North South University

Dhaka, Bangladesh

Term Paper on Rolex

Submitted to:
Professor Dr.Mahmodul Hasan
School Of Business
North South University

Submitted by:
S.N Name ID
1 Amanur Rahman Khan 1421257660
2 Md. Al- Amin Sheikh 133 0221 660
3 Faiaz Nahian Khan
4

Date of Submission
December 20, 2014

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Term Paper on Rolex

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 Letter of Transmittal

20 December, 2014

Professor Dr. Mahmodul Hasan

School of Business
North South University
Dhaka, 1229.

Subject: Prayer for Submission of the Term Paper on “Rolex”

Dear Sir,

It has been a great pleasure for us to work on this report on ‘Rolex’. This report has been
prepared by a group of 4 people as a part of the course (Marketing Management)
requirement. It is prepared after having extensive overall analysis of thiswrist watch
manufacturing company. We have tried our level best to follow your guidelines in every
aspects of preparing this project.

The report has given us an opportunity to apply theoretical knowledge in real world. It
also has given us a glimpse of our individual understanding and skills in various
situations. We sincerely hope that you will admire our teamwork.

Sincerely yours,

Group: JilapirPach

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 Executive Summary
The world of horology saw the birth of a visionary in Hans Wilsdorf who foresaw his
watch beaming with accurate time on the summit of the earth and also leagues under
the sea. In 1905 shunning his work of a clerk in the watch-making industry of
Switzerland he, along with his brother-in-law, engaged as the founder of his own watch
company, Wilsdorf& Davis, in England. He was a young man of 24, burning with a
desire of making wristwatches that would outdo all the prevailing watches in accuracy,
precision, endurance and reliability. His determination paid him bountifully. Within five
years of the inception his company one of the models of the wristwatch he manufactured
obtained the first official chronometer certificate. Yet another new feather was added to
his cap in very good time when Kew Observatory awarded his wristwatch with a class A
Certificate, the highest of its awards.

Rolex has a different collection of Tudor line models with quartz or mechanical
movements. These models have the Oyster crown, water resistance to 165 feet. They
come in two sizes of steel or yellow metal cases at comparatively economical prices.

The company is now beginning to introduce ceramic bezels across the range of
professional sports watches. They are available on the Submariner and GMT Master II
models. The ceramic bezel is not affected by UV light and is very scratch resistant. Rolex
is easily one of the most famous high end watch line in the world. It is also the most
recognizable and arguably one of the most durable watches in existence. Pocket watches
were more popular than wristwatches but Rolex had a vision that one day wristwatches
would far surpass pocket watches in popularity.

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 Table of Contents
1.0 Definition of marketing management 1
2.0 Mission, Vision & Business Plan of Rolex 2
3.0 Corporate Strategy 2
4.0 SWOT Analysis 4
5.0 PESTEL Analysis 6
6.0 Michael Porter's Five Forces 7
7.1 Core Marketing Concept 9
7.2 Market Segmentation 10
7.3 Marketing strategies 12
8.0 Marketing Mix(7p+4c) 13-14
9.0 Value Chain model 15
10.0 Total Quality management 16
11.0 Brand and Branding of Rolex 17
12.0 Box analysis of Brand elements 18
13.0 Brand Dynamic Pyramid 19
14.0 Five M’s model 20
15.0 Mass Communication 22
15.1 Advertising Budget and Campaign Cost 22

15.2 Sales Promotion and Budget 25

15.3 Events and experiences 25
15.4 Public relation 25
15.6 Corporate social Responsibility 26
16.0 Marketing Budget and Expenditure 27
17.0 Pricing Strategies 29
18.0 Break Even Analysis 30
19.0 Recommendation 31
20.0 Conclusion 32

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 21.0 References 33

1.0 Definition of Marketing Management (Theory 2000 – 2011)

Marketingmanagement is the art and science of choosing target markets and

getting, keeping, and growing customers through creating, delivering, and
communicating superior customer value.

1.1 Definition of Marketing Management (Theory 2012 – 2016 ±)

Marketing management depends on the size of the business and the industry in
which the business operates. Effective marketing management will use a company's
resources to increase its customer base, improvecustomeropinions of the company's
products and services, and increase the company's perceived value.

