Portfolio Architectures Horlogerie Brands
Successfully placing a product on the market is a challenge. When the market is already saturated (as is mostly the case in the luxury industry) there has to be some kind of benefit for the consumer to switch and start using a new product. This does not mean that all new products are better in functionality. When brands add products to their product portfolio it is mainly the brand that adds benefit.
When using a brand to promote a new product, the values of the brand are transferred onto the new product. When done correctly the values of the brand, earned from the consumer experiences of previously sold products, gives the brand’s product the competitive edge it needs to conquer its place on the market.
The Two Extremes: Product Brand vs. Umbrella Strategy
A ‘product brand strategy’, in Europe called a ‘house of brands’, assigns great freedom to every separate product by creating a unique, product specific brand. In many ways this technique is similar as the technique used to describe the conglomerates Swatch Group and Richemont, although the technique is not used to separate products but entire brands. The technique gives the possibility to conspicuously dominate a market by creating multiple brands. To the consumer it seems as if the brands are competitors while in reality the brands belong to the same corporation.
The product-brand strategy is not actively used by the independent brands of the watchmaking industry, but the principles are used by conglomerates such as the Swatch Group and Richemont. The brands of these conglomerates occupy the majority of the watchmaking market by creating, or taking over, brands that fit every consumer category. Swatch Group owns of eighteen horlogerie brands. All sell high-quality timepieces and are, as sales are in many cases arranged by corporate contact, on display in the same stores. However, each brand is given a private space in the shopping window and are presented as competitors. Richemont owns many luxury brands, in watchmaking but also in jewellery. Cartier and Van Cleef & Arpels, are respectively the number one and number three providers of fine jewellery. Their clientele fits the same profile: global citizens from the upper class and aristocracy, with significant money and appreciation for exquisite jewellery. Both operate internationally and have stores that are located in the same city and even in the same area or street, such as in Paris, Qatar and New York. Again, both are presented as competitors but are part of the same corporation.
An ‘umbrella strategy’, in America called a ‘branded house’, strives to create unity across its market segments to express the brand values in one coherent manner. Creating such unity is complex and takes more effort from company management and the management of the separate market segments. However, a strong master brand holds more value as it imbues trust in the company’s products, leading to consumer loyalty.
The master brand strategy is most often used in the higher segments of the watchmaking. When watches become more and more expensive, trust becomes an important sales factors. Consumers connect the longevity of the watch to that of the brand. Longevity is often shown in the brand’s history, which is then flaunted to inspire confidence.
Master brand strategies are most visible for brands that do not have their origin in the watchmaking industry but have entered the watchmaking industry by brand extensions, such as Bulgari. Bulgari, currently owned by LVMH, has developed its business as a jeweller and only later extended its brand to a number of different luxury markets such as timepieces, perfumes and even hotels. While some pieces of fine-jewellery have a product name and timepieces belong to a product line, it is Bulgari that is displayed on all of its products. When products of the brand are discussed one indeed talks about Bulgari timepieces, Bugari jewellery and Bulgari hotels. It is the Bulgari name that dominates and gives common meaning to the products.
The Line brand and range brand strategy
The Americans only distinguish between the product brand strategy (house of brands) and the umbrella strategy (branded house). Europeans however recognise roughly 8 more brand architectures. The line and range brand strategies are the first two we will discuss.
A line brand strategy tries to deliver a complete experience with a range of complementary products. With a line brand strategy the function of the product line is leading, offering one coherent response to a consumer’s need. Extensions therefore exist only of complementary products that stay within the functional area of the initial product. This makes extension possibilities limited, but strengthens brand awareness, consumer trust and brand loyalty.
A range brand manages all their products through a unique brand concept and a single brand name to avoid inconsistent external communication. It therefore is closer related to the corporate master strategy than the line-brand strategy, but all products still fit within the same product category. With a range brand strategy it is possible to extend the brand to products with different functionality.
