Success is a Tag Heuer game

Tag Heuer apparently can do no wrong. Its 2000 and 6000 series watches were hits, then it introduced its Kirium watch to somewhat mixed retailer reviews a year ago. So what happened? Sales exceeded expectations by 300%, and the product sold out in record time. The Kirium – now back in supply – remains one of the hottest watches in America.

Although known for steel models, Tag Heuer has eased upscale by phasing out parts of its line and introducing higher quality, including 18k gold and even platinum models. Retail prices range from $650 to $15,000 and average $1,200. The new 6000 chronograph chronometer sells for up to $4,850, and the brand will launch another high-end product later this year.

Some say Tag Heuer watches are overpriced. But what is too expensive when there’s no price resistance?

“We always thought $2,000 was our limit,” says Susan Nicholas, president of Tag Heuer USA. “But consumers are more and more willing to accept the brand at higher prices.”

To help it achieve an image of luxury, Tag Heuer is paring down distribution from 3,000-plus stores a decade ago to what will eventually be only 1,100. (Cartier and Rolex also successfully pursued a marketing strategy of limited distribution.) Tag Heuer is now the No. 2-selling watch behind Rolex in most stores that carry it.

Tag Heuer’s buyers are people drawn to its sports image, largely Generation X young professionals (the generation that followed the baby boomers). A leader in the stainless steel trend that still dominates today, its products dovetail with the casual sporting lifestyle of the 1990s. It doesn’t hurt, either, that the brand is a favorite of celebrities and fashion leaders.

Still, more than anything, brilliant marketing and good timing have fueled Tag Heuer’s success. “It’s all timing in this business of timing – and a lot of luck,” says a former competitor. “Tag Heuer, like Rolex and Swatch, had the right product in the right place at the right time. When the casual sports lifestyle took over in the United States, so did Tag.”

It wasn’t quite that automatic. There were those eye-popping ads with their naked Olympians, a swimmer in a pool with sharks and runners jumping over giant razor blades. The brand recently signed on a new “Tag Team” of sports celebrities to promote the line. National Basketball Association superstar Grant Hill is among them. The Detroit Pistons forward will likely be featured in a new ad campaign scheduled to launch in June, the details of which are being kept under wraps. “We chose Grant Hill because he’s the living embodiment of the mind set and ethos of Tag Heuer,” Nicholas says.

How long will Tag Heuer’s success last? After all, megabrands have been knocked off their pedestals before. True, Tag Heuer has conquered the sports-watch niche, but is that dangerously one-dimensional? What would happen if sports watches lost their cachet?

Nicholas says new watches over the next five years will “blow consumers’ minds” and broaden the brand’s scope. The products will appeal to new customers – specifically women and Generation Next (successors to Generation X’ers). Tag Heuer also will explore acquisitions, licensing opportunities and products other than watches.

“We don’t want to be so hot that tomorrow we’re cold,” Nicholas says. “It’s always a delicate balance of being very much in demand and not being a fad. I feel our success has been calculated. We’ve been on this steady march. Maybe it was a new kid on the block marching boldly with a little luck. But now we’re marching as one of the new leaders. We’re in the big leagues. It’s a position of strength not to be abused. We’ll probably never say we’ve made it.”

Okay. We’ll say it: Tag Heuer has made it.

A Sure Way To Get Customer Attention

You already know watches are a good way to build customer traffic. Why not magnify watches’ lure by promoting them outside your store?

But how? Derksen USA has an answer: install its high-tech projection system. It flashes floating spotlight images of a store’s logo or of a working clock onto any surface, including floors, walls, sides of buildings or sidewalks. Curiosity or surprise stops passers-by in their tracks.

Originated in Germany just six years ago, the show-stopping promotion system is now getting established in the United States. Derksen, based in Orangevale, Calif., is the exclusive U.S. distributor and views jewelers as its prime customers. Prominent stores such as Tourneau, Shreve & Co., Nordstrom and Saks Fifth Avenue have already signed on.

“We had it for a month and it’s unbelievable,” reports Richard Horne, president of San Francisco-based Shreve & Co., which projects an image of a customized Rolex clock with the Shreve & Co. logo on it. “We have a lot of tourists moving around and when it goes on at dark, you can’t believe how many stop and take pictures of it. Most of them can’t figure out where the light’s coming from. A lot of people come into the store later after seeing it.

