BATTLE OF THE BRANDS
Patek Philippe vs. Rolex
Gizem Ozdemir, Cynthia Younes, Martin Lemay, Alex Beauchesne
Table of Contents
Introduction to the Watch Industry3
Customer and Competitor Analysis4
History of Patek Philippe5
Patek Philippe’s Strategy6
History of the Brand11
Scope of the Brand12
Results – Patek Philippe15
Recommendations Patek Phillipe16
* Introduction to the Watch Industry
Rolex and Patek Philippe are part of the jewelry and watches market – watches consist of 20.8% of the jewelry market share, but most specifically the Swiss watch market. The Swiss watch market is more exclusive and includes the best and most accurate watchmakers in the industry [ (Tower) ]. The Canadian jewelry and watches market gained total revenues of $2,327.6 million in 2009 The Canadian market represents a small percentage market value for the industry. It stands for 3.7% of America’s jewelry and watches market value while the United States accounts for 89.7% [ (DataMonitor, 2010) ]. This means that for companies from the luxury watch market Canada does not account for a large proportion of their revenue, this can be primarily attributed to the low accessibility and awareness of these products – awareness for Patek Philippe in Canada is really low, and their high prices. Though, in the global market, the watch industry is doing incredibly well, and is in sustainable growth. It recorded exports of 11 billion dollars in 2004, 12 in 2005, and 13 in 2006. This growth can be strongly explained by the increase of demand in emerging markets such as China and India [ (European CEO) ].
There exist 4 segments in the luxury watch market: high-end luxury, luxury, pseudo-luxury, and basic luxury. Starting at $5,000, the high-end luxury segment contains the most expensive watches; some can exceed $2 million. Patek Philippe is part of this segment. Than there is the luxury market, which starts at $1,000 up to $1 million. The pseudo-luxury segment follows with a start up price of $500 to $5,000. Lastly there is the basic luxury market that has prices that reside below the $2,000 mark.4 [ (Ziglar) ] In the Swiss watch market, brands usually compete on features, product attributes, positioning and awareness. Features represent mostly the degree of innovativeness of watches, in other words its technicalities. Product attributes consist of the quality and of the type of raw materials that were used to build the watch. Also, Swiss watchmakers compete based on their product differentiation and its position based on the degree of innovativeness and the degree of luxury. Finally, brands compete on awareness and reputation. Reputation plays a big role in competition, because buying luxury watches are high involvement purchases. Associations need to be strong with the brand; customers usually want the watch that represents the most their values and social status. 5 [ (Jeannine Komonosky) ]
* Customer and Competitor Analysis
Patek Philippe has a really prestigious customer base. Its customers are mostly connoisseurs, collectors, knowledgeable, and most of all extremely wealthy consumers. Based on the step-down Analysis in Annex B, the potential population of Patek’s target market in Canada is of 1488 and its potential revenue of $45 million. Concerning Rolex, we have identified its customers as nouveau riche, that look for prestige and status recognition. Based on our step-down analysis in Appendix 1, Rolex’s potential population of their target market in Canada is of 288 270 and potential revenue of $2.4 billion.
Patek Philippe’s main competitors are Longines, Ebel, Rolex and Breitling.6 (Tower) By comparing Patek to its competitors on the perceptual map in Annex...