Size of market, recent trends:
The market for luxury watches in the UK is worth £360 million in 2001 (520,000 units), which represents a value growth of 36% in current terms of 1996. This is a slightly higher growth rate than that seen in the wider market for watches (27%) and therefore luxury watches have increased their total share in that period (to 2.8% of volume and 54.6% of value).
The following table provides the recent trends of UK retail sales of luxury watches from 1996 to 2001.
Source: Mintel
As this table shows, the UK market for luxury watches is estimated to have grown by 27% since 1996, both in volume and real value terms, although at current prices value growth is still higher. This makes the increase in average price paid still more striking, and this has been a consequence of consumers trading up from the entry level, both between brands and within the same make.
Future trends:
Source: Mintel
According to a Mintel analysis, the luxury watches sector will outstrip sales of mainstream watches, with luxury watches increasing by 23% at current prices, which represents growth of 13% at real prices.
The younger customers are significant since levels of aspiration are at their highest among 15-24s, and this augurs well for long-term future growth.
Consumers in the UK are showing greater discernment in the matters of design, style and quality, and are accordingly more prepared to pay for products that demonstrate those qualities. There seems every reason to forecast continued healthy growth for the market.
Moreover, the democratisation of this luxury market is helping to promote gift purchase to male and female buyers alike. So we can expect to see continued growth in the market.
Current market shares:
This table provides information about luxury watch sales as a proportion of total watch sales in the UK, and shows the relationship of the luxury watch sector to the total market.
Source: Mintel
In volume terms, therefore, the luxury market constitutes a niche sector accounting for less than 3% of volume sales. By value, however, luxury watches are of supreme importance to the total market, accounting for over half of sales since 1996
C-Nature of competition:
The market of luxury watches has evolved since a lot of large groups has taken smaller jeweller over to become more competitive. For example, the main acquisitions since then have been: LVMH's takeover of TAG Heuer, Ebel, Zenith and Chaumet in 1999. The market is now concentrated into 9 main groups witch detain half of the market share, and control together 18 prestigious brands. All of the major groups have stated that they are in the market for further acquisitions, although the LMH group represented probably the last major opportunity since all the larger remaining independents have thus far made clear their determination to remain independent. The other half of the market is hold by a lot of small company. The following table provides information about the largest groups and their market share.
Source: Mintel
We can see that the leader of the market is The Rolex Company with 64 800 units sold in 2002 and 13% of market shares. The market is quite favourable for the launch of a new brand or a new company because 53.4% are held by a multitude of small brands who has sold 267 900 units.
Three types of watch are very specific to the luxury market:
- First, watches made to the highest technical specifications are used purposely by professionals. Examples include pilots' watches, sport watches, as Tag Heuer, made by such companies as Breitling, Blancpain, and Zenith, and divers' watches, water resistant to 300 meters, for instance, by companies such as Rolex and Swatch group. These companies are positioned according to the technical sophistication axis, and the price one.
- Second, watches made with high-value jewellery pieces, are gem set into precious metals. This category includes for example Gucci group, Vendome group or Cartier. These brands are considered as well design innovative by the customer.
- Third, Grande Complication timepieces watches, are of interest to the watch aficionado, as “Manufacture horlogere”. These are mechanical masterpieces, including minute repeaters, perpetual calendars and tourbillion movements. Luxury watch purchasers are buying into the image of mechanical excellence.
D- Environment: SWOT
Our product can be identifying into the internal point (strength, weakness), and external one (opportunities and threats).
Strength: To develop our brand, we will start by launching only one product, so we are able to concentrate all our effort in our watch’s creation and production.
Weakness: Our brand does not exist in the luxury market by now. Consequently the product is not already recognized by customers, so they do not know its quality or value.
Opportunity: Our watch is an innovative product. Indeed, the watch is made with black diamonds, which begin to be very appreciated by the fashion world. Moreover, this trend will most likely develop itself this year, and that could let us be confident about our watch success.
