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!