Chapter 7: Business Marketing

TAG Heuer, maker of some of the most beautiful and luxurious sports watches in the world, happens to fall on both sides of business marketing. They are both buyers and sellers of product, buyers in the process of creating their intended finished products, such as the watches in their Aquaracer, Formula 1, Carrera, and Grand Carrera lines, which are then sold to resellers such as Tourneau, Macys, and Nordstrom's.

TAG Heuer is what you call an Original Equipment Manufacturer. If you take a watch such as the TAG Heuer Grand Carrera Automatic Chronometer Chronograph RS2, a watch retailing for $8,000, you might think it's a completely manufactured product from TAG.... think again. The crystal on the case is purchased from an outside source, as well as the most important part of the watch - the movement! The watch's movement is actually an ETA Base 2894, but you wouldn't know that because TAG Heuer states it's a "TAG Heuer Caliber 17 RS". TAG takes the base movement, makes a couple of tweaks such as the replacement of a hairspring and rotor, and calls it a day. Most companies in the introductory luxury market buy component parts and processed materials in order to make a cost effective finished product. This is completely understandable for watches in the $1,000 - $5,000 price range, but with the cost of products rising as well as the possibility of ETA no longer being a supplier to TAG Heuer, things might start to change... very soon.

Once these products are complete, they are then sold to Authorized Retailers, such as Tourneau, Macys, Nordstrom's, and Bloomingdale's, among others, who then in turn sell them to the public. Along with the watches being provided, are materials such as displays and catalogs for the public to see what's new or preview the next big thing from them!

Chapter 8: Segmenting and Targeting Markets

When running such a huge operation such as TAG Heuer, one of the most crucial aspects is knowing who to target. Who is most likely to purchase your product? Who is most likely to purchase a TAG Heuer Grand Carrera, or a Aquaracer, or a Link? Each line is made for a specific target market. The target markets are segmented into smaller subgroups in achieving the goal of marketing a certain product to a certain group, whether based on age, ethnicity, or sex.

MKTG5 states "Market Segmentation plays a key role in the marketing strategy of almost all successful organizations and is a powerful tool for several reasons. Most important, nearly all markets include groups of people or organizations with different product needs and preferences". Although TAG Heuer's production of their Golf watch seems to be coming to an end, that particular watch was targeted specifically to golf players and enthusiasts. In making the watch light using a titanium case, they felt that particular segment would buy the watch, suiting the specific need of playing golf with a light durable watch, one that would not affect their play on the links. That didn't work so well for them, but TAG Heuer has been very successful with other product items such as their Link and Grand Carrera.

Since TAG Heuer is a company that sells over 1,000,000 units a year, they practice the act of Demographic Segmentation. They make product appealing to a specific market, such as their Grand Carrera(which would be considered income segmentation), which is targeted for the sports enthusiast looking to spend 5-10k on a timepiece or the Formula 1, made to appeal for the young(age segmentation) as well as the person looking to buy an introductory luxury product.

TAG Heuer also sells women products, a market that I've seen pick up over the last couple of years. While TAG Heuer doesn't focus of Ethic segmentation much, they are going to release a series of limited edition Carrera watches in Japan, called the TAG Heuer Carrera Ring Masters, with different color inner bezels, attempting to target the Japanese specifically.

TAG Heuer has always been successful in this practice and over the last couple of years, they have been developing new products to market to those willing to spend $80,000 on a TAG Heuer innovative product(TAG Heuer Monaco V4) as well as product with extremely precise "to the micro-second function", such as their new Mikrotimer.

TAG Heuer: Holiday Plans 2011

Like most swiss watch companies, TAG Heuer has no plans for this holiday season or any in the near future. While some companies might design variations of their product for the holiday season, introduce a new product, or discount an existing product, TAG Heuer remains unassociated with any sort of holiday. Maybe it's due to the fact that they're a global brand, sold throughout 6 of the 7 continents, and might not want to offer a special "Christmas product", unless they offer a "Hanukkah product", or a "Kwanzaa product". But more than likely, you will see TAG Heuer's on sale as many Jewelers and Department stores try to lure in consumers during the busiest season of the year.