Threats: There is a lot of competition in this market. Furthermore, the market is essentially constituted by some big companies, which owns other smaller firms, and they are probably more competitive than our brand.
Part 2: Targeting
Between the different types of watches that we have seen above, our product will identify itself in the high jewellery, as it is a watch inlaid with black diamonds.
The geographic criterion enables us to determine the most interesting area to launch the product and the advertising campaign.
Regarding to this chart, it is in London area that there are the most luxury watches owners. Moreover, London’s inhabitants are the most interested people. As a result, we will target the London area to launch our brand.
We have seen that the sex criterion has a large importance in the purchase behaviour, because of the different models between a man and a woman. The following table provides information about the luxury watches’ interest according to the genre.
Source: Mintel
According to this table, even if men are the most numerous owners, women are also interested and often hope to receive one. Moreover, women now account for a significantly larger proportion of the employed workforce and are earning good salaries. Furthermore, an increasing proportion of women are delaying childbearing or choosing not to have children at all, and so women are now far more likely to buy a luxury watch for themselves or as a gift than was the case ten years ago.
This figure shows the segmentation of luxury market by gender.
Source: Mintel
We can see that Women’s watches have shown slightly faster growth than men's. Women’s luxury watches have increased their share of the total with women buying more watches. Manufacturers have nurtured this trend with fashionable designs targeted directly at women, the current spate of more conscious femininity in design with use of diamonds, pastel colours, smaller sizes and often-delicate straps or bracelets should further promote sales of women's watches.
Consequently, to launch our new product, we will target on women, who constitute an interesting market regarding to the trend.
But we must also focus on an age class:
The following table provides information about ownership and potential ownership according to the age criterion.
Source: Mintel
We can see that the age class that consider buying the more is 15-24. But in average, people under 35 years old have not the means to turn their aspirations to ownership into reality. So we can exclude these people. 45-54 is the age band where there is the more luxury watches owner. But this class do not enough consider buying a luxury watch. Indeed, regarding to this table, interest in luxury falls off sharply among the over-45s. We can also note that there is a big difference in the percentage of owners between the 35-44 and the 45-54. This means that it is especially at these ages that people buy luxury watches. Regarding to this table, the most interesting age brand is 35-44. They are more likely on average to have the means to purchase luxury watches than younger aspiring buyers. Consequently, the most interesting age bracket is 35-44, because as said below, they will buy watches above all, and regarding this table, a good percentage of them consider buying some. As a result in targeting the 35-44 age brackets, we can be confident about our product to gain market share.
As regards to the family life cycle, we can exclude of our target pre-family and post family people, as we focus on the 35-44 years old people. Consequently we will target families, and empty nester (no family people). Moreover, empty nesters do not have to spend money for their children, and can use their income to buy products for them, as luxury watches. Families have got young children (under 16 years old), who are at an age where they do not cost too much money to their parents; and as they are two people working, they are two people earning money.
About the level of income, the following table provides information about the proportion of owners of each income brackets.
Source: Mintel
We can see clearly that the AB class is showing the highest number of luxury watches owners. Naturally, we will target these people, who have got enough money to buy our product.
Part 3: Advertising objectives
Once the market has been targeted and the role of advertising has been determined, it becomes reasonably straightforward to find objectives for the advertising,
“An objective is the goal or aim or end result that one is to achieve”, said Butterfield in 1997. Advertising objectives are recognized as a criterion of decision-making, and always enable us to evaluate our results. In fact, the more the objectives are accurate, the more they correspond to the SMARRTT objectives.
The meaning of SMARRTT is:
-
Specific: objectives should be clear, precise, and directional.
-
Measurable: they should possess a quantified measurement statement.
-
Attainable: can they be reached?
-
Realistic: can the objective be achieved in the short term?
-
Relevant: appropriate for the task at hand.
