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North South University

Term Paper on Rado

Submitted to
Professor Dr. M. Mahmodul Hasan
MBA/EMBA Program
School of Business

Submitted by

1 Zakia Hossain ID# 142-0986-060


2 Md. Manzur Ul Islam ID# 131-0618-060
3 Adnan Moin ID# 141-1591-660
4 Tanjida Zaman ID# 132-1014-660

Date of Submission: 20/12/2014


Letter of Transmittal

Saturday, 20th December, 2014

Professor Dr. M. Mahmodul Hasan


Faculty- MBA/EMBA Program
School of Business
North South University
Bashundhara, Dhaka 1212

Subject: Submission of Term paper on Rado

Dear Sir,

We have prepared a report on the company Rado; which was assigned to us as a


requirement of course curriculum. In view of that, we worked as a team with utmost
enthusiasm and applied our knowledge and understanding of the different factors and
elements related to marketing management, theories and analysis. We hope to relay the
approaches that have been taught in class.

If you require any further clarification or additional information regarding this report,
please do contact us without any hesitation.

Sincerely,

1 Zakia Hossain ID# 142-0986-060


2 Md. Manzur Ul Islam ID# 131-0618-060
3 Adnan Moin ID# 141-1591-660
4 Tanjida Zaman ID# 132-1014-660
Acknowledgement

We would like to express our deepest appreciation to all those who provided us the
possibility to complete this report. A special gratitude we give to our respected faculty
Professor Dr. M. Mahmodul Hasan, whose contribution in stimulating suggestions and
encouragement, helped us to coordinate our project work.

Special thanks go to all team mates, who helped to assemble the parts of the report. We
would like to express our gratitude towards our parents for their kind co-operation and
encouragement which help us in completion of this project. Last but not least, many
thanks go to our respected supervisor who has invested his full effort in guiding the
team in achieving the goal.
Executive Summary

This report provides an analysis and evaluation of the renowned wrist watch
manufacturing company Rado, in terms of the marketing management concept &
theories. To conduct the analysis we have used secondary sources of information and
tried to evaluate the present working condition of the company in terms of several
marketing analysis like SWOT, PESTEL, Michael Porters Five Forces, Marketing
Strategy & Core Marketing Concept, Market Segmentation, Marketing Mix (7P + 4C),
Value Chain Model, TQM Loyalty, Quality & Control, Brand & Branding, Box Analysis
of Brand Elements, Brand Dynamic Pyramid, The Five Ms of Advertising, Mass,
Marketing Budget & Expenditure, Pricing Strategies, Breakeven Analysis. From the
analysis we summarize that Rados unique and latest design, luxurious image and
customers loyalty are the main key components of sustaining as a market leader in this
competitive global market.
Table of Content

SL. TOPIC PAGE

01. Defining Marketing Management (Theory 2000-2010 & 2011-


2015)
02. Mission
03. Vision
04. Business Plan
05. Corporate Strategy
06. SWOT
07. PESTEL
08. Micheal Porters Five Forces
09. Marketing Strategy & Core Marketing Concept
10. Market Segmentation
11. Marketing Mix (7P) + 4C
12. Value Chain Model
13. Total Quality Management (TQM)
14. Loyalty
15. Quality & Control
16. Brand & Branding
17. Box Analysis of Brand Elements
18. Brand Dynamic Pyramid
19. The Five Ms of Advertising
20. Mass Communication
(a)Advertising Budget & Campaign Cost
(b) Sales Promotion & Budget
(c) Events & Experiences/Sponsors
(d) Public Relation/Government Lobbying
(e) Corporate Social Responsibilities (CSR)
22. Marketing Budget & Expenditure
23. Pricing Strategies
24. Breakeven Analysis with Chart/Graph
25. Recommendation
26. Conclusion
27. References
Introduction

Rado is a Swiss high range manufacturer of watches, with headquarters in


Lengnau, Switzerland. It is noted for its use of scratch-proof materials, a field in which it
is considered a pioneer. Today the company produces about half a million watches a
year with a staff of about 470 in total. Rado's watches are obtainable in more than 150
countries, at over 5900 points of sale. The most important markets are Southeast Asia,
Japan, China, Middle East as well as countries within Europe such as Switzerland,
Germany, Italy and the USA.

