Montres Rolex SA

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Montres Rolex SA

3, rue Francois-Dussaud
Geneva 24, CH-1211
Switzerland
Telephone: 41 22 3022200
Fax: 41 22 3002255
Web site: www.rolex.com

CELEBRITY ENDORSEMENT CAMPAIGN

OVERVIEW

Rolex, the Geneva-based maker of ultra-high-quality and high-priced timepieces, had at one time or another sponsored the Wimbledon tennis tournament as well as the PGA and LPGA golf circuits, and its advertising made heavy use of athletes. Thus in 1997 it signed a deal with young golfing sensation Tiger Woods for a campaign that ran through 1998 and beyond, adding his name to a roster that included golfer Arnold Palmer, Olympic skier Picabo Street, and mountain climber Ed Viesturs. Rolex advertising in 1998 featured Woods, Street, and others, including quite a different category of celebrity—classical musicians. J. Walter Thompson of New York handled the account, which was valued at $9.3 million in 1996. Spending for 1998 was well over $10 million and focused primarily on magazine advertisements.

Rolex historically had tended to take a low-key approach to marketing, as befit a company whose customer base was in the top fraction of all income earners. Nonetheless, given the fact that it was known for the accuracy of its timepieces, Rolex began to market itself in connection with athletic events at least as early as the 1970s. It also established itself as the timekeeper of record for a number of international competitions. Certainly athletics was a "great leveler," bringing together people of different backgrounds, and with its 1998 advertising Rolex sent a clear message that it intended to reach a somewhat wider market with its products, particularly the lower-priced Tudor line.

HISTORICAL CONTEXT

Rolex was founded in 1905 by Hans Wilsdorf, a Swiss watchmaker. Central Europe, of course, had a reputation for producing some of the finest timepieces in the world, and the company quickly established a reputation as one of the best. As the Australian watch retailer Greg Alexander told Dugald Jellie of the Sydney Morning Herald, however, "It's a sales and promotion and public perception phenomenon. They're good-quality watches, but they're no better quality than any number of other brands that sell for much less."

Whether or not this was so, Rolex quickly made—and kept—a name for itself as one of the premier watch manufacturers in the world. It was the first to popularize the wristwatch. Up until the early twentieth century, timepieces had typically been worn in the pocket, attached to a man's waistcoat with a chain. But as times changed, so did watch buyers, and by the mid-twentieth century women were at least as likely to purchase watches as men, which opened up new markets for Rolex.

In addition to its men's and women's wristwatches, Rolex produced stopwatches, clocks, and old-fashioned pocket watches. With its image of precision timekeeping, the simplest Rolex retailed for hundreds or even thousands of dollars even in the 1970s, but Rolex also offered models in bronze or gold as well as its "plain" stainless steel line. Buyers with an urge to add even greater status to their wrists could also purchase varieties of Rolex encrusted with diamonds or other gemstones.

The corporate culture of Rolex was secretive, as befit its image as the maker of high-tech products for a small portion of buyers. It maintained no website, nor did its name pop up in news stories with anything like the frequency of lower-priced competitors. In an effort to gain greater control of its production, in the 1990s the company acquired Gay Freres, a European company that supplied watch straps.

As Rolex became more widely known in the 1970s and thereafter, the company had to deal with a number of imitators, counterfeit Rolexes that carried a price tag thousands of dollars lower than the real item. One way buyers could know a real Rolex from an imitator was by watching the dial: if the second hand "ticked" perceptibly as it moved between numbers, it was not a true Rolex. The genuine article, like time itself, moved smoothly, without breaks.

TARGET MARKET

There was a time when few people questioned status symbols, along with the right of a very small minority to own what was beyond the reaches of the masses. By the end of the twentieth century, however, egalitarian sensibilities had taken over in western Europe and the United States, and a product such as Rolex might have become marginalized as an expensive bauble available only to the elite. But coupled with this change in political direction was a change in the direction of marketing, and Rolex moved with the times.