-
Targeted: related to audience.
-
Timed: creating a time frame enables the campaign to the monitored and assessed.
The objectives are something that can be achieved by advertising. “To get high sales” from the launch of the new brand is not an advertising objective, though it is, obviously, something to which our advertising can and should contribute. Objectives are usually the more specific interpretations of the role statement, including where possible specific targets, measurable by specific research.
In our case, for the luxury watches market, our idyllically objective is to create a desire for our watch.
First we want to reach the objective concerning awareness in our advertising. We want people to discover our watch, and our brand. Our product must be known by everyone in the UK market. People even if they do not consume this product should have already heard about it, and know how high quality our watch is. In a long term our objectives will be to create a loyalty toward our product and our brand.
Our potential customers are those who are already interested by luxury watches; but we want also to attract new customer, as jewel lovers, who have to become aware (thanks to our advertising) that our gold and black diamond watch is also a jewel.
In the luxury watches market, people usually purchase a model of watch regarding the brand that manufactures it. If we want our watch to be bought, people have to perceive our brand both as a luxury and high quality one, and the objective is to build a luxury brand image around our product. Furthermore, some people buy such kind of luxury watches in order to show that they have got a lot of money, more than because they like the watch. We can persuade this people that wearing our watch may be a real sign of richness.
We also want to give a personality to our product so that women can identify with black diamonds (which are in new trend), in order to be fashionable.
On the basis of this analysis we can now develop a specific media strategies for the advertising.
Part 4: Advertising Strategy
The advertising strategy is split in 3 sections, which are the Push or Pull selected strategy, the message strategy, and the media strategy.
Push, Pull:
In order to select a strategy, we have first to define the “Push or Pull” theory. Pull strategy consists in basing our advertising directly on the customer, in order to persuade him to purchase a product. On the contrary, push strategy consists in inciting the distributors to influence the customer on buying our product rather than another.
In our case, both of the strategies are appropriate:
We have to develop a pull strategy through targeting our advertising on customers, in order to attract a maximum of them and to make them aware of our brand. This corresponds to the objective concerning the awareness of our product launch. In doing that we will normally touch a big part of the population.
We have also to develop a push strategy, in order to “push” retailers to sell our product. Indeed, our brand has to be seen as a luxury and quality one, so it is important that famous watch-sellers have our product in exposition and incite potential customers to buy it.
Message strategy:
For the choice of the message, we have to keep in mind that the creative factor is more important than the money spent on the campaign, and we are going to put a lot in.
However, “it’s not what you say but the way that you say it” that is important, in a message. We are going to build a message that has to be rational (appeals to logic), emotional (appeals to consumers softer side) and also labelling (consumer will be labelled as interested in that type of product), by giving style, fashion, colours, and information to our ad.
The message of the campaign will have three main functions:
Our advertisement has to inform people of the launch of our new brand and watch, and to reduce buyer’s fears about the gem use as the black diamond is a new trend not yet known by everyone.
It has also to persuade people to purchase now or to receive a sales call, by building a brand preference. Indeed, customers have to know that our watch is different of the competitor’s one because it is an innovative product, which have both style and high quality.
Additionally, the message of our campaign have to reach the objective of remind: When our watch will become successful and the new brand willbe established and well-known, the brand has to keep a high level of awareness, ideally as one of the first two in its field spontaneously named by respondents to a survey.
The message strategy could be divided in four main parts, which are the brand personality’s one, the endorsers’ one, the rational one and finally the emotional one.
We have interest in providing as fast as possible a luxury image of our brand. People have to know the difference we offer from the competitors, which is essentially our innovative use of black diamonds. As we are not yet known as a luxury brand, we have to prove to the population that our watch is good quality, and made with gem that begin to be very appreciated. Our message objective is that all the targeted population has to be aware that our brand exists and is synonym of fashion.
