The Genius of Rolex Marketing?

[m1911a1]

The majority of you folks realize how Rolex does business....
University people have written essays on the subject.
http://www.slideshare.net/jplopan/rolex-marketing-plan

I personally have pursued high quality, rugged, water-proof, wear-anytime, stainless-steel watches since watching John Cameron Swayze and the Timex commercials back in the 60's.

I've worn Rolex watches for 35 years and have observed the supply & demand phenomena and exclusivity they seem to readily create.
I personally NEVER got caught up in "the latest thing"....and still don't.

Typically "Markets-Make-Businesses" except for maybe the personal computer business over the past 25 years.
However, Rolex seems to offer something that appears to be very limited in supply.....which creates a frenzy of buyers.

Case-in point....Blue-on-Black GMT-BLNR.....
It is one of the most coveted items they produce.......UNTIL!
The next best thing comes along (Ceramic-Daytona) and now the owners don't care for the BLNR as much?
Is it because we as human beings simply want something we can't easily have (EXCLUSIVITY)?

I also wonder if Rolex dumped a million of the new SS-Ceramic-White Daytona's into the market tomorrow afternoon.....
How many people would truly love it and buy one immediately?

What say you?

[dera]

Originally Posted by m1911a1

I also wonder if Rolex dumped a million of the new SS-Ceramic-White Daytona's into the market tomorrow afternoon.....
How many people would truly love it and buy one immediately?

They can't. Their watchmakers are busy making the best selling models = the Datejusts, they only have certain production capability for the professional models, and they don't want to take out manpower from making the best sellers.

[GB-man]

I would love it if they dumped a million of them. I could negotiate a discount!

[Stuxnet]

Any decent manufacturer wants 75% of revenues to come from product introduced in the last 4 years. Allows for pricing power, market share gains, customer retention etc. Rolex is more than a "decent" manufacturer.

[watchwatcher]

I can't speak for anyone else...but if they dump a million tomorrow, I'll most likely get one.

[tunadubby]

What you said is absolutely correct. Luxury watch brands all play this game. Perceived exclusivity matters.

There are several other things they do

1. Very little discounts

2. Price only ever goes up in stores.

Thus if you ever want a Rolex brand new from store, the best time to get it is always "now". They are only able to do the above because they have a large and loyal enough customer base. And in my honest opinion, the products themselves do warrant a loyal following - they are simply the most indestructible refined and accurate mechanical watches out there.

[AK797]

I agree that the idea of exclusivity and hard to get/highly coveted is appealing. The DC is not a must get for me but I will probably get one next year and the strong resale based on strong demand is an extra comfort like a warm blanket.

[kilyung]

No offense to anyone but I don't get the argument that any Rolex is exclusive or rare. With the exception of some vintage pieces, there aren't any modern models that I couldn't readily find. Ultimately what drives my interest is how the watch makes me feel.

[sea-dweller]

Thanks for sharing!

One strength that they also have is that once a customer is in their "ecosystem", it is a continued revenue stream, in terms of service dollars. They control their service centers closely and charge set prices for a service.

[m1911a1]

Originally Posted by kilyung

No offense to anyone but I don't get the argument that any Rolex is exclusive or rare. With the exception of some vintage pieces, there aren't any modern models that I couldn't readily find. Ultimately what drives my interest is how the watch makes me feel.

I agree 100% with you.....
But you wouldn't know it by the folks, ideas, and posts on this forum most of the time.

[Sublovin]

OP, I completely agree with you and have said the exact same thing in a couple other threads, but somehow peoples feelings get hurt and I and up having to defend my opinion.
There is no doubt in my mind that people covet the latest and greatest of all things when it comes to hobbies. No doubt, some interest will now shift from BLNR to the Daytona.
I said it in another thread, it's just like sneakers on the playground, everyone wants to have the new pair first, until something better comes out.
I don't allow myself to get caught up in that, I do really like the new white Daytona, but I will wait and buy when the dust settles and the prices become normal .

