patrick_y presents a detailed business analysis of Patek Philippe's market dominance, delving into the brand's corporate strategy, design philosophy, and marketing prowess. This article provides a structured examination of the factors contributing to Patek Philippe's esteemed position in the luxury watch industry, offering insights valuable to both collectors and industry observers.
Let's analyze why Patek Philippe is so dominant. What
their corporate recipe is. And what other brands are trying to learn
from Patek Philippe.
Why do people buy
the Patek Philippe brand? At the end of the day... People buy what
they find familiar, and what they think has a beautiful design. Patek
Philippe has great brand recognition, and great designs.
Why
do consumers buy a Patek Philippe watch? If I thought Patek Philippe
does have incredibly designed timepieces. The Stern family knows a lot
about design as they were in dial design and manufacturing prior to
being the stewards of Patek Philippe.
If
I had never heard of Patek Philippe, and even after doing my research
about it, still couldn't find a lot about it, I wouldn't buy it.
Fortunately, this is rarely the case, since brand recognition of Patek
Philippe is very good.
If I
did not know enough about the watch industry to evaluate the quality of
a Patek Philippe on my own, I would have to defer to known experts,
watch critics, journalists' opinions, etc. Not every Patek Philippe
buyer knows how to properly evaluate a watch and what to look for to
determine the quality of a timepiece. But when they do their research
and read published articles, most journalists cast Patek Philippe in a
very positive light.
The
truth of the matter is that Patek Philippe does make some great
designs. The latest Ladies' Twenty-4 round case watches may not be
indicative of their design prowess (the latest consensus is that the
design is not extremely attractive nor unique); but Patek Philippe
certainly has made some stunning and iconic designs. Example: The 5110
and 5130 World Timer is the most beautiful World Time watch from any
brand. The 5140 Perpetual Calendar is a great design and very thin.
The 5960 is another great design that's sporty and elegant. Many would
even argue that many Patek Philippe models are more aesthetically
attractive than their equivalent competitor's model. Aesthetics
are paramount. Patek Philippe usually excels in design.
A stunning design of Louis Cottier's original WorldTime vision. Image Credit: Patek Philippe
Patek
Philippe does advertise a lot. And I MEAN A LOT. Advertisements are
somewhere around 3% of the gross retail revenue! It is estimated more
than $2 billion US Dollars of Patek Philippe timepieces are transacted
at the retail level. Patek Philippe enjoys a high average sale and high
volume. Considering how much value Patek Philippe watches sell for at
retail value; it is one of the largest watch retail advertisers in the
world. Brand awareness is at a very enviable level that other companies
cannot easily match because they don't have the revenue. Not only do
they spend a fortune on advertising, they came up with a great slogan
that's worth a fortune in itself... "You never own a Patek Philippe...
You merely take care of it for the next generation..." It's a little
corny, but it resonates so well with the buying public. So great job to
Patek Philippe; massive spending, quality in execution, and a
thoughtful message! They couldn't have done this better. Combine the
fact that Patek Philippe (like Vacheron Constantin, another great
maison) strives to create super complex pieces and strives to have high
auction values, a lot of owners feel that the total cost of ownership of
a Patek Philippe can be reduced if there is a higher resale value.
Image Credit: Patek Philippe
Quality...
We're going to go into movement architecture and movement finishing.
We already discussed design quality and Patek Philippe's designs are
among the best (Stern family used to be dial makers and have hired great
designers).
(1) Movement architecture is great; the
watches are usually mostly thin, complex, and that thin case design
allows them to be worn very elegantly in a variety of ways. Thin is
beautiful and versatile. You can't go wrong with thin. Even Patek
Philippe's complex watches are often among the thinnest in their class.
Being a Geneva based maison, watches are supposed to be thin.
Generally the French side of Switzerland is supposed to make thinner
watches. The German side of Switzerland can be excused for making
thicker watches (a la IWC Schaffhausen). Patek Philippe movements are generally layer-cake movements, but the components are so well designed that even the 240Q which is a perpetual module added to an existing 240 base movement, the watch is still extremely thin. Lange may have integrated movements, but they're thick due to a less efficient design and Lange adds a 3/4 plate that increases the thickness of the movement (Germans believe in the three-quarter plate adds rigidity and therefore accuracy to the movement). Consumers can't fault Lange for the thickness added due to the traditional 3/4 plate design, that would be unfair as it's a tradition to be followed by German watchmakers. Patek Philippe's quality is also incredible; the Minute Repeaters have an excellent volume (loud and clear), consistent speed 17 seconds to 19 seconds for 12:59 sequence), and great crystal clear tone quality with little background noise - very strong performance and more consistent than other brands. Thierry Stern personally listens to every minute repeater before it is dispatched to the client.