Chapter 11: Developing and Managing Products

Some of the most successful individuals and companies in history key to success was thinking out of the box, creating products that had not existed until they created it. Microsoft with Windows, Apple with the personal computer and the smartphone, Perrelet with the automatic watch. In the watch industry, most manufacture's have research and development teams brainstorming ideas every single day to create the next amazing product in the watch industry.

TAG Heuer happens to be one of the most innovative watch companies over the last century. They are responsible for creating the Mikrograph, the first watch accurate to 1/100th of a second, the Mikrotimer, the first miniaturized electronic instrument accurate to 1/1000th of a second, the first automatic chronograph watch with a micro-rotor, and the V4, the first watch using belts as opposed to gears as a method of winding the movement. These are just a handful of examples from the brand that has been "pioneering time since 1860".

TAG Heuer Innovations

To further reiterate their success, TAG Heuer's Mikrograph, one of their most recent innovations, has won "Public Prize" at the watch of the year at a recent industry event.

From TAG Heuer's Facebook page:

THE MIKROGRAPH WINS THE PUBLIC PRIZE

THE TAG HEUER CAMPAIGN WAS VOTED THE BEST 2011 WATCHMAKING CAMPAIGN

On 11 November 2011, during the prestigious Watch of the Year evening organized by the Ringier Group in Geneva, TAG Heuer was twice acclaimed by an audience of over 450 personalities from the world of watchmaking and from communications. The Mikrograph, the first chronograph to display one hundredth of a second, thanks to a central hand, was awarded the best watch of the year by the public, whilst the campaign that supported its launch was awarded the Best Campaign prize. Overwhelming recognition for the brand, the only one who had twice the chance to be on the podium

Prototypes of new innovations are generally revealed at one of the largest industry events of the year, BaselWorld. In 2012, the event will take place in Geneva, Switzerland from March 8-15. I look forward to seeing what TAG Heuer can come up with next!

Chapter 16: Integrated Marketing Communications

MKTG 5 says it best in the opening line of this Chapter. It states "Fews goods or services, no matter how well developed, priced, or distributed, can survive in the marketplace without effective promotion". Awareness of the product is vital for a company to prosper, not only for a short time period, but for 150 years, like TAG Heuer. While always a larger sports watch manufacturer, TAG Heuer has seen rapid growth since being acquired by powerhouse conglomerate, LVMH, on September 13, 1999 for $739 million. Belonging to LVMH has given them a competitive advantage. TAG Heuer produces over 1,000,000 watches a year and now have their own facilities to work on new innovations, such as the Mikrotimer, pictured above.

For TAG Heuer, advertising is its key to success. Year in and year out, TAG Heuer is in the top 5 globally in Swiss watch advertising, spending $22.7 million in advertising in 2010. Due to its higher available funds, you will see TAG Heuer advertising in various channels such as newspapers, magazines, billboards, and store ads. Some of these include Luxury magazines such as Robb Report and Industry magazines such as WatchTime and International Watch.

TAG Heuer public relations is one of the best I have personally experienced. When the Tiger Woods scandal broke, they were one of the first companies to drop him and all of his ads. TAG Heuer just doesn't need the negative publicity. TAG Heuer has moved into the new age with Twitter and Facebook pages. There provide consumers with all the latest news and previews of their products. They are also there to help you. Any questions you have whatsoever, they are there to assist you with any questions or concerns you might have.

While advertising is TAG Heuer's main channel of connecting to consumers worldwide, BaselWorld is one of the most important events for the company yearly. BaselWorld is an industry event where many companies promote their new products for that year as well as concept items. There, they inform the industry on what these particular products do, what they might run, when they are available, as well as giving them the opportunity to hold and preview the product for themselves. In turn, word spreads through these people, as many own a store, work at a magazine, or even have an industry blog. I tend to read many of these blogs and jump for joy when I am informed of these products, being that I unfortunately cannot make the travel to Switzerland to attend this marvelous event. I, for one, am looking forward to the next BaselWorld!

Chapter 10: Product Concepts

TAG Heuer, a global brand, known across the world for their sports wristwatches, have a variety of items aside from watches, including cell phones, leather jackets, and sunglasses. As stated in earlier in my blog, TAG Heuer can only be found at certain locations, at TAG Heuer boutiques and at Authorized Dealers, such as Lord & Taylor and Tourneau.

