The Rolex Story
Hans Wilsdorf and his Amazing Watch
Hans Wilsdorf was
born in Bavaria (Germany) in 1881 to a successful, middle-class family of iron
mongers. At age 12, circumstances made young Hans an orphan. His charge was
given to an Aunt and Uncle who promptly placed him in a Boarding School in
Coburg, Germany about 25 miles away from his home. It was a dreadful existence
and Hans was very unhappy. He focused on his school work to survive and became
quite proficient at reading, writing and speaking English. This would later
become quite useful!
One
day, Hans decided he had had enough and left the boarding school for Geneva,
Switzerland. He found a job working for a pearl merchant. He learned the
business and noted that the company actually did not create anything and still
made a great profit! The company purchased pearls from various markets then
sorted, graded and packaged them for sale to jewelers. This would also prove to
be a great lesson to young Hans.
Ultimately,
Hans got a job with a growing watch company called Cuno-Korten in Switzerland.
He was hired because he could read and write English and could answer
correspondence from The British Empire and America, the richest nations in the
World at that time. While at Kuno-Korten Hans became fascinated with watch
movements and their accuracy. This was the beginning of his life-long passion.
Hans
later found a partner, Alfred Davis, and together they opened their own watch
company, Wilsdorf and Davis. Hans convinced a small watch movement manufacturer
in Bienne, Switzerland , Aegler, to produce watch movements for him small
enough to wear on the wrist. A great visionary, Hans saw the trend to move away
from Pocket Watches. Their new watches proved to be very successful.
Wilsdorf
and Davis first registered the Tradename Rolex in 1908. It means absolutely
nothing and is thought to have been inspired by George Eastman who in 1884
decided against naming his camera the Eastman 25 in favor of Kodak. Mr. Eastman
is quoted as saying I knew a tradename must be short, vigorous, incapable of
being misspelled to the extent that will destroy its identity, and, in order to
satisfy the trademark laws, must mean nothing. The brand name Rolex was born!
Mr. Wilsdorf
continued to be innovative with his watch and was intent upon its high level of
accuracy. Then, in 1926 he added a new level of distinction he made it
water-proof and deemed it the Oyster. He coined the term due to his
frustration in trying to open a tightly closed Oyster!
In 1927, Mr. Wilsdorf was looking to make his
Rolex watch known around the world. He employed the services of a young London
typist named Mercedes Glietz who at the time was attempting to swim the English
Channel. Hans announced to the world media that she would be wearing his
water-proof Rolex Oyster watch and that she would emerge from the water and his
watch would be perfectly on time. This had never been done before. When Miss
Glietz stepped from the water, exhausted, after swimming for over 15 hours, her
Rolex was right on time. She and her Rolex Oyster made headlines around the
world!
Rolex
has continued to stay in the forefront of the watch world with classic design
and innovation, to this day. If you would like to learn more of this incredible
watch and its history, I highly recommend the book, The Best of Time, by Mr. James
M. Dowling and Mr. Jeffery P.
Introduction
Rolex is a brand of Swiss
wristwatches and accessories renowned for their quality and exclusivity, as
well as their cost (from a few thousand to more than one hundred thousand U.S.
dollars). The watches have become status symbols of the rich and famous as well
as the upwardly-mobile career-minded individual. Although a symbol of success,
Rolex has earned its strong reputation through innovations in design and
function over many decades.
Rolex
is one of the top global brands for over a century. The crown symbol is
recognized throughout the world. Rolex watches are designed to exceed
expectations. It takes more than a year to assemble over 220 minute pieces.
This is done systematically by hand and is extremely detailed oriented. In fact
about 400 operations are conducted only on the main plate. The assembly is put
through rigorous testing and retesting. So rigorous in its testing that if the
movement deflects for less than one second, the entire assembly is often
disassembled and the entire process is restarted from the beginning. Due to
high standards and excellent quality control, Rolex is the brand that will
continue to be the leader in luxury wristwatches.
