolex and Swatch. Many of the luxury companies have been tightening or restricting their requirements for qualifying as Swiss-made. This has been effective in forcing the smaller companies to move out of the market. Thus the smaller companies are finding it difficult to survive in the market which is already dominated by the Swiss watchmakers (Aarkstore Enterprise, 2009). One of the other major competitors of the company is Omega. Although Omega is a smaller brand it has been growing at very fast pace. Omega watches took over a major portion of market share from Rolex which came as a serious threat to the company. This was possible because the Omega watches came with trendier designs and styles and at a cheaper rate. A 23 years old student was heard “I won’t wear Rolex, that’s a brand for my dad” (Mulier, 2010). She preferred to buy an Omega watch which produced newer style of watches. This is the reason why the company has been trying to introduce new brands in the market. It has been trying to use materials which are light and strong. It has been trying introducing special features in the watches to give it a newer look. Rolex watch-makers are trying to change the look of the watchcase and the bracelet (PR Log-a, 2010). Rolex has been trying to retain its market in China which makes the largest market in the world for Swiss watches (Mulier, 2010). Although China has been the major market for the company so far, it has been trying to expand its operations in the US market as well. In fact it has been selling brands in the nation at a cheaper rate than its competitors like Tag Heuer. “For example Rolex, rainbow Timemaster automatic table series starts at $ 3 breitling watches,600 dollars, is very close to the people in the United States” (Watches Code, n.d.). The demand for Rolex watches as fallen across the world because of the recessions. Research reveals that the consumer spending on luxury items in the US has fallen considerably due to the economic downturn. Thus the company has been trying to enhance its sales of the lower end models and has been successfully doing so. The company is very optimistic about its recovery by 2012 (Government Grants US, 2010). Rolex has been sharing its profits with some of the non profit organisations and is well aware of its corporate responsibility that very few other companies can boast of. This has been adding to the goodwill of the company. The reputation of the brand was successful in sheltering it from the ill effects of the global crisis to a substantial extent. Recommendations It is true that the brand has been able to capture the niche market of the high class people across the world. It should continue to do so. But it must be realised that the world is not as conservative as it was. It is becoming more liberal. People looking for the traditional looking watches have been showing a gradual change in their tastes. The taste has been changing from traditional to trendy. In fact they are looking more towards simple solutions, newer features and latest use of technology (Business Plans, 2011). Since a number of luxury brands have emerged, it is critical that this brand must try to highlight on the functional requirement of customers. It is time that the watch must be portrayed as something which can meet the customers’ both aspirational and functional requirement. It is not just a piece of object to display and showcase. The watch can be used by people for assisting them on their daily chores. The brand must be clear about the different personalities of people, different professions and the requirement of each profession. For example, the doctors’ profession requires them to be extremely punctual. If the market for doctors is to be tapped, the brand must design such watches which would act as a scheduler or even an alarm clock. For people who are vigorously travelling from place to place, a design can be developed for them which would be able to swap between the various time zones. As a number of new brands have been evolving and taking its market share, it should look towards changing its market segment as well. With economic development, the people from the middle class are being able to afford more of the luxury items. They also constitute a major proportion of the population. It would be beneficial to trap this market. The watches produced by Rolex remain far above the reach of the middle class people. It is critical that the company introduce brands at little cheaper rates which would make it more affordable. The company’s promotional strategies would also require alteration. It should not aim towards only the upper class of society. It should aim towards attracting the young and educated males and females who are looking for both the trendy and technologically advanced objects. The brand already has a stable market in China which has also been growing. It must look towards expanding operations in the growing economies of the world. Since it has been able to occupy a major portion of the market in China, it is apparent that its relationship with China has also