I like my anachronistic, overpriced toys just as much as anyone — and I reckon the companies that make them are entitled to their profits since I'm irrational enough to pay in full knowledge that it's just a few bits of steel, brass, polymers and industrial minerals — but it's pushing it a bit far to publicly gloat about how their ignorant-of-which-end-of-the-car-the-engine-is-in buyers will still line up for the hype they fabricate out of nothing.
IWC CEO Georges Kern makes these assertions openly in a business-conference presentation called "Selling Dreams":
Pressed for time? Many of the good bits are within the first three minutes.
These type of cynical observations doubtlessly happen in private banter between luxury execs, but the first rule of Fight Club is that you don't talk about Fight Club.
I'm genuinely surprised to hear a watch-company CEO publicly state that "...this is really the cost of the product and that is image" while using both hands to helpfully indicate with the use a small gap and a large gap between thumb and forefinger. (The large gap wasn't for the product.)
He also gleefully talks about how "people so desperately want these products" that "they're queuing... they're queueing" and is clearly delighted that "you can increase prices and still the people will buy it."
Kern then goes on to talk about how their Portofino line was weak, but it had a nice-sounding name so they had to invent a tale to go with it. Because of this and other types of fanciful "storytelling", "you can increase prices by 30% and you have no decrease of your volumes."
"And this is the beauty of our business."
I used to like their watches' understated looks and sober functionality, but the increasingly bloated redesigns have strayed further and further from this style ever since Richemont came along. They've also inflicted their love of limited editions and ridiculous marketing tie-ins on the company. The triple date window alone shows how much design integrity they're willing to sacrifice in the name of dumb trends.
I did find it amusing how he attempts to put his "high-end" brand in Patek Philippe's echelon. I don't have much love for Patek's increasingly DeBeers-like modus operandi, but their watches are legitimately high-end and are in a different league entirely from IWC's fashion-oriented tuna cans.
"We're a small industry, but we're a very profitable industry for the shareholders." Great, but not with my money. I suppose IWC has done me a favour by giving me one fewer company to care about.
Is anyone else disappointed by this attitude? Or am I just being too picky?
Oh dear. This looks like it might be something of a Ratner moment for Georges Kern...
Do people never learn? Arrogance and hubris like this are foolish in the extreme.
He's not saying anything we didn't know before (although some people like to pretend it wasn't true!) but for him to say it publicly is bursting the bubble of denial.
Last edited by markrlondon; 7th July 2014 at 01:01.
Indeed. If you see your clientele as so many sheep to be fleeced, it's generally prudent to restrain oneself from making a convincing presentation about it.
It is surprising to see him say it, but I can't imagine it is anything that we didn't already know!
wow I can not believe he just said all that, why on earth would he give such a talk?
the phrase he used in that talk that sums it up for me was, calling one of his own watches " beautiful and useless, and costing 25k so we created a story for it"!
I agree IWC off my list too now.
and to cap it all off he has a Gordon Brown mouth thing going on!
Last edited by jegger; 7th July 2014 at 01:15.
Did he boast about their absolutely shit after sales service? "Ha, ha, ha, if you think we screw them with pricing just wait until I tell you how we void their warranty!"
I have to wonder if modern IWC is focusing on "developing world" consumers because nothing they sell appeals to me. It's a shame too. IWC was my first love - my 3536 and Mark 12 will never leave my collection. It's similarly a shame that I'm not on my work computer - I'd post a picture of Mr. Kern holding hands with some male celebrities.
Thanks for posting this. Nothing new to me, but I am sure it will serve to educate somebody. Very honest, very straightforward and a beautiful lesson in marketing. Something that is close to my heart and something I take pride in.
Last edited by GrandS; 7th July 2014 at 02:34.
Yes, you are being too picky, and you have been a bit naive by not realizing that this attitude is quite widespread among luxury watchmakers. This is not limited to IWC.Originally Posted by Belligero
The simple fact is that nobody needs to spend much on a wristwatch these days. If you paying a significant sum for a watch you are buying something more than just a watch. What are you buying? An image, a story, a dream. The only problem I see is people who can't afford to buy this kind of watch and buy one anyway and create hardship for themselves and their dependents. That is sad, but you can hardly blame IWC for it.
What kind of watch do you buy if you dream of flying fighter planes while your pretty girlfriend with her cleavage on show is waiting for you? It starts with a B, but no prizes for guessing...
Last edited by GrandS; 7th July 2014 at 02:58.
It's been done in the industry for decades, but it has not been brazenly boasted about previously as far as I know. It's the difference between knowing your hot girlfriend goes poop, and stepping in a pile of her poop - a very different situation.