The transfer of model-personality characteristics of the endorser becomes linked with the brand imagery. The use of endorsers can change negative opinions about a brand (in case of an expert or satisfied customers). But it can also cause a negative reaction if it is not well used. In our case, it is very important to use an endorser because our brand is a new one. As our target are rich woman aged between 34 and 45 years old, and because of the luxury image we want to give, the appropriate endorser would be a well known public figure. If for example Linda McCartney could be seen wearing our watch, it could have a high impact on all the population, giving value to our brand. So our target could identify with this celebrity.
This aspect is linked to the push strategy. We have to be rational with distributors of luxury watches, if we want them to accept selling our product. As they take some risks in signing a partnership with our brand, it could be necessary to provide them our forecast about the sales.
It could be interesting to make emotional advertising, as we want our target population to enter in a dream world, as those of luxury watches. Benefit can be a high involvement of the population.
The words that will be used should be memorable and grab people’s attention. Picture also draws attention, as well as size and colour, but copy must be well composed. Our message will include a picture of a beautiful woman, who looks like very fashionable, and who wear our new black diamonds watch.
Media strategy:
As we are a new brand, our priority is to be known and to build an image around our brand. Our company has to choose the type of media we want to use. The main media are the audiovisual, print media, and the billposting. Within all these media, there are choices to be made by our company as choices of size, of position, of frequency and duration of appearance.
The billposting is not the appropriate media in our case, because as our brand is new, we will be perceived as popular. It is not the positioning of advertising that we research. In fact this type of media is appropriate for already prestigious brand.
We can use audiovisual media, which include radio, television, cinema, Internet…
-
First, radio is not an appropriate media to advertise our watch, because of the lack of image. Consequently, nobody will be able to know the aesthetic, luxury, and fashion of our watch. As these are the most important purchasing criteria, radio would not be efficient.
-
Television can be a good media to promote our watch. But we have to differentiate the approaches to this media. The first one is those of an advertising spot: the problem is that as TV is a mass media, the positioning of our ad would be wrong, and our brand would be considered too popular.
Nevertheless, we can use TV to show our watch being wear by some celebrities in some interview, or during a famous event as fashion parade or Oscars Ceremony, where the audience is high. As celebrities wear it, our watch could be seen as the symbol of luxury and fashion.
-
Cinema can be use as movie sponsorship. That is concept that has been developed since some year. We can provide one of our watch to a director of movie, in order that one of the actor wear it, and that spectator seen the watch. It is an indirect media,
-
Internet can also be a good media, as it is now more and more use. We have to create a website, which indicate all kind of information about our brand and our product (fabrication, gem use…). There must be some photo of our watch, and customer could of course purchase directly in line.
Print medias are the more interesting medias to advertise our product, given their selectivity and therefore relative cost-efficiency. Women's lifestyle titles (“Vogue”, “Harper's”, “GQ”) account for the majority of spend while broadsheet newspapers are also used, although less extensively. They are very appropriate in our case because they are essentially read by our target population. The Financial Times is an exception, however, and receives a significant proportion of its ad revenue from luxury watches in both its weekend edition and its monthly How to Spend It magazine. In addition, major luxury brands also advertise extensively in international publications such as Newsweek and Time and major in-flight magazines because of their reach of ABs. The Financial Times thus also qualifies as an international title.
After having set our advertising message and chosen our media, we need to put up a pre-test for this ad.
Part 5:Pre-testing
Before releasing the advertising campaign, we have to make a pre-test in order to evaluate our advertisement. This pre-testing helps us to determine the efficiency of our advertising, in order to reach our objectives previously defined; this kind of action is also useful to avoid wasting time, money, and energy in an inappropriate campaign.
We have to test all the different advertisements next to our target to determine if they achieve our objectives in terms of awareness, comprehension and involvement.
Before launching our campaign, it is very useful to know if our message is well perceive as wanted, and if our target had a good level of awareness and knowledge about our product.
