Luxury Brand Management: Patek Philippe - Case Study Example

Luxury Brand Management: Patek Philippe Table of Contents Executive Summary 3 Introduction to the Brand 4 Brand Analysis 4 Brand Identity 4 Brand Image 5 Brand Personality 5 SWOT Analysis 6 Recommended Strategy for Brand Development and Growth 6 Heritage Marketing &Branding 6 Brand Positioning 7 Exclusive Marketing 7 Proposal for an International Event 8 Critical Success Factors (CSFs) 9 For Brand Growth 9 For the International Event 10 References 11 Appendix: SWOT Analysis of Patek Philippe 13 Executive Summary Patek Philippe is a leading super-luxury watch brand based in Geneva, Switzerland. The brand has been in existence for the last 176 years. The brand is presented and marketed as an exclusive brand with a rich heritage. Its customers perceive it as an exclusive luxury brand and are prepared to pay a premium for it. In terms of brand personality, the brand is presented as sophisticated, as can be seen in the names of some of its collections such as the “Supercomplication”. A SWOT analysis of the brand points to its heritage as its main strength and low brand recognition as the main weakness. A three-point strategy is recommended for the development and growth of the brand: heritage marketing and branding, exclusive marketing and brand positioning. Also, it is recommended that the brand hires a recognized consultancy with experience in handling luxury brands to plan and execute international events aimed at promoting the event. A number of success factors are identified for the proposed marketing strategy and the international event. Luxury Brand Management: Patek Philippe Introduction to the Brand Patek Philippe is a Geneva, Switzerland-based super-luxury watch brand. The Patek Philippe brand has been in existence since 1 May in 1839. The brand is owned by Patek Philippe & Co., the last independent family-owned watch manufacturer in Geneva. Its independence allows the manufacturer to exercise full creative freedom from the design, production and assembly of what experts consider the world’s finest timepieces (Patek Phillipe, n.d.). Constant innovation has propelled the Patek Philippe brand to the top of luxury watches. The brand has over eighty patents to its name. Brand Analysis A brand is much more than the name of a business or its products. A brand comprises a consumer’s experience with both the business and the product(Urde & Greyser, 2014) and is, therefore, a powerful marketing tool. A company may build its brand around the passion and vision of its founder or by exceeding the expectations of its customers, for instance. This section analyses the Patek Philippe brand in terms of its identity, image and personality. Brand Identity “Brand identity” refers to the way a business wants consumers to perceive their brand, but not how consumers actually perceive the brand. The components of brand identity are the visual aspects of the brand such as its name and logo, all created by the business. Like all Swiss watch manufacturers, Patek Philippe& Co. presents the Patek Philippe brand as having a rich heritage. Brand heritage refers to the history and qualities that a brand has had for a long time and are seen as an important part of the brand(Urde, et al., 2007). With a history spanning close to a hundred-and-eighty years, the Patek Philippe brand indeed has a rich heritage. The watch manufacturer is full aware of the leverage presented by its rich heritage. The theme of heritage recurs on the companys website. The watch manufacturer effectively uses the device of storytelling to persuade visitors that its brand has been proven to be true and reliable(Baum, 2011). Through storytelling, the brand is also presented as being consistent with the vision of its founders François Czapek and Antoni Patek.The brand also makes reference to its long history both on its website and in advertising by constantly quoting “Since 1839…” (Buza, et al., 2012). Brand Image By contrast, brand image refers to the manner in which consumers perceive a brand(Gur, 2012). A positive brand image is key to business success. Patek Philippe’s customers regard the brand as exclusive(Buza, et al., 2012). Indeed, Patek Philippe & Co. markets the watches as exclusive creations; the average price of a Patek Philippe, as of 2012, was $21,000. The most expensive Patek Philippe, called Supercomplication, fetched $11 million, the highest price ever paid for a watch(Buza, et al., 2012). For this reason, people are willing to undergo a rigorous application process to become the brand’s customers. In the process, they disclose their personal information such as their financial status and educational background. Even after they have been accepted, some customers have to wait for years before their orders are processed. The long waits persist despite the fact that the watch manufacturer has more than doubled its annual production from 15,000 units in the 1990s to 40,000 units today(Buza, et al., 2012). Brand Personality Just as people have personalities, brands too have them. “Brand personality” refers to a set of human qualities assigned to a brand. The essence of brand personality is to have the consumer relate with the brand, thereby increasing its equity – the additional value a brand gains over time in addition to the value drawn from its benefits. The five most common types of brand personalities are sincerity, ruggedness, competence, excitement