Image and aspiration. What about the product? Maybe that is why the service department is what it is!
Good grief, off with his head!, for having the nerve to say what everyone can plainly see. The emperor is naked.
Last edited by GrandS; 7th July 2014 at 06:30.
The AD markup is alone 50% or more of retail price
Makes you wonder how much it cost to make the watch. We are paying for him to make fool of us WIS as well!
I think that the real guy had been locked in the basement, and Cilla has taken his place.
An ego combined with arrogance can be very costly.
“Don’t look back, you’re not heading that way.”
I can’t see much to be shocked about, really.
Kern is simply stating the reality of aspirational goods: not gloating nor boasting, just showing how one company (amongst many others in that sector) sell their own dream.
Giver that the presentation was over two years ago and there’s no evidence that I can see that IWC have been adversely affected by it I think we can safely assume that the vast majority of their customers simply don’t care. ;-)
R
Ignorance breeds Fear. Fear breeds Hatred. Hatred breeds Ignorance. Break the chain.
As has been said, this is nothing that the rational among us dont already know - even those in denial.
Sad that some people don't seem to care that much of the cost of the supposedly luxury item they bought could have been avoided and hinges on b#llsh#t, but I suppose I'm kind of one of those sheep that these companies regularly sheer...
That was exactly what I meant with this: http://forum.tz-uk.com/showthread.ph...=1#post3190278
Thanks for providing the answer.
I bet you wouldn't hear a Japanese CEO speaking like that.
I will never understand why people with this attitude join watch forums like this. Surely there are forums for jealous underachievers.
Spot on.
Never. Private face stays private. Public stays public.
The truth? Is that important?
Watch forums are just for losers who need to buy a dream/image? I didn't think so, but this makes me wonder.
This did get posted once before (it's from a couple of years ago I think), but it's good to see it pop up again as it's compulsory viewing. He was talking at a conference on marketing for insiders, it's not intended as a public talk and their customers will generally not see it. But it shows very well how the game is played. It's depressing to see the strings moving, but at the same time it's somewhat impressive that they are confident they can recoup this incredible marketing spend. Then again there's the same hubristic air of people who feel they are extremely clever because their house went up in price in a housing boom.
This 'brand story' (and sub-brand story) thinking is everywhere these days. One of the most popular ones is the heritage / craftsmanship story which seems to apply to anything British, but also Grand Seikos, and quite a lot watches with neither heritage nor craftsmanship.
IWC seem to have a clearer view of how to concoct these stories than other brands. But at the same time, for me when they became quite so marketing lead, rather than design and technology lead, is exactly when they lost direction. Their collections change every season like a fashion label, the watches getting bigger and bigger but not better. They seem to have lost something essential, a seriousness and authenticity conferred by their heritage. They are convinced they are selling dreams rather than beautiful watches, and it's starting to show.
I think we all know we're paying far more than the watch costs to manufacture. It just isn't pleasant to have it spelled out quite so clearly.
Came expecting to be outraged, watched the clip, decided I'm not.
Sure he could probably avoided some of the soundbites (I liked the one about the watch being expensive and useless...) but it certainly wasn't one a par with Mr Ratner's "cheaper than an M&S prawn sandwich but probably wouldn't last as long." quip on his jewellry..
I guess that's not far from the truth..........
We know, but we are wis, and still a lot are taken in by all the G'shite about reworked calibers and all that.
People don't mind buying into a dream, as long as it gives them a good feeling and some status to boot.
Daddel.
Got a new watch, divers watch it is, had to drown the bastard to get it!
Nothing new but the emphasis on raising the margin by storytelling is a different angle. Ofcourse we pay for brand and image, but here they simply invent an image afterwards. Whichever image sells most is added to the product.
Well some pay for brand and image in greater percentages than others. And some place a higher emphasis on manufacturing excellence and build quality.
He's just destroyed his brand for me.
Did he really tell you anything that you didn't already know? Was it his honesty, cheeky arrogance if you like that killed it for you?
I think this is the same video that's been floating around for a bit now, so clearly it hasn't done IWC much harm - Nike making trainers for a couple of quid in sweatshops is more the sort of thing gets into the general media, the typical IWC buyer probably won't see this clip.
I agree that he's getting uncomfortably close to breaking the illusion of a watch as a high-end, artisan, precious item though. I thought the golden rule of luxury goods was that everyone needs to buy into the dream, and be reading from same page. Spelling out the conceit in the way he does is dangerously close to treating his customers as mugs.
