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Submitted to
Professor Dr. M. Mahmodul Hasan
MBA/EMBA Program
School of Business
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Dear Sir,
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Professor Dr. M. Mahmodul Hasan, whose contribution in stimulating suggestions and
encouragement, helped us to coordinate our project work.
Special thanks go to all team mates, who helped to assemble the parts of the report. We
would like to express our gratitude towards our parents for their kind co-operation and
encouragement which help us in completion of this project. Last but not least, many
thanks go to our respected supervisor who has invested his full effort in guiding the
team in achieving the goal.
Executive Summary
This report provides an analysis and evaluation of the renowned wrist watch
manufacturing company Rado, in terms of the marketing management concept &
theories. To conduct the analysis we have used secondary sources of information and
tried to evaluate the present working condition of the company in terms of several
marketing analysis like SWOT, PESTEL, Michael Porters Five Forces, Marketing
Strategy & Core Marketing Concept, Market Segmentation, Marketing Mix (7P + 4C),
Value Chain Model, TQM Loyalty, Quality & Control, Brand & Branding, Box Analysis
of Brand Elements, Brand Dynamic Pyramid, The Five Ms of Advertising, Mass,
Marketing Budget & Expenditure, Pricing Strategies, Breakeven Analysis. From the
analysis we summarize that Rados unique and latest design, luxurious image and
customers loyalty are the main key components of sustaining as a market leader in this
competitive global market.
Table of Content
History of Rado
Rado was formed in 1950 as Schlup & Co. Rado initially produced watch
movements only. In 1957 the company launched its first collection of watches under the
Rado brand. In 1962 the Rado Diastar, the world's first scratch-proof watch, was
launched. It has been in production ever since, now sold as DiaStar the Original. In
1968, Rado became part of the ASUAG, which merged 1983 with the SSIH to the SMH
group, renamed in 1998 as the Swatch Group.
Marketing Management (Theory 2000-2011)
Rados marketing management relates with both the theories of 2000-2011 and
2012-2016.
Vision
Rado strives to become one of the leading international seller and dealer of
quality authentic vintage & luxury Swiss watches of value online.
Mission Statement
Maintain Rado (Captain Cook, Manhattan), Zodiac (Sea Wolf, Astrographic), &
Bulova (Oceanographer, Snorkel) in weekly inventories;
Business plan
A business plan should have seven clear sections. These are: summary, concept
section, market conditions, promotion costs, marketing strategy, manpower plans and
exit strategy.
Rado plans to innovate in order to stay strong for the coming 50 years. The
luxury watch brands that are suffering today were doing rather well quite a few years
ago but they increased their prices without having altered the substance, the value that
is inside the product. Luxury brands step up battle for travelling shoppers but Rado do
not see the need to move upstairs because it is positioned between Tissot and Omega.
Rado has a strong brand in each price segment, so its objective is clear that it always try
to bring best value for the price segment that it is strong in.
Corporate Strategy
SWOT Analysis
Strengths
1. Rados creation of high tech diamond (hardest material on earth) is in the Guinness
book of world records, strengthening the brand positioning of being technologically
innovative in materials.
1. The brands non-classic design is not popular with traditional watch collectors
Opportunity
1. As the brand has not restricted itself to any look, there are plenty of opportunities in
expanding the product line without affecting the brands positioning.
Threats
1. The brands competitors in the high-end segment are positioned as watches with
classic design. While Rado has a classics collection, it is threatened heavily by their
presence
2. Fluctuating economies means limited spending on luxury items
PESTEL Analysis
Political
Being foreign watch maker Rado had to face challenges regarding tax policy,
employment laws and trade restrictions and tariffs. It cannot completely enter into a
foreign market until such issues are solved. Joint ventures are sometimes beneficial if
Rado can maintain all policies of that particular country.
If the government of a particular country where Rado has its operation takes
some steps to improve the rate of gross domestic product (GDP) and decrease the
inflation that would help Rado maintain its growth in the market and perform well in
the watch industry.
Economical
Social/Socio-Culture
The consumer definitely became very knowledgeable and demanding in the past
10-15 years in terms of watches, because of course not only the perception of watches
changed a lot, the watches are not simply a tool anymore to tell the time, but it became
an accessory that says something about ones personality, lifestyle, preferences, and
values. The consumer is becoming more and more educated also about technical
aspects. That had changed the whole perception at the market in the past 10 years and
that helps develop Rado so well in different age group and among different career
professionals.