[brettpaul]

Originally Posted by kilyung

No offense to anyone but I don't get the argument that any Rolex is exclusive or rare. With the exception of some vintage pieces, there aren't any modern models that I couldn't readily find. Ultimately what drives my interest is how the watch makes me feel.

Agree with you Mike....I can have any Rolex made in the last 15 years on my wrist in 5 days or less, including sourcing it.

It's how they make you feel that drives most of us I expect - otherwise we'd all be happy enough with 3-4 watches in rotation.

[Rocco21]

Id buy one tomorrow if readily available,prob buy both.

[lhanddds]

Hard to get yes, exclusive not really. They are going to make millions of these. They'll be as prevalent as BLNRs in a year.


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[XZACM102]

I'm sure Rolex marketing benefits from 5 year long waiting lists at ADs. Not many companies can afford this luxury of constraining supply while influencing customers to step up, go grey market and pay premium etc.
So do you think that new SS Daytona will be as limited in supply as previous model when launched and also many more years after? Or will new Rolex CEO try to balance better supply/demand ?

[DeeTee]

The market is shakey right now so Rolex felt like they had to drop a huge watch to keep the masses happy.
They were forced to put out a SS C Daytona or a SS C Coke.

[tunadubby]

Originally Posted by kilyung

No offense to anyone but I don't get the argument that any Rolex is exclusive or rare. With the exception of some vintage pieces, there aren't any modern models that I couldn't readily find. Ultimately what drives my interest is how the watch makes me feel.

You are exactly right that in absolute numbers, they far out-produce the likes of JLC. But they also face a far larger demand than anybody else in the luxury timepiece business (how this came to being is for another discussion).

In the following discussion, I try to convince you that it is not crazy to line up for a newly announced Rolex. I limit the scope to modern Rolex, and exclude more exotic offerings such as two-tones or diamonds.

Given a large demand, Rolex produces just enough to keep prices stable, even during bad times. And during good times, they raise prices like everybody else. Moreover, because they have such a large market share, they can discipline their AD's on price - there is a very credible threat that if the AD discounts even slightly, Rolex can unplug and go to the jeweler next door.

The perceived stable prices and eventual price increases become features of the brand. Thus if one prefers brand new to used, then purchasing "now" at the store rather than later is a no-brainer.

In the secondary market - you are again correct that we see many many more listings of Rolex than any other brand. But then again, the demand for Rolex in the secondary market is also significantly higher anyone else. This is, in part, driven by the perception that Rolex watches are the most indestructible and accurate pieces of metal in existence. And if all else fails, send it in for service and you get back a tank again. Thus secondary prices also remain stable because of the sizable demand and supply.

Given stable prices in both the primary and secondary market, there is a certain limit to arbitrage. The informed can gain on the uninformed, but much less so than in other brands (or vintage Rolex). This, again, reinforces the image that modern Rolex is a "safe bet". Thus as a first time consumer of luxury timepiece, one is often advised to buy Rolex.

All of this is to say that despite producing a shit ton of watches, Rolex has been extraordinarily successful at keeping prices stable in stores and on forums. The former is done by controlling supply relative to demand and having very high bargaining power in the manufacturer-dealer relationship. The latter is sustained by the perception of high quality and serviceability, which I do think is warranted. Given stable prices and expected price increases, consumers gain confidence and buy "now".

Therefore, purchasing newly released Rolex is not entirely irrational.

Full disclosure: I do not own a modern Rolex.

[997.2]

What's your source on the lack of interest in the BLNR now? This is all speculation and personally I don't really care. I think that I like what I like, and that if something is 'rare' on top of me liking it, neat. Seriously though. It's not like Rolexes are a dime a dozen and I live in a huge city. This whole 'rarity' thing has gone too far.


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[albmich]

Originally Posted by kilyung

no offense to anyone but i don't get the argument that any rolex is exclusive or rare. With the exception of some vintage pieces, there aren't any modern models that i couldn't readily find. Ultimately what drives my interest is how the watch makes me feel.

x10

[Snow-Dweller]

Originally Posted by tunadubby

You are exactly right that in absolute numbers, they far out-produce the likes of JLC. But they also face a far larger demand than anybody else in the luxury timepiece business (how this came to being is for another discussion).

