Why do Rolex Watches Retain Their Value? Quality, Savvy Marketing and Cachet are the Core Motives

By James D. Roumeliotis

The renowned Rolex brand is a precision Swiss manufacturer of prestigious wristwatches or “timepieces” (for a lack of a better word in the category) which possesses pedigree along with a stellar reputation. It was registered as a trademark in 1908 and as a company in 1915.  It is a privately held and independently run entity, as well as considered the single largest luxury watch brand in the world.

The brand is responsible for many innovations in the watch industry including the first self-winding watch, the first waterproof case, the first watch with a date on the dial, the first watch to show two time zones at the same time and the first brand to earn the chronometer certification for a wristwatch.

Rolex watches rarely lose their price value because it is one of the very few watch brands which has mastered five vital fundamentals as follows:

1) Superior Craftsmanship and Materials: Rolex makes virtually everything in-house as a totally vertically integrated manufacturer. The watchmaker is first rate in metallurgy and manages to produce incredibly accurate and reliable time pieces. For a Rolex watch to work seamlessly and maintain its beauty, even in the harshest environments, it uses Oystersteel, a steel alloy specific to the brand and belongs to the 904L steel family. It is particularly resistant to corrosion and acquires an exceptional sheen when polished. Rolex watches are also hand-made which is expected from a fine Swiss made watch. The movements and bracelets are assembled by hand, whereas a precision and high-tech proprietary machine or robot helps with doing things such as applying the right pressure when attaching pins, pressing down hands and aligning the parts. Moreover, all Rolex Oyster case watches are thoroughly tested for water resistance. This is performed with an air-pressure tank.

2) Artificial Scarcity: They are intentionally producing below the critical mass of watches that they can put into circulation. Going over would flood the market, but Rolex somehow manages to stay under that point by limiting its annual production output. This retains a lower supply and creates over-demand thus keeping prices above a certain level.

3) Perceived Value: Perceived value is the price that consumers are willing to pay for a product. In this area, Rolex manages to get their perceived value right in contrast to the actual value. Quite often the pre-owned or second hand price will indicate what consumers are willing to pay for the product, as opposed to the price that the manufacturer had initially decided to set.

4) Savvy Marketing: Rolex promotes itself predominantly high-end luxury brand that is the ultimate aspiration of the consumer…a fashionable alternative to using a cell phone to tell time and a status symbol. The brand has consistently sold to an upper class target market that consists of mainly men over the age of 35. The Rolex marketing approach has a subtle touch. Its clever marketing and PR tactics, along with its choice of sponsorships, portray a brand which represents sports, success and elitism. The brand’s iconic gold crown is prominent on scoreboards, banners, and timing clocks at high-profile sporting events around the world including golf, motor racing, tennis, yachting regattas and equestrian sports.

5) Structured After Sales Service: Rolex provides repairs on most of the products that they have released throughout the company’s history. This task is bestowed to a Rolex boutique or authorized service center throughout the globe. It has generated some controversy in the watch and jewelry domain because like the other prominent prestigious watchmakers, the brand has gradually limited access of spare parts to independent repairers.

Therefore, in summary, with superior quality workmanship, the scarcity factor, ideal perceived value and savvy marketing, Rolex is one of the few watchmaking brands to have created a great value proposition and sought-after status. Not surprisingly, it is also well regarded and the most widely accepted premium watch brand, in terms of resale value and demand, at pawn shops and any other preowned watch retailer.

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