A quick interview with Thierry Stern about minute repeaters:
www.patek.com
(2) The truth
of the matter is that Patek Philippe movement finishing quality isn't
terribly special. Many other brands have higher quality finishing on
their movement. Look at these photos from W220's fantastic post about
his watch and you can see the Patek Philippe movement doesn't pass
scrutiny at high magnification.
Let me be clear; Patek Philippe
movement finishing is VERY GOOD. There is BETTER finishing available from
other brands, namely A. Lange & Soehne; you want great movement
finishing, consider a Lange. And the BEST are from independent brands and a
little known brand called Montblanc Villeret. Another moderator pointed out, it's important to note that Patek Philippe timepieces are made of rhodium plated brass, not German Silver. Brass is more difficult to finish, the rhodium plating covers some of the detail in the finish as well.
This image shows some polishing chatter in the anglage on this very expensive Patek Philippe 240Q Perpetual Calendar timepiece. Image Credit: W220
Excellent movement finishing, notice the polished column wheel cap. Skinniest anglage. Image Credit: Foversta
The movement of the Lange is extremely well finished and visually arresting to look at. Image Credit: Foversta
This is the best movement finishing you can get from any large brand.
Better than Patek Philippe, better than A. Lange & Soehne. Fattest anglage. Photo Credit: Montblanc
Link to W220's post with great macro photographs, see them and make your own determination:
An article by Foversta that compares to very expensive perpetual calendar split chronograph timepieces:
Image Credit: Patek Philippe
I
have met Thierry Stern several times. Thierry is definitely not his
father, but he understands talent (very important, hence why I put it
first), he understands the company's strengths and weaknesses, and he's
determined to enhance the company's strengths and improve the
weaknesses. I am confident in his ability to captain this company.
People who want to see an ultra conservative, perfect, super-polished, and reserved leader won't
see it in Thierry. His differences compared to his father is also sometimes a benefit to consumers; he's much more open to discussion and willing to answer difficult questions posed by consumers. He's definitely his own man with his own way of doing things.
Image Credit: Patek Philippe
As for the switch to
the Patek Philippe seal... I admit, I'm not a fan of this. But I have
to have empathy from the side of Patek Philippe. Patek Philippe feels
in their opinion they do go above and beyond the Geneva Seal
requirements and they are not noticed for this. For instance, their steel
gears are finished to a higher quality than required. Most other brands
are close to the minimum standard Geneva Seal requirements. If Brand
XYZ has a Geneva Seal at the bare minimum, Patek Philippe doesn't want general consumers to assume Patek Philippe timepieces are equivalent in
quality to Brand XYZ. It's a wrong perception they wanted to correct.
Combined with the millions they have to pay to get certified, Patek Philippe
didn't feel this was a strong ROI. So they SPENT MILLIONS MORE to
develop the Patek Philippe Seal, run a multi-million dollar marketing
campaign around the Patek Philippe Seal, and are hoping the endeavor will pay off
over the next ten years (about 2018/2019 will be the 10 year anniversary
of the Patek Philippe Seal). Will it pay off? Hard to tell. I still prefer the Geneva Seal. But if you examine the concept with empathy and
objectively, I can't call foul. And yes, there are brands that are Geneva Seal brands that don't have as nice of movement finishing as Patek Philippe yet claim they're just as good. These claims can be very unfair from Patek Philippe's viewpoint. In the end, consumers benefit; Patek Philippe retains its high quality with either seal, and Patek Philippe's departure from the Geneva Seal created enough commotion that the Geneva Seal increased its standards in 2012 partially in response to the departure.
In conclusion... 1-Design, 2-marketing, 3-resale perceptions, 4-innovation, and 5 a high
level of quality is what makes Patek Philippe a competitive brand. All the other brands try to emulate Patek Philippe in one way or another, but few have succeeded. Generally, other brands succeed best by creating their own design niches with less traditional designs and more expressive designs. There are other horology brands that do some aspects better than Patek Philippe, but none are better than Patek Philippe's marketing. And no horology brand does all of these as well as Patek
Philippe as consistently as Patek Philippe. No brand is perfect, not even Patek Philippe; but this brand is one of the few that can continuously produce extremely desirable pieces.
If you're reading this, you probably are a Patek Philippe owner. Rest assured, you have one of the best timepieces on the planet. But don't just assume it's the best because you were told this. I hope this post educated you so you know why your watch is so special compared to others! Thank you for reading, and please share your thoughts below! I read every single comment!