In the following discussion, I try to convince you that it is not crazy to line up for a newly announced Rolex. I limit the scope to modern Rolex, and exclude more exotic offerings such as two-tones or diamonds.

Given a large demand, Rolex produces just enough to keep prices stable, even during bad times. And during good times, they raise prices like everybody else. Moreover, because they have such a large market share, they can discipline their AD's on price - there is a very credible threat that if the AD discounts even slightly, Rolex can unplug and go to the jeweler next door.

The perceived stable prices and eventual price increases become features of the brand. Thus if one prefers brand new to used, then purchasing "now" at the store rather than later is a no-brainer.

In the secondary market - you are again correct that we see many many more listings of Rolex than any other brand. But then again, the demand for Rolex in the secondary market is also significantly higher anyone else. This is, in part, driven by the perception that Rolex watches are the most indestructible and accurate pieces of metal in existence. And if all else fails, send it in for service and you get back a tank again. Thus secondary prices also remain stable because of the sizable demand and supply.

Given stable prices in both the primary and secondary market, there is a certain limit to arbitrage. The informed can gain on the uninformed, but much less so than in other brands (or vintage Rolex). This, again, reinforces the image that modern Rolex is a "safe bet". Thus as a first time consumer of luxury timepiece, one is often advised to buy Rolex.

All of this is to say that despite producing a shit ton of watches, Rolex has been extraordinarily successful at keeping prices stable in stores and on forums. The former is done by controlling supply relative to demand and having very high bargaining power in the manufacturer-dealer relationship. The latter is sustained by the perception of high quality and serviceability, which I do think is warranted. Given stable prices and expected price increases, consumers gain confidence and buy "now".

Therefore, purchasing newly released Rolex is not entirely irrational.

Full disclosure: I do not own a modern Rolex.

Thank you for your well written post.

I think it is worth remembering that Rolex is a private Swiss company 100% owned by a Swiss charitable foundation. It has been this way for 60 years, and it is unimaginable that this will ever change. It has no shareholders to answer to, and it is able to function in complete secrecy (no accounts are accessible, they are not required to publish any information, financial or otherwise).

Rolex does not have the same pressures as any other comparable corporation. The result is that it can play the long game, and it does this extraordinarily well.

I would guess that a very big part of Rolex's profits are reinvested (much more than possible for any normal company). "The Rolex Way" is not only to build a rock-solid product, but also a rock-solid reputation. It has the money to do both!

[Speed]

Originally Posted by kilyung

No offense to anyone but I don't get the argument that any Rolex is exclusive or rare. With the exception of some vintage pieces, there aren't any modern models that I couldn't readily find. Ultimately what drives my interest is how the watch makes me feel.

Originally Posted by m1911a1

I agree 100% with you.....
But you wouldn't know it by the folks, ideas, and posts on this forum most of the time.

Originally Posted by Sublovin

OP, I completely agree with you and have said the exact same thing in a couple other threads, but somehow peoples feelings get hurt and I and up having to defend my opinion.
There is no doubt in my mind that people covet the latest and greatest of all things when it comes to hobbies. No doubt, some interest will now shift from BLNR to the Daytona.
I said it in another thread, it's just like sneakers on the playground, everyone wants to have the new pair first, until something better comes out.
I don't allow myself to get caught up in that, I do really like the new white Daytona, but I will wait and buy when the dust settles and the prices become normal .

Well said, said & said.

[tkerrmd]

Originally Posted by m1911a1

The majority of you folks realize how Rolex does business....
University people have written essays on the subject.
http://www.slideshare.net/jplopan/rolex-marketing-plan

I personally have pursued high quality, rugged, water-proof, wear-anytime, stainless-steel watches since watching John Cameron Swayze and the Timex commercials back in the 60's.

I've worn Rolex watches for 35 years and have observed the supply & demand phenomena and exclusivity they seem to readily create.
I personally NEVER got caught up in "the latest thing"....and still don't.