History of Rado

Rado was formed in 1950 as Schlup & Co. Rado initially produced watch
movements only. In 1957 the company launched its first collection of watches under the
Rado brand. In 1962 the Rado Diastar, the world's first scratch-proof watch, was
launched. It has been in production ever since, now sold as DiaStar the Original. In
1968, Rado became part of the ASUAG, which merged 1983 with the SSIH to the SMH
group, renamed in 1998 as the Swatch Group.
Marketing Management (Theory 2000-2011)

Rados marketing management relates with both the theories of 2000-2011 and
2012-2016.

These theories emphasize on maintaining a sustainable growth by adding value to


the customers by delivering and communicating superior customer value.

Vision

Rado strives to become one of the leading international seller and dealer of
quality authentic vintage & luxury Swiss watches of value online.

Mission Statement

Sell up to 20 unique watches weekly at profitable to the company yet at


affordable prices to customers.

Maintain Rado (Captain Cook, Manhattan), Zodiac (Sea Wolf, Astrographic), &
Bulova (Oceanographer, Snorkel) in weekly inventories;

Maintain favorable buyer-seller relationship by actively providing assistance to


all customers.

Business plan

A business plan should have seven clear sections. These are: summary, concept
section, market conditions, promotion costs, marketing strategy, manpower plans and
exit strategy.

Rado plans to innovate in order to stay strong for the coming 50 years. The
luxury watch brands that are suffering today were doing rather well quite a few years
ago but they increased their prices without having altered the substance, the value that
is inside the product. Luxury brands step up battle for travelling shoppers but Rado do
not see the need to move upstairs because it is positioned between Tissot and Omega.
Rado has a strong brand in each price segment, so its objective is clear that it always try
to bring best value for the price segment that it is strong in.

Corporate Strategy

Rado is strongly committed to the Groups clear, healthy corporate strategy of


broad geographical presence in all main markets of the world, its unprecedented
positioning in all market price segments as well as its reliance on its highly integrated
production and product development capabilities with its innovative research and
technical know-how. At Rado, nothing is impossible. Its philosophy is to keep exploring
and pushing the boundaries.

SWOT Analysis

Strengths

1. Rados creation of high tech diamond (hardest material on earth) is in the Guinness
book of world records, strengthening the brand positioning of being technologically
innovative in materials.

2. Proud recipient of more than 30 international design awards.


3. The brands USP in use of innovative materials is broad in nature and not restricted to
any particular look.
4. Rado has also associated itself with various sporting events, especially Tennis that has
provided the brand international presence
5. Part of the Swatch group that has 28,000 employees across 50 countries
Weakness

1. The brands non-classic design is not popular with traditional watch collectors

2. Limited market share growth due to competition

3. Failure to keep up the middle income segment market share

4. Do not tap the rural market

Opportunity

1. As the brand has not restricted itself to any look, there are plenty of opportunities in
expanding the product line without affecting the brands positioning.

Threats

1. The brands competitors in the high-end segment are positioned as watches with
classic design. While Rado has a classics collection, it is threatened heavily by their
presence
2. Fluctuating economies means limited spending on luxury items

3. Fake/cheap imitations cause damage to brand

4. Mobile phone as substitute product of watch.

Many foreign brands entering into market creating heavy competition .

PESTEL Analysis

PESTEL stands for Political, Economical, Sociocultural, Technological,


Environmental, Legal analysis of the external environment affecting the business.
PESTEL analysis is a tool used to look at the environment of the business. PESTEL
analysis provide the information that help Rado to understand the market situation,
business position and the direction of operation.

PESTEL analysis is done by managers to understand the macro environmental


factors affecting the business. These analyses are strategic tools for understanding
market growth, market share, and latest trends.