strengthened. Rolex happens to be one of the most wanted brands in China. The brand should not alter any of its strategies in the Chinese market as this would disturb the already established and successful market. The watch market in US has been growing. It would constitute a market where the brand can think of expanding more aggressively. In fact its strategy to introduce watches at a cheaper price in comparison to its competitors would be a good move on the part of the company. Russia and Ukraine are some of the other countries where the demand for luxury watches are on the rise. As mentioned earlier, Asia also has an emerging market for the watch brands. These are the few markets where the brands should think of expanding. The style of watches preferred by consumers has been changing. It is recommended that the brand keep up to the expected style of customers. It should replace the old and conventional styles with the new, trendy styles. In fact it must allow the designers to develop designs for the watches. This requires extensive research as the trends of the modern society keeps changing frequently and rapidly. Conclusion Thus it is apparent that the world is witnessing changes in tastes and preferences. Technology has also been changing. It is important that the brand introduces features according to the customers’ requirements. Rolex would have to introduce new technologies, designs and styles in order to retain its market share. One of the strategic moves recommended in the project is to introduce designs and models suited for the different professions. This would include introducing features which would be suited for specific professional needs, i.e., features present in a doctors watch would be different from the features present in a swimmers watch. Research reveals that a number of new brands have been emerging at lower prices offering the same features. This would act as potential competitors to eat away the market share of the brand. That is why the most important feature recommended is that the brand keeps introducing new styles in its portfolio at reasonable prices. This would be effective to drive away the small brands from the market. Its international expansion should also be concentrated more towards the nations which have been growing fast in comparison to those which are already economically advanced. China is where the brand has developed wide acceptance. It should continue to maintain its relationship in China. Moreover countries like Russia and Ukraine have also been portraying emerging market for luxury watches. The Asian nations have been showing similar signs and would prove to be potential market for the brand. Lastly, the brand requires a little change in the pricing strategy to make it more affordable in the market. References Aarkstore Enterprise. 2009. Global Watch Market Report: Focus on Luxury Watches. [Pdf]. Available at: http://www.prlog.org/10177800-global-watch-market-report-focus-on-luxury-watches.pdf. [Accessed on January 10, 2011]. Aginsky, A. 2008. Market and Industry Report: Russian and Ukrainian Watch Market. [Online]. Available at: http://www.russiablog.org/2008/07/market_and_industry_report_rus_2.php [Accessed on January 10, 2011]. Business Plans. 2011. Market Segmentation. [Online]. Available at: http://www.businessplans.org/segment.html. [Accessed on January 8, 2011]. Eurpa Star. 2005. Market Focus China: Shanghai watch market. [Online]. Available at: http://www.europastar.org/1000751944/. [Accessed on January 10, 2011]. Get a Rolex. 2010. Swiss Wrist Announces 2009 Rolex Watch Models. [Online]. Available at: http://www.get-a-rolex.com/rolex-submariner/swiss-wrist-announces-2009-rolex-watch-models/. [Accessed on January 10, 2011]. Government Grants US. 2010. Rolex wrist watches intends to beat Tough economy With New Manufacturing Solutions. [Online]. Available at: http://governmentgrantsus.org/rolex-wrist-watches-intends-to-beat-tough-economy-with-new-manufacturing-solutions/. [Accessed on January 8, 2011]. Live Trading News. 2010. Rolex Oyster Perpetual Submariner Date. [Online]. Available at: http://www.livetradingnews.com/rolex-oyster-perpetual-submariner-date-12487.htm. [Accessed on January 10, 2011]. Mulier, T. 2010. Rolex’s Swiss Watch Hegemony Threatened by Omega (Update1). [Online]. Available at: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aG8H3YKlGUsU. [Accessed on January 8, 2011]. PR Log. 2010. Rolex Watches,rolex Watches Official Website,rolex Watches For Sale,rolex Watches Price List. [Online]. Available at: http://www.prlog.org/10687117-rolex-watchesrolex-watches-official-websiterolex-watches-for-salerolex-watches-price-list.html. [Accessed on January 8, 2011]. Watch Beef-a. 2010. Replica Rolex Watches Also Symbolize A Person Social Status. [Online]. Available at: http://www.watchbeef.org/news-Replica-Rolex-watch-Also-Symbolize-A-Person-Social-Status-1759.html. [Accessed on January 10, 2011]. Watch Beef-b. 2010. Rolex Oyster Perpetual Submariner Date Watch In BaselWorld 2010. [Online]. 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