and sophistication. A look at Patek Philippe’s collection reveals that the brand is presented as complicated; “Complications”, “Grand Complications”(Patek Philippe, n.d.) and the “Supercomplication” sold for $11 million (Buza, et al., 2012)are some examples. It is likely that most affluent consumers are “sophisticated’” and can, therefore, identify with this brand personality. SWOT Analysis The Patek Philippe brand has many strengths, but its heritage is probably its biggest asset. Brand heritage goes a long way into inspiring confidence in a brand(Baum, 2011); a brand of the statue of Patek Philippe must be trustworthy and reliable for it to have survived for close to two centuries. During that period, it must also have developed the culture of innovation and the resultant continuous improvement for it to have withstood competition. On the flipside, the brand’s main weakness could be its low brand recognition; compared to brands such as Rolex and Breitling, few people know about the Patek Philippe brand(Buza, et al., 2012). However, the low recognition could be a strength in disguise in the sense that it adds to the brand’s exclusivity and is in line with its manufacturer’s strategy of exclusive marketing. The complete SWOT analysis is provided in the appendices. Recommended Strategy for Brand Development and Growth A three-point strategy is hereby recommended for the growth and development of the Patek Philippe brand: heritage marketing and branding, brand positioning and exclusive marketing. Heritage Marketing &Branding Heritage marketing is primarily concerned with the long history of a product and the attributes associated with such long history(Hakala, et al., 2011). Indeed, the Patek Philippe brand holds an enviable position in the Swiss luxury watch industry: it is the oldest family-owned brand. Over, the years, Patek Philippe & Co. has perfected the art of watch-making to produce timepieces. The heritage is a great asset upon which the company should capitalise to develop and grow its brand around the world. Indeed, effort is being made in this direction. For instance, in its advertising and throughout its website, the company unceasingly reminds its customers and visitors that it has been around since 1839; this enduring presence is reason enough to trust the brand. However, the company should seek to leverage fully on its heritage. Closely related to heritage marketing is the concept of heritage branding. As a strategy, heritage branding entails packing and presenting the Patek Philippe brand as a social entity with a past and a future. The brand is a social entity in the sense that its users interact with it and in the process, develop the conceptions about the product. Brand Positioning The Swiss watch industry is characterised by high competition. There are approximately six hundred companies, many of which eye the luxury market. Over the years, Patek Philippe & Co. has strived to keep the Patek Philippe brand at the very top of the super-luxury segment. The company’s strategy has consisted in manufacturing a small quantity of high-value watches as opposed to producing for the mass market(Manfred & Rebecca, 2012). The company has remained true to this strategy even though annual production has more than doubled from around 15,000 pieces in the 1990s. In 2013, the company sold approximately 55,000, representing a 2.5% increase from the previous year. What the company needs to do is balance between increasing production to meet soaring demand and the need to avoid a situation where the brand floods the market with its watches. Exclusive Marketing Patek Philippe & Co. pursues exclusive or selective marketing. Selective marketing is a powerful tool for generating and maintaining value for a brand (Gur, 2012). The explanation is simple: by controlling the number of its watches entering the market, the supply of the watches remains low and prices go up. Moreover, Patek Philippe watches are goods of ostentation. The higher priced they are, the more valuable the affluent perceive them. All the 55,000 Patek Philippe watches manufactured in 2013 were sold via speciality dealers spread across seventy countries. In certain cases, customers have to apply to become customers before they can place an order. Some customers have to wait for years before their orders can be completed. The company should maintain the selective marketing strategy while improving its technical and other capacities to process orders expeditiously. Proposal for an International Event In mid-October 2014, Patek Philippe celebrated its 175th anniversary at its manufacturing plant in Plan-les-Ouates, one of the suburbs of Geneva(Gomelsky, 2014). Guests to the event included journalists, collectors and retailers. Six new wristwatches were unveiled at the highlysuccessful event, the showpiece of which was dubbed the Grandmaster Charm. Patek Philippe also took advantage of the event to show case its 175-year history. This paper recommends the hosting of similar events annually in the various countries in which the brand is present. Such events will not only boost the patronage of the brand by international customers, but also provide opportunities to reach new clients. Given the difficulty associated with organizing an international event, especially in a foreign country, Patek Philippe should consider engaging a luxury-marketing agency. The emphasis is on a luxury-marketing