Technological
Environmental/Ecological
Legal/Regulatory
Marketing strategy
The marketing strategy is based on the mix of the product, price, place and
promotion. These factors are determined according to the needs of the target market.
It can be seen that the marketing strategy targets high income segment men and
women. Rado is not a cyclical fashion brand, it has a core market but it has also moved
with the times whilst being respectful of its classic design past. The strong aesthetics of
the products also play a major part in the overall sales machinery. The strategy is to
incite the maximum amount of sales. However, Rado faces a lot of competition from the
already exiting players in the market.
Market segmentation
There are various ways through which the companies can identify
attractive market segments but the most popular approach is that the company
evaluates each segment on the basis of some factors. All segments are evaluated by
Rado on the basis of their size (number of customers). The growth rate of each segment
is explored and the competition which Rado has to face in each segment in determined.
The company also determines the brand loyalty of each segment and attainable market
shares are calculated. Rado then determines the required market shares at break-even
point and matches the profit margins of each segment.
The marketing mix of the Rado Watch Company is an example of why not
following the usual way to market products is often a good idea. When the company was
started if the founder had not taken the unusual step of gaining certification as to his
watches accuracy the company and the hallmarks of the product would not be known. It
is important that successful marketing managers take advantage of the controllable
tools of the marketing mix as they have done at Rado.
This is the most common, and general targeting technique. Demographics target
marketing is based on consumers' vital statistics such as age, sex, location, income,
etc.Though superficial; demographics can play a useful role in your marketing strategy.
2. Psycho-graphic Targeting
Though this sounds like a psychological technique, it's really a target marketing
technique because it targets consumers based on their pre-existing psychological
characteristics. These characteristics can be general, such as conservative or liberal,
outgoing or introverted, social or private.
3. Niche marketing
Niche marketing simply means finding a specific group of customers from within
a larger group of customers and basing your small business marketing strategy on that.
Marketing Strategy Click For example, lets say you want to start a restaurant.
'Restaurants' is a large category with lots of competition. Niche marketing should be
applied.
The trick to using niche marketing as part of your marketing strategy is to choose
a niche that's small enough for you to dominate, but big enough to be profitable.
1. Positioning
In their book 'Positioning: the Battle for Your Mind', authors Al Ries and Jack
Trout popularized the idea that your product, service, or company has an image (like a
personality) in the minds of consumers. Positioning techniques are used to be sure that
the image in consumers' minds about your company is the one you want them to have.
2. Branding
Many marketing strategies are founded on the concept of branding. Think of a
brand as the reputation of a product or company, translated into a marketing tool. For
example, Rado is a watch company, but the Rado Brand is far bigger than just watches.
The Rado Brand - its reputation - stands for elegance, celebrity, and class.
3. Focus
This includes your product line. Keep your product line focused. Avoid
temptations to apply your name to more than one specialized area.
4. Differentiation
Differentiation means just that; making yourself different from the competition.
For now, the principle to keep in mind is that when you are in doubt about your
marketing strategy, "be different."
Once you've developed your marketing strategy, there is a "Seven P Formula" you
should use to continually evaluate and reevaluate your business activities. These seven
are: product, price, promotion, place, packaging, positioning and people.
Product: In case of Rado, the product is intangible, heterogeneous and
perishable. Moreover, its production and consumption are inseparable. Hence, there is
scope for customizing the offering as per customer requirements and the actual
customer encounter therefore assumes particular significance. However, too much
customization would compromise the standard delivery of the service and adversely
affect its quality. Hence particular care has to be taken in designing the service offering.
We now look at the 3 new elements of the services marketing mix - people,
process and physical evidence - which are unique to the marketing of services.
People: People are a defining factor in a service delivery process, since a service
is inseparable from the person providing it. Thus, a restaurant is known as much for its
food as for the service provided by its staff. The same is true of banks and department
stores. Consequently, customer service training for staff has become a top priority for
many organizations today.
Process: The process of service delivery is crucial since it ensures that the same
standard of service is repeatedly delivered to the customers. Therefore, most companies
have a service blue print which provides the details of the service delivery process, often
going down to even defining the service script and the greeting phrases to be used by the
service staff.