This is one of the reasons TAG Heuer is considered a speciality product. For a company that sells over 1 million watches a year, there are not as many Authorized Dealers as you would think. TAG Heuer has a reputation to maintain, and AD's are selected after being deemed "worthy" of carrying their product.

When going through the consumer decision making process, especially for an item that will run over $1,000, people are very selective and go through their process before making a luxury purchase.

The general consensus is that TAG Heuer is the powerhouse in the sports watch industry. In my opinion, there is no question, with the vast amount of product available in that category. Though TAG Heuer specializes in sports wristwatches, they have a variety of product lines to suit an individuals needs.

The Formula 1: A sports watch starting at $1,100, inspired by Formula 1 racing. The watch features a coated Titanium-carbide rotating bezel - offered in different dial colors - rubber strap or bracelet - for both Men and Women.

The Aquaracer: A watch designed by divers for divers, water resistant from 300M to 500M. From $1,700 - many different variations available - for both Men and Women.

The Link: What TAG Heuer called the "Elegant Sports Watch". The collection consists of watches that are verstaile, ones that can be worn with both business and casual attire. Starting at $2,000 - many different variations available - for both Men and Women.

The Monaco: The First Square Waterproof Sports Chronograph watch, made famous by Steve McQueen. One of TAG Heuer's most unique and popular watches, among sports and watch entusiasts. Starting at $3,000 - many different variations available - for both Men and Women.

The Golf: A less popular line of watches made by TAG Heuer. Promoted heavily when Tiger Woods first signed on with TAG. Only one titanium model currently in production, at $1,900.

The SLR: A watch created through a relationship between TAG Heuer and McLaren Mercedes-Benz. Very sporty chronograph watches, for the racing car enthusiast. Starting at $4,500 - many different variations available - for Men only.

The Carerra: What TAG calls "the contemporary sports watch inspired by motor racing". Starting at $2,000 - many different variations available - for both Men and Women.

The Grand Carerra: TAG Heuer's most exclusive line of watches. For the person who wants a higher-end sports wristwatch. In this line you will see watches ranging from $4,300 to over $20,000.

Of course, all of these watches come with TAG Heuer's International Repair Guarantee.

Chapter 18: Sales Promotion and Personal Selling

Advertising is the key to introducing and exposing a product to the public, and while sales promotion can do the same, though its goal is short-term and direct - sell now!

We all open up the paper Sunday morning and see tons of coupons inside. We see coupons for cereal, electronics, and supplies. What is scarcely available are coupons for luxury items, especially luxury timepieces. The fact is, stores such as Saks Fifth Ave, Bloomingdales, and Lord & Taylor have sales, almost on a weekly basis. Inventory turnover is crucial to stores, such as those, whose inventory is completely different from one season to the next. Of course, there are always those "exceptions". The fine print below excluding exclusive designers and ultra high-end product, almost always including luxury timepieces.

Walk into a TAG Heuer or any other watch boutique and they all have one thing in common(besides watches) - They do NOT discount. Most high-end companies believe discounting de-values their product. The belief is that the consumer has no reason to believe they are buying a product priced at $5,000, if the watch is consistently being discounted for 50% off. The consumer feels the product is $2,500 and not $5,000, tarnishing the integrity of the product.

Only a year ago, you would see a TAG Heuer selling for up to 40% off - that is until TAG Heuer lowered their discounts to dealers and implemented a new rule stating that dealers are forbidden to sell any of their active product for more than 25% off.

TAG Heuer watches, depending on the model, can generally be purchased for 20% off at a local Authorized Dealer. While TAG might prefer 0%, I am sure they have come to accept the fact that discounts are a part of the shopping experience and generally a help in exposing their product to consumers who might not have bought a timepiece from their company otherwise.

While there are no venues that offer timepiece personal shopping, I highly recommend stores such as Tourneau to view over 100 brands on display. While their salespersons have a bad reputation, they have a couple of veterans willing to help out a new consumer. Most look for the quick commission, but some believe in relationship selling. They not only look to make the sale, but make you into a client of theirs for the future. They will guide you throughout the store in helping you pick the right timepiece.