Political

Being foreign watch maker Rado had to face challenges regarding tax policy,
employment laws and trade restrictions and tariffs. It cannot completely enter into a
foreign market until such issues are solved. Joint ventures are sometimes beneficial if
Rado can maintain all policies of that particular country.

If the government of a particular country where Rado has its operation takes
some steps to improve the rate of gross domestic product (GDP) and decrease the
inflation that would help Rado maintain its growth in the market and perform well in
the watch industry.

Economical

If a country is prospering in its economic growth and other factors such as


interest rate, exchange rates and inflation rates are favorable then this would reflect that
many people have ability to purchase the luxury products. This would create a favorable
scenario for Rado to keep up its market share in that country.

Social/Socio-Culture

The consumer definitely became very knowledgeable and demanding in the past
10-15 years in terms of watches, because of course not only the perception of watches
changed a lot, the watches are not simply a tool anymore to tell the time, but it became
an accessory that says something about ones personality, lifestyle, preferences, and
values. The consumer is becoming more and more educated also about technical
aspects. That had changed the whole perception at the market in the past 10 years and
that helps develop Rado so well in different age group and among different career
professionals.

Technological

Rado is a technological brand focused on design and has brought major


innovation to this industry for the last 50 years.
Innovation and high-tech materials have been an obsession with Rado for the last 50
years. When other watch brands were mainly focusing on legacy and craftsmanship,
Rado was the one brand always looking to the future and always trying to push the
boundaries. Some examples of this are the milestones that Rado were first to achieve.
First Sapphire Crystal, first curved sapphire, first ceramic watch, first high-tech
diamond watch, pioneered the use of crystal metallization and so on.

Environmental/Ecological

The high-tech ceramic is lighter, scratch resistant, hypo-allergenic and it has


incredibly low thermal conductivity making it more comfortable in adjusting to body
temperature.

Legal/Regulatory

Many governments have opened the market to encourage foreign investment.


The import license for watch is easy to obtain by foreign organization. This created
certain opportunists as well as challenges for Rado because many foreign brands are
entering into market into which Rado wants to expand. Furthermore, by 1992, WTO has
removed quantitative restriction and reduces the import duty to 25% which earlier was
50% on import watches. This makes Rado difficult to maintain a sustainable growth
because of increased competition of foreign brand.

Michael Porters five Forces

Marketing strategy

The marketing strategy is based on the mix of the product, price, place and
promotion. These factors are determined according to the needs of the target market.

It can be seen that the marketing strategy targets high income segment men and
women. Rado is not a cyclical fashion brand, it has a core market but it has also moved
with the times whilst being respectful of its classic design past. The strong aesthetics of
the products also play a major part in the overall sales machinery. The strategy is to
incite the maximum amount of sales. However, Rado faces a lot of competition from the
already exiting players in the market.

Core Marketing Concept

Market segmentation

There are various ways through which the companies can identify
attractive market segments but the most popular approach is that the company
evaluates each segment on the basis of some factors. All segments are evaluated by
Rado on the basis of their size (number of customers). The growth rate of each segment
is explored and the competition which Rado has to face in each segment in determined.
The company also determines the brand loyalty of each segment and attainable market
shares are calculated. Rado then determines the required market shares at break-even
point and matches the profit margins of each segment.

The Rado Marketing Mix

Marketing is the effort made by an organization to identify needs and wants of


potential customers and then satisfying them. The most successful organizations are
those that are the most successful in first identifying and second satisfying customers
needs. A careful examination of the marketing mix of a company yields insight into the
health and direction of the company by indicating the market being pursued by the
company. There are many organizations that excel at marketing products and services
but the greatest example of marketing genius is displayed by the Rado watch company.

The marketing mix of the Rado Watch Company is an example of why not
following the usual way to market products is often a good idea. When the company was
started if the founder had not taken the unusual step of gaining certification as to his
watches accuracy the company and the hallmarks of the product would not be known. It
is important that successful marketing managers take advantage of the controllable
tools of the marketing mix as they have done at Rado.