The Swiss watchmaker's strategy in the late 1990s could be likened to that of another precision instrument that emerged from central Europe to capture the sensibilities of American buyers—the Mercedes-Benz. Built by Daimler Benz AG of Stuttgart, the Mercedes had long been viewed as a car available only to the upper crust, but in the 1990s Mercedes introduced new lines that would place its product within the reach of middle-class buyers. Of course this strategy came about not as the result of a newfound democratic impulse; rather, it was a sound marketing decision that greatly increased Mercedes's market share.

Rolex applied a similar idea with its Tudor line. Whereas the price tag on a typical Rolex started at $2,000 and could go as high as $180,000 or more, according to Terry Lefton in Adweek, a buyer could put a Tudor around his or her wrist for as little as $850. The high end of the Tudor line ran to $4,000, a meager price compared to that of the most expensive Rolex. Regarding Woods's endorsement for Tudor, Left on wrote that the young golfing sensation would "take the lead role in Rolex's repositioning of its Tudor line as the more youthful, accessible brand in a tiered brand-family system."

Woods's multiracial background was surely no accident either. The golfer raised eyebrows in 1997 when he declared himself a "Cablinasian," an acronym that referred to his mixed heritage: Caucasian, black, Indian, Asian. His image in Rolex ads sent the message that the watchmaker wanted to extend its appeal beyond white buyers, and the use of Yo-Yo Ma and Kiri Te Kanawa, classical musicians of Asian heritage, in Rolex advertising sent a similar message.

COMPETITION

In November 1997, Wendy Hessen of Women's Wear Daily, one of the foremost publications of the fashion accessories industries, presented the magazine's list of the top 10 brands of jewelry and watches. As Hessen noted, "With the exception of Cartier and Rolex, most of the names on the list are broader-based or even mass-distributed brands that are more familiar to the mainstream consumer than the luxury patron." The other eight brands on the list were indeed, with one exception, familiar to most American buyers: Timex, Seiko, Bulova, Citizen, Casio, Swatch, Monet, and Swiss Army.

Although the latter was, like Rolex, a Swiss product, it appealed to buyers with far less disposable income than the typical Rolex customer. Given the high prices of Rolex, however, there was a broad market available to potential competitors such as Swatch, which had run ads with supermodel Tyra Banks to promote its new ultrathin Skin line of watches. The headline said it all: "Am I naked? Or am I not?"

In July 1998 Jewelers Circular Keystone conducted what it called an "informal survey" of independent jewel-ers around the United States. It found that Seiko was the brand carried by the greatest number of respondents—31 percent. This was not nearly as surprising as the fact that Rolex came in second, with 24 percent. Rolex was followed by Bulova, at 19 percent; Pulsar, with 18.5 percent, and Cyma, at 17 percent.

Inasmuch as it tied its marketing to sports and was also a Swiss company, TAG Heuer was a competitor to Rolex, although its products sold for much lower prices. The company had fallen on hard times, but it had set the pace for other watchmakers with an aggressive program of marketing, launching campaigns such as "Don't Crack under Pressure" and "Inner Strength" in both Britain and the United States.

More direct competition for Rolex came from Movado Group, the producer of Concord watches. The latter carried a price tag between $2,000 and $15,000. In October 1998, Stuart Elliott of the New York Times reported that Movado Group had assigned its $8 million advertising budget to Arnell Group, known for campaigns it had undertaken for Tommy Hilfiger, Donna Karan, and others.

WATCHING THE STATUS SYMBOL

"On a first date," wrote Dugald Jellie in the Sydney Morning Herald, "a girl once told me you could tell the quality of a man by the quality of his shoes and watch. At the time, I was wearing black R.M. Williams boots. And a Rolex on my wrist. Mind you, it was a 100 per cent faux Rolex, picked up in Hong Kong for about $7. That's the sort of bloke I am; a fake, a phony who straps on a $7 watch. But hey, it told the time. Which is what a watch is all about, plus a whole lot more."

As Jellie went on to observe, a watch was at least as much a status symbol as it was a timepiece. On the question of watches as an investment, Jellie cautioned readers never to buy a new watch, a much better strategy being to invest in a used model of proven quality. His second rule was "never invest in a woman's watch. Women buy their watches for function and because they look good. Men buy their watches as objects of mechanical design and engineering, and because they can wear them underwater to 100 metres."

