Brand managers for luxury brands such as Rolex often find themselves in tricky positions. When the C-Suite of a company decides that they want to expand their consumer base by offering cheaper versions of their flagship luxury products, it carries a huge branding risk.
A brand manager is immediately tasked with maintaining the superior, luxurious nature of the product and brand, and cross their fingers that brand attitude won’t be affected for the worse. Calvin Klein is one of the more well-known examples of this risk. We decided to test this notion, and gauge the risk/reward factor for a well-known luxury brand.
Our Testing Methods
At Upfront Analytics we decided to explore this branding conundrum with Rolex, considered to be one of the leading luxury brands in the watch space. However, instead of using traditional market research testing methods (surveys and polls), we used our system 1 based testing strategy to glean information and data from users. We do this by way of a mobile game which we developed which offers a quiz show setting in a fun gaming environment. A portion of the questions are directly related to branding and market research. We believe that this system 1 method provides superior market research data because the responses are instinctual and behavioral by virtue of being in a non-test like atmosphere.
Rolex & Cheap Swiss Watches
Our goal of this case study was to see if people’s opinions toward Rolex changed after being exposed to cheap Swiss watches. In order to set up the experiment, we asked players to choose between a cheap Swiss watch worth $120 and a cash prize of $40. 52% chose the watches and 48% chose cash. This was done in order to expose users to the idea of cheap Swiss watches.
This question was posed to gamers on January 22, 2015. Half of the players had been exposed to Rolex watches from January 11-22, and the other half were subsequently exposed from January 23 to February 2.
The initial question that we used to ascertain the effects on Rolex watches was by asking users how much they thought a Rolex watch was worth. The price estimates between the two groups dropped 33% from those who were not exposed to cheap Swiss watches and those who were.
This is direct evidence that mere exposure to low end products (by comparison) causes people to lower their price expectations for luxury brands, such as Rolex.
We took the experiment a bit further and inquired more directly toward brand attitude. Here is a screenshot of a game which uses word association in order gauge feelings toward items and brands.
We inquired about attitudes toward expense, desire, status symbol, and received the following data:
In the chart above, the blue columns represent those who were not exposed to cheap Swiss watches, and the red column represents those who were. We found that those exposed to the cheap Swiss watches showed increased feelings of enhanced exclusivity toward Rolex, as well as a decrease toward negative stereotyping of those who wear Rolex.
Lessons for Rolex
The initial returns on this market research survey seem to indicate that Rolex could indeed roll out a line of discount watches in order to increase their customer base, without upsetting existing attitudes. In fact, it might even increase positive attitudes toward their brand. However, to say that with the utmost authority, we would have to increase our sample size beyond the 1500 or so participants. Check out the original Rolex Brand-Awareness case study to see the full sets of data and information.