Marketing Management - Case Study Example

Marketing Management Marketing Management Rolex is a popular Swiss watch company that manufactures watches and accessories under the brand name, Rolex. It has a reputation worldwide for producing the most prestigious watches. The brand Rolex has its primary focus on high-end consumers. Rolex watches are masters of life and anybody who may at any time buy a Rolex creation wizard must be synonymous with wealth, influence and success (Rolex, 2015). Rolex designers are much aware that their target audience is the societies’ top cream. They, therefore, have to do all they can to satisfy the desires of their elite fans since the customers would wish to show the world their social status and wealth. The brand personality is a set of human characteristic mainly attributed to the brand name, Rolex, something that the consumers can relate. The brand personality effectively increases the brand equity by having consistent set traits (Schultz and Doerr, 2009). The brand personality generates benefits to the Companies, aside from its functionality benefits. Pricing of Rolex products directly relates to the technical perfection of the mechanism, use of high-quality materials and precious stones. Rolex has earned a recognition of technical excellence that is hard to find its equal counterparts. The company is Swiss’ chief consumer of gold whose chunk is use in the watchmaking industry, for example; the company uses about 40 grams of gold to produce a male body gold watch. The company also leads in the production of some gold bracelets encrusted with diamonds (Rolex, 2015). The expression that time is money is not just figurative to Rolex Company but a literal sense that is employed effectively in the production. Hans Wilsdorf, the founder of this famous firm, spent huge sums of money to advertise the firm to the world platform. He knew that excellent quality watches firm would soon be part of everyday life as opposed to massive pocket watches and indeed those days; watches were women’s fashion accessories. Wilsdorf also broke the stereotypical thinking that the small-sized wristwatches could not allow for the mechanism of good quality and against all odds, he created a product that does not lose competitive edge even in the modern word. Currently, the production capacity of the company is between 650 to 800 thousand watches annually, which still fall short of demand (Rolex, 2015). Rolex has been the market leader from pricing to market strategies perspectives. No any other firm or brand has been able to penetrate the market of the rich customers with efficient communication strategy directed to the masses. Most of the Rolex products range from men’s designer wristwatches, expensive jewellery and evening dresses for the female. Hans Wilsdorf, the company’s founder, realized the importance and power of advertisement in brand promotion. In the year 1925, he invested 100 thousand francs in the British media for the Rolex Company name to the newspapers. The first notable leap in marketing of Rolex watches was done by Mercedes Gieitze, an English stenographer, who swam across the English Channel for over fifteen hours carrying on her wrist chronometer Rolex Oyster in 1927. In early 20th Century, Rolex Company used a simple advertising strategy where the visual image of watches with a listing of the product’s strengths and differences in comparison with other strategies (Rolex, 2015). Soon, they began making emphasis on product’s qualities, the status of their chronometer and certificates received by the Company. The brand is a sum of intangible product attributes such as name, packaging, and pricing as well as its history, reputation and fashion advertising. The brand, therefore, combines the consumer experiences that the product produces and the results of using the product. For the products that have physical properties, various characteristics such as price, personal consumer sentiments, affection, loyalty and trust also count. A set of ideas, image, views and associations lies at the centre of brand perception (Schultz and Doerr, 2009). To the peoples’ minds, brand relates to the company’s ideas, concept, and products or services. Looking at the industry of luxury goods to which Rolex is a part, the brand is synonymous with the company’s name and products. All these components are complements of each other. At the Rolex Company, concept and brand image forms the bedrock of brand positioning. Rolex has gained and maintained a significant market share by establishing a good brand position (Rolex, 2015). The Company’s brand positioning highlights main points of difference such as favourable, strong, and unique brand associations. These enhance consumer choice as well as competitive points that establish category credentials that negate any potential advantage that competitors might be tempted to exploit. The brand is a means of communication between the company and its clients. It also offers additional information regarding communication with the social environment aimed at marketing relations such as advertising and advertising media and content. These include direct media advertisement, public relation campaigns and presentations, a visual range such as shop designs, and personal behaviours among others. Brand identity is a key point to Rolex Company because it indicates distinctive qualities of Rolex products that serve as both emotional and functional characteristics. The main characteristic elements that shape up the personality of the Rolex brand include brand essence as the main content. Brand essence communicates the fundamental nature of the Rolex trade name and the associated products from the company (Rolex, 2015). The Rolex marketing team have developed various effective ways of expressing the company’s brand essence such as advertisements. These highlights the uniqueness of the products as well as benefits derived as pertains the values over other brands. Brand attributes is another element that functions as an emotional drive expressed