Marketing †Luxury Watch Marketing Plan Essay

1. Executive Summary This report contains a marketing plan strategy for a new luxury watch entering the luxury watches market. The new product that will be launched on this market is a exclusive luxury watch. Exclusive luxury watches are defined as the ones sold above $9999. The watch for which we are drawing the marketing plan is a gold and platinum watch with white diamonds. The use of innovative and unusual styling is become an increasingly important feature of the luxury watch market. The unique feature of the watch is the possibility of customization and therefore personalization of this watch. The report is composed of four parts. To begin with, we have done a context analysis to discussion the various macro and micro environmental factors that impact the relevant market dynamics such as market size and growth, positioning of existing brands etc. Then we have come up with the demographic and psychographics description of the target market. | | Pocket watches offer a different kind of experience for consumers. Some use it for its novelty and style whereas others find it more functional than wristwatches. A lot of people also use wristwatches and pocket watches alternately. Regardless of one’s preference, using a pocket watch at this day and age is still a very welcome sight. | 2. Main Report 3. 1. Context Analysis The marketing environment for Perkupoldies exclusive watch market represents overwhelming opportunities. It also contains some challenges that the firm believes it can meet successfully. The macro environmental factors are extremely encouraging. a) Economic environment: The number of people in the Forbes’s billionaire group and Merrill Lynch/Capgemini millionaire group are steadily increasing over the past decade. The number of billionaires has increased by more than 250 percentages. According to Merrill Lynch/Capgemini report the World’s High Net worth Individuals (HNWI) population has also grown to 9. 5 million with their assets rising to $37. 2 trillion. | Number of Billionaires| % Increase in number of billionaires| Billionaires combined net worth (in trillion dollars)| % increase in Billionaires group| 2012| 1226| 257. 56| 4. 6| 328. 57| 2003| 476| | 1. 4| | b) Social – Cultural environment: Wealthy people are driven by views of oneself. They spend money for acquiring of luxury goods and services to publicly display economic power. Sociologically, to the conspicuous consumer, such a public display of discretionary economic power is a means either of attaining or of maintaining a given social status. i. Developed Economies ii. Emerging Economies c) Technological environment – Product innovations, groundbreaking developments in mechanical and atomic watches enable extreme engineering and personalization of watches possible. Additionally, the below situation analysis details the context for Perkupoldies marketing efforts. Here we take a closer look at the internal and external factors that influence our marketing strategy using SWOT analysis. SWOT analysis The above SWOT analysis combines the external (opportunities and threat) and internal (strength and weakness) analysis. 3. 2. Market Analysis with Porter’s Five Forces a) Threats for New Entrants: The presence of profits in an industry will attract new firms willing to take advantage of these profits. Over time, too many new entrants will drive down these profits, decreasing at the same time the attractiveness of the industry. The presence of various barriers to entry can minimize this threat. b) Bargaining power of buyers: If the brand is very famous, successful and appealing to customers, there is no obvious difficulty for distributors to sell the products: the marketing and communication efforts done by the brand will drive customers easily into the jeweler’s shops. Jewelers are usually not especially risk takers and if they have no guarantee that the brand is a hit and will be easily sold, then one might have a hard time trying to convince them to buy ones products. All the power is in the hands of the distributors; with no distributors, the way to the customers is locked. What is more, distributors might be pressured by actual players to refuse to distribute new brands. Therefore, as we mentioned earlier, distribution is an important barrier to entry. c) Bargaining power of Suppliers: The luxury watch industry is dominated by mechanical technology; as a result, the procurement of mechanical movements is the high end brands’ main concern. Qualified manpower can also be an issue that should not be neglected; the number of watchmakers able to produce some of the most intricate complications is very small. d) Threat of substitute products: Counterfeit is a phenomenon that needs to be mentioned because it represents a non-negligible threat for the luxury watch industry. Secondly, in a larger sense, other luxury products can also be considered as a substitute. Now if we think about a legal substitute, which could be fought with conventional marketing weapons, the issue is more complicated. While in a narrower sense substitute could be confined to jeweler, in a broader sense we have to include all the luxury goods available on the market. a) Jewelry b) High end Pens (e. g.:- Mont Blanc) c). Cars Some customers could buy a watch while others would rather travel to tropical and exotic countries, or buy luxury cars or furniture. Therefore, because the range of substitute products we can include is so broad and difficult to define clearly, it is rather difficult to assess accurately how serious the threat is. e) Rivalry among Competition: Concerning the large trends, the past years, big groups were fighting over brands: each group wanted to increase its brand portfolio by taking over independent brands. 