TRENDY? HEAVEN FORBID!
Filmmaker Steven Spielberg saw an ad recently for a sporty wristwatch he couldn't resist and sent an aide to buy one: the first gold model from Switzerland's TAG Heuer. This $15,000 bauble almost didn't make it to Spielberg's wrist. TAG Heuer's chief executive, Christian R. Viros, had initially vetoed gold cases as clashing with his company's sober, stainless steel culture. Only after distributors screamed for a model to compete with rival Rolex' precious-metal watches did he give in. "We like understatement," says Viros, who drives a black Porsche and shudders if you call his watches "trendy."
Trendy they are, nonetheless. Just as glittery Rolexes defined the high-flying 1980s, TAG Heuer's chunky, brushed-steel watches with big numerals are becoming an emblem of the down-to-earth 1990s--even though the average price is $1,200. The stand-out styling has pushed the company into the big time. It now ranks fifth in dollar sales among Swiss watchmakers, behind Rolex, Swatch, Cartier, and Omega. Only five years ago, it was 15th. Its sales have nearly tripled in that period, to $212 million.
The company is a striking example of the power of marketing. It's run by Viros and two fellow consultants from Booz, Allen & Hamilton Inc., all of them French. They were hired to revive Heuer after a Saudi family bought it in 1986. Viros built dams in Pakistan before getting an MBA at Columbia University and then consulting for S.C. Johnson & Son Inc., Courvoisier cognac, and a Greek yogurt maker. Viros quickly divined the secret of the watch trade. "We don't sell products to tell time," he says. "We sell image."
SAFE ZONE. Heuer's image had wound down. Its midpriced lineup was diffuse, from sports models to dressy evening watches. Ad spending was tiny. Viros dumped all but sports models and hired designers to come up with a common style for new products. All Heuer watches have rotating "bezels" for ocean diving and resist 200 meters of water pressure.
From consulting, Viros knew that the safe zones in consumer products are either luxury or mass-market goods. He picked the former, dropping Heuer's $100 models and moving gradually upscale. Soon he'll kill TAG Heuer's cheapest watch, a $250 model with a fiberglass case. A $700 model will then be its least expensive. Viros is big on promotion, pouring 17% of sales into advertising and an additional 8% into sponsoring sports events. Even so, aftertax profits are a huge 25% of sales.
From now on, growth will be harder, so Viros is plotting a new "micromarketing" strategy to build clout in existing markets. In trend-conscious Japan, he'll soon open a "TAG Heuer Space" for art exhibits--and watch sales. If it pays off, he'll open 10 more in Singapore, New York, and elsewhere. He'll sponsor more local events, such as this month's New York Marathon, where TAG Heuer was official timekeeper. And new products are coming, including a watch with a blue face.
Viros hopes the next decade won't bring a new watch ethos. "We want to become an institution," he says. That's a tough order, but Viros at least knows the formula: image, image, and image.Stewart Toy in Neuchtel, Switzerland