STRONGBRANDS    Professor Tim Calkins, Kellogg School of Management

The world of watches is a fascinating space for branding, and one of the most puzzling brands is the Grand Seiko.

Watches and Branding

When it comes to marketing something, there are two things to consider. First, there is the actual product or service. Second, there is the brand. When people see an offering, they always see both things together: product and brand. The brand often plays a key role in terms of perceptions; sometimes the brand elevates the overall offering and sometimes the brand damages the offering.

In the watch industry, branding is far more important than the actual product. Start with the fact that watches are largely unnecessary today, since most people have a more accurate time-keeping system with them at all times: their phone. Digital watches are an extension of the phone, a convenient, if polarizing, addition to the personal technology portfolio.

If a person is wearing a traditional watch, it is usually because the watch makes a statement. The watch says something about them. It communicates to the world.

Watch brands have enormous power. Rolex is a tremendous brand and has a host of positive associations. There are even more prestigious brands: Hublot, Lange, Piaget, Vacheron, the list goes on. Of course, all fall away when compared with the most remarkable watch brand in the world, Patek Philippe.

Seiko and Grand Seiko

Seiko is an old, well-established Japanese company, dating back to 1881. It was one of the first brands to launch a quartz watch. Seiko is known for making quality watches at low prices. One of the most famous Seiko watches is the Seiko 5, which was introduced in the 1960s. These mechanical, self-winding watches have a classic design and sell for astonishingly affordable prices. I recently purchased one for about $70.

Grand Seiko is the company’s high-end line. Seiko introduced the Grand Seiko brand in Japan in 1960 and expanded it globally in 2010. Grand Seiko watches are beautiful items, carefully crafted and polished, designed to compete with high-end Swiss brands. A typical Grand Seiko might sell for $5,000.

The Problems

Seiko is a troubled brand. The company makes beautiful, quality watches. Unfortunately, people know that Seiko watches are cheap. If you are wearing a Seiko, it communicates to many that you are wearing a cheap, Japanese watch. Now, if you really know the Seiko brand, you may think this is someone who knows watches, but most people aren’t that familiar with the Seiko brand.

If Seiko is troubled, the Grand Seiko brand is even more troubled. The primary problem is that the Grand Seiko brand carries the name Seiko, and Seiko means cheap. A Grand Seiko is a bit of an oxymoron, expensive cheap. Just like Seiko, if you really know watches you may appreciate Grand Seiko’s craftsmanship and quality, and value. Unfortunately, most people don’t know watch brand that well. For $5,000 you can get a Rolex or a Grand Seiko. Which would you buy?

Grand Seiko creates confusion around Seiko, too. Is Seiko inexpensive, or expensive? That isn’t entirely clear when Seiko is inexpensive and Grand Seiko is expensive.

Last month the Financial Times ran a story about Seiko, featuring an interview with its new president, Akio Naito. The interview was fascinating and confirms this branding problem. Naito explained the situation, “Seiko has become a brand of no clear identity. Everything for everybody ended up being everything for nobody.”

Fixing Seiko

How do you fix a brand problem like this? It isn’t easy. As Naito correctly noted, “If we were a new company, it would be relatively easy to build a brand. But, because we are 140 years old, we already have some solid foundations in terms of clientele and perception.”

I think there are two critical steps. The first is separating the brands. If Seiko wants to play in the high-end area and compete with brands like Patek and Lange, then a new brand is critical. A new brand probably necessary even to compete in the Rolex tier. Linking a premium brand to a cheap brand is just not likely to work. I doubt we will see “Grand Walmart” or “Grand Hyundai” anytime soon. When Toyota wanted to get into luxury cars, the brand didn’t launch “Grand Toyota.” It launched Lexus.

The second step is creating meaningful differentiation. What makes these brand different? Certainly, the Japanese link may be critical. What are the visual cues? What is the pricing and marketing that supports this high-end focus?

The good news for Seiko is that Akio Naito seems to understand the importance of branding. The bad news is that fixing the problems will require difficult choices.

 

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