1.2 Marketing Management of ROLEX:

The wrist watch Brand Rolex choose the business class people who are upper class as
their target consumers so that they can afford it , give superior service to these selected
consumers grow a market for the consumers and deliver superior customer value.
(Theory 2000 – 2011).

The size of the Rolex industry is huge and they the customers are also huge. They use
their resources very effectively. They continuously improving their product and services
according to satisfy their customers and to increase the company’s perceived value.
(Theory 2012 – 2016 ±)

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2.0 Mission, Vision & Business Plan of ROLEX:

Mission:

To manufacture, distribute and service high quality wrist watches.

Vision:

To continue the long tradition of excellence that the Rolex name represents.

Plan:

-Educate the younger market on the value of wrist watches.

-Create social media strategy that will encourage users to interact with the brand as well
as extend the message to a larger audience.

-Promote the purchase of wrist watches as a “reward” for key success in a young man’s
life.

3.0 Corporate Strategy:

Rolex also maintained its brand image by limiting production, even as demand rose. For
luxury goods, scarcity in the marketplace can influence value, spur demand, and
contribute to collectability and long-term appreciation. And a company that can pitch its
product as an investment can frequently charge a premium. Finely-made luxury watches
tend to appreciate in value over time. Rolex watches have held their value well, too.
Price guides for collectors indicate that almost all older Rolex models are valued above
their initial selling price. Most collectible Rolexes sell in a range of between $1,500 and
$20,000.

Rolex has also taken pains to ensure that its watches are sold only in appropriate
venues. The crystal prism that indicates a store is an “Official Rolex Dealer” is highly
prized. Rolex looks for dealers with high-end images, relatively large stores, and
attractive locations that can provide outstanding service – such as Tourneau. At one
point, Rolex got into a dispute with Tiffany because the venerable retailer was

7
imprinting its name on the Rolex watches it was selling. When Tiffany refused to stop,
Rolex dropped Tiffany as an official jeweler. In the 1990s, as part of an effort to control
sales of their goods in the so-called gray market, Rolex cancelled agreements with about
100 dealers.

Rolex has also focused on maintaining the purity of its brand. Many luxury-goods
makers have used their original product as a springboard. Cartier and Mont Blanc, for
example, have bet that the equity of their brand built on a single product will pull sales
for a variety of luxury goods. And some brands have licensed their brand to other
manufacturers, thus ceding some control over the products appearing under their name.
But Rolex makes only watches, and it has never licensed its name.

In the future Rolex will no doubt face stiffer competition as innovative entrepreneurs
search for new ways to attack its markets. And the large luxury goods conglomerates
enjoy certain advantages over an independent firm like Rolex. They have restructured
operations to take advantage of size and significantly reduce cost, enjoy synergies in
advertising and marketing, and are more willing to engage in open discussions in trade
associations to learn from the competition. The conglomerates may also be more willing
to source from Asia, where labor costs are considerably lower than Switzerland.

But as it approaches its 100th anniversary, Rolex is sticking to its core strategy of
independence, continuity, and brand purity. The company’s attitude has allowed it not
just to survive decades of technological and economic upheavals, but to thrive amid
them. Even in today’s massive, global luxury-goods market, an independent company
that clearly defines its market niche and relentlessly sticks to its strategy can rise to the
top.

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4.0 SWOT ANALYSIS OF ROLEX:

Figure: SWOT analysis of Rolex

SWOT Analysis of Rolex:

Strength

Brand awareness involves the ability of consumers to remember to the brand name or
recognition brand. In the purchase decision, it can play a vital role because people
usually like to buy familiar brands. Brand awareness has been calculated by a variety of
brands and is available at Annex lV: Brand Awareness. This result shows that Rolex has

9
97% for awareness. The Rolex brand value is quite high and the name is known around
the world.

Weakness

The strategy has been defined so well but it is hard for the company to change its
strategy even how innovative the strategy are. The weakness is that could remain some
segments that hard to be achieved on the market. For instance, if the fashion goes to
GPS watches, Rolex is hard to changes the strategy because

Even they try to change their product to GPS watches, people assume that Rolex to be
classic watches. In this case, Rolex would be hard to get a market share of” GPS
watches”

Opportunity

Rolex brand name is very valuable. It seems that I can be diversified in related fields.
Rolex should take the opportunity to open jewelry line over the world. Rolex has the
ability to produce jewelry with its technical.

Threats

The threat of Rolex is youth does not recognize the name of Rolex. Normally, the most
mid age people recognize the name of Rolex because most of the segments were set only
for mid age people or middle upper social people.

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5.0 PESTEL analysis of Rolex:

PESTEL stands for Political, Economical, Socio cultural, Technological Environmental,

Legal analysis of the external environment affecting the business.

PESTEL analysis is done by managers to understand the macro environmental factors

affecting the business. These analysis are strategic tools for understanding market
growth, market share, latest trends etc.

* Political factors : These refer to the relevant government policies that affect the
business environment of Rolex like Tax policy, labor law , minimum wages law ,tariff
rates etc

* Economic factors: These refer to the macro economic factors that may affect the
business of Rolex which are Inflation, Gross National Income, Gross domestic product,
REPO rate, reverse Repo rate.

* Socio-cultural factors : These refer to the various social and cultural factors
prevalent in the business environment of Rolex like Greater awareness of the people
towards environment, changes in taste of the consumers, average age of the consumers
etc.

* Technological factors: These include the technological factors such as R&D

activity, automation and other innovations which has changed the way business is
conducted.

* Environmental factors: These include the environmental and ecological factors

that affect the business for Rolex like climate change, global warming, and rapid
depletion of our natural resources.

* Legal factors: These refer to the legal environment in which the business is
conducted like Trade barriers, consumer law, anti-dumping duty, corporate acts.

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 6.0 Michael Porter’s Five Forces for Rolex

Figure: Michael Porter’s Five Forces for Rolex

1. The bargaining power of buyers:

When consumers are looking for a Rolex watch, they are confronted to the multitude of
brands competing and the various segments: fashion brands watches, mass-market
watches, etc. As we have seen previously, the number of watchmakers is very important
and therefore, buyers have to make a choice. The different criteria involved in the
decision-making process may be:
· Price, Quality, Style, Size.

2. The bargaining power of suppliers:

There is an important difference between the mass market brands and premium ones. If
both of them often have the Swiss made inscription, they have two different meanings.
For the first ones, the watch components are usually made in a low labor cost country,
with a low to medium quality, and then are assembled in Switzerland, allowing the

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watch to be Swiss made. For the second ones, both manufacturing the components and
assembling them are made in Swiss by the company, which is often synonym of a good
quality. For the first group of manufacturers – that includes Swatch, suppliers don’t
have to have a very strong know-how, and can therefore be relatively numerous. This is
diminishing their bargaining power over watch brands.

3. The threat of new entrants:

Even though the haute – horlogerie segment has very strong barriers to entry
(manufacturing costs, brand heritage, distribution selection…), Swatch can be attacked
by new entrants. Indeed, its products are simple, accessible, playful, and colorful – the
exact opposite of haute-horlogerie watches – and entering this segment does not have
very specific requirements (as brand heritage can be). It also can be attractive as there
are not a very strong competition on this specific segment.

4. The threat of substitutes:

The way we use a watch shifted drastically these years. As the wristwatch was a
revolution (opposed to the pocket watch), the mobile phones are changing the rules of
the industry. The utilitarian aspect of a watch a decreased a lot, the time being now
available on mobile phones, computers, and more. People would rather consider a Rolex
watch as a style accessory, an expression of their personality. Therefore, we can see the
threat of substitute as relatively high. The primary function of Rolex watches – that is
giving the time!

5. Rivalry:

In the watch making industry, there is a strong competition between firms, which are
mainly portfolios brands. Rolex have many strong competitors like Titan, Tag, RADO,
TISSOT and so on. These firms as The Swatch Group, own different brands, covering
several segments of the market. Each brand tries to develop its image, concept and
storytelling. Also, firms compete through costly marketing campaigns to increase their
influential power over their customers and new potential customers.

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14
7.0 Core Marketing Concept, Market Segmentation & Marketing Strategy

7.1 Core Marketing Concept:

All customer segments usually seek strong and reliable communications that are easy to
use. However, feature preferences vary in between the segments. Some people want
better service in good price whereas some want more service no matter what it costs.
Some want the service at reasonable price. People want to achieve a good reputation
with his/her belonged products. People want to keep in touch with friends and families
with a new vision of life. Travelers have a strong need for a universal timing portal that
will take care of all his services and save his/her time.

Target Markets:

 18+ and above.

 Young aged people.
 Matured age groups.
 Aristocrats.
 Professionals.
 Business people
 Travelers.

Positioning:

Rolex has positioned itself as an aristocrat brand without any compromise in the quality
of the services and sustaining its growth by generating substantial profits. They believe
their competitive advantage is good quality with extraordinary look.

Rolex has been successful to position itself in almost every part of world with its
excellent channel of distribution. And for creating sales and enquiry, it has introduced
various exciting and beautiful advertisements and sales promotional activities.

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7.2 MARKET SEGMENTATION

Marketing segmentation is to divide the customer base in cluster groups with different
needs and behaviors in order to create different and appropriate marketing proposition.
Rolex has segments in major bases: geographic, demographic, psychographic and
behavioral.

Geographic:
 Segmentation is done on the basis of states/regions and market density with
wealth.

 Country- USA, China, UK, Canada, Qatar, UAE, Saudi Arabia, Kuwait, Hong
Kong, Singapore, Bangkok, Japan, Australia, South Africa, west indies, India,
Bangladesh, Sri Lanka, Brazil, Argentina.

 After tapping developed countries, then they target developing and semi-urban
markets as fast emerging as profitable market segment.

Demographic:

 Bases are- Age (18+ and above), income level (all), ethnic background (all), life
cycle, occupation (all), education, social class (upper middle to upper class),
generation.
 Separate schemes for different age & high income groups: Offers special outlets for
premium customers & premium plans for business executives and professionals.

 Example: offering special collections on special events.

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Psychographic:

 In growth stage, Rolex finds it suitable to segment the market by observing

people’s psychology which has changed by technological evolution.

 Based on one’s lifestyle, personality, beliefs, values etc.

 Main bases on VALs Framework:

o Believers: Literal, Loyal. (Professionals, executives, aged, Business).

o Experiencers: Impulsive, variety seeking. (Young people).

Behavioral:

 Users can be found. (High or Low).

 Study showed that aged groups are highly loyal; young users have split loyalty.

 Positive attitude groups is found in the market.

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7.3 MarketingStrategy

The ‘Marketing’ Concept:

Rolex purely follows the ‘product concept’. The product concept holds that the key to
achieving organizational goals consists of the company being more effective than
competitors in creating, delivering, and communicating superior customer value to its
chosen target markets by well-designed and high quality product.

Some significant strategies are:

Offering special product on special events.

Discounts offered to shareholders and their referrals.
Strengthening the Customer service
Advertising- High professional advertisements.
Huge public relations and campaigns.
Connecting with every segment of the society.
Bonding with service.
Product/ Service development after research and studies.

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 8.0 Marketing Mix 7P + 4C

Product/Service: People:

Rolex has 3 watch lines: Talented, trained and

Oyster Perpetual, Professional experienced staffs in
and Cellini. The primary Target number of 2800; Excellent
bracelets for the Oyster line are Leadership; Research
named Jubilee, Oyster and Market team, Engineers, IT
President. specialist, other workers.
Some Models: Day-Date,
Datejust, Explorer, Daytona,
GMT-Master II, Lady Datejust, Marketing
Submariner, Yacht-Master
Mix
Process:

Automated; Online
service guideline;
Corporate service
blueprint, service
centers.

Physical evidence:

Price: The Rolex service

procedure is designed
Rolex watches vary
to ensure that every
in price according to Promotion: Place:
timepiece leaving a
the model and the
TV commercials, Rolex serve its Rolex workshop
most expensive
Billboards, Internet, watches all over the complies with its
Rolex ever was the
Newspapers, in-store world [More than original functional and
GMT Ice reference
displays, 100 countries]. aesthetic
116769TBD with a
Where its specifications.
retail price of Latest: The New
headquarters is in
$485,350. Cellini Collection;
Geneva,
the New Oyster
Switzerland.
Model.

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4C of Rolex:
Clients:
Rolex has consistantly
slod to an upper class
target market that
consist of mainly man
over the age of 35.
Target
Market
Convenience:
Service centers are more
than in 25
countries.Inernational
Service Guarantee.
Online forms at website.
Costs:
Invests more in social
media marketing.
Spreading retail shops
all over the world.
Communications:
Direct or indirect
interactions with
customers. Customer
Care Points. Value
added service via
messaging options. E-
mails; Online forms.
Retail stores/outlets.
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9.0 Value Chain

Mapping of Business Processes is useful for analyzing the specific activity in ROLEX
Company so later to get the value and benefits specific to a company. The specific
activity that occurs in ROLEX Company can be described as can be seen as the image
below.

Value Chain Analysis Model for Rolex

Firm Infrastructure: Business strategy, market strategy, market policy

Human Resources Management: Product development, market

research, staff recruitment and training

Technology Department: Database marketing, internet sales, transaction

processing system

Procurement: Equipment, raw materials

Inbound Operations: Outbound Sales and Service:

Logistics: logistics: Marketing:
-Production -Online
-Pricing of Rolex -Vending -Promotion feedback
machines
-Transportation -Storage -Advertising -FAQs
facilities -Wholesalers events
-Fuel -Ordering
-Maintenance -Retailers online
-Delivery time

-Production
material

The goal of these activities is to offer the customer a level of value that exceeds the cost
of the activities, thereby resulting in a profit margin.
The primary value chain activities are:

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  Inbound Logistics: The receiving and warehousing of raw materials, and their
distribution to manufacturing as they are required.
 Operations: The processes of transforming inputs into finished products and
services.
 Outbound Logistics: The warehousing and distribution of finished goods.
 Marketing & Sales: The identification of customer needs and the generation of
sales.
 Service: The support of customers after the products and services are sold to
them.

10.0 Total Quality Management

Total Quality Management (TQM) philosophy constitutes a new paradigm of

management. It is a way to continuously improve performance at every level of
operation, in every functional area of organization through integration of people and
systems. This embodies provision of supporting environment based on senior
management explicit commitment, developing employees’ competency, collaboration
with stakeholders and change of organizational culture. The ultimate objective is
customer satisfaction. (Brocka & Brocka, 1992; Mohanty & Lakhe,2002).
Implementation of fundamentals of total quality management has been introduced and
practiced in individual firms in India for quite some time.

Wilkinson and Witcher (1993) summarized TQM as having three major requirements
asFollow:
1. Total: Functional integration and teamwork at all levels in the organization
through institutional management.
2. Quality: Strict adherence to the requirements specified by customers ensuring
use of appropriate tools, techniques and processes.
3. Management: Creation of enabling environment, commitment of senior
management and provisioning of adequate support facilities.

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In view of the above, Rolex, as a leading wrist watch manufacturing company all over
the world, asserts customer focus, innovations and excellence in smarter and faster
products and services, empowerment and development of employees, partnership with
suppliers and other stakeholders as its strategic priorities to achieve excellence through
Total Quality Management. The main focus of these quality management practices is to
develop a knowledge base and long term partnership for sustained excellence. The
customer focus at the company is guided by performance excellence, respect,
accountability, and integrity at all levels. Regular customer feedback is sought with a
view to align the company’s quality objectives to customers’ needs.

11.0 Brand and Branding of Rolex

Branding is a major issue in product strategy. On the one hand, developing a branded
product requires a huge long-term investment, especially for advertising, promotion,
and packaging.

Rolex logo itself says it’s a king. Rolex made their logo in a way which indicates the most
reliable and most fashionable watch in the market and user feel like king. Brand logo
sometimes made the company more useful than words.

Rolex few often brand its products with public personalities. It brands and promotes its
product and logo in tennis ground and also it made its brand ambassador to ROGER
FEDERER a top class and no.1 tennis player. Also Rolex made brand ambassador to
SACHIN RAMESH TENDULKAR to capture Indian market. It also made its ambassador
to TIGER HOOD and many more to capture

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different segments.

12. Box Analysis of Brand Elements (6 Categories)

Memorable Meaningful

Rolex

Likable Transferable

Rolex

Adaptable Protectable

Rolex

Rolex can be categorized under Meaningful, Transferable and Protectablebrand

elements. The reason for such classification is elaborated below:

1. Meaningful: The name Rolex itself suggest a sense of trust, dedication sincerity:
a brand that you can rely on. The entire phrase Rolex gives an appropriate
identity on what the customers are expected to relate their services.

2. Transferable: Due to the use of the word Rolex, which itself is a vast term, the
company has ample opportunities to explore this sector and launch new models
of wrist watch. In fact, Rolex is already in practice of this strategy, officering
several products under its umbrella.

3. Protectable: The Rolex is a private company trade mark and has patented its
brand. Therefore the brand and its elements such as logo and other significant to
the brand are protectable.

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25
13.0 Brand dynamic pyramid

Strong Relationship

Bonding Rolex

Advantage

Performance

Relevance

Presence

Weak Relationship

Rolex has established in 1905. It has gain an integrated reputation and trust in the mind
of customer. Rolex has successfully passes 110 years in its business. It spread its
business all over the world and producing more than 2000 watch per day for its
customer.

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14.0 Five Ms’ of Advertising

Advertising facilitates large-scale marketing. It is a medium of mass communication.

Manufacturers supply information about new products through advertising. The fact
that companies spend millions of dollars on advertising through TV, radio, the internet,
and newspapers indicate its benefits in sales promotion.

Advertising is defined differently by various authorities and the institutions dealing with
the subject of advertising.

The American Marketing Association (AMA) defines advertising as,

“Any paid form of non-personal presentation and promotion of ideas, goods or services
by an identified sponsor.”

The five Ms’ of advertising on which an advertiser has to take decisions:

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This definition suggests the following features of advertising.

1. Advertisement is a paid form of communication. Advertiser exercises a control

over it.
2. It is non-personal selling. It is a medium of mass communication for large-scale
selling.
3. It acts as an important marketing tool for presentation and promotion of ideas,
goods and services.
4. It needs the sponsor of the message known. Advertising will be meaningless if the
advertiser is not clearly identified.

Below is the TV commercial of the offer “The World of Rolex” which is the base of the five M
of advertising here.

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 Message

-A Crown for every

achievement.

-When greatness
achieve, Live for
greatness.
Money
Measurement
Mission
In this campaign
Customers find
The World of Rolexspendmillion
so
Rolex s of $and
meaningful&Role
endorsement Media x earn son many
Federer.
-Electronic Media loyal customer.

-Celebrity
endorsement

-TV Commercial

-Outdoor
advertising

15.0 Mass Communication

15.1 Advertising budget and Campaign cost

Rolex advertisings are emphasis the history, tradition and everlasting elegance of it
brand. It reinforces its brand image in the current context and links it with its rich
history and tradition. Recently, Rolex had launched an advertisement campaign with
the theme “It Doesn’t Just Tell Time. It Tells History”. In another campaign it
highlighted the famous wearer of the brand which included US president, Social
reformers, sports & music celebrities of both past and the present.

29
A typical advertising budget will take into account all advertising costs. These are:

Advertising agency commissions cost

Purchasing all advertising and promotion media, including internet,
newspaper, TV, and direct mail (postage) cost.
Outdoor advertising cost
Collateral material cost (Brochures, mailing pieces, catalogs, etc.)

Advertising Budget and Campaign Cost

15%

40% Media Advertisng

Collateria Material
Public Relation

25% Events and sponsor

Campaign Cost
5%

15%

Media Advertising cost 40%

Collateral Material cost 5%

Public Relation 15%

Event & Sponsorship 25%

Campaign cost 15%

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 Media Advertising Budget

5% 5%

Print Media
Electronic Media
Outdoor Media
10%
Internet
15%

Print Media 5%

Electronic Media 15%

Outdoor Media 10%

Internet 5%

At the end of the year 2013, the total budget for advertisement of Rolex was 1.2 billion
dollar. At the peak Rolex booked about 5,000 spots in 40 TV channels, 1 million sqft of
space on hoardings across the world and inserted ads in over 70 publications in
international languages.

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A mega advertising campaign was launched across the media to mark the launch in
tennis tournament. The main theme of their first campaign is bringing the power of
watches to every common person. The next set of campaigns talked about the innovative
product features, which differentiated Rolex from competitors.

15.2 Sales promotion:

As a luxury brand Rolex does not use sales promotional techniques which have the risk
of reducing the high prestige associated with the Rolex brands.

15.3 Events and sponsorships:

Rolex is the official time keeper of Wimbledon and the Australian Open tennis grand
slams. Rolex has been a part of the golfing world for years. It is the official time keeper
for two of the four majors, The Open Championship and the U.S. Open; the presenting
sponsor for one of the five senior majors, The Senior Open Championship; and the
official sponsor of the Women's World Golf Rankings. In 2013, Rolex became the official
timekeeper to the FIAFormula 1 motor racing championship. Rolex has also been the
official timekeeper to the Le Mans 24 Hours motor race since 2001.

Rolexwatch is the main sponsor of clock in all tennis tournaments

Rolex sponsors world golf tournament in 2003
Rolex sponsors in US open 2009 and 2010.

15.4 Public Relations

Rolex maintains a well-organized public relations team which works as the voice of the
company with the general public. Following the recent trends it has entered in
Facebook, LinkedIn and other social media to better connect with its customers and
stakeholders.

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15. 5 Corporate Social Responsibility

In 1976, Rolex introduced “Rolex Award for Enterprise” to honor extraordinary

individuals who possess the courage and conviction to take on major challenges. Since
then it has awarded a new or ongoing project anywhere in the world – one that deserves
support for its capacity to improve lives, or protect the world’s natural and cultural
heritage. These projects have touched all aspects of humanity by expanding knowledge
or improving life on the planet.

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16.0 Marketing Budget & Expenditure
Watch brands are continuously increasing their marketing expenditure from year to
year. Total spending reached $399.74 million in the year 2012, up 9.3 percent over 2011,
according to Kantar Media, which tracks advertising across all media channels. Sixty
watch brands spent more than $1 million on advertising, up from 54 brands in 2011. To
make the list of the Top 25, a firm had to spend over $3.63 million compared to $3.43
million a year earlier. Marketing & promotional spending was up for the third
consecutive year, after falling sharply in the recession year of 2009. The 2012 total
surpassed the previous record of $388 million set in 2007, and was a sign of a
continuing recovery in the U.S. watch market.

Rolex has the biggest marketing budget and tops the list of promotional spenders. In
2012, Rolex had spent 52.14 million on marketing which is the industry highest. Rolex
has vastly outspent all of its competition since 2000, when it took the top spot on the list
from Timex. In 2012 Rolex reached a new milestone, spending over $50 million on
advertising. No watch brand has ever spent this much on advertising before.

Marketing Expenditure of Major Watch Companies

Rolex 52.14
29.48
Omega 23.20
21.62
Cartier 20.04
20.02
TAG Heuer 15.96
15.11
Montblanc 8.19
7.92
Longines 7.73
7.66
Dior 4.96
4.48
Rado 3.73
3.64
Tissot 3.28

Amount in ($ millions)

(Source: Kantar Media, 2012)

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Rolex allocates a very considerable Marketing Activities Budget
amount for its Marketing Budget. The Allocation
major portion of the budget is usually
Advertisements (Electronic 33%
dedicated to TV Advertising and event
media)
sponsorship. This is in line with the
Event Sponsorship 25%
company’s strategy to attract and keep
Brand Ambassador 12%
the consumers captivated highlighting
sponsorship
the elegance of Rolex watch. As Rolex is
Print Media 10%
the title sponsor of many prestigious
Public Relation 5%
sports events of Tennis & Golf, a major
Marketing Dept. (Salary & 12%
portion of the marketing budget is
Overheads)
allocated for Event sponsorship. The
others 3%
usual break up of Rolex Marketing
Budget is below

Marketing Budget Allocation

Advertisements (Electronic media)
3%
12%
5% 33% Event Sponsorship

10%
Brand Ambassador sponsorship

12% Print Media

25%
Public Relation

Marketing Dept. (Salary &

Overheads)

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17.0 Pricing Strategy

Steps in Setting Price

Steps 1: Selecting the Pricing Objectives:

Rolex’s pricing objective is Product-Quality Leadership. With this objective, Rolex

charges premium prices for its high quality and luxury watches

Step 2: Determine Demand:

Rolex has to determine the level of demand in the market for high quality luxury watch
brands and quantify the quantity demanded for various price levels

Step3: Estimate Cost:

In this step, Rolex has to calculate the production cost, promotional cost and the
overhead cost associated with a new watch model. In addition, the expected margin is
also an important matter of concern in this step.

Step4: Analyze Competitor Price Mix:

Rolex has to analyze the prices charged by its competitors for the same category and
quality of watches. In most of the cases, Rolex is able to charge higher level price
because of its superior brand value.

Step 5: Select Pricing Method:

Rolex follow the Value Pricing Method, that means it charges price based on how much
the customers value it product and most importantly its brand image.

Step 6: Select Final Price:

After going through the rigorous process of all the above steps, Rolex selects the price
for its watches so that, it reflects the customer demand, competitive pricing, customer
value and its own brand value.

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18.0 Break Even Analysis
After conducting the break even analysis we have found out that, Rolex’s break even
sales for the three years from 2011 to 2013 is USD 9,835.71 million. That means Rolex
must generate this amount sales to cover all its expenditures. For each dollar sales above
the break even sales, the company will make a profit equal to its Contribution Margin (1-
Variable cost as % of Sales). In this case, the contribution margin is 0.30.

Breakeven Sales = Fixed Costs / (1 – Variable Cost % of Sales)

Particulars/Year 2013 2012 2011 Total

Sales 5,350.00 5,100.00 4,850.00 15,300.00

Fixed Cost 2,407.50 2,295.00 2,182.50 6,885.00

Variable Cost 1,605.00 1,530.00 1,455.00 4,590.00

in millions of $

Break Even Sales = [15,300 / 1- (4,590/15,300)] = $ 9,8535.71 million

$ 9,835.71 million

Sales

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19.0 Recommendation
Some recommendation for Rolex;

 Luxury and superior are the main target market of Rolex, but Rolex should
produce wrist watches for the economic or middle class customers.
 Rolex should target the young market as younger generation markets as this is
the biggest target market for every types of products.
 Rolex should launch some campaign for new types of customers.
 Rolex should promote their watches on wedding occasions.
 Rolex should open their watches outlets on high developing countries.

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20.0 Conclusion:

This marketing plan summarizes the main points of how Rolex will market their wrist
watches to a younger generation than the current target market. This expansion will
allow Rolex to move into an untapped area that needs education on the value of a high
quality time piece. In order to properly address this objective, Rolex needs to update
their marketing strategy to include a greater presence in advertisements that target this
younger market as well as a strong showing in the social media realm. Rolex has a long
tradition of creating the standard for luxury in wrist watches. By adding a new segment
of the population to their customer base, they will ensure that they continue their
standard of excellence. Moving forward as technology evolves is key in achieving this
goal.

The company is now beginning to introduce ceramic bezels across the range of
professional sports watches. They are available on the Submariner and GMT Master II
models. The ceramic bezel is not affected by UV light and is very scratch resistant. Rolex
is easily one of the most famous high end watch line in the world. It is also the most
recognizable and arguably one of the most durable watches in existence.

39
21.0 Reference

1. Marketing Management – A South Asian Perspective – 13the edition by Philip

Kotler, Kevin Lane Keller, Abraham Koshy and Mithileshwar Jha; Pearson
Prentice Hall.

2. Website of Rolex.
http://www.rolex.com/

3. Brocka, B., & Brocka, M.S.(1992). Quality Management: Implementing the Best
Ideas of the Masters, Richard D. Irwin, Homewood, IL.

4. Mohanty R.P., & Lakhe R.R.(2002), TQM in Service Sector, Jaico Publishing
House, Mumbai,India.

5. Wilkinson, A., & Witcher, B. (1993). Holistic Total Quality Management must
take account of political processes. Total Quality Management, 4(1), 47-55.

6. Varghese S., (2007) Reliance Infocomm’s strategy and impact on the Indian
Mobile Telecommunication scenario, Media and Communications Department,
London School of Economics.

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