Is TAG Heuer a victim of its own success?

Is TAG Heuer a casualty of its own success? It has been mentioned to me that TAG Heuer is a second line Swiss watch, is this really true? I asked a sales representative at a well known Perth retailer who had always been forthright with me.

Her answer was the brand was well marketed and very popular with the younger crowd but still a very good brand. Plenty of people are aware of the Rolex and TAG Heuer branding but are much less aware of Patek Philippe, Blancpain, Audemars Piquet or Girard Perregaux despite the high quality but low volumes.

Is TAG Heuer the ultimate Swiss watch? The answer is clearly no, a number of lesser known high quality brands eclipse the TAG Heuer brand for sheer quality and prestige whilst remaining low sales volume and ultra high prices.

The low volume nature of the high end brands increase value and prestige whilst the high sales of TAG Heuer definitely damage resale value, a simple case of supply and demand is witnessed here. TAG Heuer as a luxury brand has a higher sales strategy than competitors and the greater supply certainly satisfies demand without being a mass produced product.

Naturally the scarcity factor of the product is diminished as sales soar, now supply is being met. Do you really manufacture a product for customers, retailers or the second hand market? I thought the answer was pretty obvious.

In the lower end market, the Formula 1 series has a relatively low entry price around the $1500 mark, most budding and start-up entrepreneurs can afford a TAG Heuer Formula 1 series watch. I have never been interested in the Formula 1 style of watch, as style is fairly personal, I can see plenty of people jumping onboard the long running Formula 1 series.

There are times entry-level products undermine the prestige ranges and it sometimes requires a decline in sales of lower-end products to enhance the more prestigious ranges and higher profitability.

TAG Heuer doesn't really retail a high end watch, I'm thinking in the $40k range with diamond encrusted faces and gold plating, TAG Heuer is well positioned in their price range holding a dominant market share.

It is argued that as TAG Heuer is part of the luxury goods conglomerate Moët Hennessy Louis Vuitton, the brand has really suffered but I disagree. As part of the LVMH group, TAG Heuer also markets eyewear, accessories and mobile phones, something watch purists hate but in order to not only survive but prosper a certain degree of diversification is required to add value to the brand.

Sure brands get damaged and TAG Heuer isn't a Rolex or IWC but a rationalisation of the Swiss watchmaking industry in the 1980s and without such intervention the brand could well cease to exist.