Marketing strategies can be developed with techniques like target marketing,


niche marketing, branding and others. Although these techniques can seem confusing,
with understanding they can give you a solid framework to begin developing a strategic
competitive advantage. Here are explanations of some of the most useful techniques.

Target Marketing Techniques

Target Marketing - Graphic These technique target consumers based on


characteristics they already have such as age, psychological profile, and special interests.
1. Demographic Targeting

This is the most common, and general targeting technique. Demographics target
marketing is based on consumers' vital statistics such as age, sex, location, income,
etc.Though superficial; demographics can play a useful role in your marketing strategy.

2. Psycho-graphic Targeting

Though this sounds like a psychological technique, it's really a target marketing
technique because it targets consumers based on their pre-existing psychological
characteristics. These characteristics can be general, such as conservative or liberal,
outgoing or introverted, social or private.

3. Niche marketing

Niche marketing simply means finding a specific group of customers from within
a larger group of customers and basing your small business marketing strategy on that.
Marketing Strategy Click For example, lets say you want to start a restaurant.
'Restaurants' is a large category with lots of competition. Niche marketing should be
applied.

The trick to using niche marketing as part of your marketing strategy is to choose
a niche that's small enough for you to dominate, but big enough to be profitable.

4. Psychological Marketing Techniques

These are marketing techniques that actually place a thought, impression or


feeling into the minds of consumers.

1. Positioning

In their book 'Positioning: the Battle for Your Mind', authors Al Ries and Jack
Trout popularized the idea that your product, service, or company has an image (like a
personality) in the minds of consumers. Positioning techniques are used to be sure that
the image in consumers' minds about your company is the one you want them to have.

2. Branding
Many marketing strategies are founded on the concept of branding. Think of a
brand as the reputation of a product or company, translated into a marketing tool. For
example, Rado is a watch company, but the Rado Brand is far bigger than just watches.
The Rado Brand - its reputation - stands for elegance, celebrity, and class.

3. Focus

By making Focus part of your marketing strategy, you create an image of


expertise.

The guiding principal of focus is specialization. In the minds of consumers, you


can only be an expert in one thing. Therefore, focus all your marketing efforts on that
thing, and you will reinforce a perception of specialization and expertise.

This includes your product line. Keep your product line focused. Avoid
temptations to apply your name to more than one specialized area.

4. Differentiation

Differentiation means just that; making yourself different from the competition.

Fundamentally, differentiation is the underlying aspect of every other technique.


Entire books have been written on the subject including 'Differentiate or Die' by Jack
Trout.

For now, the principle to keep in mind is that when you are in doubt about your
marketing strategy, "be different."

Marketing Mix of Rado (7p+4c)

Once you've developed your marketing strategy, there is a "Seven P Formula" you
should use to continually evaluate and reevaluate your business activities. These seven
are: product, price, promotion, place, packaging, positioning and people.
Product: In case of Rado, the product is intangible, heterogeneous and
perishable. Moreover, its production and consumption are inseparable. Hence, there is
scope for customizing the offering as per customer requirements and the actual
customer encounter therefore assumes particular significance. However, too much
customization would compromise the standard delivery of the service and adversely
affect its quality. Hence particular care has to be taken in designing the service offering.

Pricing: Rado price is directly related to the technical perfection of the


mechanism, the use of precious stones and metals. It is recognized that a Rado - a
sample of technical excellence that is difficult to find equal counterparts. The company
is the largest consumer of gold in Switzerland, and the largest amount of gold used in
the watch making industry is this mark (for the production of male body gold watches
Rado takes about 40 grams of precious metal). The famous Rado leaders also on the
number of gold bracelets and watches encrusted with diamonds.

Fig: Marketing Mix 7Ps


Place: The third P in the marketing mix is the place where your product is
actually sold. Develop the habit of reviewing and reflecting upon the exact location
where the customer meets the salesperson. Sometimes a change in place can lead to a
rapid increase in sales. This may include any physical store (supermarket, departmental
stores) as well as virtual stores (e-markets and e-malls) on the Internet.