Brequet is a watchmaker of the earliest hours and prides itself for its inventions that helped the progress of the engineering of watchmaking. However, to better meet the costumer’s need, Breguet also holds a fine jewellery segment that is structured according to the line-brand and range-brand principles. By extending the brand values to jewellery pieces, Breguet provides products with different functionalities with a single mission; pay tribute to monarchs and world personalities that have been among Breguet’s clientele. Each collection expresses not only the values of Breguet, but also memorialises a former VIP client. Every single product is a Breguet but ‘collections’ are created to match the different pieces together. This supports the consumer in its decision-making process and expresses the identity of the brand.
The maker’s mark strategy
The maker’s mark strategy is not a branding strategy in the sense that it connects consumers to the brand’s identity, but addresses the intermediaries to identify the industrial group that produced the product. The maker’s mark is often used purely as means of information, for example in case of repair or liability, but also functions as sign of authenticity and quality. What is important to understand is that a maker’s mark does not endorse the brand, but is only used as a means of recognition for professionals and at most signifies quality.
The complexity of timepieces and the continuous innovations have in the last decades let to the rise of companies specialising in a single aspect of watchmaking. A need had risen to express the quality of individual parts and segments of the watch. In many cases a maker’s mark was added on the escapement to express the company that produced it.
As the maker’s mark can only be found on the escapement it is invisible to the consumer. Quality is expressed by the consumer brand. However, many brands have decided to completely manufacture their own timepieces in house in order to strengthen the aura of authenticity of the company. The design of timepieces displays more and more the inner workings of timepieces in order to show the timepiece is completely manufactured by the company. Frederique Constant, for example, refined its maker’s mark and displays it on the self-winding mechanism of the watch. In this manner the maker’s mark is not only used as a sign of quality, but also as a sign of authenticity.
The Endorsing Brand Strategy
The endorsing brand subtly displays its name to show approval of products of other brands or companies. The strength of the endorsing brand strategy is that of reassurance. In many instances it is not the endorsing brand that attracts the eye, but upon a closer look the label is recognised and gives insurance to the consumer.
The advantage of an endorsing brands is that it is an inexpensive way of presenting the endorsing brand to the public. By adding a symbol where the consumer brand is presented the brand becomes familiar to the consumers. Furthermore, as the endorsing brand takes it upon himself to reassure the consumer, the consumer brand or product can focus on differentiating from the competition. If an endorsing brand for example reassures the consumer of the highest quality products, the consumer brand can focus on developing its brand personality and philosophy.
For a company such Cartier, did the architecture of the brand mature before the profession of brand management existed. In such cases the brand developed itself without any guidance, creating a rich but complex history.
When launching a new product there one central question that needs to be answered : does the product fit in the current brand portfolio or is it better to set it apart? When a brand matures and more products are fitted into the portfolio this question becomes increasingly difficult to answer. The new product can change the interpretation of the brand, it can affect the market share of other products being sold or it might just not fit the brand. In many cases a hybrid form of structuring is applied, in which different strategy types are used on different levels of organisation.
Cartier applies a hybrid form of the umbrella, the range, and the endorsing brand strategy in its product portfolio. On top of that it is also part of the conglomerate Richemont, which uses a product-brand strategy to manage its brands.Cartier did not decide upon this structure in a single fortnight. The company has a history tracing back to 1847, long before the brand management profession existed. For most of its history the brand developed itself without any guidance, creating jewellery and timepieces when opportune.Cartier shows that history has to be considered every time a new product is launched, and that it can considerably hamper the strategic decision making proces. Their Santos and Tank watch, have rooted themselves in French history and created a name for themselves that literally rivals that of Cartier. The phrase ‘I wear a Tank’ is with these products more common than ‘I wear a Cartier’. Cartier tries to avoid this in their newer models, implementing the brand name in the name of the timepieces. Hence the name Rotonde de Cartier.