Grutzen Watches
Market Analysis Summary
The purchase of mid-level and high-level European watches has increased by 50 percent over the past two years. We expect the sales to continue growing, and to capitalize on this ever-present market for watches – people will always need and buy watches.
4.1 Market Segmentation
The market segmentation is divided into the leading target markets. The division reflects the differences in marketing strategy that will be used to target each different market.
- The “yuppies” who enjoy being the first on their block to have a new, “chic” and “hip” product.
- The “yuppies” who follow trends and buy products that everyone else has.
- Older adults who simply have good taste and a sense of style.
- Wealthier college students.
- Still fashionable senior citizens.
| Market Analysis | |||||||
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |||
| Potential Customers | Growth | CAGR | |||||
| New Yuppies | 5% | 100,000 | 105,000 | 110,250 | 115,763 | 121,551 | 5.00% |
| Trend Yuppies | 2% | 50,000 | 51,000 | 52,020 | 53,060 | 54,121 | 2.00% |
| Older Adults | 5% | 25,000 | 26,250 | 27,563 | 28,941 | 30,388 | 5.00% |
| Other | 4% | 20,000 | 20,800 | 21,632 | 22,497 | 23,397 | 4.00% |
| Total | 4.15% | 195,000 | 203,050 | 211,465 | 220,261 | 229,457 | 4.15% |
4.2 Target Market Segment Strategy
The watch industry, particularly the upscale markets, is growing faster than ever. Potential watch buyers are willing to spend moderate to high amounts on watches because they can make the customer look good – and hence feel good about themselves. In addition, Grutzen Watches will be built to last a lifetime – battery replacement every ten years will be the only necessary maintenance, therefore customers will see the inherent value in the watches.
The upscale niche market that Grutzen Watches has targeted is competitive because of the competitors and the discerning consumers it serves. However, the competition is based more on quality than price unlike the discount market.
4.2.1 Market Needs
The upscale watch industry is currently in a growth period, so now is an ideal time for entry.
4.2.2 Market Trends
Henry Winster will distribute the watches to Los Angeles and San Francisco outlets from his residence in Los Angeles.
- The cost of marketing the new product is expected to be the biggest challenge for Grutzen. The initial use of Henry Winster’s facilities as a distribution channel will allow for cost savings.
- The lack of an existing recognized brand name will be an initial problem, but in a few years Grutzen Watches intends to have achieved powerful brand equity – allowing it to rely on, and succeed because of its brand name.
4.2.3 Market Growth
The leading competitor is Swiss Army Watches.
Consumers often only buy a new watch every 5 to 10 years, yet they purchase them often as gifts. Therefore, advertising will be increased during the Christmas holiday season.
The intended retail outlets are full price and full service, therefore Grutzen will not need to use an extreme price penetration strategy to gain a foothold in the market.
4.2.4 Main Competitors
Our main competitor is Swiss Army Watches. Our next closest competitor is Tag Heuer. Both of these firms have strong brand equity, but there is room in this market for a new company as brand loyalty is not high on potential consumers’ reasons for purchasing.
By 