Promotion: When speaking about promotion strategy of Rado, I can propose to


focus on event marketing. As the name implies, the basis of event marketing is an event,
and often a set of special events organized to promote a product or service. We can say
that, in terms of business objectives, a special event is a form of human involvement in
the culture of the brand, corporate or other community organization through his actions
and feelings, because of this we can achieve long-term effects of event-marketing: affect
both those who take part in it and even indirectly affect those who missed the event, but
is the target group.

We now look at the 3 new elements of the services marketing mix - people,
process and physical evidence - which are unique to the marketing of services.

People: People are a defining factor in a service delivery process, since a service
is inseparable from the person providing it. Thus, a restaurant is known as much for its
food as for the service provided by its staff. The same is true of banks and department
stores. Consequently, customer service training for staff has become a top priority for
many organizations today.

Process: The process of service delivery is crucial since it ensures that the same
standard of service is repeatedly delivered to the customers. Therefore, most companies
have a service blue print which provides the details of the service delivery process, often
going down to even defining the service script and the greeting phrases to be used by the
service staff.

Physical Evidence: Since services are intangible in nature most service


providers strive to incorporate certain tangible elements into their offering to enhance
customer experience. Thus, there are hair salons that have well designed waiting areas
often with magazines and plush sofas for patrons to read and relax while they await
their turn. Similarly, restaurants invest heavily in their interior design and decorations
to offer a tangible and unique experience to their guests.

The traditional Marketing mix is a 4 Ps model and is business oriented. The 4 Cs


model of marketing on the other hand is more consumer oriented. Because of its focus
on consumers, the 4 Cs model is mainly used for Niche Marketing. However, just like
the traditional marketing mix, it can also be used for mass markets. The four variables
in the 4 Cs model are

Consumer
Cost
Convenience
Communication

Fig: Marketing Mix 4Cs

Consumer The principle of four Cs of marketing states that your customer


should be your prime focus. Unlike the traditional marketing mix where the primary
focus is on Products, in the 4 Cs model, the primary focus is on the customer.

Cost Cost is equivalent to Pricing in the traditional marketing mix. Cost is a very
important consideration during consumer decision making and hence in the 4 Cs
principle, the cost variable is given special attention. The 4 Cs model generally plans on
the basis of Customers and not products. And hence they have to plan the cost of the
product on the basis of their customer.

Communication The concept of communication remains same for both, the


traditional marketing mix as well as for the 4 Cs of marketing. Off course, the marketing
communications for a company following the 4 Cs of marketing is completely different
as it needs a completely different Segmentation, targeting and positioning.

Convenience Convenience is equivalent of distribution or placement of the


traditional marketing mix. When you have a niche customer base, the convenience of
the customer in acquiring your product plays a critical role. Take a niche product like
Heavy machinery as an example or even products like television and air conditioners.

Brand and branding

The brand name Rado as a symbol of his image:

creates a positive attitude to the product and firm

guarantees for buyers the product quality,

creates a high level of expectations about its properties,

provides a high reputation of the goods,

increases its value in the eyes of consumers.

The Brand value is called a set of goodwill and good impressions. Creating and
maintaining a positive attitude to the goods is an important indicator of loyalty to the
brand (the degree of attractiveness of the product to consumers, high enough to ensure
high demand and regular purchases). Brand value is confirmed by its characteristic
features - prestige, fame, national or international recognition, stability and attractive
position for a long period of time.

Brand image is a way to interact with target consumers, and the image in the
mind of the consumer binds the good and the values of consumers. Image of the brand
is aimed at long-term recognition of the good and company, and the formation of a clear
understanding of the product.

Building brand image involves activity of image makers, whose task is to analyze
the image formation and target customers. Thus, the images of the brand combine:

- A rational component - special properties of consumer goods;

- Emotional and irrational component - a dream, a legend, personal history, especially


attitudes and stereotypes of the consumer;

- The human factor - service standards.

