The History of Prestigious Piaget Brand - Essay Example

Type you here Topic: PAIGET: A Competitive Analysis with Other Brands: Whenever we talk about the fashion brands, the firstname that comes to our mind is "Piaget". Piaget brand is synonymous to the word fashion and has been able to reach new heights since it was first established in Geneva, Switzerland in 1874. Piaget, since its inception has been able to blend creativity, customization with their expertise in watch making and jewelry. All of these combined result in a unique fashion product which is marketed under the brand name "Piaget". (Piaget Official Website, 2009) Let's now look at some important dates in the history of this prestigious brand: 1874: House of Piaget was founded was Georges Edouard Piaget. The purpose behind this house was to dedicate it to the manufacture of movements. 1943: The brand name Piaget was register and it started making its own watches. 1956: The brand launched the first mechanical, 9p Caliber, ultra-slim watch and became the innovator and master of these types of movements. 1959: The brand started their first boutique in Geneva, Switzerland. 1960: The brand introduced the first ever 12p Caliber movement, which took their name in the Guinness book of world records This made Piaget, the undisputed leader in the watch making industry. However, the brand decided to expand by diversifying into jewelry making. They increased their expertise in gold by acquiring various gold work-shops throughout Geneva. 1964: Piaget, then again took the route of innovation by developing watches featuring dials made up of semi-precious stones. 1979: Piaget introduced a new brand known as Piaget Polo, which decorated the wrists of top celebrities at that time. 1980: Piaget continued its image as a luxury brand by introducing the most expensive gents watch. This watch was sold for 5-Million Swiss Francs. 1990x-Now: During this period Piaget introduced various top-notch watches such as, Tanagra, Miss Protocole and 600P tourbillon caliber watches. During this period it also expanded by opening up production facilities in other cities of Switzerland. It also celebrated its 130th anniversary in the year 2004. In 2008, it was rated as the sixth largest luxury brand. As far as the future plans of the company are concerned, it wants to enrich and further master the art of watch making and jewelry manufacturing. It strengthens its faith in providing high-quality luxury items to its customers by increasing their know-how in watches and jewelry. (The Watch Quote, 2009) As far as the target market of Piaget is concerned, it serves to only a small market. The reason behind serving such a small market is that most of these watches are manually produced and are not produced in bulk so that they do not lose prestige associated with them. As a result, Piaget is content serving a small market, a market which includes rich people and those who can afford the expensive prices that are commanded by Piaget. Piaget is very much aware of Synergy effect and that's why all the component parts of its watches are produced by the firm itself and Piaget believes in using top-quality material for all its watches. BRANDS CLASSIFICATION GRAPHS: 1) Feminity vs. Masculinity: SPORTS vs. Refinement Tradition Vs. Creativity Watch vs. Jewelry BATTLE OF THE BRANDS (COMPETITIVE ANALYSIS): Looking at the above graphical analysis, one can easily say that the five closest competitors for Piaget are: Cartier, Baume and Mercier, Richard Mille, IWC and Rolex. These firms are providing competition to Piaget by offering the same level of service and producing good which are close to the products that Piaget is producing, Similarly, Piaget is also affected by the pricing and advertising decision of these firms and there is a mutual interdependence between these firms. Starting from the type of market these companies lets compare and contrast these companies from Paiget's strategy. Most of these companies like Paiget, target a niche market. By niche market we mean that these companies serve to small number of customer. These customers are very rich and have the ability to spend thousands of dollars on luxury items like watches and jewelry. If we look at Paiget statistic, its share in this niche is around 7%. This means that out of the total demand of these goods, 7% is fulfilled by Paiget. Similarly, if we further divide the market, we'll see that Paiget usually produces unisex products. This means that its products can be wore by both men and women. Almost all of the competitors of Paiget produce unisex products apart from Rolex, which mainly targets the men market. If we look at the pricing policy of these firms, we can say that these brands manufacture them mainly for the very rich people. The average price that these brands charge is in thousand of dollars. The market leader in this industry is Rolex, which charges the average price of $5000 dollars for its products (The average price is taken out by taking the sum most expensive product and the cheapest product that the company produces and dividing it by 2). Other companies also charge very lucrative amount of money, but they are cheaper when compared to Rolex. The average price of Paiget, For example, is $3000. Similarly, IWC charges the average price of $3300. So, the range of prices for these watches is between $2500 and $5000. Many of these businesses have experienced plummeting demand due to ongoing recession and now are planning to cut down their prices. If we look at the competition between these firms in terms of marketing policies we can see a lot of similarities between these brands. Most of these brands usually market their products by using a brand ambassador. Brand Ambassador is celebrity who is followed by million of people. For example, Rolex's brand ambassador is Roger Federer. Similarly, Cartier's