Research Paper on Montres Rolex S.A.
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Rolex is one of the most recognizable brands in the world. At any rate, Montres Rolex S.A. is apparently one of the leaders of the watch industry. The company produces about 2,000 watches a day and its annual revenues exceed $3 billion (). At the same time, it should be pointed out that the company operates in the luxury watches industry that means that potential customers of the company are supposed to be representatives of upper classes. In such a situation, it is really important to provide the high sale rates of the company that implies the necessity of the effective work with customers and the promotion of the brand in order to increase its popularity and attractiveness to customers.
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On analyzing the target customer groups of Montres Rolex S.A., it should be pointed out that the target customer groups are defined by the positioning of the company in the luxury segment of the watch market. At first glance, such positioning of the company limits consistently its potential customers. However, in actuality, such a view on the company and its customers is quite superficial.
In this respect, it is important to underline that traditionally Montres Rolex S.A. was focused on the sales of luxury watches to representatives of upper classes of society, whose income was high enough to afford the acquisition of luxury watches. In fact, the company traditionally offers customers watches, which could be viewed rather as objects of art than ordinary watches because the use of precious metals and jewelry do not only increase the material value of Rolex watches but also make them original and unique in a way. In such a situation, it is quite natural that Rolex watches are basically positioned as watches destined to conservative customers, who want to emphasize their high social status by means of watches.
However, it should be pointed out that in the course of its development the company has introduced different lines of watches which target at different category of customers, though, Rolex watches have never left the luxury segment of the watches market. It is worth mentioning the fact that, at the present moment, Montres Rolex watches offer a variety of products and introduces new lines, such as sport watches. For instance, in 1992 the company introduced the new model the Oyster Professional Yacht-Master.
Also, it should be said that, in spite of the fact that the company was traditionally oriented on the production of male watches, in 2000, Montres Rolex S.A. enlarged its target customers group and started the production of watches for women, this product was the Oyster Perpetual Daytona for women. This step was very important because it made the products of the company available to the larger number of customers. Basically, this step was determined by objective factors since the current trends indicated to the increasing buying power of women. On the other hand, the company needed to increase the sale rates because of the growing competition and its traditional orientation on the production of durable luxury chronometers.
In such a way, it is obvious that at the present moment the target customer groups of Montres Rolex S.A. is very large that may be explained by the necessity of the company to enlarge its market share by means of attraction of new customer groups.
In fact, it is obvious that the intention of the company to increase its sale rates and strengthen its position in the market was determined not only by the desire to increase revenues and profits of the company. As the matter of fact, the growing competition was probably the most significant factor that forced the company to increase the production and diversify its target customer groups. In this respect, it should be pointed out that among the major competitors of Montres Rolex S.A. it is possible to name very respectable and popular companies, though, according to specialists (Aehl, 1993), none of competitors of the company is as popular and recognizable as Rolex is. To put it more precisely, the company was placed 71st among 100 most popular and important global brands (International Directory of Company Histories, 2000). In fact, this is the top position among all watches manufacturers that are the direct competitors of Montres Rolex S.A. This is why it is possible to estimate that the current position of the company in the market is very strong.
Nevertheless, the major competitors of the company, such as LVMH Moet Hennessy Louis Vuitton S.A., Movado Group Inc., Compagnie Financiere Richemont A.G., the Swatch Groups S.A., and TAG Heuer International S.A., gradually increase their pressure on Montres Rolex S.A. and the threat of the increasing of their presence in the luxury watches market becomes more and more significant (See table 1). In this respect, it should be said that the luxury watches market is less flexible than the traditional watches market because the price of products of the company is not affordable for the mass consumption, though the company manages to produce up to 500,000 watches annually that is apparently a significant success of Montres Rolex S.A. However, companies operating out of the premium segment market have larger opportunities to increase the production and sales.
It is important to underline that the maintenance of the positive market performance was, to a significant extent, stimulated by the process of globalization which opened new opportunities for Rolex to enter new markets and overcome existing financial barriers. On the other hand, this process increased the competition since its rivals could also benefit from advantages of globalization.
Moreover, at the present moment, the popularity of the brand and its recognition by customers worldwide produce a negative impact on the competitive position of the company. To put it more precisely, the position of the company in the world market is substantially undermined by the illegal production of Rolex watches. In fact, this is the problem of piracy, violation of intellectual property rights and unauthorized use of the brand of the company by minor, clandestine manufacturers, which are basically operate in Asia in such countries as China, for instance. It is quite difficult to assess the losses of the company from such clandestine business.
Thus, taking into account all above mentioned, it is possible to conclude that Montres Rolex S.A. attempts to enlarge its target customer groups, entering new niches of the luxury market. Nevertheless, the competition in the market grows stronger forcing the company to look for new ways of the enlargement of its potential customer groups. Moreover, the situation is deteriorated dramatically by the competition from the part of illegal, unauthorized manufacturers of watches which illegally use Rolex brand to manufacture and sell their own products without the company’ authorization.
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