Criteria for Choosing Brand Elements

Memorability

Rado inherently be memorable and attention-getting, and therefore facilitate recall or


recognition.

Meaningfulness

Brand elements may take on all kinds of meaning, with either descriptive or
persuasive content.

Two particularly important criteria

General information about the nature of the product category


Specific information about particular attributes and benefits of the brand

The first dimension is an important determinant of brand awareness and salience;


the second, of brand image and positioning.

Likability

Descriptive and persuasive elements reduce the burden on marketing


communications to build awareness.

Transferability

-How useful is the brand element for line or category extensions?

-To what extent does the brand element add to brand equity across geographic
boundaries and market segments?

Adaptability

-The more adaptable and flexible the brand element, the easier it is to update it to
changes in consumer values and opinions.

-For example, logos and characters can be given a new look or a new design to make
them appear more modern and relevant.

Protect ability

Marketers should:

-Choose brand elements that can be legally protected internationally.

-Formally register chosen brand elements with the appropriate legal bodies.
-Vigorously defend trademarks from unauthorized competitive infringement.

Michael Porters Value chain

Michael Porters Value chain concept is one of the most valued concept in
todays market because the Value chain tells us how we can differentiate our products by
analyzing the chain of events which occur within our company. As differentiation is very
important in todays saturated market, naturally Value chain is being referred in a lot of
management studies.

The Value chain comprises of total 9 steps The first 5 are the primary activities
which are the basics in any company and are the activities which provide strength and
sustainability to the company. The remaining 4 are the support activities or also known
as the secondary activities and these are used by the company for differentiation as well
as maintenance of the organization. Both, the primary as well as the secondary activities
are necessary for the firm to survive.

Fig: Michael Porters Value Chain Model

Primary activities of Porters value chain are as follows


1) Inbound logistics Bring raw material from source to the company. The value chain
can be enhanced in this step by improving the quality of raw material as well as
optimizing the cost of inbound logistics.

2) Operations Converting the raw material to finished goods is the job of Operations.
The customer value is increased majorly in this step if the operations are up to mark and
the product is manufactured in the right manner and meets quality standards.

3) Outbound logistics Sending finished goods from manufacturing point to


distributors and retailers. The value chain receives a boost if the out bound logistic
activities are carried out in time with optimal costs and the product is delivered to end
customers with minimum affect to the quality of the product.

4) Marketing and sales The marketing and sales apply push as well as pull strategy to
increase the sales of the product. The company exists to make profits and if profits can
be increased by marketing and sales, than the company has to use these tools.

5) Service The post sales service is the most important because it directly affects the
word of mouth publicity of the product. If the service is not upto mark, no one will buy
the product and the brand will lose market share and may be taken out of the market
eventually. Thus service is very important in the value chain.

Secondary activities involved in the Porters Value chain are as follows

6) Procurement The management of vendors and the procurement of the raw material
on a timely basis is where procurement comes in.

7) Technology development No product can survive if the company does not keep it
updated as per the latest technology.

8) Human resource management The right people in the right place can make all the
difference for the company and hence the HR department is a support activity most
important for the firm.
9) Firm infrastructure Without a proper infrastructure, and lack of government
handling or legal support, a firm might face a big hurdle. Similarly, administration
department will help in maintenance of the facilities in a firm.

Brand Dynamic Pyramid

For each brand, each person interviewed is assigned to one level of the pyramid
depending on their responses to a set of questions. The Brand Dynamics Pyramid shows
the number of consumers who have reached each level.