by buyers and potential customers. Brand attributes identify the physical character and personality traits of the brand, similar to the attributes that allow one to identify with individuals consistently. The brand name is another major element. It is a term, design, word of expression or feature used to distinguish one company’s products from the others. There is also the brand power that means the level of awareness or the strength created by the brand for buyers (Kotler and Keller, 2009). Other elements include the brand value and development index that implies the degree to which the product advances into the market. The last element is the brand loyalty that means the degree of brand involvement on the target market segment or audience that results from the consumer behaviour. Brand equity is the value of the direct or indirect benefits that accrue to a brand because of the products capability to influence consumer behaviour. It also includes the product’s ability to sell, and provision of the security for sustained future revenues to the owner. The element such as brand name builds the Rolex brand equity and maintains it to attain a strategic advantage for the product in the market. Brand awareness, quality, and brand loyalty underline the brand equity as well as underpinning the consumer-based brand equity. This view is rooted in consumer cognitive psychology mainly concentrating on consumer behaviour. Sources of brand equity are generated from customers’ mindset. Consumer brand-based equity normally occurs when a high level of awareness and product familiarity exist among consumers with the brand that holds some strong, unique and favourable associations in their memory like the Rolex products. Rolex brand elements serve to enhance its awareness and facilitate the formation of strong, unique and favourable brand associations. Number one brand-building contribution of brand elements is in the consumers thought, as they tend to think about the product they know with the brand name and associated logos like the crown in the Rolex brands (Kotler and Keller, 2009). Some of the brand elements work together or individually to contribute to brand equity they include the following: Brand name: The brand quality is built upon this basis. The name Rolex is a critical and core sign of the brand, and it creates the basis of awareness and communications (Kotler and Keller, 2009). The name creates inherent strength to the world of wristwatch and actively used to influence external stakeholders. From the perspective of conventional branding, the name is instrumental for the marketing team, who use symbolism to influence and affect consumers’ perceptions about the product and its attributes. The brand name serves as a psychological property to the consumers and an anchor to the product’s identity since it carries all the essentiality of brand equity. Rolex views its brand name as a long-term commitment that must wear well in the increasingly competitive global market. The name is the fundamental choice because it often captures the central theme or key associates of the product in an economical and compact fashion (Schultz and Doerr, 2009). Once a potential consumer sees Rolex, his or her memory is instantly activated thus serving as superior to the word in expanding the target audience. Logos and symbols: Visual brand elements usually play important roles in equity building, especially in creating brand awareness (Sheehan, 2011). The visual identity of a brand is essential to establishing and maintaining the presence of the market. The Crown and Oyster symbol in the Rolex Company is critical in interpreting the brand promise. They create a highly memorable, easy to recognize the brand signal that triggers the consumers’ minds to build associations with the brand. It also helps consumers in brand identification to differentiate between Rolex brands and other brands thus creating a specific offering. Logos and symbols embellish the brand meaning in some ways since they are key ingredients to brand development and enhancing brand awareness. Slogans: These short phrases communicate descriptive or persuasive information about the brand. A slogan captures the brand essence and becomes a vital part of the brand equity (Kotler and Keller, 2009). Slogans often appear in advertisement campaigns to communicate and create brand awareness. The Rolex Company’s slogan, A Crown for Every Achievement, helps consumers to grasp the meaning of the brand in terms of positioning and brand quality building. The current strategies practised by Rolex have some potential weaknesses as far as the marketing strategy is concerned. In its corporate strategy, Rolex has its brand image by limiting the production capacity even if the market demand rises. For the luxury goods that Rolex produces, scarcity in the market can significantly influence the value, contribute to demand increase, and result into a collectability of a long-term appreciation. Finely made executive watches normally appreciate over time, a factor held by Rolex watches (Sheehan, 2011). Price guides show that Rolex models are valued slightly above their initial pricing thus culminating to more revenue. Despite these, Rolex loses much revenue by restricting its production capacity. It also fails to meet consumer demands, a factor that in the long run may contribute to other products penetrating the Rolex’s potential market. Rolex is also at pains to ensure that their watches are sold in appropriate locations convenient for customers. The crystal prism that shows that the store is an official Rolex dealer is highly priced thus limiting the number of dealers selling the Company’s product. Rolex also looks for dealers with high-end images with relatively large stores in an attractive location that can provide outstanding services for the rich. At one point in history, Rolex was involved in a dispute with Tiffany because the latter, who was a Rolex retailer, was imprinting its name on the Rolex watches. When Tiffany refused to stop, Rolex dropped