3. 3. Pocket watch Industry Background. There was a time that no gentleman felt well-dressed without his pocket watch. Pocket watches, which originated in the fifteenth century among the upper class nobility, reached their heyday in the mid-17th to early 20th century. At one point in time, no middle or upper class gentleman would dream of leaving home without his pocket watch. Among the working class, pocket watches were more than a sign of status. They were, for many workers, an important work tool. Railroad workers, in particular, relied upon their pocket watches to time their duties. By the middle of the 20th century, with the advent of inexpensive wristwatches, the popularity of pocket watches began to wane. From full hunters’ case watches to ladies’ pendant watches, pocket watches are making their way back into the popular fashion scene. Their renewed popularity may have begun within the youthful goth culture, especially the Steampunk segment of Goth culture which esteemed all things Victorian and mechanical clockwork objects and items. If there’s any modern day item that embodies the spirit of Victorian Steampunk culture, it’s the pocket watch. While the popular comeback of pocket watches may have begun with the underground steampunk movement, it has quickly become a new fashion status symbol, popular with youth from the club scene to the stock market floor. Today, advances in glass mechanics and structure have created a new style of pocket watches transparent, scratch-resistant cover so owners can see the time without opening the case. Popular styles of pocket watches today include replicas of antique pocket watches as well as more contemporary styles that fit with today’s men’s and women’s fashions. 3. 4. Description of Product. The watch has several state of the art features which are meant to satisfy the below mentioned needs of the customers. a) Stated needs – To purchase a luxury product b) Real needs – A jewelry and accessory c) Unstated needs – An ever appreciating value d) Delight needs – Personalized e) Secret needs – An expression of status and exclusivity The features of the watch are as mentioned below: 3. 5. 1. Body Construction – The timepiece will be a beautiful handmade timepiece bearing the owner’s name. The watch may be made out of White gold, yellow gold or titanium depending on the specifications provided by the customer. 3. 5. 2. 1. Crystal – Swiss 3. 5. 2. 2. Glass – Sapphire glass with non-reflective coating 3. 5. 2. 3. Chain – Titanium/Yellow Gold/White Gold 3. 5. 2. Nature and Quality of jewels – The watch will have at least 100 brilliantly cut diamonds on the dial case. The chain will be made out of pure 22k gold with have around 200 cut diamonds. Though these specifications are given for the standard watch provided by our company. We will provide custom designed watches for customers that may have more diamonds. Proof of authenticity will be provided for all the diamonds on the watch. 3. 5. 3. Hand Crafted – Usually custom watches would require 4- 6months of manufacturing time depending on the availability of material. All watches will be hand crafted by highly skilled jewelry craftsmen. As each part needs to be fabricated, decorated, assembled, and tested, you can image that the process takes a long time. 3. 5. 4. Features – a) 26 cities world time (including Adelaide) b) Perpetual Calendar c) Radio controlled: Receives standard time radio waves across the world d) Daylight saving function (automatic in radio wave receivable zones, manual in other zones) e) Alarm, 12/24 hr.time f) Magnetic resistance g) 2000m Water Resistant 3. 5. 5. Limited Edition – The watch will be one of its kinds since the design will be custom made by our designers specifically for our customers. The design will be classic and superior that reflects the unique personality of our client and create everlasting value. 3. 5. 6. Warranty type: lifetime International Warranty 3. 