The brand pyramid is a model that illustrates the steps by which a customer
establishes loyalty to a particular brand. The model can be visualized as an inverted
pyramid with five levels. As one moves up the pyramid, from the narrow point to the
broad base, customer loyalty increases in direct proportion to revenue potential.
Different sources refer to these levels by different names, but they remain the same in
essence.
Fig: Brand Dynamic Pyramid

The five steps of the brand pyramid can be summarized (from bottom to top) as follows:

Presence: The customer is aware of the brand and recognizes the name, but
may have no particular opinion or emotional attachment to the brand.
Relevance: The customer is evaluating a brand in relation to other similar
products or services.
Performance: The customer will begin to set certain expectations and may
develop a real sense of the brands identity.
Advantage: The brand has proved itself superior to competitors and the
customer may begin to feel an emotional connection with the brand.
Bonding: The customer has established a bond with the brand and is likely to
remain a loyal customer. Consumers at this level of the pyramid may actively
promote the brand to their family and friends.

At the lowest and most narrow level of the pyramid, presence, customers are simply
aware of a brand. At the highest and broadest level, bonding, customers have
established a solid loyalty to the brand. Rado is residing at the bonding level.

The Five Ms of Advertising

Advertising is a form of communication where organizations brands or products


are marketed to a targeted to an audience. It is a paid form of communication; the
message is disseminated to an audience through a message channel. These channels
could include the World Wide Web, televisions, radios and print based advertisements.
Advertising objectives have a flow structure through which the ad is disseminated to a
particular group of individuals. The flow structure consists of 5 Ms, popularly known as
the 5 Ms of Advertising. The five Ms are mission, money, message, media and
measurement; these elements combined create advertisements.
Fig: Five Ms of Advertising

Mission

There are several ways that a company can determine what the mission of an
advertising strategy should be. Quantitative measures such as increasing the awareness
of the brand among a certain segment by a certain percentage can be chosen. Rado is
increasing the awareness among the customers of South East Asia and Central Asia 20%
could be a mission. This could be measured before and after using a survey or some
other form of primary research.

Money
Budget constraints are everywhere in business, and nowhere are they more
evident than in small businesses. Advertising and marketing can sometimes be ignored
because they do not offer immediate results. However, in every business environment,
some resources must be allocated to building a brand and image. Without this, the
company will not continue to grow. Even during recessions, marketing must be a
priority to avoid losing market share. Having a suitable budget is an important part of
the process. Rado is now spending money on online advertisement rather than its
mainstream advertisement.

Message

Advertising is a creative process. There are slogans, themes and gimmicks that try
to lure the customer in. The message of an advertisement is this creative aspect. Any
manner of theme can be implemented as long as it is in line with what the company
stands for. Rado online based advertisement in Asia zone attracted a quite good number
of customers.

Media

This aspect of the program refers to the media that will be used to communicate
the message. This can include television, radio, mail, telephone and in person contact.
Most media has metrics to measure their efficiency and costs associated with those
metrics. Choosing the right media can make or break an advertising program.

Measurement

Finally, the firm must measure the effects of the program on their intended
audience. This can be done by measuring sales or trying to gauge interest through
research. It is often very difficult to measure how much the advertisements actually
impacted customer interest and how much other external factors played a part.

Mass Communication
Advertising Budget & Campaign Cost

An advertising campaign is typically broadcast through several media channels.


Successful advertising campaigns achieve far more than the sporadic advertising, and
may last from a few weeks and months to years. For Rado, advertising budget
formulation and spending campaign cost is very important to grab the competitive
business mark

Sales Promotion & Budget

The allocation of monetary resources to sales promotion is determined by the


promotion strategy of the firm. In most cases, first the total amount of money for
promotion is determined then it is budgeted for different activities. Before deciding the
money allocated to sales promotion, the management should evaluate relevant factors
such as type of product, its stage in PLC, the market situation, level of competitive
activity, etc. All these factors, alone or in combination, can significantly affect the
promotional budget.

Events & Experiences/Sponsors

To sponsor something is to support an event, activity, person, or organization


financially or through the provision of products or services. A sponsor is the individual
or group that provides the support, similar to a benefactor.