agency; whereas there are tens of thousands of marketing agencies around the globe, only a handful understands the luxury market. An example of such a firm is UK-based Luxury Connect. The company boasts of sixty-five years of experience working with luxury brands (Luxury Connect, n.d.). The company helps its customers increase their profitability through strategy and marketing. Critical Success Factors (CSFs) For Brand Growth Most people seek to stand out from the rest. One of the ways through which people stand out is luxury and luxury brands make this possible. Some of the major success factors for a brand include people, product, passion, pleasure, price and purpose(Rosa, 2012). Most luxury brands are characterised by personal attention accorded to the customer; every person in the company is an ambassador of the brand. Thus, many prestigious brands devote significant portions of their time and budgets to training their employees on how to handle customers. For the product, a luxury brand must preserve its integrity and authenticity. The implication is that the luxury product must be of consistent high quality. Indeed, Patek Philippe has performed well in this area. For luxury consumers, the price is a symbol of value; the higher priced a brand is, the more valuable it is, hence more desirable. Luxury customers have been known to be very passionate about some luxury products(Rosa, 2012). It is passion that drives them to become collectors. They may spend several years researching a brand they are passionate about. On their part, the people behind a brand must be seen to be passionate about their brand. Again Patek Philippe scores favourably in this area; the watch-making process is described passionately throughout its website. Luxury is pursued for pleasure. Therefore, the luxury brand must be pleasurable to the customer. The pleasure is delivered through great product design and attention to detail in its making. Most people wrongly believe that the sole purpose of a luxury product is to showcase wealth; truth is, besides being a symbol of status, a luxury brand must first fulfil a need. This idea challenges the notion among luxury watch makers that people don’t wear luxury watches to tell time, they wear them to make a statement about their wealth and social standing. Thus, Patek Philippe must not lose sight of the functional value of its watches. For the International Event One critical success factor in an international event designed to promote a luxury brand is positive publicity (Rosa, 2012). Prior to hosting any international event, Patek Philippe should publicise it through their website, the local media in the country where the event is happening and the international media. However, it is worth noting that positive publicity is an ongoing effort, not a once-off event. Thus, Patek Philippe should strive to maintain a positive public image consistently, not just in the run up to a major international event. Another critical success factor is effective organisation. For this reason, that Patek Philippe may need to hire the services of a marketing agency with experience in managing luxury brands. References Baum, L., 2011. The Communication of Heritage: How Swiss watch companies communicate their heritage on the Web site, Aarhus: Aarhus University. Buza, J., Luterbacher, A. & Sennhauser, P., 2012. Patek Philippe Watches, Bergen: Norwegian School of Economics. Gomelsky, V., 2014. Patek Philippe Celebrates 175th Anniversary in Style. [Online] Available at: http://www.nytimes.com/2014/11/06/fashion/patek-philippe-celebrates-anniversary.html?_r=0 [Accessed 23 April 2015]. Gur, O., 2012. The Brand as a Social System of Interpenetration: Conceptualizing Brand through Communications, London: The London School of Economics and Political Science. Hakala, U., Lätti, S. & Sandberg, B., 2011. Operationalising brand heritage and cultural heritage. Journal of Product & Brand Management, 20(6), pp. 447-456. Luxury Connect, n.d. About. [Online] Available at: http://luxuryconnect.co.uk/ [Accessed 23 April 2015]. Manfred, R. & Rebecca, R., 2012. Meta-luxury: Brands and the culture of excellence. 1st ed. Basingstoke: Palgrave Macmillan. Patek Philippe, n.d. Collection>All Models. [Online] Available at: https://www.patek.com/en/collection/all-models [Accessed 22 april 2015]. Patek Phillipe , n.d. Origins. [Online] Available at: https://www.patek.com/en/company/origins [Accessed 22 April 2015]. Rosa, C. d. A., 2012. Luxury Today – Key Factors for Success. Berlin, E-Leader Berlin. Urde, M. & Greyser, S., 2014. The Nobel Prize: A ‘Heritage-based’ Brand-oriented Network, Boston: Harvard Business School. Urde, M., Greer, S. & Balmer, J., 2007. Special Issue Papers: Corporate brands with a heritage. Brand Management, 15(1), pp. 4-19. Appendix: SWOT Analysis of Patek Philippe Strengths Brand heritage Expertise to make sophisticated watches Exclusive marketing – builds brand value The only watch manufacturer to obtain the Geneva Seal – the brand meets stringent requirements International presence Established procedures and practices Weaknesses Low brand recognition relative to rivals Stringent customer application process – could put off potential clients Slow processing of orders – some orders taking up to years to complete Opportunities Expand into new countries Increase production to match demand Threats Competition International currency fluctuations Read More