InterFUND

How Toyota and Rolex, Two Great Brands, Inspired Two More – Part 2

In Part 1, I discussed how the Lexus brand came to be. Toyota, a company for the masses, under the tutelage of Eiji Toyoda, launched the Lexus brand and quickly elevated his company into the desirable and lucrative luxury market.
Juxtaposed with the creation of the Lexus brand, the Rolex Company in 1946 chose to create the Tudor brand, inspired after the long-reigning English dynasty. To put the launch of the Tudor brand in context, Hans Wilsdorf and his brother-in-law Alfred Davis founded the Rolex Company in 1905 with the belief that watches could be worn on the wrist and be both elegant and reliable.

 

 

At the time watches were large needing to be carried in the pocket. They also were plagued with inaccuracies. Wilsdorf knew if he could solve these two problems, he could revolutionize the watch industry. In 1914, the Kew Observatory granted Rolex a class “A” precision certificate, the first wristwatch to ever receive this rating. Rolex would go on to achieve many “firsts” including the first ever watch with a self-winding mechanism and the first ever waterproof and dustproof watch. These achievements made the Rolex brand synonymous with precision and cutting-edge technology. To compliment this precision, Wilsdorf pushed his designers to create timepieces with unmistakable style and elegance. From the early twentieth century to this day, Rolex has been the benchmark in chronometers. With watches ranging in price from $2500 to over $40,000, the Rolex brand is reserved for the wealthy.

And so, Wilsdorf in 1946, decided to create a new brand “that would sell at a more modest price” while attaining “the standards of dependability for which Rolex is famous.” With WWII ending just a few months prior there was hope for a better world. However, this was an especially difficult economic period. Many returning home from the war could not find jobs. Factories throughout Europe and Asia had been destroyed and the focus was on rebuilding. Even the wealthy weren’t buying like they had been and this was affecting Rolex sales. Rolex needed a new brand that could capture a bigger market for their watches. If the Rolex Company could capture consumers at the price point below where Rolex branded watches were sold, their market size could more than double. This would allow Rolex the ability to significantly enhance revenue growth for the foreseeable future. Wilsdorf also understood that if he didn’t reach a broader audience for his product, Rolex might suffer a significant period of revenue decline in the aftermath of WWII. Like Toyoda, Wilsdorf could have purchased another watch company such as Breitling or licensed an existing affluent brand such as Waterman to meet his objectives. Instead, Wildorf selected the Tudor brand which he had trademarked back in 1926 for just such an occasion.

Unlike Lexus where Toyota parts could not be used if it expected to be classified as luxury automobile, Tudor watches, which were a category below Rolex, could make use of Rolex parts and movements. Moreover, in a lower classification, Tudor could be sold for a fraction of the price of a Rolex while still commanding strong margins. Through the creation of the Tudor brand, Wilsdorf understood he could grow revenue while preserving the exclusivity of the Rolex brand. The Tudor brand, in turn, would fulfill pent up demand of the affluent market which had been clamoring for a watch with performance and elegance, but which was not as expensive as a Rolex. To ensure the Tudor brand would have its own enduring identify, Wilsdorf positioned Tudor as the watch to be worn when participating in “dangerous” professions. This positioning allowed Tudor to be the perfect watch for real and aspiring divers, miners, pilots and race car drivers. Over the past 60 years Tudor has built a reputation for ruggedness and reliability. In a natural evolution of the brand, Tudor became the official “timing partner” for Porsche Motorsport in 2009. By aligning with one of the world’s most renowned performance automobile brands Tudor will continue to reinforce it brand promise for exacting precision in all types of environments.

While the Rolex Company is privately held and does not divulge its sales by brand, we know Tudor markets and sells more than 140 styles of watches today. Suffice it to say, Wilsdorf’s launch of the Tudor brand enabled him to achieve his objective of growing the Rolex company revenue over the long-term (now at $3 billion) while offering a larger portion of the population a chance to own Rolex technology. Both Toyoda and Wilsdorf were visionaries that understood where they wanted to take their companies. Toyoda began with a brand for the masses and elevated his company with the Lexus brand that has been the benchmark in luxury, performance and reliability since its inception. Wilsdorf set out to create the world’s most accurate and elegant watch brand. He then devised a way to share his achievement with a much bigger portion of mankind through the Tudor brand.

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