How would Rolex as a company be affected if they made a 100 dollar watch?

I have waited for years just to give this answer, thank you! And being in a field like watches, and not physics, I had a really tiny possibility of making it work. But I will do my best.

Well, one day the current CEO of Rolex dies, and its place is being taken by this rather innovative and obscure guy, Mr. Chacun, who has the full support of the board. Rolex is a mysterious entity, as it is controlled by a charitable foundation, so its inner workings are even more mysterious than other more regular companies.

Mr. Chacun presents his plans to the board. He wants to make Rolex an affordable company. He wants everyone to have a Rolex at his wrists, because the world would be a better place if it happened. Despite this being an overturning of all the company philosophy during the years, the board agrees, and Rolex engineers begin to work to create the 100 CHF Rolex.

They cut corners in order to stay inside the budget. At the design board, they create a caliber which is simple, much simpler than anything inside the current Rolex offerings, and resort to cheaper elements for everything. No more blue spirals, no more antimagnetic features, no more everythings.

The model 1111666 is born. It is a three hander with a simple automatic movement on a central winder. A poor someone from the engineering department suggested to add a date indicator, but was summarily executed in the meeting room (did I say Rolex abides its own rules?).

The dial is simply printed industrially - no more fancy applying of the indexes and crown, just stick the damn hourmarks in with glue - we have no budget for those frills. The 1111666 has to resort to regular 316L steel as well. After long discussions, also the bracelet has to be left out from the base package of 99 CHF (this is a trick pulled by Mr. Chacun himself - and I guess no-one is going to balk at this, don’t you think? Remember the day engineer episode above). They sell it for 29.99 CHF as an aftermarket. But as another engineer put it “It seems like it is made of tin cans”. After that, he meets the same outcome of his friend, the date engineer (boy, this guy is beginning to have a tremendous impact on the story).

The marketing guys scramble to search for an alternative way of marketing the watch. The only way is to avoid the traditional distribution channels and get sold online through a deal with Amazon and Alibaba.

The company launches the 99 CHF watch - and it is a huge success, taking the market by the storm!

Orders begin flocking in by the hundreds of thousands! So much that really soon the company is busy churning out 1111666s - but appallingly, the demand increases, even beyond every expectations!

At the same time, the current clients of Rolex begin to phone to the official dealers in order to cancel their reservations for the old models which were so difficult to get. And they were lined up there for years, up to ten.

Ring ring.

“Jeweler Acme, Inc? Hello, I am Mr. Smith. I would like to cancel my reservation of the Daytona. I know you told me it should be arriving the next month, but after I have seen a 1111666 at the wrist of the grocery boy delivering them at home I do not think I would like to have one anymore. Yes, you are right: do you have any Patek Philippe ready? I have always suspected they might have been better from the start”.

By a thorough scalping, the profit of Rolex from a single 1111666 is in the order of the (whew) 50 CHF. These guys have worked very well!

But the profit per watch before the advent of Mr. Chacun and his bizarre theories was in the order of 5.000 CHF and more - 100 times more, with a single watch. So, to have the same results the company has to crank out 100 times more watches.

Oh wait, they would not be sufficient to. Because they would need to make them with the present costs - that is, the current workforce and machinery - to have the same level of profitablility.

The company stalwartly pushes on, reconverting its production lines, but clearly cannot keep up with the demand. Shortages surface, and disgruntled would be buyers begin to berate publicly the company and its offerings,

The experts of the field cruelly begin to ridicule the company for offering such a watch which clearly is below the compant status and clients expectations. The initial enthusiasm wanes towards open hostility.

Mmmmmm, the future does not look too bright for Mr. Chacun and the company.

As the first wave of enthusiasm passes, people begin to notice that the 1111666 is just another watch, not much different from its closer alternative, the ubiquitous Seiko 5:

But hey, this Seiko 5 at least HAS THE FRIGGIN DATE AND DAY IN (the revenge of our date engineer, eventually!).

And a steel bracelet too. And it is already distributed all around the world with a traditional model which keeps people happy.

In the meanwhile, the other models of Rolex have plummeted in value, and the secondary market is almost destroyed. Most of the past buyers who bought Rolex for status do not want to wear a Rolex anymore, and migrate towards other more upscale brands.

As everyone has a Rolex, the fleeting thrill of having one at your wrist wanes and fades, and people begins to reconsider their buying. If a Rolex is like any other watch, why buying it? Just to keep the hour? A Rolex was good to have before the 1111666 because it was not a watch, but a status symbol.

Now, Rolex has lost that role. Has now become just another watch. Maybe nice, maybe good, decidedly affordable but nowadays just a watch like any other on the market. A bit lower, in perception, than a “reputable” brand like Tissot.

Oh, by the way, seeing the devastating effects of his strategy, the fact that not everybody has a Rolex on their wrist by now, and the value of the company reduced by more than five times, Mr Chacun falls in a deep depression, resigns from his role as CEO, and eventually, one day, is thrown into Lake Geneva by the son of the date engineer (ah, karma, finally!).

The fact is commented upon by all the Swiss press as:

“Ex Rolex CEO, Monsieur Chacun, est mort”.

And if you do not know French, try to Google the translation of “chacun”.

As you can see from this small story, I do not see anything good coming from such a scenario, except the possibility of enjoying my readers from considering the opportunity - and hopefully getting a smile or two out of it.

Choosing to switch positioning by reducing it with a currently established brand is suicidal. Any kind of attempt to create a sort of B-line with the same brand in the high-end and luxury sector has met with spectacular failure until now. The only possibility would be to create a new brand to fill a niche, given the current marketing models. Any extension of the same brand in the low end would cannibalize the higher offerings by making them seem less exclusive.

Seiko - which has a very large offerings, from the low end to the high end, has several lines, everyone separated by a encompassing definition. Seiko 5 is the low end, Grand Seiko is the luxury line. The reason why Seiko works is because it was like this since the beginnings. They have expanded gradually, by aiming to create first a good product, and then creating the affordable version and the high-end version out of it.

And the proof is that now the middle end of the Seiko lines is adjusting its prices upwards, since it was severely underpriced for its value. If prices go up, it is a good thing. If the prices go down, not that much.

PS: for the reference, this is a Photoshopped Seiko SARB 033 (thanks Anuragh Chris Bhadra) which is a fine watch indeed!

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