5. Factors Considered while purchasing luxury watches a) Precious Metal Construction – It should go without saying that a high end expensive watch should be constructed from quality materials. This means the best possible metals and so forth, but it is also a good idea to ensure that the metals involved are inherently valuable. It also goes without saying that precious stones also are a desirable component given the style and variety of the watch. b) Nature and Quality of Jewels – The first thing to look at is the origin of the stones. The two major options are natural or manufactured. Natural stones are obtained the traditional manner – via often controversial mining methods. There is an inherent romance to the concept that a stone was derived from the earth, discovered, cut and polished, and then used on your luxury item. Aside from â€Å"recycled stones† (taken from older or unsold items), the alternative to natural stones are manufactured stones. c) Hand Construction – High-end watches are hand-made and assembled by master watch makers. Sometimes a team of people will be involved in making the watch, other times a single watch maker toils for as long as a year or more on a single watch. As each part needs to be fabricated, decorated, assembled, and tested, you can image that the process takes a long time. The longer it takes to make a watch, the more refinement and decoration will be found in an on it. There is no specific amount of time that you should look for as it depends on the company. d) Complications – High-end watches don’t just have beautiful mechanical movements, they have complex movements. Other complications effect how accurate a watch is or how interesting the movement is to look at while in operation (i. e. various types of tourbillon escapements). Other common complications in high end watches are perpetual calendars, rattrapante chronographs, sonneries, fusee and chains, moon phases, and multiple time zones along with world timers. e) Style- The best watch makers are skilled in making unique designs, but ones that are â€Å"instant classics. † The best designs will look good on anyone. Lastly, when looking at a designer look, you want to make sure it has enough unique qualities to justify the â€Å"exclusive† item you are thinking about buying. f) Limited Edition – The best luxury things in life comes in small quantities and are made in limited productions by dedicated people. Besides, having too much of anything cuts the value and the intrigue. So look for limited edition or highly limited production watches. Ask how many of a particular model has been made and whether or not there are 1000 or 100,000 of them out there. The more limited a watch is the more exclusive it is, which is a major component of true luxury goods. g) Appreciation of value – The lucky high-end luxury watch buyer will be able to afford a timepiece that has the potential to increase in value. 3. 6. Segmenting Targeting and positioning 3. 7. 7. Segmenting Market segmentation is vital for a company’s success. Without a clear idea of the nature of the target segments, the firm is forced to use a scatter? shot approach to marketing strategic decision making with little chance for success. It is necessary to identify target segments of consumers and tailor offerings to best meet the wants and needs of that particular group of consumers. 3. 7. 8. 4. Demographic criteria: a) Sex: The luxury market could also be segmented according to the sex criteria. Indeed men’s watches are quite dissimilar from women’s. There are differences on the precious metals used for the fabrication, on the size of the strap and of the dial. b) Income level: Naturally the income is a very important factor of the luxury market, because it determines the purchasing power of consumers which has to be very high. c) Geographic criterion: The luxury watches market could also be segmented according to geographic regions. People from different regions do not share the same culture of the purchasing power. 3. 7. 8. 5. Psychographic criterion Psychographic bass for segmentation center on perceptual issues. These segments are determined by combining individuals who are psychologically similar in their orientations. These distinctions are made based upon similarity of lifestyles, personalities and values. a) Lifestyle – it reflects the ways in which the individual chooses to live their lives. What types of activities they enjoy, what life settings they desire, and who they surround themselves with are all components of lifestyle. b) Personality – here the idea is to group people into roughly similar personality types with the underlying assumption that people will be more favorably disposed toward those of a similar personality profile. c) Core values – to try to match its core values with those of its customer segments building positive associations. The company stresses values in its products/services as well as in its corporate environment and culture, and the hope is that the segment will become loyal to the company because it embodies the core values of importance to the consumer. People have different reasons to buy luxury watches. Five motivations can be listed: * To be fashionable * To have a customized and unique product * To have an excellent and reliable product. * To have a product with the latest technology * To have a high standard of living 3. 7. 8. 