Public Relation/Government Lobbying

Public relations (PR) are the practice of managing the spread


of information between an individual or an organization (such as a business,
government agency, or a nonprofit organization) and the public. Public relations may
include an organization or individual gaining exposure to their audiences using topics of
public interest and news items that do not require direct payment.
Corporate Social Responsibility

CSR is a form of corporate self-regulation integrated into a business model. CSR


policy functions as a self-regulatory mechanism whereby a business monitors and
ensures its active compliance with the spirit of the law, ethical standards and
international norms. CSR aims to embrace responsibility for corporate actions and to
encourage a positive impact on the environment and stakeholders including consumers,
employees, investors, communities, and others.

Marketing Budget & Expenditure

A marketing expenditure is simply a payment made for a marketing-related


investment or expense. Market research, product development, promotions, sales and
service are all areas in which companies make marketing investments. Companies often
allocate certain amounts toward marketing expenditures through a set budget amount.
Much of a company's marketing expense comes through promotion, and more
specifically advertising.

As far as it is a watch manufacturing company marketing expenditure is very


crucial to grab the market. Rado make r distribute various attractive TV commercials
which increase its marketing expenditure. In the TV commercials or print ads they try to
introduce renowned personality so that customer gets more attracted to the brand. This
also increases the marketing budget and expenditure of the company but in return they
expect that more and more customer will be attracted to their brand and customer
loyalty will increase.

Pricing strategy

The pricing strategy that the Rado Company employs is distinct in its conception
and execution. Rado sets its prices with little regard to the competition and their
pricing, choosing instead to price its timepieces as it sees fit and therefore setting the
price point for others to follow. Rado watches vary in pricing according to model, age
and materials but the core collection of Rado pieces will range from about US$700 to
about US$28,000. Models that include pave dials of diamonds and baguette diamonds
can cost approximately US$30,000 to US$250,000. The company does not offer any
sort of discounts for customers or any sort of price reductions or sales although
occasionally there are dealers that offer discounts because of financial difficulties. Rado
does not offer discounts because consumers are willing to pay the prices set by the
company as is evidenced by the fact that even during an economic downturn and faced
with discounted other brands of watches the majority of luxury watch shoppers where
looking for a Rado.

Breakeven analysis

Companies do breakeven analysis to determine the point at which revenue


received equals the costs associated with receiving the revenue. Break-even analysis
calculates what is known as a margin of safety, the amount that revenues exceed the
break-even point. This is the amount that revenues can fall while still staying above the
break-even point. Break-even analysis is a supply-side analysis; that is, it only analyzes
the costs of the sales. It does not analyze how demand may be affected at different price
levels.
Fig: Break-even analysis

Rado which formed in 1950 as Schlup & Co., initially produced watch movements
only. In 1957 the company launched its first collection of watches under the Rado brand.
Today the company produces about half a million watches a year with a staff of about
470 in total. Rado's watches are obtainable in more than 150 countries, at over 5900
points of sale. So we can understand that the company crossed its breakeven point and
now it is producing and distributing its watches with substantial profit margin.

Conclusion

The wristwatch, for most of the last century, has been the ultimate male
accessory. One of the few accepted male adornments, the pocket watch evolved into the
wristwatch and subsequently into a key indicator of social status, particularly in the
upper echelons of society. Wrist Watches form an integral part of the personality of
individuals in the present era. Earlier seen as a luxury item, they are now witnessing a
fundamental change in perception, and are now gaining respect as an essential utility
item. For the watch industry, time seems in its favor what with the liberalization of the
global market coupled with the rising purchasing power of the young and consumerist
customers.

Though mobile phones have become the substitute for watches clocking the
penetration to only 27%, still Asian watch market is growing at high speed bringing
hosts of opportunities for all the segments equally. There are oodles of innovations,
better watch portfolios with quality and price ranges and enhanced selling outlets to
increase consumer base at large.

The new generation, encompassing todays tweens and teenagers, has never had
it so good. Brand-conscious, tech-savvy, old before their years and equipped with
generous incomes that are almost entirely discretionary, they are an increasingly
attractive segment for marketers of all kinds of products, ranging from fashion and
beauty to digital devices. Rados unique and latest design, luxurious image and
customers loyalty are the main key components of sustaining as a market leader in this
competitive global market.
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