Known to be the world's bestselling watch company, with over 100 years of
history, Rolex could be written as the definitive textbook in branding, with an
emphasis for luxury items. Unfortunately, for many customers today, branding
has taken on a negative nuance. Pop culture ads that rely on fashion and
polling trends, naming right battles, mass production that sacrifice quality
through outsourcing – these are some of the different means that companies use
to gain success. However, Rolex has stood its ground and has not resorted to
any such means in building its image. It let's its quality products speak for
itself. Hence it stands as the standard in the wristwatch industry.
Quality, performance, innovation and stability are the four pillars that Rolex
has built its brand, since the inception of the history of wristwatches. The
company first sold pocket watches and folding watches called travel clocks when
it was first formed in 1905 as Wilsdorf & Davis. Interestingly, until this
time, it was only women who wore wristwatches. Later it became popular when
people realized how impractical it was to have pocket watches, this was during
the Boer War of South Africa
(1899-1902) when they noticed the soldiers with wristwatches.
Seeing the opportunity in this new market, Hans Wilsdorf, along with his
brother-in-law, William Davis formed the company and began producing high
quality watches. Around three years after W & D was formed, the company's
name was officially changed to Rolex, a name that was trademarked by Wilsdorf.
Somewhere during that time, the benefits of having a logo and brand name to
distinguish a product from its competitors was just being discovered, and
Wilsdorf capitalized on this opportunity. In essence they wanted a name that
was easy to pronounce by all, had no meaning as such in any European language
and something that was short and easy to spell. Another example of simple brand
name was George Eastman naming his camera Kodak.
Quality
It was from Herman Aegler's Rebberg firm that Rolex got their mechanics in a
watch. As a teenager Wilsdorf worked at Cuno Korten with Aegler, a watch
exporter in Switzerland. Quite often Wilsdorf would set up 15 watches and check
them each for accuracy and it was here at Cuno Korten that Wilsdorf's obession
with accuracy began. Also he would submit the most accurate ones to the
Neuchatel Observatory for testing without permission. However this was
overlooked since all the testing passed and he received much praise from his
seniors. Much later Aegler's company came to produce exclusively for Rolex, as
it does today. Aegler's descendants still run the company, although owned by
Rolex.
With his new company, Wilsdorf's obsession for accuracy continued. He was
awarded the world's first chronometer award for a wristwatch, after sending the
first Rolex movement to the School of Horology in Bienne, Switzerland. Rolex
began to gain a worldwide reputation for the finest quality watches, with this
award. Rolex watches went on to win a number of awards. Rolex received numerous
awards. In 1914, Rolex received the Class A Certificate of Precision award from
the Kew Observatory in England, previously only given to marine chronometers.
During the testing the watches were subjected to three temperatures and five
positions. This entire testing lasted for 45 days. After, Wilsdorf insisted
that all Rolex watches would be sold only with an Official Timing Certificate and all their watches
would be subjected to a similar testing.
Industry Overview
Value
Chain
Mapping
of Business Processes
mapping the business process is useful for analyzing
the specific activity in ROLEX company so later to
get the value and benefits
specific to a company. The specific activity that occurs in ROLEX company can be described as can be seen as
the image below.
The goal of these activities is
to offer the customer a level of value that exceeds the cost of the activities,
thereby resulting in a profit margin.
The primary value chain
activities are:
·
Inbound Logistics: the receiving and warehousing
of raw materials, and their distribution to manufacturing as they are required.
·
Operations: the processes of transforming inputs
into finished products and services.
·
Outbound Logistics: the warehousing and
distribution of finished goods.
·
Marketing & Sales: the identification of
customer needs and the generation of sales.
·
Service: the support of customers after the
products and services are sold to them.
These primary activities are
supported by:
·
The infrastructure of the firm: organizational
structure, control systems, company culture, etc.
·
Human resource management: employee recruiting,
hiring, training, development, and compensation.
·
Technology development: technologies to support
value-creating activities.
·
Procurement: purchasing inputs such as
materials, supplies, and equipment.