6. Segmenting on the basis of Demography a) Income group – HNWI, UHNWI, Billionaires b) Sex – Male, female 3. 7. 8. Targeting Targeting requires the firm not only to aim at but hopefully to hit its target segments. The final important aspect involves the establishment of an important perceptual position in the mind of the consumer. It involves the decision of the number of different segments to select and serve and the best action plans to reach the identified segments. Measuring Effectiveness of Target Segments a) Measurable – size of segment, income and purchasing power, and characteristics of the segment b) Accessible – reachable by the firm and able to effectively serve the segment c) Substantial – large enough and capable of generating sufficient profits d) Differentiable – truly distinct from other segments in terms of composition and response to marketing stimuli e) Actionable – marketing programs can be developed to effectively identify, attract and serve the segment Purchasing behavior of Customers. a) Kind of purchase: Most of the luxury watches are bought either by a person for themselves or for another person (as gift). The unit price of a luxury watch would deter much of the gift buying behavior except by the seriously wealthy or on a very special occasion. One typical example is â€Å"birthday† or â€Å"wedding anniversaries† that, in the latter case, help to promote sales from the late spring onwards. b) Decision Making: In this market, the Influencer is the person who hopes to receive a watch as a gift. For example, it could be a woman who incites her husband to buy one for a special event. The consumer is the one who uses the product. In our example, it would be the woman who asks her husband to buy one for her (the consumer is often the influencer). c) Duration of decision–making process: We can distinguish people who do not consider high price to be a deterrent and who make an impulsive purchase; and others who think about spending such money in a luxury watch for a long time. d) Length of buying process: There is a minority of people who are interested in such product. But those who are really interested have already taken the price into consideration and thus would buy our product relatively easily. e) Consumption process: Due to their high prices, luxury watches are an investment for a lot of’ people and that is why it is in average bought once in one’s life. Analysis of Demand a) Potential market – millionaires and billionaires b) Available market – HNWI (High net worth individuals) UHNWI (ultra High net worth individuals) and billionaires. c) Target market – UHNWI (ultra High net worth individuals) and billionaires Based on the above mentioned Segmentation, purchasing behavior and analysis of demand the firm Perkupoldies would be targeting UHNWI and Billionaires. 3. 7. 9. Positioning The last crucial step is placing of the product or service in a particular perceptual position within the mind of the consumer. The idea here is that there is a specific consumer segment in mind and a specific plan to reach it, and now the idea is to ensure that the target consumer has a clear and distinctive image in mind regarding the product offerings being aimed at them that is consistent and positive. a) Customer knowledge b) Ultimate social symbol c) Brand logo – crown d) Innovations in product line. e) Powerful brand ambassadors f) Sport and cultural events g) Philanthropic programs 3. 7. Distribution Distribution channel is key to the sales of Luxury products like Perkupoldies luxury watch. The central dilemma while choosing the distribution channel is generating sales in a dynamic market while maintain brand image and price. The steps to be followed while choosing a distribution channel are as follows: Step (a) – Analyzing customers desired service output levels: For understanding consumer needs the following 5 service outputs need to be viewed. (a) Lot size – usually one to two watch depending on whether its a single watch order or a couple watch order. (b) Waiting and delivery time – The basic product must have a very waiting and delivery time of less than 15 days for global delivery. The personalized versions will have a waiting and delivery time constraint of less than 45 days. (c) Spatial convenience – As a high end luxury product, it will be required to be available at key luxury outlets. (d) Product Variety – the assortment breadth of the marketing channel is very large as the product is highly customized. (e) Service backup – add-on services like credit, delivery, repairs and a high quality of service will be required by the distribution channel. Step (b) – Establishing objectives and constraints: The primary objective of the distribution channel is to provide easy availability at specific high end luxury retail outlets combined with the online purchase options for a highly customized product. Step (c) – Identifying and evaluating major channel alternatives: There are 3 major channel alternatives namely wholesale, luxury retail and online. There are three distribution channels