It is relevant to known if the message in advertisement give enough information about our product, and if the customer can recognise it.
We have to determine the level of involvement created by our message. Is the customer interested about our product after seeing our advertisements?
The pre-test:
The pre-testing is defined as a qualitative research. The simplest way to realise it, is to show the advertisement to a number of individuals selected from the target group, and get a discussion about the ad. There are some main criteria for judging advertisement:
- Does the ad make me stop and look at it?
- Is there an original unusual idea in it?
- Does it work at a piece of design?
- Is it relevant for the product?
- Is it easy to understand?
(« Advertising what it is and how to do it », Roderick White)
For this research we need a minimum of two discussion group, but more are better.
The sorts of question it can answer are, for example:
- Is the ad interesting?
- Is it liked or disliked?
- What does it tell them about the product? What will it taste like?
- Who do you think the product will appeal to?
- What sort of shop will sell the product?
- What kind of feelings do they get from the ad?
- Might they try the product?
All these questions help us to determine if our advertisement is right or if it needs some changes.
There is a second type of test:
Pre-testing print ads involves folders which the respondents browse through. A selection of many advertisements, including the ad to be tested, is put in this file folder. The respondent is asked to recall and then asked questions about the ad to judge comprehension, mood, liking, feeling, and interest of the product.
The question will include:
- What product can you remember?
- Then (for each product remembered) what did the ad tell you about the product?
- Can you remember the message?
- Can you describe the illustration?
- What else can you remember about it?
- What are your feelings?
Regarding to the answers given, it is now possible to draw conclusions about the impact of the ad – Is our ad the most mentioned by people? Did they remember much detail about our ad, and which one? Did the things they told us about the ad or the product correspond at all to what we hoped they would get out of it? Did they describe our ad better than competitor’s one?
Being aware of the performance level of our campaign is obviously a big issue. Understanding the impact that it should have is essential. Pre-testing our campaign allows us to anticipate its performance and obtain a comprehensively understanding of our campaign. This enables us to adjust our campaign before launching.
Campaign evaluation
One of the most important tasks of our work is to measure how our action has worked. We can ask ourselves: Was our campaign successful? What were the terms of success?
We have to evaluate the success of our campaign especially in terms of purchase and in terms of awareness.
- As advertisement is a real component of the marketing mix, its contribution to the success of the brand can be measured in terms of purchase. We have to measure and compare our obtained results, in terms of sales, profits and market shares, to our previous figured objectives: are they close, matching or totally different from those we hoped for? We have to study the evolution of sales during all the advertising campaign to determine the influence of the advertisement in the purchase consumer behaviour; and so, if we change our advertising strategy, how does it affect it.
- The success or failure of an advertisement cannot be judged solely in basis of sales, but also in terms of brand awareness. To determine the effectiveness of the advertisement to the people awareness, we have to carry an awareness survey, in order to measure the level of awareness and knowledge about our product. The research is conducted in stage and repeated over a period of months, to follow the evolution of consumer attitude over time. The respondent is asked question about their awareness, their general knowledge and their consumption behaviour toward the product. Question can be for example: Do you know our product? What do you think about the brand? Do you use this product?
With this kind of research we can see if we have reached our advertising objectives in terms of brand image.
Other measurement techniques could be: running graphs, tracking studies, Usual and Attitudes studies, Preference tests, Consumer Panels, Qualitative research
Pre/post analysis, Economic modelling.
Market and advertising research seek to measure the effectiveness of advertising messages on consumers and how far the goals of the campaign have been attained to provide a guide for future action.
Bibliography
Mintel report: “Luxury Watches” July 2001
Books:
Advertising, what it is and how to do it: Roderick White, 1981
Advertising: Maurice I.Mandell,1980
Advertising management: C.Weinberg, P.Doyle, K.Simmonds, P.Law, 1974
Notes from the lectures of Kathy Mouat and June Long…
Internet web sites:
