Sales and selling strategy analysis: Prestige Watch ??? Omega Watch Hong Kong Introduction Over the past decades, wearing prestige watch has been a sign of being successful and wealthy, together with wearing jewelries and riding luxury vehicles. Omega watch, being one of the most representative prestige watch brands under the world’s top watch manufacturing group, Swatch Group, this article discussed the current sales approaches, forces and difficulties. It concluded with appropriate actions and future direction in selling for the company. Industry Overview
Direct selling is dominated sales strategy for Prestige Watch industry with distributions in their own brand retailers, watch shops, or watch and jewelries exhibitions. Customers buying luxury watches looking at overall value represented by the product, include durability, design, functionality, uniqueness and most importantly, the image that represented. The product is tangible but it is very difficult to measure as there are various factors and most of them are very subjective and personal. Therefore, selling of luxury watches are usually delivered face to face directly between salespeople and customer.
Don’t waste your time!
Order your assignment!
Customers and distributors usually visit retail shops or product expos or relevant exhibitions to choose. Sometimes, salespeople will visit customers with selected products, usually for privileged or customers with more buying records. On the other hand, indirect sells such as internet or phone selling is not very likely to happen in prestige watch industry. Marketing communication plays an important role in building and maintaining stakeholder relationships, where retaining of customer relationship is the main focus of companies having a relationship marketing orientation.
In the prestige watch industry, is only moderately relationship marketing oriented. The industry is very concerned in quality and customer commitment, however, its majority is not focused on account based selling to customize and fulfill customer’s need on individual basis. Salespeople usually provide response towards customer’s request, whilst, seldom contact customers proactively without any request. Due to economical changes, there’s a very steady upscale of sales in the industry over the past decades.
The global economical problem of 2 extremes riches and poor has revealed the fact that there are more rich men globally and the demand of luxury watches has climbing up over the past years. In the single year of 2006, Swatch group has recorded an increase of gross sale by +12. 3% from the previous year to 5. 050 billion Swiss francs, net profit by +33. 7% to CHF 830 million. Behavioral factor changes also drive future changes in the sales practices. Among the rich people, there is a change in the age structure that there are more young millionaires.
Successful of young IT professionals and financial analysts could be sources of those young riches. As observed by director of watch distributor, Mr Ying, the average age of customers has dropped from 50 to 35 over the past decade. Current luxury watches buyers, especially those young professionals, are often more well educated and have a stronger knowledge in wealth management. All these forces and changes will be illustrated in more details in following sections. The Company and Selling Strategy Omega was founded at La Chaux-de-Fonds, Switzerland in 1848 by Louis Brandt.
With its first series-produced calibers in 1894, Omega has paved the way of its marketing success being one of the most prestigious brands under Swatch Group, the top watch producer in the world. Omega watch is a typical prestige brand that may not listed as one of the top 10 luxury watches, but the brand is very well known especially for its achievement of being the first watch wear by first astronaut landed on the moon. As there are different sales approaches adapted and forces faced in different markets, we focus on Omega Watches Hong Kong for a more in-depth analysis here.
The selling strategy of Omega lined up with others in the industry. Focus stayed in direct selling to customers through retailer shops, distributors or B2B / B2C exhibitions. Sales are usually retail salesperson type, or “Inside order-taker”, they stay in the shops or booth and make the transactions by providing retail services. Sometimes there are delivery salesperson those will deliver product to customer mainly for privileged customers. Being a brand selling luxury product, Omega has retained customer relationship through member registration with every customer.
Decently printed product catalogues and company news were sent to members regularly. In addition to customer walk-in, the company also creates opportunities for sales to seek for new business. For example, members were also invited to join exhibitions or even cocktail parties and events on company’s important days, such as grand opening of new branch. Salespeople dominate in these events to resolve customers’ questions or introduce new goods to potential customers. Company Relationship Marketing Position
As a seller of high value precious products, a good customer relationship lead to success of business and relationship marketing model is suitable for the company. However, currently Omega is not a heading relationship marketing company in the industry. Omega has maintained customer relationship through membership and personal contact to privileged customers. Currently, the bonding between sales and members are not very strong as they have little direct contacts. The table below illustrated key issues in relationship marketing orientation and where Omega has positioned in the industry. Extent in Relationship Marketing Orientation |Relationship Marketing |Prestige Watch industry average |Omega Watch company | |Focus |Customer retention rather |Concerned |Not very successful except to a few | | |than single sales | |privileged customers | |Orientation |On customer value rather |Both |Both | | |than product features | | | |Timescale |Long |Short |Short | |Customer service |High |High |High | |emphasis | | | | |customer commitment|High |High |High | |customer contact |High |Medium |Less | |Quality concern |First of all |First of all |First of all |
Source: Adapted from Cranfield School of Management, “Marketing Management: A Relationship marketing Perspective”, Palgrave 2000, page 19 There are rooms of improvement for Omega to retain a better customer relationship. Competitive Advantage Having positioned as a prestige watch with mature skill and technology, the selling approaches developed by Omega has performed in line with the company marketing and production divisions. Marketed for customers in top tier, salespeople are trained to possess knowledge in their product and technology, with a high service level. There is regular management training to receive knowledge in latest technology used in new products from production division. They have to make sure that all salesperson has received the same necessary knowledge.
Strengths for selling of the company include the very well back from its history, a very well known brand name was built since has introduced “moon watch” wear by the first astronaut landed on the moon, until its latest sponsorship of Olympic 2008. The company has already creating opportunities through its launch of jewelries in 2006, that widen coverage of product mix and supplements sales of watches. Besides, they have retained a comprehensive list of customers those could be used for future promotions. Though, weaknesses come from the relatively lower resell price and positioning of the brand remains in a high but not the top level for years. There maybe threats to the company, if there is no breakthrough of the brand, it will be a problem in selling to younger customer segments while it might be perceived as an “old brand” that remains in middle level of top watches. SWOT Analysis Strength |Weakness | |Good brand name |Reselling price | |Marketing – sponsor of Olympic 2008 |Positioning | |Opportunities |Threats | |New jewellery line |Old brand name – out dated in fast changing market | |Member list |New brands | | | | Forces and Problems Various forces exert from behavioral, technological and financial points of views driving changes in sales practices in the company. Behaviorally, as buying of prestige watch has become an investment for some of the buyers, which is very important to retain the resell value. Salespeople should be trained to retain condition of watches. Market knowledge, especially resell value of the product segment should be well equipped and updated among salespeople.
Technological changes include advanced industrial technology and information technology has both driving changes towards the company. Technology change more frequent advanced skills in material or timepiece mechanical details. For example, Omega unveiled its new Calibres 8500 and 8501, two co-axial movements created exclusively from inception by Omega in Jan 2007. Also, information technology has speed up and improved accuracy of information exchange. Financially, there are more younger and educated customers for prestige watches and Omega. Therefore, on top of original matured and experienced salespeople, there should be younger workforce, with higher education background and more service based mind.
Also, due to the develop of Chinese’s economy in latest years, there are more Chinese buyer looking for luxury watches in Hong Kong as there is guaranteed quality control. Major Forces driving changes in Sales Practice of the Company |Behavioral |Technological | |Higher education |Frequent technology change in parts and skills of watch | |Higher wealth management sense |manufacturing | |Rising customer expectations |Fast information xchange | |Globalization of markets |Salesforce automation / Electronic sales channels | |Managerial |Financial and Economy | |Changing to direct marketing alternatives |Increased number of young millionaires | |Blending of sales and marketing |More Chinese tourist buyers | |Increasing professionalism of salespeople and sales managers | | Future and Direction Due to changes in environment, there are some changes in sales practices and strategy as mentioned in previous section. Internally, there should be more salespeople training to adapt latest technology, product design and even stock levels. More young and high-educated sales staff should be employed to attract young professional customers. As Omega has just joined jewelry market, salespeople often possess professional experiences and knowledge in watches but lack of comprehensive knowledge in jewelry.
Externally, to maximize effect of retention of customer relationship, Omega should make a use of the existing registered customer records. The salespeople should create more direct contact opportunities to their customers or registered member. For example, Omega may introduce watches and jewelry rentals to their registered members, especially for important occasions such as wedding and business parties. The rental could limit for registered or invited customer only so to retain the prestige image of the brand. Insurance should be applied upon rental to ensure safety of company revenue upon any damage or loss. To attract and retain more Chinese buyers, salespeople should also be well quipped with Mandarin and cultural knowledge to interact with Chinese customers. Most importantly, Omega should breakthrough itself and looks for a better position in the industry. One of the solutions could be releases of a new signature product with very luxury design and materials such that the brands image could be clarified better positioned as one of the top brands. Salespeople should have well equipped knowledge and build strong associate with privileged customers for further company developments. References: 1. Omega website http://www. omegawatches. com/ 2. Swatch group website http://www. swatchgroup. com/company/company. php? withflash=enabled 3. Wikipedia http://en. wikipedia. org/wiki/Omega_SA