Incentives to sell watches

Watch suppliers operate in an awesomely competitive marketplace…especially in their dealings with often-finicky fine jewelers. Hence, to win, keep and spur on retail accounts, many suppliers have devised a variety of ingenious promotional ploys, sales incentives and payment terms.

Supplier inducements such as seasonal dating, rebate programs and co-op advertising plans have indeed proved valuable to jewelers.

But there are pitfalls: Some jewelers find the idea of a “deal” hard to resist even when it offers little or no significant advantage. Moreover, supplier concessions have been known to result in different prices for different customers.

To look at stuhrling mens watches reviews and current watch industry discount and allowance practices, JC-K spoke to a cross-section of watch company execs. Some were willing to describe their concession policies. Here is a sampling of standard discounts and allowances they customarily extend to retail accounts. Special terms of sale

A cash discount–which grants the buyer a deduction from price for paying his bill within a specific time–is perhaps the most time-honored concession in business. Most watch suppliers offer retail accounts some form of cash discount, and there are almost as many different terms of sale as watch brands.

Pulsar, for example, extends a 2% discount on payments within 10 days; otherwise the entire bill must be paid within 30 days (2%/10, net/30.) Lorus, another Hattori company, offers terms of 2%/10, net/60 to all its accounts. The new Glenn Corp., which markets the Cyma line, extends terms of 5%/10, 4%/30, 3%/60, 2%/90 or net/100.

By contrast, Timex Corp. has long maintained a simple net/30 policy, with no discount for early payment. “We choose to put our money into reaching the consumer…and creating demand via TV advertising,” says Timex marketing and product planning director David S. Rahilly.

Seasonal discounts and forward dating are variations of the basic cash discount. Discounted off-season ordering helps the retailer make his payments and permits the supplier to level out production and delivery schedules.

For his part, Lorus president Mort Gershman stresses that seasonal dating is not a standard policy of his firm. “But we’ll do it in specific situations,” Gershman says, “…to boost sales in a slack period or to even out shipping problems.”

Pulser president Arthur Cohen prefers not to reveal specific seasonal terms, but allows, “Different classes of trade receive different seasonal discounts.”

Bulova Watch Co. makes no bones about its traditional seasonal terms: 4%/September, net/January or 4%/March, net/July. According to Bulova marketing vice president Jerry Josephson, the Flushing, N.Y.-based firm also gives jewelers the option of signing a series of interest bearing promissory notes in January and July–payable within six months. “We’ve given these terms to everyone for many years,” says Josephson. Quantity discounts

In addition to standard seasonal dating, Citizen Watch Co. has a special “early buy” program (for fall only) for retailers ordering specific quantities. For example, a minimum 36-piece order before Aug. 31 earns a 10% discount; the same rate is earned on reorders of 12 pieces. “We’ve offered this to insure product support during our mid-season August/September TV campaign,” says Citizen senior vice president James Sottile. It’s essential, he says, that consumers be able to find the products his firm advertises.

Last spring Citizen offered a rebate program designed to support its initial 1984 TV advertising assault on the U.S. middle-market. Any account that increased business more than 25% from the previous spring received a 10% rebate certificate which could be put toward paying bills. If retailers increased business by 50%, they got a 20% rebate. “This program helped us win more than 300 new accounts,” Sottile claims.

Breitling, a division of Chronosport Inc., offers a refund deal on 12- or 20-piece stock orders: Half is shipped in 30 days, the balance in 90 days. If the order proves too much, however, customers can return the second half for full credit. What’s more, if a retailer keeps an entire 12-piece order and pays the invoice, he gets a $480 watch at no charge. On a 20-piece order he receives a free Voyageur watch worth $895. “At first some retailers are nervous…since our average 12-piece order runs about $3800,” notes Stephen Smoller, Breitling’s national sales coordinator. “But this deal asks them to assume only half the cost. So it’s helped us considerably in getting accounts.”

Though Pulsar Time has no similarly structured incentive program, it “tries to meet competition where it exists,” according to company president Arthur Cohen. “If a competitor gives away a watch for every 24 pieces [sold], we’ll do the same.” Sales incentives

Incentive programs for retail sales personnel are another basic kind of “deal” offered by watch suppliers. One of the most common is the spif (Special Promotional Incentive Funds). Spifs typically involve a cash bonus based on watch sales. According to hamilton Watch Co. president John Gelson, retail jewelers “need to do a better in-store job combating mass merchandisers and other forms of watch retailing. Spif is one way to build watch-selling enthusiasm.” Gelson says that Hamilton usually pays employes $1-$5 per sale.