Consumer
Cost
Convenience
Communication
Cost Cost is equivalent to Pricing in the traditional marketing mix. Cost is a very
important consideration during consumer decision making and hence in the 4 Cs
principle, the cost variable is given special attention. The 4 Cs model generally plans on
the basis of Customers and not products. And hence they have to plan the cost of the
product on the basis of their customer.
The Brand value is called a set of goodwill and good impressions. Creating and
maintaining a positive attitude to the goods is an important indicator of loyalty to the
brand (the degree of attractiveness of the product to consumers, high enough to ensure
high demand and regular purchases). Brand value is confirmed by its characteristic
features - prestige, fame, national or international recognition, stability and attractive
position for a long period of time.
Brand image is a way to interact with target consumers, and the image in the
mind of the consumer binds the good and the values of consumers. Image of the brand
is aimed at long-term recognition of the good and company, and the formation of a clear
understanding of the product.
Building brand image involves activity of image makers, whose task is to analyze
the image formation and target customers. Thus, the images of the brand combine:
Memorability
Meaningfulness
Brand elements may take on all kinds of meaning, with either descriptive or
persuasive content.
Likability
Transferability
-To what extent does the brand element add to brand equity across geographic
boundaries and market segments?
Adaptability
-The more adaptable and flexible the brand element, the easier it is to update it to
changes in consumer values and opinions.
-For example, logos and characters can be given a new look or a new design to make
them appear more modern and relevant.
Protect ability
Marketers should:
-Formally register chosen brand elements with the appropriate legal bodies.
-Vigorously defend trademarks from unauthorized competitive infringement.
Michael Porters Value chain concept is one of the most valued concept in
todays market because the Value chain tells us how we can differentiate our products by
analyzing the chain of events which occur within our company. As differentiation is very
important in todays saturated market, naturally Value chain is being referred in a lot of
management studies.
The Value chain comprises of total 9 steps The first 5 are the primary activities
which are the basics in any company and are the activities which provide strength and
sustainability to the company. The remaining 4 are the support activities or also known
as the secondary activities and these are used by the company for differentiation as well
as maintenance of the organization. Both, the primary as well as the secondary activities
are necessary for the firm to survive.
2) Operations Converting the raw material to finished goods is the job of Operations.
The customer value is increased majorly in this step if the operations are up to mark and
the product is manufactured in the right manner and meets quality standards.
4) Marketing and sales The marketing and sales apply push as well as pull strategy to
increase the sales of the product. The company exists to make profits and if profits can
be increased by marketing and sales, than the company has to use these tools.
5) Service The post sales service is the most important because it directly affects the
word of mouth publicity of the product. If the service is not upto mark, no one will buy
the product and the brand will lose market share and may be taken out of the market
eventually. Thus service is very important in the value chain.
6) Procurement The management of vendors and the procurement of the raw material
on a timely basis is where procurement comes in.
7) Technology development No product can survive if the company does not keep it
updated as per the latest technology.
8) Human resource management The right people in the right place can make all the
difference for the company and hence the HR department is a support activity most
important for the firm.
9) Firm infrastructure Without a proper infrastructure, and lack of government
handling or legal support, a firm might face a big hurdle. Similarly, administration
department will help in maintenance of the facilities in a firm.
For each brand, each person interviewed is assigned to one level of the pyramid
depending on their responses to a set of questions. The Brand Dynamics Pyramid shows
the number of consumers who have reached each level.
The brand pyramid is a model that illustrates the steps by which a customer
establishes loyalty to a particular brand. The model can be visualized as an inverted
pyramid with five levels. As one moves up the pyramid, from the narrow point to the
broad base, customer loyalty increases in direct proportion to revenue potential.
Different sources refer to these levels by different names, but they remain the same in
essence.
Fig: Brand Dynamic Pyramid
The five steps of the brand pyramid can be summarized (from bottom to top) as follows:
Presence: The customer is aware of the brand and recognizes the name, but
may have no particular opinion or emotional attachment to the brand.
Relevance: The customer is evaluating a brand in relation to other similar
products or services.
Performance: The customer will begin to set certain expectations and may
develop a real sense of the brands identity.
Advantage: The brand has proved itself superior to competitors and the
customer may begin to feel an emotional connection with the brand.
Bonding: The customer has established a bond with the brand and is likely to
remain a loyal customer. Consumers at this level of the pyramid may actively
promote the brand to their family and friends.