Jellie also advised his readers not even to consider investing in a digital watch. These, he wrote, "remain nothing more than a flashing footnote in the history of time and keeping it. For a brief second there, it appeared they would supersede traditional timepieces with hour and minute hands, until dateline 1982, when a worldwide oversupply caused the market to crash. Digital watches—some priced at $2,000 when introduced—were being sold for $3."

MARKETING STRATEGY

Elliott noted that Movado Group's advertising choice was "an example of how marketers of premium-priced products are stepping up efforts to peddle their wares to consumers." This was certainly Rolex's strategy when, in May 1997, it signed Woods to a five-year deal that included endorsement fees and royalty payments. An advertising source told Lefton of Brandweek, "The idea is to get people in the Rolex family earlier. [Rolex] felt that Tudor will be legitimized and made more youthful by Tiger." Rolex continued to focus on either athletic or classical music stars, and among the figures included its advertising was Olympic skier Street, another appeal to the youth market.

The advertising was primarily in print, tied to high-end magazines. Lefton did not name any publications, although Rolex has advertised in the New Yorker, certainly a periodical whose readership was among the nation's wealthiest. Lisa Lockwood of Women's Wear Daily included Rolex, with its budget of around $10 million, among fashion "megabrands." She noted, "Today's megabrands are spending across a wide spectrum of media, heavily skewed toward magazines."

At midyear Barbara Spector in Jewelers Circular Keystone wrote that "the time is right for selling watches," and she quoted a prominent Massachusetts jeweler as saying, "We do seem to be in the middle of a big watch boom." In this climate Rolex enhanced its position through careful marketing methods. Wrote Spector, "Many jewelers say that high-end watch companies have helped them compete by limiting distribution of their products. Several specifically mention Rolex's stricter policy, adopted by the company a few years ago." One retailer told her, "We increased the number of Rolex products [in our store], they reduced the number of Rolex dealers, and we sold more Rolexes. Since then, we've been very happy." With the new policy, the retailer continued, "We have a totally different relationship with the salesman; he's extremely supportive and helpful."

OUTCOME

The boom market in watches continued into 1999, and companies scrambled to make the most of it. European watchmakers, as Keith Flamer of Jewelers Circular Keystone observed, had discovered a new country, the United States, one that offered a huge potential market along with a number of obstacles. An Italian watch company executive contrasted buying patterns in the United States with those in his homeland: "Spending $400 on a watch is a major investment here, compared to Italy, where it is an afterthought." Indeed, as Flamer noted, "Watch executives say the United States is the most difficult country in which to market watches because it's heavily populated, regionally fragmented, constantly changing, and price-conscious." In such a challenging, yet potentially quite lucrative, market, "consumers must be bombarded with brand messages from all directions."

Of most watch marketing during 1998 and 1999, Flamer wrote that "subtlety is out … Like a kid acting up in class, the unconventional advertising [of watch companies] is commanding attention, especially among the young." A Rolex ad that appeared on the back of the May 31, 1999, issue of the New Yorker, however, showed that the Swiss company's idea of letting it all hang out was still fairly conservative. The ad showed Ma, his arms spread wide, one hand on his cello. "Yo-Yo Ma favors Italian instruments made in the early eighteenth century," the headline announced. "Occasionally, however, he makes an exception." According to the copy, "Yo-Yo Ma says his 1712 Stradivarius is 'like a great Bordeaux,' while his 1783 Mantagnana is 'earthier, like a Burgundy.' About a third instrument, his Rolex, he says, 'I just love it. You can use it for any occasion.' "

Precisely because of its low-key approach, Flamer referred to Rolex—along with competitors Cartier, TAG Heuer, Movado, Omega, Raymond Weil, and Swatch—as one of "a handful of companies whose marketing efforts stand out. They've built brand awareness with specific niches, creativity, consistency, distinctive product, appeals to the emotions, and yes, multimillion-dollar advertising campaigns."

In April 1999 Rolex chose Olympic champion Ekaterina Gordeeva as the first figure skater to appear in one of its ads. Two other things set the Gordeeva ad apart from others. First, the photograph was staged, not a candid action shot, as was typical of Rolex advertising using athletes. And the watch on Gordeeva's wrist was her own, a gift from Sergei Grinkov, her late husband and skating partner.