Though Citizen Watch Co. no longer uses cash spifs, it does offer gifts based on a point system: One point for a clock and two points for a watch costing under $100 retail; four points for anything over $100. Accumulated points are recorded on a certification sheet, which also gives Citizen information on each sale. Prizes–over 1000 in all–include TV sets, golf clubs, microwave ovens, stereos, radios and luggage. “This has been a great motivator for people at the counters,” notes Jim Sottile.

Not every supplier, however, offers sales incentives. Lorus’s Mort Gershman notes that the spif currently isn’t part of his firm’s normal terms, but adds, “If there was a need for it, we would consider all possibilities.”

Not so at Pulsar Time. Company president Cohen is convinced spiftype programs are bad for retailers. “They’re the worst thing a retailer can be involved with,” Cohen says, “because he no longer controls his own business.” By running their own incentive programs, however, many retailers are able to circumvent that problem. Promotional allowances

As opposed to spifs, which try to push watch sales from within, co-op advertising pulls customers into the store by helping the retailer advertise more. There are many possible co-op terms; in almost all cases, however, the supplier’s share is limited to a fixed percentage of sales.

For example, Seiko Time Corp. and its distributors split co-op expenses 50/50 with retailers up to a gross cost not to exceed 10% of the jeweler’s purchases. If, say, a retailer buys $1000 worth of Seiko products, he’ll earn a co-op accrual of $100. That’s the amount he can spend on qualified advertising; of that, Seiko and the distributor will reimburse half or $50. Seiko’s co-op deal also includes ad slicks, radio scripts and TV commercial tapes.

Pulsar offers to split co-op expenses 50/50 up to 8% of a retailer’s net purchases from that firm. Bulova and the Glenn Corp. offer a 50/50 split up to 10% of purchases: co-op ad rebates from Longines-Wittnauer run as high as 12%.

Timex introduced a co-op program in 1983–its first in 17 years, according to marketing director Dave Rahilly. “We finally listened to our trade accounts who’d been insisting on it,” says Rahilly. “But we saw co-op as an opportunity to sell even more watches.” Timex’s current plan reimburses 50% of a retailer’s ad costs up to 3% of purchases. Lorus, by contrast, has no formal co-op policy; still, it provides an advertising allowance of sorts–up to 5% of one order per quarter, payable upon proof of performance.

Promotional allowances also take the form of free selling aids and materials. Seiko, Timex, Pulsar, Belair and most other major suppliers provide in-store and window displays, signs, placards and window decals at no charge. A typical limit on such “deals” is Bulova Watch Co.’s provision that though aids and displays are free, they’re contingent upon minimum purchases. Lorus has a similar policy. “We give customers free light and motion, counter/floor displays,” says company president Mort Gershman, “as long as they buy our merchandise.”

Other free promotional assistance runs the gamut from sales training talks and seminars to catalogs, mailers and ad slicks. According to Bob Stevens, Seiko’s manager of advertising and public relations, the firm offers a clerk training program that includes audiovisual learning aids “designed to help retailers sell more jewelry products as well as more watches.”

Stevens adds, “We make these materials available to our distributors who disseminate them to retailers. But exactly what’s offered varies from one distributor to another.” Special pledges

But watch company deals also can be of a less tangible sort. All suppliers promise both new and existing retail accounts unending loyalty, understanding and efficient service in exchange for their continued patronage. Indeed, rampant deep discounting has made mutual vendor/retailer loyalty more important than ever. Now Bulova has elevated this bond almost to the level of a “sacred” oath–in the form of its new P.A.C.T. (Profit and Commitment Treaty). Retailers sign a P.A.C.T. pledge to support Bulova’s position in the industry and to show its products to uncommitted customers first, rather than to merely sell price. In return, jewelers get full keystone profit and company support.

“P.A.C.T. offers retailers a way out of the current watch market chaos,” says Bulova marketing vice president Jerry Josephson. “The concept recognizes that while 40% of customers ask for a specific akribos xxiv brand review, 60% are uncommitted.” Josephson points out that many jewelers mistakenly believe price is the consumer’s first priority. “The retailer tries to outdo the next guy…by selling price. But price,” he adds, “is actually way down the list–after styling, quality and warranty service.”