“When you figure it probably cost us what a newspaper ad does and the image is on every night, I don’t think it’s expensive in the long run,” adds Horne.

The analog clock spotlight features a working sweep second hand. Even if it doesn’t immediately draw customers into the store, it at least lets them know the correct time and which store gave it to them.

If your store carries watches, the system could be a catalyst for attracting co-op dollars from a watch company – especially if a branded watch name is featured with the store logo on the projected image. “This technology might be the beginning of a new partnership between retailers and their vendors,” says Michael Puehse, vice president of Derksen USA. “If we stop traffic and get people into the store, the vendors are going to be happy to offer co-op advertising.” Even if you don’t carry watches, the blinking projections are a good way to attract attention.

The Derksen Graphic Projection system is mounted inside the store with the working clock projecting outside or wherever the retailer wishes it to flash. The system features laser-etched images about five to six feet in diameter. Retailers simply give Derksen their camera-ready art and the system arrives ready to go.

Derksen offers four types of projections, ranging from a single image to the working clock with a customized face. Prices are $1,495 to $3,030, with delivery by Federal Express. Electricity expense is modest, since all variations run on 110 voltage, just like an ordinary light bulb.

Executive Moves

Tag Heuer promoted Susan L. Nicholas, executive vice president and general manager of Tag Heuer USA for the past 15 months, to president. Nicholas joined Tag Heuer USA in September 1995 as marketing director, bringing more than 10 years’ experience in brand management and marketing consulting.

She is a former executive vice president for the international marketing and design consulting firm Cato Gobe & Associates. Her brand portfolio comprises more than 20 consumer and retail businesses, including the Coca Cola Co., Coach, L’Oreal, and Gillette.

Tag Heuer USA also named Bob Goode vice president of sales. He came from Warner Lambert, where he was responsible for annual sales of $500 million and a sales force of 90 people.

The Vendôme Luxury Group hit the headlines with news that Jean-Michel Paray is the new president of Vacheron Constantin USA. Herman Plotnik, Vacheron Constantin’s former president, left his position March 31 and was offered a new role within VLG North America, the watch brand’s holding company. This was the first major executive change with the brand since VLG purchased Vacheron Constantin in late 1996.

Baume & Mercier USA, another VLG watch brand, also saw its top executive, Steven Kaiser, leave March 31 to pursue new ventures in the watch and jewelry industry. Replacing him as president is Margaret M. Siegel. She was previously vice president-

international for Coach. Siegel takes on Baume & Mercier’s largest market. She’ll be responsible for sales, distribution, credit, customer service, after-sales service, public relations and advertising. Siegel was instrumental in introducing the Movado Group to Coach and played an important role in the launch of Coach watches. She also was previously the first president of Tiffany & Co.’s Swiss watch factory.

Former president Tsutomu Mitome returns for a second stint at Seiko Corp. of America. He replaces Takashi Wakuyama, who returns to Tokyo as general manager of Seiko’s Pulsar division. The change was effective April 1.

The Seiko switch follows a pattern of SCA presidents returning to Japan after several years at the U.S. helm. Mitome served as SCA president from 1983 to 1988. Doubling as a board member of Seiko Corp. Japan, Mitome’s enhanced responsibilities this time around include international policy development. Also at SCA, Bob Perry was promoted from regional vice president of Northeast sales to vice president of national account sales.

In other watch company changes, Susanne Rechner becomes vice president of national accounts for the Movado Watch Co. She fills the position previously held by Les Perry, who was appointed general manager of ESQ Watch Co., another division of the Movado Group. Rechner was previously with Seiko, in charge of national accounts.

Festina appointed regional sales representatives for its major U.S. push. It tapped Jim Brown for the Midwest, Ken Fischer, Jr., for Florida and other southern markets, and Michelle Raggi for New York and New England states.

Richard Carlton joined Long Island City, N.Y.-based Armitron as vice president of sales. He was formerly with Casio. Michele Watches, based in Miami, Fla., tapped Andrew Habel as its national sales manager.