options available for Perkupoldies luxury watch as mentioned below: a) Wholesale – These are sales through third parties. They may include various stores, boutiques etc. While this option offers growth for the product market there are several challenges associated with this distribution channel. b) Retail – These distribution channels are managed in-house. The sales are usually done through company owned or franchised branded stores. Company owned or franchised stores allow will allow Perkupoldies to have a better control over the pricing. For luxury products ‘Luxury Retail’ presents tremendous opportunities. Luxury Retail includes distribution channels like travel location and High-end hotels. c) Online – Sales and transactions are completed online. This distribution channel can operate as both retail and wholesale. Traditionally websites are operated by established retailers such as department stores and e-boutiques. There is an increasing trend towards luxury outlet e-stores, m-commerce, iPad applications, Social networking etc. Step (d) – Evaluating major alternatives: Based on the above analysis of distribution channel options and weighing their pros and cons it can be seen that the best option of distribution channel for perkupoldies is as mentioned below (a) Luxury Retail outlets in high end hotels and travel location (b) An online channel for customizing the product and ordering it. (1) Customize the Hands of the watch| (2) Customize the Body of the watch| (3) Customize the Body of the watch| (4) Personalize the watch e. g. engravings and pictures on the watch| Shown above online screens to enable customization of the Perkupoldies pocket watch|. 3. 8. Brand â€Å"What Rolls-Royce is to car, Perkupoldies is to pocket watch† Here are five steps to build a luxury brand – (a) Identifying a niche segment One of the fundamental principles of effective branding is for brands to diligently select a lucrative segment that they can then target through an enticing positioning. Given the focus on highlighting symbolic value either through an overall brand experience or via exclusivity in offerings, price points or availability, luxury brands have a heightened need to identify the niche segment for which they have designed their offering. (b) Positioning based on high levels of differentiation Since all luxury brands follow a differentiation strategy, the main focus should be to aggressively differentiate the brand ‘experience’. Successful product differentiation creates a competitive advantage for the seller, as customers view these products as unique or superior. (c) Emphasizing symbolic value Symbolic value emanates from the social standing of the brand, that is, the extent to which the brand is perceived as being an elite offering aspired to by customers. As such, symbolic value reflects the extent to which the brand is endorsed and validated by the cream of the customers. (d) Creating perceptions of exclusivity Perceptions of exclusivity can be created by unattainable price, limited geographic availability, barriers to possession, or even limited supply. Clearly, it is the identity, which the brand confers upon the owner. (e) Uncompromising delivery on superior brand promise Not only do luxury brands need to consistently deliver on the promise of symbolic value, but they also will need to project consistency and continuity at every possible touch point. Maintaining focus on superior value and unique brand experience across time and space is an important part of uncompromising delivery of brand promise. 3. 9. Advertising Print advertising appeals to luxury target groups Luxury brands have to cultivate their image continuously and an important aspect of this is the choice of appropriate advertising media. Although, the two luxury-oriented target groups see advertising as being more credible than the population as a whole, there are significant differences between the individual media, parallel to the degree of receptiveness. For both luxury and for premium-watch buyers, magazine advertisements are the most persuasive with 40 percent of this target group according advertisements the highest level of credibility. Poster campaigns are also rated positively. Less well received is advertising in the electronic media, on television and, above all, in e-mails and on the internet. Premium-watch buyers are also characterized bya very great affinity to luxury. However, they are significantly less interested in fashion than luxurybuyers – precision timepieces are their passion. Premium-watch buyers are interested in watches for watches’ sake and not as part of their outfit. 3. Conclusion This marketing plan explains how an attractive combination of 4P’s can be offered by Perkupoldies to promote and sell the pocket watch. There is an existent market for this product. The ease of entry is very low as it’s primarily an online business with a few high end luxury retail outlets. The company is offering a value proposition by offering a high value item which has an everlasting value. 4. References.