As others have said, these discussions will have long gone on behind closed doors, but in today's social media environment, I'm not sure it was wisest thing to put on the public record.
Yes, arrogance , and it's way above cheeky.
Where they are right, is that some brands don't have a clear idea what they are selling, while the ones that are doing well do have:
PP, AP and VC: we have been selling extremely expensive watches to old money since the beginning of time itself and have a couple of design icons in the collection
Rolex: For the successful, or to celebrate finally becoming successful. Plus heritage and continuity, and Bond used to have one.
Omega: for film stars like Clooney, and Bond has one now. A bit like Rolex, but with the added advantage of not being Rolex. And high tech. Also in other news, we went to the moon.
Breitling: planes and busy dials
Grand Seiko: heritage, craftsmanship, technology, Samurai polishing
B&R: Helvetica. Now with added imaginary heritage.
Bremont: what would go with my Barbour?
Tag: we had something to do with Motorsport but we don't know what we're about any more really
Oris: ........? We're a bit cheaper than the others?
Kerns is right that a watch needs a story. But it needs more than just a story, which is why their vintage pieces (older pilots watches, Genta's ingenieur) seem so much more serious and substantial than their current offerings.
Last edited by Itsguy; 7th July 2014 at 11:18.
I actually appreciate the honesty. Watches have always been about dreams (moon, diving, expeditions, etc etc)
While we think today's watches are expensive (and no doubt they are) back in the day they were also very expensive. But they have outrageously expensive in the last 20 years with "watch collecting"
Kern makes an excellent point, showing the thumb as the real cost of the watch a complete hand "selling a dream". That is the rule for every manufacturer out there today.
Anyway, if the same watches of today were costing 15 times less in the shops, would you strive to have them? I seriously doubt so. Having a high price tag is also big part of ownership.
Possily one of the best brand summaries I've ever read.
Thanks for the replies, everyone! I appreciate the opinions and the discussion.
Surprise; the one that starts with "I" did that nearly verbatim a while ago with this so-bad-it's-almost-good schlockfest:
They certainly love their hype too, but at least "B" has some legitimate claim to making a few functional pilots' watches. They've even somewhat toned down the magpie-bait factor recently after approaching the David-Attenborough-favourite "clearly visible from space" standard that IWC is still enthusiastically pursuing. Even the rather shiny 40 mm B01 Montbrilliant is reasonably wearable on a strap and offers a decently-well-regarded integrated chronograph instead of the commodity movements — or off-brand clones of commodity movements now that Swatch Group is pumping up their own pricing power a bit more aggressively — that IWC offers around its MSRP. Also, actual pilots to tend to be fans of their slim and useful ana-digi models.
It takes some doing to make Breitling look subtle by comparison, by the way.
I had to google that, but after doing so, I'd say your comparison is spot-on. I enjoy Gerald's sense of humour even more than Georges'. In fact, I've no doubt that he'd be great to have a pint or two with.
Richemont's service attitude is notoriously contemptuous and profit-obsessed. Perhaps that'll be the topic for the next conference? Since he's such a fan of imagery and celebrities, I propose hiring Christian Bale to reprise his Patrick Bateman role for another flexing-in-the-mirror scene to properly thrust home the point, as the analogy seems too apt.
And yes, the designs seem to pander more and more to those who want to draw attention to themselves and their ability to blow a load... of cash.
Anthropologists have amply documented how we've had a lust for shiny things since the caveman days.
I'm not so naïve as to be genuinely shocked that this is how the dominant luxury conglomerates run their affairs, but I got the distinct impression that he veers a bit off the path of typical marketing-technique discussion toward something a bit more narcissistic. In an industry that's so highly dependent on carefully-managed image, I doubt that many other CEOs (with the notable exception of Gerald Ratner) would speak so unguardedly about how insubstantial they are.
On the other hand, if this truly is the professional standard in the industry, then the private conversations must really be something!
With fewer than 7K views so far, very few current or prospective clients will have seen how he regards them. This was obviously not intended for a general audience, so I truly did appreciate the fly-on-the-wall perspective.
Exactly. Did you notice that the only time the word "quality" was used was in reference to the photography and scene-setting?
I made my mind up about IWC after the main spring broke on my Aquatimer...... Got it fixed and moved it on....I'll never put my hard earned their way again....
This is a clear case of complete faith in marketing / hype due to a lack of belief in their own product.
We are all aware of cost over retail price with regards to manufacture and realise the marketing and dream building are a big part of their overheads. Combine this with dealer mark up and we are where we are. But to say your watch is 25k and useless is the "coup de gras" as far as I'm concerned.