Focus
Differentiation of Rolex: Serve highest end of wristwatch market (premium pricing
& image)
A Market Analysis for the Watch Manufacturer Rolex
Rolex was founded in 1908 by Hans Wilsdorf in
Switzerland. Rolex has leaded the luxury watch industry with its innovations
and strong hold in quality. In spite of other luxury watch competitors, Rolex
always acquired top notch position.With a strong heritage of quality and
dominance in the watch industry, company is facing a downward trend in the
sales and revenue. Recession is not only reason for the decline in sales but
the important factor is not aligning with the changes in the consumer
behaviour.
The market is changing at a rapid rate.
Earlier it was said that if you don’t own a Rolex at the age of 50, consider
yourself as a failure. But now the trend has changed and along with it the
buying behaviour of consumers. The increase in price since 2006 imposed a
strong threat to the revenue of the company. The buying power of the customers
has decreased due to recession. ‘’Starting in 2007, Rolex put in substantial
price increases, between 13 to 20 percent, that impacted middle- to upper
middle-class clients already squeezed in the recession,” said Mr. Crowley, who
has worked closely with watch retailers since 1980.
Apart from recession company is also facing
the rising sales of illegal replica watches and the sales of second hand
watches. The second-hand Rolex specialist has registered a 40 percent
year-on-year rise in turnover in the past six months as more retailers turn to
pre-owned watches as an alternative revenue stream. This all shows the major changes in the
buying habits of consumers. The youth is ready to buy the luxury watch but
according to present economic situation the prices rose too high that they are
satisfying their prestige needs by other means.
A present study has revealed that the luxury
watchmaker Omega is taking over the Rolex market. Omega sells luxury watches
60% cheaper than Rolex. Current buyer finding the Omega watches as newer and
trendier while the Rolex is termed as old and traditional. To overcome the
hurdles posed by competition, illegal copies and decreasing interest of
consumers in the Rolex, company has to remap its marketing plans according to
the changing taste of consumer behaviour.
Consumer behaviour is defined as the behaviour
that consumers display in searching for, purchasing using, evaluating and
disposing of products and services that they expect will satisfy their needs.
Consumer
‘Market segmentation is the process of
dividing a market into subsets of consumers with common needs or
characteristics.Consumer behaviour is greatly shaped by the
external and personal factors of consumers. The buying behaviour has been
changed a lot in past 15-20 years. World has become a global village with
diminishing boundaries. Multinational companies have made it possible that one
can get any product in any country irrespective to the country origin of the
product. This has also made the consumer more brands aware. More exposure of
the brands has provided more options to the consumer. Now the consumer has a
complete shift in their buying behaviour. Consumer behaviour is comprises of
different factors and every factor has a small or big impact on it.
The various factors which influence behaviour
of consumer can be divides into three groups:
a.
Cultural factors
·
Culture
‘Culture is defined as the sum, total of learned beliefs, values
and customs that serve to direct the customer behaviour of members of a
particular society. Culture has a wide impact on the consumer behaviour. Consumers
buy certain things as they feel that it is right thing to buy according to
their culture, e.g. sex toys or sex related products are considered as a big
taboo in most of the Asian countries due to their culture rather than in the
western culture which is considered as an open culture. Though there are
sub-cultures but they share basics of the country’s culture. Culture is
communicated to the members of the society through commonly shared symbols. The
consumer behaviour is greatly shaped by the culture of certain region. For
example serving turkey on thanks giving day or on New Year evening raises the
sale of turkey. Consumers save money for weekend games like football games on
weekend. Rolex brand has created a culture of luxury watches which shows the
higher status of its wearer. Rolex is considered as a traditional symbol of
prestige and superiority. According to the new culture people want to enjoy
luxury before getting old. Now the youth is spending more in luxury items as
they are getting more options than the past. Now the young people are more
independent and getting better pay to bear the cost of luxury. The study
reveals that Luxury spending has held up remarkably well despite the global
downturn in the UK market. This is the reason Omega kept its prices lower than
Rolex to capture the young market. To overcome this shift in culture Rolex has
to position itself as a dynamic and in the reach of young sophisticated
consumer
.·
Sub culture
Sub culture is defined as ‘a distinct cultural group that exists
as an identifiable segment within a larger, more complex society.
