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Some thoughts on UN's company strategy and philosophy

January 27 2003 at 5:21 AM

Marcus Hanke  (Login mhanke)

Response to FAQ, reference and feature articles

First of all, please note that we are not an 'official' UN forum, which means, that my statements are far from being authoritative and only reflect my personal opinion, which is based on my experience with the brand UN, as well as several talks with UN staff members.

Brand positioning and customer profiles are issues of strategic planning, which is done by a few persons at a company's top executive level, in UN's case by Rolf Schnyder himself. It is very common that these things are kept confidential, partly because no one wants his competitors to get a free 'compass' on one's company; thus being able to plan a counter-strategy. Partly, because sometimes smaller or larger changes of that strategy might be necessary, and it could be annoying, having to explain the customers why you changed the course.

Finally, the questions you have asked can be answered differently, regarding the different markets where the product is sold. It is the - sometimes difficult - job of regional sales managers, to check out these differences and to market their brands accordingly.

I have frequently tried to do the same as you, to position UN within the lineup of watch brands. However, this proved to be very difficult, if not impossible. Ulysse Nardin is occupying a niche within today's watch industry, and does this very effectively. Technical innovation, the new interpretation of the mechanical watch, be it as an instrument (GMT, Perpetual), be it as a work of art (Freak), seem to be the prime goals of Ulysse Nardin's activities.

While the dedication to traditional master watchmaking is not forgotten at UN (just think of the marvelous repeaters, and tourbillon watches like the Genghis Khan), what the company excels others in, are technologies which make a mechanical watch more useable, or more 'thrilling'.

Generally, one could say that the best liked customer of a high-end watch manufacturer is the dedicated collector. Interestingly, most of the highly complicated, and therefore expensive watches are owned by people that have more than one of such pieces. In spite of the high costs, one who buy a tourbillon, will often also buy a repeater, or a perpetual, or both. The more you can keep these customers loyal to your brand, the more of your expensive pieces you will sell.

However, I am quite convinced that in total sales numbers, these serious collectors are but the minority. The larger income is made by customers, who do not buy the top complications, but the watch models of the lower range, one might designate them as "bread-and-butter-models", too. All top watch manufacturers have such watches, which make the major share of this company's turnaround. IWC has its "Flieger" and "GST" lines, Audemars Piguet its "Royal Oak" (in particular those without larger complciations), even Patek has such a line, with its steel "Aquanaut" and the simple "Calatrava". Ulysse Nardin is offering the "Marine" series in that range.

These watch lines are by far less expensive than the top models, and mainly serve two purposes: First, they are a first step into a certain brand. A person who cannot afford a perpetual or tourbillon now, might be able to do so in some years, and it is wise to offer him a nice product to start his brand loyalty. And second, normally the development of these watches is not so expensive, since they offer a more standard technology. Thus, the income they bring for the manufacturer, helps providing the means for the development of the real novelties and highly complicated watches. This is common with other products, too: If you decide to buy a Mercedes C-class car, your purchase helps developing products like the Maybach. Additionally, you might be satisfied with your purchase so much, that eventually you will upgrade within the brand, until you really might be able to purchase a Maybach. However, as in the car business, the high prestige value of the top models, will also increase the prestige of the more inexpensive watches, thus offering a higher "value". Of course, the quality of the introduction watches must never be inferior to the standards applied to the top models, otherwise the brand would lose credibility.

Therefore, if you want to analyze Ulysse Nardin's products as an indicator where the brand should be positioned, you have to include both main product lines; the top and the introduction models. Within the top watches, UN has no difficulties to reside among the best. However, it is difficult to offer a direct comparison, since the company philsophies seem to be rather different: Patek, Lange, Audemars, Vacheron, etc. invest a large, if not the largest share of their resources into the perfection and refinement of the classic art of watchmaking. The products they offer are wonderfully crafted interpretations of the mechanical watch as it was made already decades, if not centuries ago.

While Ulysse Nardin proves that it is able to play within that league, too, (just think of the 'mighty' Genghis Khan), its main goal is the development of innovative mechanics and technologies. Thus, I personally would consider a Freak or a Perpetual GMT as being far more typical for Ulysse Nardin than the Genghis Khan. Within its niche, UN hardly has a direct competition, which seems to ensure its prosper future even in case the luxury market should lose its economic impetus.

Regarding the introduction watch models, notably the "Marine" series, the avid collector might not be the typical customer. However, it will be difficult to qualify generally, who shall buy these products. There are regional differences, which have to be addressed by the regional sales managers. Unfortunately I am neither knowledgeable nor experienced enough to give a good overview, but I can give some details from how the situation is here, in Central Europe, in particular in the German-speaking countries: While in other countries, fashion and design are very important, the watch-buying public in Germany is massively influenced by the concept of "the good watch".

Besides cheap plastic watches with quartz movements, which are the majority of watches sold, as everywhere else on the world, those Germans (or Austrians), that purchase an expensive watch, do so to own a "good watch", that will accompany them for the rest of their lives. Such a watch costs about one or two months' net salaries, if made of of steel, twice that if made of gold. It is solid, unspectacular in both design and technology. The average customer wants to become old with this watch, and many think that only mechanical watches can offer this reliability and continuity. For the manufacturer the problem is, that these customers, once they are satisfied with their purchase, won't buy another watch. Only a minority of them will take their first "good watch" as a starting point for a watch collection. However, they might serve as multiplicators, spreading their good opinion of the watch.

Therefore, it is more than difficult to find an exact market position for UN: On the one hand it competes with the best brands, throwing their unique complications and concepts into the competition. Of course, the quality of both, material and work, must adhere to highest standards, in order not to drop out this competition. Serious collectors can be a difficult breed, they are very well informed, and experienced enough to check the quality themselves. Their financial means make it easy for them to drop watches of a certain brand in favour of another, that they consider being more worthy to collect. The fact that Ulysse Nardin has so many dedicated long-time collectors, IMO proves that they are successful in offering top quality.

Regarding the more inexpensive watches, UN faces an even harder competition than in the absolute luxury class. Here, the trump card as a niche manufacturer cannot be played as easily, since the introductory watch models only barely offer the break-through technologies typical for UN's top products. With the exception of the power reserve display, the popular "Marine" series only features standard technology. Thus there must be other reasons for their huge success on the market. A certain prestige value, deriving from the famous and spectacular top products, may be one reason. Their design another. Just as IWC managed to claim the archetype of all current aviator's watches, offering a complete product line, based on this model, Ulysse Nardin successfully placed the "Marine" theme as their recognizing style within the introduction watch lines. With its consequent design, UN found a certain uniqueness already at that level, which somewhat mirrors its special status within the haute horologie. People buy these watches, often not to collect them, but to wear a watch that appears to be a bit different. Uniqueness alone, however, could not guarantee the success. Without a high quality level, the "Marine" watches would not be such steady sellers.

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