TAG Heuer takes on the crisis
In the 150 years since its founding in 1860, TAG Heuer has become as iconic for its bold, provocative advertising campaigns as for its unique brand of high-quality precision watches.
The world-renowned Swiss luxury company has recently launched a new marketing campaign entitled “The Knights of Modern Time” featuring four high-achieving individuals – Leonardo DiCaprio, Tiger Woods, Maria Sharapova and Lewis Hamilton – whose personal narratives demonstrate the drive to succeed in a world fraught with seemingly insurmountable obstacles.
The “Knights” campaign captures perfectly the resilience of mind with which the leaders of TAG Heuer have chosen to take on the global financial crisis.
Although the declining demand for luxury goods from cash-strapped consumers has caused a slump in TAG Heuer sales, the company has also adopted careful marketing and product launch strategies that have allowed it to retain a loyal customer base as well as to expand into new industries and geographical markets.
Swiss Style sat down with Jean-Christophe Babin, TAG Heuer’s CEO, and Steve Amstuz, the Managing Director of TAG Heuer Meridiist Communication Instruments, to discuss the company’s incredible survival tactics, advertising launches and recent diversification into the wireless telecommunications industry.
Strategies in crisis
When asked how TAG Heuer is faring as the financial storm begins to wind down, Babin admits that the crisis has been one of the worst in his lifetime in terms of market losses. “In the past few years, the market for luxury watches has declined by about 25 percentage points,” says Babin. “The only other period of recession that I have seen that compares to this one was in the seventies, and even during the worst of the seventies the market never dropped by that much.”
Despite the significant market slump, Babin is confident that natural industry growth combined with TAG Heuer’s carefully planned customer retention strategies will actually cause the company’s sales prospects to grow in the coming years.
“Throughout the current crisis and market downfall, we have been able to rely on our core strategy, which has always involved keeping a wide range of prices and offering the best value products at each price level,” Babin comments. Throughout the years, TAG Heuer has offered products from diverse collections, styles and brands ranging in price from 1,000 to 8,000 Swiss francs.
“Maintaining a broad range of collections has been critical to our success, not only for the sake of having different styles but also for offering different price points,” he added. “In the years before the crisis when the prices of new brands were skyrocketing, we never took advantage of the situation to raise our prices. We have made a few minor adjustments to correct for variations, but we have never abused the situation. Instead, we have always calculated a fair price based on cost for each new product.”
According to Babin, offering high quality products that give the best value for the money has also become more important than ever because of the crisis. “Customers are now more cautious about their spending due to the credit crunch, and as a result our sales have suffered like those of any other Swiss brand,” he says. “However, we have also gained market share because a lot of retailers and consumers realize that the value we offer for their money is greater than before. When consumers who usually spend 12,000 francs on a watch find themselves in the 9,000 franc price range instead, they will be looking for brands that offer something that no other could.”
Substance and values
How will TAG Heuer convince consumers worldwide that its products truly offer the biggest bang for the buck? “In times of crisis, people look for substance as well as style,” says Babin. “That is why our new advertising campaign places special emphasis on the intangible values associated with our brand.” Such values include the determination to overcome personal challenges and thrive, as TAG Heuer has done over the last century and a half, as well as the desire to build new models for sustainable development in the wake of the crisis.
“One of the major changes we have made to our newest celebrity advertising campaign – ‘The Knights of Modern Time’ – is to replace Brad Pitt, who we had in our earlier campaigns, with Leonardo DiCaprio. This is largely because of the latter’s demonstrated involvement in environmental activism and sustainability initiatives, something that we believe consumers tend to value more in times of crisis,” Babin elaborates. The high profile advertising campaign is very emotionally charged, features compelling artistic direction and ends with the resonating tagline, “What are you made of?” that compresses into one neat catchphrase TAG Heuer’s resilience and fearlessness as a company and brand.
Babin reveals that another of TAG Heuer’s key value-driven marketing strategies is to emphasize the company’s ability to design products that give a sense of permanence in an ever-changing world. “Having a timeless design is very important for luxury watches,” says Babin. “Consumers will not spend 4,000 euros on a product if they do not feel that its value is timeless. We have therefore always tried to emphasize the timelessness of our products in our marketing strategies, as we did with the Monaco brand famously worn by Steve McQueen in the film Le Mans. Our products have always managed to strike a good balance between technological innovation and everlasting design.”
As the company approaches its 150th anniversary in 2010, TAG Heuer leaders will continue to celebrate the company’s long history of tradition and resilience. “TAG Heuer is one of very few 19th century luxury companies that has retained a unique identity over the ages,” says Babin. “The company has passed many milestones over the course of its history and deserves to be celebrated for its tenacity in a tumultuous world.”
Conquering new markets
In addition to boosting its market share in the watch industry by developing and actively marketing quality products, TAG Heuer has also taken bold moves to diversify into the telecommunications industry by launching the Meridiist, its first luxury mobile phone, earlier this year. The phone incorporates many avant-garde technological features not found in any existing mobile brands, including a digital clock controlled by a power switch and illuminated by an Organic Light-Emitting Diode system, dual display screens and a corrosion-resistant outer shell built out of materials typically used in watchmaking.
According to Managing Director of TAG Heuer Meridiist Communication Instruments Steve Amstuz, TAG Heuer’s diversification into the telecommunications industry has not come at the most opportune time. Although the market for mobile phones has been growing exponentially over the last 10 years, industry revenue has begun to drop significantly in 2007 and 2008. Despite the general decline in telecommunications sales over the last three years, however, the launch of the new TAG Heuer mobile phone has been successful due largely to the innovations in technological design that the phone brings to the wireless industry.
“Novelty is always a captivating thing in this world,” says Amstuz. “Even though we entered the telecommunications market at a bad time, we have managed to ride the wave of success for the last 12 months just by bringing something new to this category.”
Although TAG Heuer is still focusing for the moment on its traditional strongholds in Europe, the United States and Japan, Amstuz is hopeful that its new line of mobile telecommunications products will help the company expand its customer base in the emerging BRIC markets over the next 10 to 20 years. “In countries like China, Russia and India where there is a growing upper class, the mobile phone is a major status symbol,” says Amstuz. “Customers in these countries who are interested in the latest brand of mobile technology that we offer will eventually be drawn to our watches as well.”
When questioned about the timing of TAG Heuer’s product and advertising launches, Amstuz expresses his confidence that the company’s leadership has taken the right steps by actively moving forward in response to the crisis instead of lying low and waiting it out, as so many others have done.
“It might have been wise to wait one or two years to launch our new mobile phone line, given the state of the telecommunications industry today. However, it’s also important in the present moment to start setting up our product bases everywhere in the world with a very aggressive commercial deployment, so that we would be ready when the crisis finally winds down and consumer demand rebounds,” says Amstuz.
“This is essentially what we are trying to do with the launch of our mobile phone products and new advertising campaigns. We’re capturing press attention, increasing our visibility in the stores and letting our customers know that we will continue to make quality products despite the crisis. In short, we are showing the world what TAG Heuer is made of.”
Article by Karin Sun