Sub cultural analysis enables the marketers to segment their
market to meet the specific needs, motivations perception and attitudes shares
by the members of a specific sub-cultural group. The consumers have strong
affinity to the goods and services attached with their sub-culture. These
sub-cultures are dynamic.
The various sub-cultural traits are:
- Nationality
- Religion
- Race
- Geographic region
- Age
- Gender
- Occupation
- Social class
Consumers possess behaviour of buying costly goods on certain
days which can be festival or a special occasion. These are the occasion to
boost the sales. Like other companies promote their products as special for the
occasion, Rolex has to be aggressive on those events. Rolex can promote its
technologically advance and vibrant watches on valentine’s day, friendship day
,mother’s or father’s day. With this Rolex can be linked with the cultural
values and this will keep the image of Rolex alive in the mind of consumer
throughout the year.
Different subcultures possess different buying behaviour.
Certain rituals are more important than festivals in some subcultures. The
wedding and retirement party are considered as a milestone in the journey of
life. The cultural belief with the marriage is lifetime relationship and with
the retirement is that person has worked hard and now deserves a good life.
Rolex possess numerous qualities like a rich culture. Its long
life commitment and a reward for hard work justify the cultural beliefs and
values. Company has to market its product in relation to the sub-cultural
events and beliefs.
·
National culture
Nationality is an important sub-cultural reference that tells
about the value and buying behaviour of consumers. The national culture
outlines the buying behaviour of the foreign brands. Countries which have high
national identity are more inclined to their national brand rather than
foreign. The consumers in strong national identity possess behaviour of strong
likeness towards the local made goods. On the other hand a country like Japan
has rich quality culture. They make goods of superior quality. So while buying
a made in Japan item, consumer might consider a high end, high quality brand.
The national identity of Rolex is very strong. It is a Swiss
company which are specialized in the watch making industry. The history of
innovations and market leadership has earned the trust of the consumer. This is
the unmatched strength of the company. The precise quality and sophisticated
looks justify the price tag of the watch. It has to be marketed as first choice
for the customers who fascinate about luxury watches.
·
Social class
‘The overall rank of people in society; people who are grouped
within the same social class are approximately equal in terms of their social
standing, occupation and lifestyles.’
In a social structure it is just not important that how much
money a person have but how money is spent. People who are grouped in a social
class normally have similar type of occupations, similar lifestyles and common
tastes. The relation between the Rolex and social status can be stated with the
theory of Herzberg’s theory. His theory states that differentiate between the
satisfier (factors that cause satisfaction) and dissatisfier (factors that case
dissatisfaction). The absence of dissatisfier doesn’t mean is not enough,
satisfier must be present to motivate.
In case of Rolex the
motivating factor is the reflection of higher and sophisticated social class
myth attached with the watch. It satisfies the prestige need of the people. The
buying behaviors of different social classes differ to much extent. Higher
social class buys the product by assuming the quality according to the brand
without worrying about the cost. But middle class consumer is more inclined
towards the quality and features. They chose the product which justifies the
cost. Rolex is a mirror image of high class society. But due to change in the
social cultural values and economic trends, the difference between social
classes is diminishing. Due to this there a vast change in the buying pattern of the consumer. Now middle high class is
considered as a vast market and predicts the future of the company. The buying
behaviour of upper middle class is very much different from the higher class,
even if they buy the same luxury product.
Middle class consumers save on the little things which are not
much important to them and then spend on premium brands. Though they are
earning big amount now days but due to recession their buying behaviour is less
polarised and more concentrated on the lower end of the brand spectrum. In
order to prevent the loss of market share various luxury brands has launched
big discounting campaigns to attract those customers back. Rolex is currently in reach of rich and sound people but the
market is shrinking as the other luxury watch makers like Omega is producing
attractive luxury watches at low prices than Rolex. According to my point of
view if Rolex go with reducing prices of its brands in the market, it will
hamper its image of prestigious brand. People who have bought the Rolex at sky
touching prices will feel robbed.
The solution is to launch a special edition Rolex watch targeted
to the upper middle class for a limited time of period. This will create
bonding of the customer with the brand. And after that by updating the consumer
with the advanced models, company can motivate them to buy the costly models
also. With this strategy Rolex can also adapt itself with the different
consumer behavior of different social classes.
a.
