strategic plan for Patek Philippe exclusive luxury brand

1. GROUP B

2. PORTER’S FIVE FORCES
Exclusive brand image
Threat of new entrants
Patented technology
High capital
(Low)
Access to distribution
Swatch dominates
Bargaining power of Bargainingcontrol of
Brands power
components
suppliers Rivalry
Attractive
Innovation distribution
customers
High cost vertical M&A Retailers influences
(High)
integration Industry
(High)
Luxury Brands (Low)
customers decision
Counterfeits
Threat of substitutes
Jewelry
Luxury mobile phones
(Moderate)
Other luxury products

3. EXCLUSIVE LUXURY
DIRECT COMPETITORS
PATEK PHILIPPE
AESTHETICS
TECHNICAL
ACCESSIBLE LUXURY

4. THE WORLD LUXURY WATCH
INDUSTRY AT A GLANCE
Continued strong Growth until 2008
The crisis of 2009 mainly involved the accessible luxury segment
Recovery in 2010 and expected record sales in 2011
Asia fastest growing market
China grew 47% in 2009, 57% in 2010
Continued Growth expected in China and India
Total value (CHF bb)
20 Countries Value 2010 increase % Share %
15 Hong Kong 3185,5 46,90% 19,70%
10
USA 1674,4 13,80% 10,40%
France 1167 20,50% 7,20%
5
China 1099,5 57,00% 6,80%
0
Italy 923,3 2,60% 5,70%
O. Countries 8108,4 15,50% 50,20%
2005 2006 2007 2008 2009 2010
Total 16158,1 22,10% 100,00%

5. LAST TRENDS IN THE LUXURY
WATCH INDUSTRY
Trends in taste and design
- Moving away from extravagance and
excess
- Move towards nostalgia and the past
- Highlighting original Swiss savoir - faire
- Understated Luxury/ Neoclassic
Other trends
- Attempt to vertical integration from other players
- Consolidation (Richemont, LVMH)
- New entrants from fashion world
- Diversification
- Higher attention to Asian tastes (automatic watches)
- Modern technology to attract younger targets (touch screen)
- Increasing counterfeit market

7. 1839 1844 1851 1932 2009
Company was
purchased by
Mr. Patek met Charles and
French Jean Stern.
watchmaker, Mr. “Patek Philippe
Adrien Philippe. S.A.”
Pioneering stem
winding and Presidency transmitted
setting system by from the 3rd to the 4th
the crown generation: Mr. Thierry
Mr. Philippe
2 Polish immigrants, officially Stern became
AntoniPatek associated with president
(Businessman) and the company,
FranciszekCzapek “Patek Philippe
(Watchmaker) found &Cie”
“Patek, Czapek&Cie”
Geneve

8. PATEK PHILIPPE
Family owned company
Flexibility & creativity
Completely integrated
Total quality control
Tradition
Aspirational brand / Lifetime value
Brand museum
Controlled distribution:
Salons in Paris, Geneva and London
500 carefully selected retailers
Independence, Tradition, Innovation, Quality and
Workmanship, Rarity, Value, Aesthetics, Service, Emotion, Heritage

9. STRATEGY COMPETITIVE ADVANTAGE
KEY RESOURCES CORE CAPABILITIES
• Patents • Heritage and expertise
• Skilled workforce • Internal production of all
• History and reputation components
• Advanced technology • Culture of innovation
• Pursuit of perfection
• Emotional value of the
brand (family transmission)
10

10. ESSENCE, NATURE, MEANS
Essence Nature Means
Functional
Emotional Quality Verticalpopulated
Highly integration
“Lasting value is
Trust Competition on technology
Innovation effort
-Time of art /
- Piecekeeping Exclusive
BENEFITS
- Precision
Family Values /Heritage HERITAGE
both material and
High techonoligy MANAGEMENT
High negotial power of
Understand Industry&Customers
Respect of traditions supplier
Management Supply&Retailers
- High technology
Brand r recognition emotional”
Aligns with values of customers New trends
Family business/independence
Client Company Business