brand image is carried by Manchester United Football Club. All of these brands have some brand ambassadors who carry the image for the company and for the follower and give a unique personality to the brand. In return, these Brand ambassadors are paid heavily so that they do not join forces with the competing brands. If we look at the production capabilities of this brand, Rolex leads the list by producing around 2000 units of wrist watches daily. Paiget produces 10,000 units of wrist watches annually. Other brands like Cartier produce around 700 units daily. Similarly, IWC has a special vintage wrist watch is produced once a year and is sold at really high price. (Report on Watchmakers in Switzerland, 2004) These were some of the traits of these brands. Now let's look at the strength and weaknesses of some of these brands against each other. Almost all of these brands are more than 100 years old and thus all of these brands enjoy a very good brand name and goodwill. Out of these brands, only very few have been able to innovate. Among the brands which took the route of innovation was Paiget. Paiget was the innovator of various thinnest watches of their time; back in the days, when having a luxury watch was considered only a dream. Paiget and Rolex, therefore, enjoy a very distinct position in the industry. They are considered as the most advance companies in the industry. They give special importance to innovation and their employees are asked to dedicate some of their work time thinking about new products. They are also given various allowances if they come-up with good idea. Similarly, Cartier is also trying to follow the route of Rolex. Cartier in the recent year has grown tremendously thanks to its marketing team. In term of sales, no other company has grown more than Cartier. It should also be credited for developing the most effective marketing techniques. It was the first company to hire a brand ambassador to carry the image of their brand. It has also given various new ideas to the industry in terms of marketing. If we look at IWC, it is probably the weakest company out of the three companies mentioned above. However, it is trying to make big strides to improve its market position in the near future. Richard Mille has also started to improve its brand image by introducing a various new range of watches. It has divided its product into Sporty Watches and Refinement Watches. This variety has taken the company to new height and it is also growing at a very good rate. Similarly, most of the brands mentioned above produce all their component parts themselves. This in-house production results in self-sufficiency and provides these firms with the feeling of Synergy. This is good for the company as there are no fluctuations in the supply of material needed in the production of watches and everything that is needed is produced with the production facilities of the companies. (Daft, 1997) If we look at the weaknesses of these brands, the first weakness is the pricing policy of these companies. They price their products above what an average person can afford. As a result, they only cater to niche. They can also improve their revenue and absorb overheads in the production, if they start producing cheaper products, along with the very expensive luxury watches that they specialize in. (Stimpson, 2001) Another weakness that most of these brands face is that they cannot market their products anywhere else other than mass Media like TV and Radio. Advertising on these media is very expensive as it reaches a wide audience. The irony for these companies is that they do not want to reach a vast audience, but instead they want to grab the attention of selected few. As a result, the average cost that they incur for advertising is very high and this adds to the price of watch which becomes even more expensive. These companies, therefore, should try to develop a way to reach their target-niche, which is less costly than mass media like TV and Radio. Another problem that this industry is facing is the shortage of skilled labors. As a result many companies in this industry are producing at level which is below their potential level. This has resulted in average fixed costs or overhead to go up. As a result, many of these firms are experiencing a decline in profits. According to estimates, if these shortages continue, the industry could lose their $1 Million worth of sales. (High Beam Research) Conclusion: In the end, we can safely conclude that this industry is growing at a steady rate and is one of the most profitable industries of the world. However, there are a lot of weaknesses that is gnawing the profitability of these firms. In order to remain efficient and to earn maximum possible profits, these firms will have to set themselves on a task of eliminating weakness and wastage. This would reduce the costs for these firms and if revenues don't change, it will give them the maximum possible profits. Another thing that we can conclude about these industries is that they are targeting only a niche market and in the current situation, where recession is prevailing, these companies will have to change their strategy. Sooner or Later, they will have to go for a mass-market in order to combat recession and to keep their business growth consistent. Reference List 1.) Piaget Official Website. Visited on: 10 July 2009 www.piaget.com 2.) The Watch Quote. Visited on: 11 July 2009 www.thewatchquote.com/Piaget-History-No_117.htm 3.) Report on World Watch Marking Industry. Report Published in 2004 www.fhs.ch/statistics/watchmaking_2004.pdf 4.) Richard L. Daft. Management 4th Edition. The Dryden Publish (2007) 5.) Peter Stimpson. Business Studies. Cambridge University Press (2001) 6.) High Beam Research. "Watchmakers fear Labor Shortages". September 6 2006 http://www.highbeam.com/doc/1P2-16067446.html Read More