Social factors
This is the surrounding of a consumer which shapes, motivate or
de motivate its buying behaviour. Friend circle, family, reference group/
opinion leader plays an important role in the selection of certain goods or
services. Social classes are determined by the complex set of variables,
including income family, groups and their opinions. Opinion leaders influence
consumers socially. Family has a very close impact on the consumer behaviour.
Opinion leadership
‘Opinion leadership is the
process by which one person (the opinion leader) informally influences the
actions or attitudes of others. ‘The key characteristic of the influence is
that it is interpersonal and informal and takes place between two or more
people, none of whom represents a commercial selling source that
would gain directly from the sale or something. The opinion leadership is a
very dynamic and powerful consumer force. The opinion leaders are considered
as:
- Positive and negative product information
- Credibility
- Information and advice
Rolex has a very positive repo in the market.
The Rolex bearer generally holds a high social status and has the ability to
pursue the people. But Rolex has failed to capture their views. Now the
consumers are money conscious and they select the branded item after discussing
it with their friends. Unfortunately there is no official Rolex lounge on the
internet where the consumer can read the personal reviews of their watches. There
should be a link on the Rolex homepage where the opinion of the past owners and
their experiences with particular watch models can be recorded. This will
influence more consumers who are followed by opinion leaders.
Family
Rolex has a strong heritage of family
relations. The Rolex in a family inspire next generation to buy the latest
model. But the negative side of the coin is now the new generation consumer
thinks Rolex as more traditional and old. ‘When it came to choosing a new
watch, Ma Jun had no hesitation in selecting a $6,800 Omega Constellation over
a Rolex’. He has a business family background and he bought the Omega watch
after seeing advertisements featuring swimmer Michael Phelps and actress Zhang
Ziyi. This is a new shift in the consumer behaviour. Now the consumer buying
behaviour has shifted from traditional to thrill and glamour. Youth now live
far from their family and are more independent than the past times. By
endorsing the latest player and top heroin Omega pictured itself as a brand for
youth. While the Rolex ads are more attached towards the traditional values. To
avoid this conflict Rolex can make a separate website targeting youth,
satisfying the belief and buying characteristic of Personal factors. Personal factor influence the buying behaviour
to much extent. Sometimes a consumer just care about what he like. Normally
this depends upon his age and lifestyle.
Age
Age plays an important role in the consumer
behaviour phenomenon. Teenagers are normally dependent on their parents for
their expenses but kids of very rich families have very different culture. They
enjoy all the luxury in their childhood. But in normal life an adult ages
between 25 - 40 is an emerging market for Rolex. Now people are able to get
high posts even in a short span of time. Those people want to enjoy luxury
items in their adulthood rather than save and have luxury when they will get
old.
Lifestyle
Lifestyle refers to a pattern of consumption
that reflects a person’s choices about how they spend time and money, but in
many cases it also refers to the attitudes and values attached to these
behavioural patterns. Many people living in the same social circle may have the
same lifestyle but there is a unique twist in the personality of each person.
The most important factor in the lifestyle is how they do spend their leisure
time, how consumers chose to dispose their disposable income. These choices in
turn create opportunities for market segmentation and creating the strategies
to cover that segment. Rolex is a mark of luxury lifestyle. Some people have
lifestyle of showing off their wealth and some people just wear luxury for
their comfort and for the unique benefits. to adapt with the changing lifestyle
company has to make different type of marketing strategy for different type of
lifestyle. This can be done by doing a market survey in the corporate sector
and where people with good disposable income live. Then there should be advertising
banners and posters in that particular area according the studied lifestyle of
consumer living there. This will relate the company with the lifestyle needs of
the particular consumer.
Positioning:
As consumer adopt new technologies their
behaviour changes.
Online Brand positioning
strategy:
Internet is a dynamic field
and companies need to follow a flexible online branding policy, which can
project a dynamic image of the product. This will also make the product more
attractive and protect it from the label of outdated. Marketing on the internet
has opened a whole new dimension to interact with consumers. This has
enlightened the way for a brand manager as the number of consumers is enormous.