Typically "Markets-Make-Businesses" except for maybe the personal computer business over the past 25 years.
However, Rolex seems to offer something that appears to be very limited in supply.....which creates a frenzy of buyers.

Case-in point....Blue-on-Black GMT-BLNR.....
It is one of the most coveted items they produce.......UNTIL!
The next best thing comes along (Ceramic-Daytona) and now the owners don't care for the BLNR as much?
Is it because we as human beings simply want something we can't easily have (EXCLUSIVITY)?

I also wonder if Rolex dumped a million of the new SS-Ceramic-White Daytona's into the market tomorrow afternoon.....
How many people would truly love it and buy one immediately?

What say you?

They would all be sold that day

[tunadubby]

Originally Posted by Clivek

"The Rolex Way" is not only to build a rock-solid product, but also a rock-solid reputation. It has the money to do both!

This is quotable and the latter is rather expensive to maintain. The privately owned nature of Rolex does set it apart from Richemont or Swatch. Did not realize this before. Thanks for the knowledge!

[GradyPhilpott]

Originally Posted by m1911a1

Case-in point....Blue-on-Black GMT-BLNR.....
It is one of the most coveted items they produce.......UNTIL!
The next best thing comes along (Ceramic-Daytona) and now the owners don't care for the BLNR as much?

What evidence is there for this statement?

[m1911a1]

Originally Posted by GradyPhilpott

What evidence is there for this statement?

I should have said "some" based upon "some" posts here since the Ceramic Daytona was announced.

Here's a couple of threads....
http://www.rolexforums.com/showthrea...highlight=blnr

http://www.rolexforums.com/showthrea...highlight=blnr

[GradyPhilpott]

Originally Posted by m1911a1

I should have said "some" based upon "some" posts here since the Ceramic Daytona was announced.

Here's a couple of threads....
http://www.rolexforums.com/showthrea...highlight=blnr

http://www.rolexforums.com/showthrea...highlight=blnr

Neither thread supports your statement.

Flippers flip. It doesn't matter what they own.

[m1911a1]

Originally Posted by GradyPhilpott

Neither thread supports your statement.

Flippers flip. It doesn't matter what they own.

I believe you are correct....

[Spartacus]

I studied Rolex in my graduate program and I love strategy. I think people on this forum tend to have tunnel vision and rarely have an objective opinion.

Rolex is the Porsche of the watch world. They are not bait and switching like Apple with the constant model change. Apple 4, 4s, 5, 5s, 6 etc.

Rolex has also built their foundation on quality, materials (precious metals), longevity and an aspirational status. They make workhorse watches, with the best materials, and if you pay the price of entry you will, like a Porsche 911, have something that will last you a long time.

Think of elements like the white gold hands or use of platinum- other brands in the price range simply don't go this distance. And, talk about sticking to their guns, holding the Daytona, sub and gmt firm at 40mm, you have to tip your hat at that perfect strategy execution.

[watch_the_time]

Thanks for sharing that analysis. The Market segmentation description seems a bit skewed and gender specific but it's no secret Rolex are masters at creating demand whether it's through marketing, quality etc.


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[Saoirse32]

Originally Posted by Spartacus

I studied Rolex in my graduate program and I love strategy. I think people on this forum tend to have tunnel vision and rarely have an objective opinion.

Rolex is the Porsche of the watch world. They are not bait and switching like Apple with the constant model change. Apple 4, 4s, 5, 5s, 6 etc.

Rolex has also built their foundation on quality, materials (precious metals), longevity and an aspirational status. They make workhorse watches, with the best materials, and if you pay the price of entry you will, like a Porsche 911, have something that will last you a long time.

Think of elements like the white gold hands or use of platinum- other brands in the price range simply don't go this distance. And, talk about sticking to their guns, holding the Daytona, sub and gmt firm at 40mm, you have to tip your hat at that perfect strategy execution.

I agree EXCEPT the fact Porsche (sadly) is not an independent company anymore and Rolex still is.