it as an official jeweller. In 1990s, Rolex cancelled agreements with one hundred dealers as part of an elaborate onslaught to control the sale of their products in the markets. However much of these activities control and preserve the Rolex quality, they limit their market coverage as well as the accessibility of their products to potential customers (Sheehan, 2011). These result in substantial loss of revenue for the firm. Rolex has always maintained focus on the purity of its brand hence many producers of luxurious goods have used their original product as a springboard. For example, Cartier and Mont Blanc have batted the equity built on their brand of a single product will pull up the sales for many luxurious goods (Newton, 2013). Some brands have also licensed their names to other manufacturers, thus relinquishing some control over the products appearing under their brand name. Rolex has never licensed its name, a strategy that has limited its integration with other companies of the same production as well as the innovations and inventions. The Rolex Company risks facing very stiff competition in future as innovative competitors and entrepreneurs continue to search for new ideas to attack its market base. Other major luxury conglomerates enjoy many advantages over an independent Company like Rolex. They have greatly restructured their operations, capitalized on their size to significantly reduce their production costs, enjoy advertising and marketing synergies, and more willing to engage in open discussions regarding trade (Newton, 2013). These and other benefits of economies of scale allow them to learn from their competitors, a situation that is totally lacking in Rolex Company. Rolex still sticks to its old core strategy of independence, brand purity and continuity. The company’s attitude has enabled it to survive over a hundred years of technological and economic challenges as well as thriving amidst them. The today’s complex and dynamism in the global luxury market poses a greater threat to these traditional ideas. With the complex environment and technologies in the luxury-commodity market today and various market penetration strategies by conglomerates, Rolex is likely to lose a significant portion of its market share (Newton, 2013). Its market segment of high-end consumers also limits the firm’s market expansion. Rolex Company should wake up to the reality of the emerging trends in the marketing word today. It should develop products that can target all the market segments from the low, middle to high-end consumers. They should also flex their rules on their official retailers to make the products available at every corner. They should embrace Integration with other businesses to bring in new innovative ideas as well as enjoying the benefits of economies of scale. Rolex brand strategy currently has a deep rich understanding in the consumers’ minds. Despite this, the brand’s future position in the competitive global market is unpredictable. Previous research showed that Rolex brand marketing and advertising strategies have put more emphasis on the product’s quality and uniqueness achieved through quality technology and design (Rolex, 2015). These have put the company ahead of its competitors and achieved word recognition and consumer loyalty. Brand Audit reveals the success of the brand elements and strategy that are still effective and powerful thereby making it unnecessary to overhaul or replace them (Rolex, 2015). Looking at the current market dynamics and the stiff competition in the luxury products market, some modifications recommendations may be necessary to strengthen the brand’s position and refresh its market recognition. The marketing mix should incorporate some new promotional steps apart from price, product and place that are currently in use. When developing promotion program, choice of communication channels within the defined marketing strategies is very vital for the target audience. For Rolex’s promotion strategy, I would recommend a focus on event marketing that is more creative and interesting promotional strategy. It is a special form of human involvement in the brand’s culture and incorporating other community organizations’ actions and feelings. Events affect both the participants and those who missed but are within the target group. Events often boost a brand’s popularity compared to other traditional tools of advertising since the impact is immediate when effectively coordinated within the marketing framework. Event marketing may bring numerous advantages to the Rolex Company in future compared to the traditional marketing tools such as selectively expanding sector coverage of the target audience. It also brings about contact with the journalists that give scope for multi-stage operations and interest generation. Groups attending the event generate massive emotions thus creating unity, sense of belonging, and to some extent customer loyalty to the particular brand. A luxurious celebrity and the rich peoples’ event will be the most suitable for Rolex as it will primarily focus on and remind the public of the brand image and unique status compared to other brands. These may include prestigious sports such as golf, horseracing, and yachting among others. Rolex brand has been successful for 109 years in the entire world market, and it continues to grow in terms of market share. Improvement in the company strategy and the brand design elements are therefore necessary to maintain the excellent quality, beauty, prestige and luxury of the brand products. Bibliography Kotler, P. and Keller, K., 2009, Marketing management, Upper Saddle River, N.J.: Pearson Prentice Hall. Newton, S., 2013, The professionals guide to business development, London: Kogan Page. Rolex, 2015, Discover more on Rolex.com. [online] Available at: http://www.rolex.com/ [Accessed 2 Jun. 2015]. Schultz, M. and Doerr, J., 2009, Professional services marketing, Hoboken, N.J.: John Wiley & Sons. Sheehan, B., 2011, Marketing management, Lausanne, Switzerland: AVA Pub. Read More