Online brand management can be a good way to increase the brand loyalty and
customer retention.
Engaging brand with
personality
Rolex has strong hold in
the media. Currently company has two versions of online brand management. One is
for those consumers who have high bandwidth of internet and second with low
speed internet. Both are good source of product information but consumers have
to chose the watch first before knowing the price on the website, which is
completely opposite in case of offline positioning. Apart from differentiating the product design and material wise, the
differentiation should be done by social class, attitude type and perception of
the consumer about particular design. Instead of selecting watches by gold, steel, large and small it should
be given a personality of its own. Human personality characteristics can be
transferred to a brand, which then creates a brand personality. A gold watch
with diamonds can reflect a personality of ‘outshine in the crowd’ or instead
of positioning the GMT Master watch for
traveller it can be positioned as for people who love to explore the world at
any time without the worry of time zones even in the space.
Use of social media
Using a social media to
create brand image is still an extremely new phenomenon. It has proved more
credible in way that people who share views about products with their friends
are more trustworthy than the advertisements. Rolex has to create its own
profile on various social websites. These profiles should be managed by a
dedicated brand management team. People will get more influenced when they come
to know that even their friend of friends have the special edition watch. They can share their views about the watch and can discuss which watch will
be perfect for them. Team has to strictly monitor the fake pages associated
with the name of Rolex. With this promotions and advertisements will reach to
more people and the registered users can directly give ‘thumbs up and down’ to
a particular product or advertisement. This will create the image of product
more dynamic in the mind of consumer.
Blog management
Blogs are the best way to
keep a fresh image of brand in the mind of consumers. Rolex can create a blog in which it can ask the top celebrities,
politicians, and army people to write their experience with the Rolex. This
will attract the consumers who have behavior of trusting their role models and
this will also fuel their desire to buy same Rolex which their favorite star is
wearing.
Offline brand
positioning
The main motto of the
offline brand positioning is to drive more online interaction. This is when
consumers can get updated with the advertisement, promotion or special events
through various offline media and then they go to website to check for more
information. In case of online positioning sometimes it become very difficult
for the brand to selectively choose to whom interacts Rolex has to go with wide
selection of media for its offline brand positioning.The brand communication strategy should reflect the use of all available
media.Encouragement is very important through offline brand positioning.
Fashion magazines, top political magazine will encourage people with good
disposable income
Impact of online brand
positioning on consumer behavior
Online branding has created
a culture of buying goods without any face to face conversation. People trust
on the brand and assume that they will be worth of their cost by just reading
their description
Brand’s Self image
Rolex present an image of
superiority, luxury and high social status. The online branding has to reflect
its characteristics to justify its image. This will influence the consumers
with a sound taste of luxury
Competitive Advantage of Rolex
Another competitive
advantage held by Rolex is their outstanding durability and reliability.
Rolexes have been tested in the deepest parts of the ocean to the highest
places on earth. A special edition of a Rolex watch was attached
to the side of a submarine to the bottom of the Mariana Trench. Upon surfacing
the watch was intact and keeping good time. Later the Explorer series was
developed to help Everest Expeditions keep time and return back to base camp
before they ran out of daylight.
No article on Rolexes can be complete with the
mention of James Bond. James Bond was Rolexes marketing dream come true when he
appeared on the movie screen wearing a Rolex Submariner. While the character in
the books wore an Oyster Perpetual the producers felt the Submariner was a
little more rugged for the well-heeled international man of mystery. We won’t
go into the later James Bond films and their choice of watches let’s just say
that the real Mr. Bond would only wear a Rolex.
COMPETITIVE ADVANTAGE OF MY SELF
Competitive advantage
that I have is in the field of art one of them is I can play angklung. When
senior high school, I've been following the show of angklung in Jakarta ahead
of the people of Japan and taught them to play angklung.
Beside that, my
abilities in math lessons. Each I met math lesson in college, I felt my brain
become fresh. Previously, I've been following the competition math in junior
high school and senior high school
REFERENCES
http://www.watchmasters.net/the-rolex-story-hans-wilsdorf.html
