Situational Analysis Of Rolex Company
Rolex S. A. is recognized internationally as one of the most reputable companies for luxury accessories. They are a Luxury Swiss watchmaker company which designs, manufactures, distributes, and services wristwatches world-wide. For this analysis, we will focus on Rolex’s brand presence within Canada, specifically their wristwatches, and use research incorporating the luxury goods, luxury accessories, and wristwatches market.
Company
Founded in 1905 by Hans Wilsdorf, Rolex became the most prestigious timepiece brand all over the world and is now managed by a private company owned by Wilsdorf foundation. Their high-priced products, that use only the highest quality, carefully crafted metals and gems, meet a wide range of consumer’s wants, such as simple, flashy, or vintage looks, watches for golfing and diving, and much more. Unlike many other Swiss luxury watchmakers, who receive a large portion of their pieces from Swatch, LVMH, or Richemont Group, Rolex has almost fully vertically integrated itself. This means they produce most of the pieces that go into manufacturing their watches themselves. This adds value to the brand because it keeps knowledge and inventions they have pioneered themselves private, as well as it follows the trend of vertical integration.
Not only has it been named “the most reputable company in 2018. . . even while society is in a crisis of trust” because of their high-quality products and dedication to treating their employees and consumers well, but they have also had many other successes in their history, with their reputation for being inventors one of their biggest. Rolex’s revolutionary inventions include the dustproof and waterproof, airtight watches in 1926, the date screen in 1945, and the deepest diving watch in the world. To distribute their product, Rolex relies on official in-store retailers to guarantee the products authenticity. Although Rolex tries to ensure authenticity, a fall back of the company is the many counterfeit watches. They are generally sold online or in street markets to people who are not willing to pay the high-price of the genuine product or to people who are unaware of Rolex’s policy to only sell in certain stores.
Category
Rolex is situated in the category of luxury watches and accessories, that is generally only catered to the elite, high-income class. Additionally, within this category, watches like Rolex specifically hold 13. 4% of the market. It is a quite mature and profitable industry, considering companies like Rolex have been around and prospering for more than a hundred years. But in that time, Rolex has managed to become the most valuable brand in its industry. In 2016, Rolex was estimated to be worth 7. 25 billion dollars, which is almost 4 billion dollars above its next competitor. Since Rolex and brands alike have become so well established in brand name, value, and history, it is assumable that successful entry to this market would be rather difficult. Within Canada, this category has been seen to have a growth of almost 60% over a five-year span in 2011 to 2016, meaning Canadians have been seen to spend upwards of a billion dollars more on luxury accessories within those years. Although, the industry may not continue to expand so rapidly because in 2019 Canadians are only projected to spend 0. 2 billion dollars more in 2019 than after the spurt in 2016.
Competitors
Although Rolex is a top competitor in this industry, many other companies, specifically other Swiss watches whom also stand for quality and reliability, compete strongly with Rolex. Some of these brands include Omega (timekeeper of the Olympic Games), Tag Heur, Cartier (biggest manufacturer of custom watches), Patek Philippe, and countless more. These brands are quite similar in the sense that they are high priced, high quality, have a long history, and are Swiss made, yet Rolex still trumps these competitors in revenue. While Rolex continues to stay ahead in terms of Swiss watches, a threat appears in accordance with Apple, who creates the apple watch. They managed to outsell Rolex and its competitors greatly due to their new technology and price range Swiss brands do not have.
Consumers and Customers
When purchasing wristwatches, consumers choose Rolex due to several factors. To consumers, the brand itself has become synonymous with prestige, wealth, and a luxurious lifestyle. Being a symbol of such highly admired qualities, it attracts consumers who look to associate themselves with these characteristics and potentially show off their affluence. As well, due to Rolex’s strong brand name, quality, and value, which is further explained in the company analysis, consumers purchase them to commemorate achievements, as investments for resale, and as collector’s items. In terms of the socio-economic status of their customers, they ae generally high-income earners, who are flexible in terms of income, such as they have a large disposable income. Additionally, as of now, men are Rolex’s main consumers, as their more popular collections cater generally to men. As for brand loyalty, Rolex has built “a loyal clientele that see the watches as special because it reflects the customers self-image”. An important insight to note is the growing demand Rolex has had among millennials.
Rolex, a 100+ year old brand, managed to expand their selves into a younger segment than they were originally placed in. This can be greatly attributed to its presence on social media, specifically Instagram, being worn by many celebrities and influencers. In 2017, for luxury products in general “85% of luxury growth was fueled by millennials”, who are not only, but the greatest users of social media. Corporate Partners Rolex has been involved in many sports including tennis, golf, motorsports, and yachting that gains them recognition around the world. 40 years ago, Rolex became the official timekeeper at the Wimbledon Championships building a great partnership between them, as well as other aspects of the tennis world. This includes supporting many players and tournaments in tennis, such as Roger Federer and the Australian Open. Rolex has also shaped a close relationship with the New York yacht clubs over the last half a century, with their privileged relationship continually strengthening. Now, Rolex has many partnerships with other high-level yacht clubs and organizations. Additionally, Rolex established long-term partnership with Formula 1 Racing in 2013 season and became its official timepiece (www. rolex. com/en). Rolex, running on an almost vertically integrated system, relies on very few outside suppliers to source any of their materials, which can be a benefit to them. The only items they source from corporate partners are “synthetic sapphire crystals and many of the dial hands”.
