IWC & Luxury Watches: Segmenting Customers

Moving on to look at the customer base then, how did you segment IWC’s customer base in that luxury watch segment?

Do you know what? We didn’t. We really believed in a product focused strategy. We’re not going to sit down and say, okay, we’re going to create this and that watch for this type of person with this age group and so on. There were some basics that were clear. We’re a very m3asculine brand. That was for sure. All the watches at that time were focused on men, even though there were a couple of female models, but that was very much sidelined. It was a masculine watch. There had to be a technical watch. It had to be clear, it had to be no diamonds. Classic. That was clear. We never sat down and said, we’re making a watch for a 30-year-old or a 30 to 40-year-old man that’s interested. We’re going to have the product and the product will find its fans. It always did. This was very much the product was there and the market developed around the product, not the other way around.

Is that unique in this space or is that just a sign of the ultimate luxury item?

It’s not unique to the watch world. I think it’s unique to high luxury in general across all product categories, but especially for watches and jewelry. For watches, probably even more because you see what your company is capable of in terms of technology, in terms of innovation and you create the most fantastic product around it. The price normally is secondary, so you don’t go out and say, we’re going to develop a product and it is allowed to cost so much. You first develop the product; you say how much are intrinsic costs and then you say that’s the price. For many years, it may change now that the world is changing, but for many years, that strategy worked really well for our watchmakers, so this is the price, these are the margins we need to have. This is the retail price. Again, the product is king and the clients flock toward the product when it goes out on the market.

It’s very interesting when you get to that high-end luxury, it does become more of a product game versus the premium brand, whether it’s spirits, whether it’s more functional products, or even alcohol and food and beverage, that’s more of an understand your customer, market to your customer, get them to buy your products. It’s like the reverse.

It’s the reverse, yes. Luxury is very different in that. Probably fashion is somewhere in between, but the hard luxury, we really are creating a product that is meant to stand the test of time. The change of tastes, you’re trying to create something that is beyond fashion and beyond short-term trends and even beyond age because if you’re given an IWC or a Rolex watch for your 18th birthday, very likely you might still be wearing it when you’re 80 years old. It really is a product that’s meant to transcend time and trends. That’s probably why the product is king and less important than current consumer trends or tastes because it’s meant to be above all of that.

In terms of product policy then, is it really just driven internally where the craftsmanship of the product owners internally?

At least at IWC, it was very much like that. Our CEO would have an idea. We would sit down with the designers and sketch a product. Then it would go into the technological feasibility phase, see what we can do, what sort of movement developed and was necessary. It was very much something that sprang out of the ideas of a few into a product. It was not going out to the market saying, “This is the analysis of the competitive landscape as you do with many other products, so this is where we’ll fit in. This is the price point it has to be, this is the color, shape, size, whatever it has to be.” No. It was, we’re going to create this product, do the best we can. That’s how we’re going to make it, without study the competitive landscape too much. It has to be said that it probably also works really well for established brands that have a big fanbase. Many collectors probably buy almost anything that you make if you don’t go terribly wrong. Slightly more challenging for a newcomer into the brand, into that world. Barriers to entry into the luxury watch world are huge. Basically, it’s very rare for new brands to come up and be able to really make a big difference in a space of under 20 years.