11. SWOT
WEAKNESSES
STRENGTHS
Perceived conservatism
Brand recognition
Limited volume production
Autonomy and flexibility
High product time to market
Vertical Integration/quality control
Poor design of website and other online
Incomparable product complexity platforms
SWOT
OPPORTUNITIES THREATS
Use scarcity to increase exclusivity Change in consumers’ taste
Expand the brand (jewelry) New entrants (luxury brands)
Supply movements to other M&A: new colosses with higher financial
manufacturers resources
New targets: women, younger people Scarcity might prevent gaining market
New markets: Asia share in Asian countries, leaving room to
competitors

12. PATEK PHILIPPE ALTERNATIVES
APPEAL TO A
EXPAND TO ASIA
YOUNGER TARGET
EXPAND TO THE
CONQUER ASIA
SAME PEOPLE CONQUER
Acquisition of new
INCREASE Prod. capacity
WOMEN
WILLINGNESS TO technology
EXCLUSIVITY
PAY MORE Risk to alienate the
Knowledge of men
Move away from
APPEAL TO A
(grow through price) market
tradition
(Crisis) YOUNGER
Brand dilution
(microcomponents)
Right target ?
TARGET
Brand dilution
PRODUCT
BRAND +
BRAND
POSSIBLE BRAND
CAPABILITIES ? POSSIBLE BRAND
MARKET
DILUTION
DILUTION
EXTENSION
EXTENSIONS
NEW
SAME NEW
MARKET

13. RECOMMENDATIONS
Maintain exclusive positioning
Raise online brand awareness
Enhance women’s business
Measured approach towards China

14. 1 MAINTAIN EXCLUSIVE POSITIONING
• Maintain their exclusive positioning
• Focus on core resources and capabilities
Objective
• Growth through price not volume
• Focus on innovation and branding
• The only independent watchmakers in Geneve
Rationale
• Unique positioning and perpetuating the ‘legend’
• Collector’s edition watches (priced above 100k Euro)
• Exclusive membership clubs
Suggested
Tactics • Propose updated versions of old models
• Unique service: engraved customer’s initials, free
extendend repair service

15. 2 RAISE ONLINE BRAND AWARENESS
• Reinterpretate traditional values of the brand in a modern way
• Engage brand advocates, communicating 360º
Objective
• Attract new potential customers
• Reach good positioning also on online media
• Part of the Patek Philippe customers use Internet to seek
information about luxury watches. Need to build loyalty also on
Rationale the net
• Patek Philippe’s technological edge is consistent with the use of
interactive media
• Revamp company and museum website
• Specific SNS’ targeting HNWI
Suggested • Proprietary social media platform (Membership, Benefits)
Tactics
• Create the myth of Patek Philippe on traditional social networks
• Interactive videos: collections, watchmaking process, etc.

16. 2 RAISE ONLINE BRAND AWARENESS

17. 3 ENHANCE WOMEN’S BUSINESS
Objective • Increase sales from women’s collection
• Women’s watch market is growing
Rationale
• Risk: a feminine brand image may alienate male customers
• Women designs should share sober traits of men’s collection
Suggested • Communication should relate more to a feminine audience
Tactics , without “feminizing” traditional brand image
• Message focused on values rather than gender (heritage)

18. 4 MEASURED APPROACH TOWARDS CHINA
• Avoid brand dilution by appealing the Chinese new rich
Objective • Remain an object of desire among the upper-crust in
China
• China is potentially the most lucrative market for Patek Philippe
Rationale • New rich are currently seeking for status only and may not fully
appreciate the Patek Philippe’s brand
• Study evolution of the market
Suggested • Slow and selective distribution (main cities, top retailers)
Tactics • Build awareness and communicate through Chinese brand
advocates / ‘friends’ of Patek Philippe

19. “You never actually own a Patek
Philippe. You merely look after it for
the next generation”

20. Q&A
GROUP B
LIA BUDIMAN
LUCIA CALDERON
ADRIAN CHAN CHUN
DEBORA CURBI
HOWARD CUSHING
VALERIA DESERTO
CARLOS FERRIS
SURYANATA HATTA