Trust from your client is very important and a valuable long term asset to any company. Once that trust has been broken, it is generally impossible to repair.
Last edited by Chinnock; 7th July 2014 at 11:10.
“Don’t look back, you’re not heading that way.”
I know it has already been said, but this was from a 2011 event, and the video has been online for over 2 1/2 years now, so although the sentiments are cringeworthy in their smugness, it clearly is not a "Ratner" moment in terms of fall-out for the brand.
I have no time for a lot of this, but I suppose you could argue that he is merely being honest about what it akes to add value to a product.
It is a shame that we (as a consumer society) are so shallow that it makes so much difference, but it simply does, at every level, not just the top level.
D
Correct.
If anyone is remotely surprised, they should get out more.
Personally I don't buy IWC, nearly bought one once, but generally they don't appeal to me. But the watches I do buy are made by companies who employ exactly the same techniques. Who cares. Luxury goods are not about VFM, never have been and never will be. If you care about VFM, you should not be paying more than £100 for your watch. If the heat bothers you, don't go into the kitchen.
Last edited by java; 7th July 2014 at 10:13.
Sorry i totally disagree. There's a lot of technology , engineering excellence, state of the art design and quality control in many watches and vfm is only comparable to other similar prices products. Grand Seiko springs to mind. Lumping every watch over 100 quid as the same in terms of those things is mind bogglingly ridiculous.
^^THIS
It was filmed in 2011 and the Portofino photo shoot was done in 2009! It really hasn't hurt their business.
True he does seems to gloat a bit about it, but then again when you can sell dreams for £££££ then why not.
As an aside, I prefer their older styles and smaller sized watched compared to their much larger offerings of the last few years, but that may be because I have tiny wrists.
Of course there is. I buy watches by AP, Parmigiani, Blancpain, Rolex, UN, etc etc, for those very reasons. But as far as VFM is concerned for the function of time telling. £100 is about where it stops. IMHO.The rest I place in the category of ART, this includes marketing Art.
He´s just acknowledging what George Orwell described years ago; "advertising is the rattling of the stick in the swill bucket"...
IWC have been doing that for years. Pre World war 2 they were more known for pocketwatches than wrist and as movement suppliers. Outside of UK MOD defence contract watches what else did they bring to the table(and the MOD watches were designed to an existing non IWC template)? They did little enough as far as innovation goes. They were very much a niche maker. Compare them to a company like Longines who would now be considered well beneath them. Historically Longines would blow them out of the water from orbit without even trying. They wouldn't be the only ones either.
The first I really heard of them was in the mid 80's when their DaVinci with the cool date function was advertised in newspapers. Since the general remarketing of mechanical watches have soul stuff, they've been much more about marketing and invented heritage BS than reality. Though they are very good at it. They were able to reinvigorate a niche brand with not a lot of innovation and history in the bank into the monster they are now. Hell they were even able to get people to buy into a remake of a Nazi war machine navigators watch, while keeping that connection very low key. ;):) Even there the original design was a war ministry template.
+1. :)Possily one of the best brand summaries I've ever read.
It's not that I'm surprised at how the game is played, it's that he would have the arrogance to brag about how easy it is to get people to pay for concocted stores.
The essentially thug-like customer-as-bitch attitude seems especially prevalent in the big three luxury conglomerates in the watch industry, and they display it rather brazenly at times. Richemont tends to be the most egregious, but Swatch group isn't far behind and the parts prices on some of LVMH's stuff reveal just how willing they are to take advantage of their clients.
However, I'm not so ready to dismiss the entire industry or go down the watch-autist route of style-blind specification comparison and yammering on about the allegedly superior "fit and finish" of unattractive and unoriginal watches.
Look at Nomos, for example. They're a genuinely likeable company with a clear, confident and distinctive design direction, and impeccable manufacturing integrity. They're a pleasure to deal with in any aspect, as well. I have yet to get anything other than the sense that they're an honest and trustworthy company who respect their customers' intelligence, which shouldn't be much to ask, but seems to only happen with some of the independents. So once you accept that it's OK to have nice things once in a while, there are alternatives to companies that take their subordinate-relations game from 50 Cent's very accurate and concise summary in "P.I.M.P".
Kern is confident that "this is how the game is played." True enough in his case, but it's not the only game in town.
Exactly, as a consumer your biggest weapon is choice and there are many brands that do not follow his example, to that extent anyway. It's certainly far from 'getting out more' .
Those that care about these things have been done a favour, we get a rare glimpse into the marketing mix of IWC and can now make our own minds up.
There are a lot of other brands with a hell of a lot more integrity in their products than this.
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