2022 Flashcards
(6 cards)
Demand and supply 4 marker
Supply shifts left cos of increased price
Explain one way in which product orientation is important to Rolex. (4)
Product orientation is an approach to marketing that focuses on the characteristics of the product rather than the needs of the consumer [K].
This approach is important because customers purchase Rolex’s luxury watches [Ap] that are made by skilled craftspeople [Ap] on the basis of quality and brand image, rather than Rolex spending money on expensive market research to help them adapt to customers’ needs
Assess the importance of creativity as a characteristic of the entrepreneur Hans Wilsdorf. (10)
Creativity was important to Hans
Wilsdorf as an entrepreneur because it allowed him to develop new ideas [K].
Wilsdorf created the first watch specifically designed for men, something no other business was doing. This creativity gave him a new market with no competition, helping him build a strong position in the industry. He also came up with the name “Rolex,” easy to pronounce in any language [Ap], helping the brand gain quick global recognition. However, creativity alone might not have guaranteed success. There may have been good reasons why men’s watches were not common, making it a risky idea
Another important characteristic was
Wilsdorf’s willingness to take risks. He risked entering a market that other companies avoided, suggesting it was uncertain if men’s watches would sell well. Taking this risk set Rolex apart, providing potential for high profits if the idea succeeded [An]. But risk-taking alone could have led to failure without careful planning. Hiring skilled craftsmen to ensure high quality also mattered greatly
Overall, creativity was most important at the start, helping Wilsdorf introduce the first Rolex watches and devise their key luxury design features. However, once established, characteristics like perseverance and initiative became equally important to maintain success and handle growing competition
Assess the likely importance of distribution (place) in Rolex’s marketing mix. (12)
Distribution, or place, is important in Rolex’s marketing mix. It helps ensure the product is available in the right locations and at the right time [K].
Rolex watches are sold through carefully chosen authorised stockists.
These retailers create a premium shopping experience, such as by offering champagne at launch events [Ap]. This gives customers a sense of exclusivity. This type of distribution adds to the luxury feel of the brand. It encourages customers to visit physical stores and engage with the product in person. This is important in the luxury watch market, where the buying experience is often part of what customers are paying for. However, Rolex’s high-end image already creates strong customer demand.
Customers may be willing to travel or wait for the product, reducing the need for widespread distribution
Another reason distribution matters is the changing nature of competition.
Rival brands like Omega and Tiffany are expanding into online sales. Rolex might need to consider doing the same to remain competitive. Having multiple distribution channels could help Rolex reach new customers, especially younger or international buyers [An]. But Rolex may risk losing control over the customer experience if it expands too far into online sales.
This could harm its luxury image. The brand is built on tradition and exclusivity, and part of that appeal may come from its limited availability
In conclusion, distribution is becoming more important for Rolex as rivals expand their online presence.
However, its strong brand reputation means customers may prioritise quality and status over convenience. The importance of distribution depends on how much Rolex wants to grow or modernise. In the short term, physical stores may remain dominant, but in the long term, adapting to online channels could be vital to staying relevant
In order to remain competitive in the luxury watch market, Rolex could become a public limited company or remain a private limited company.
(e) Evaluate these two options and recommend which one is more likely to support Rolex remaining competitive in the luxury watch market.
One option for Rolex is to become a public limited company (PLC). A PLC can raise capital by selling shares on the stock market, giving it more finance to invest in product development or new markets [K]. The luxury watch industry is changing, with growing demand for online sales and smart technology. If Rolex became a PLC, it could invest in research and marketing to compete with newer luxury watch brands like Swatch or Omega [Ap]. Access to more capital could help Rolex develop materials, features, or digital platforms to attract younger customers. However, becoming a PLC could also increase pressure from shareholders who want quick profits. This may lead Rolex to focus less on long-term quality and heritage and more on growth, which may damage its exclusive brand image
Another option is for Rolex to remain a private limited company (Ltd). Rolex is owned by the Hans Wilsdorf Foundation, which helps protect its independence and commitment to quality and tradition. As a private business, Rolex can avoid shareholder pressure and focus on maintaining high standards, classic design, and strong customer trust. This allows Rolex to stick to its strategy of being exclusive, which sets it apart from mass-market rivals [An]. Also, Rolex has grown successfully while remaining private, showing that large finance from public shares may not be necessary.
However, raising finance as a private company is harder, and it may limit Rolex’s ability to invest quickly in tech or expansion if the market changes fast
In conclusion, Rolex should remain a private limited company. Its brand is built on heritage and exclusivity, and public ownership could harm this identity. Rolex operates in a high-end niche where trust and tradition mattermore than fast growth. Its objective is likely to remain exclusive rather than expand rapidly. Its product is premium and well-known for quality, which doesn’t require high investment in frequent innovation. The situation is stable, with Rolex already holding a strong position. Therefore, while becoming a PLC could raise more money, the risks to brand and identity are greater, making remaining private the better long-term choice
2 (a) Using the data in Extract D, calculate Nike’s market share of worldwide sports footwear in 2018. State your answer to 2 decimal places. You are advised to show your working (4)