At the lowest and most narrow level of the pyramid, presence, customers are simply
aware of a brand. At the highest and broadest level, bonding, customers have
established a solid loyalty to the brand. Rado is residing at the bonding level.
Mission
There are several ways that a company can determine what the mission of an
advertising strategy should be. Quantitative measures such as increasing the awareness
of the brand among a certain segment by a certain percentage can be chosen. Rado is
increasing the awareness among the customers of South East Asia and Central Asia 20%
could be a mission. This could be measured before and after using a survey or some
other form of primary research.
Money
Budget constraints are everywhere in business, and nowhere are they more
evident than in small businesses. Advertising and marketing can sometimes be ignored
because they do not offer immediate results. However, in every business environment,
some resources must be allocated to building a brand and image. Without this, the
company will not continue to grow. Even during recessions, marketing must be a
priority to avoid losing market share. Having a suitable budget is an important part of
the process. Rado is now spending money on online advertisement rather than its
mainstream advertisement.
Message
Advertising is a creative process. There are slogans, themes and gimmicks that try
to lure the customer in. The message of an advertisement is this creative aspect. Any
manner of theme can be implemented as long as it is in line with what the company
stands for. Rado online based advertisement in Asia zone attracted a quite good number
of customers.
Media
This aspect of the program refers to the media that will be used to communicate
the message. This can include television, radio, mail, telephone and in person contact.
Most media has metrics to measure their efficiency and costs associated with those
metrics. Choosing the right media can make or break an advertising program.
Measurement
Finally, the firm must measure the effects of the program on their intended
audience. This can be done by measuring sales or trying to gauge interest through
research. It is often very difficult to measure how much the advertisements actually
impacted customer interest and how much other external factors played a part.
Mass Communication
Advertising Budget & Campaign Cost
Pricing strategy
The pricing strategy that the Rado Company employs is distinct in its conception
and execution. Rado sets its prices with little regard to the competition and their
pricing, choosing instead to price its timepieces as it sees fit and therefore setting the
price point for others to follow. Rado watches vary in pricing according to model, age
and materials but the core collection of Rado pieces will range from about US$700 to
about US$28,000. Models that include pave dials of diamonds and baguette diamonds
can cost approximately US$30,000 to US$250,000. The company does not offer any
sort of discounts for customers or any sort of price reductions or sales although
occasionally there are dealers that offer discounts because of financial difficulties. Rado
does not offer discounts because consumers are willing to pay the prices set by the
company as is evidenced by the fact that even during an economic downturn and faced
with discounted other brands of watches the majority of luxury watch shoppers where
looking for a Rado.
Breakeven analysis
Rado which formed in 1950 as Schlup & Co., initially produced watch movements
only. In 1957 the company launched its first collection of watches under the Rado brand.
Today the company produces about half a million watches a year with a staff of about
470 in total. Rado's watches are obtainable in more than 150 countries, at over 5900
points of sale. So we can understand that the company crossed its breakeven point and
now it is producing and distributing its watches with substantial profit margin.
Conclusion
The wristwatch, for most of the last century, has been the ultimate male
accessory. One of the few accepted male adornments, the pocket watch evolved into the
wristwatch and subsequently into a key indicator of social status, particularly in the
upper echelons of society. Wrist Watches form an integral part of the personality of
individuals in the present era. Earlier seen as a luxury item, they are now witnessing a
fundamental change in perception, and are now gaining respect as an essential utility
item. For the watch industry, time seems in its favor what with the liberalization of the
global market coupled with the rising purchasing power of the young and consumerist
customers.
Though mobile phones have become the substitute for watches clocking the
penetration to only 27%, still Asian watch market is growing at high speed bringing
hosts of opportunities for all the segments equally. There are oodles of innovations,
better watch portfolios with quality and price ranges and enhanced selling outlets to
increase consumer base at large.
The new generation, encompassing todays tweens and teenagers, has never had
it so good. Brand-conscious, tech-savvy, old before their years and equipped with
generous incomes that are almost entirely discretionary, they are an increasingly
attractive segment for marketers of all kinds of products, ranging from fashion and
beauty to digital devices. Rados unique and latest design, luxurious image and
customers loyalty are the main key components of sustaining as a market leader in this
competitive global market.
References