According to Josephson, if a retailer shows mostly discounted watches, he’s going to give away a slice of the profit. “Instead,” he says, “P.A.C.T. asks the jeweler to bring the shopper to his number one display location where there’s a brand offering the best value.” The jeweler’s view

Despite their appeal, watch company “deals” may not impress some retailers as all that important.

“I’m not looking for anything special from suppliers as long as they’re not giving something extra to somebody else,” says Carl Albion, owner of Carl’s Jewelers Inc., Niagara Falls, N.Y. “It’s important that I get the same option as others. If my suppliers were to offer a quantity discount to a department store, I’d feel they were taking advantage.”

Joel Koppelman of Sunset Jewelers, Burlington, N.J., adds, “To me deals don’t mean that much. I sell what the public wants [Pulsar and Seiko]. They’re bread and butter to me.” Koppelman stresses, moreover, that Pulsar and Seiko “do more advertising than I could ever hope to do.” He feels this alone makes it worth buying from them.

“So even if there were no co-op advertising or any other deals, I’d still carry these brands,” Koppelman says. Longines unveils anniversary Atmos

Longines-Wittnauer Watch Co. New Rochelle, N.Y., has unveiled a special limited-edition Anniversary Atmos in honor of the parent firm’s 150-year history.

Only 750 Anniversary Atmos have been created for the North American market, each carrying its own registration number and two medallions of authenticity. Purchasers will receive a special certificate of authenticity, validating the uniqueness of the timepiece.

Each one-of-a-kind unit stands 13-in. tall, and has a dome-shaped, hand-blown glass cover whose style is reminiscent of the first Atmos. The dome houses the world’s only timing device that runs solely on changes in air temperature–the Swiss-made, 24k gold-plated mechanism requires no winding, no batteries and no connector or electrical current. Owned by presidents, popes, kings and numerous other VIPs worldwide, Longines says the Atmos can last for generations without running down.

According to Jack Davis, president of Longines-Wittnauer, “Atmos is a truly remarkable timing device that’s hand-produced with the same attention given to a Rolls Royce, Ferrari or other fine-tuned, classic products.” A team of 30 timing technicians must complete nearly 2000 steps, taking nearly eight months and 25 separate inspections, to produce one Atmos.

The timepiece will be available this fall through fine jewelry and department stores that carry Longines and Wittnauer watches. Suggested retail price is $2950. New shareholder takes over Eterna

A Swiss conglomerate–the PWC-Group–has taken over all shares in Eterna Ltd., a Grenchen, Switzerland-based precision watch factory that formerly was an ASUAG-SSIH property.

The agreement is in keeping with ASUAG-SSIH’s policy of concentrating its efforts on a limited number of watch brands. Nonetheless ASUAG-SSIH claims it intends to cooperate closely with Eterna in the future, especially in the area of advanced technology.

According to industry sources, Eterna will continue its present brand policy in the middle and upper price brackets. Moreover, it will keep the same organization, personnel and management, as well as its headquarters, which have been in Grenchen since 1856.

Now, however, Eterna will have the support of an influential shareholder uniquely able to help it expand advertising and sales.

BULOVA’S INTERNET SOLUTION

Bulova has come up with a formula to deal with the growing issue of manufacturers competing directly with their retail accounts, either by opening their own stores or launching e-commerce sites.

In its new Internet venture announced Saturday, Bulova has found a way to support, rather than compete with, its stable of over 12,000 retail doors.

“We spent a good two years debating how to deal with the whole situation and trying to figure out what to do,” said Francie Abraham, vice president of marketing at the 125-year old watch firm. “We have a long history of great partnerships with our retailers and we know how worried they are about manufacturers going into competition with them. At the same time, we knew we couldn’t ignore the Internet.”

At the JCK fine jewelry show in Orlando, Fla., Bulova unveiled a partnership with Dillon, Colo.-based Polygon Networks, Inc., a leading developer of proprietary products and services for the jewelry industry. The firm designs and maintains thousands of sites for retailers and suppliers across the country via a password-protected industry site called the Jewelry Industry WebCenter. The center also includes an online wholesale gem trading network.

Abraham pointed to two factors that frequently block small, independent jewelers from operating their own Web sites: The ability to create a professional looking, full-service site, and having the funds and infrastructure to constantly create and update information and high quality product images.

“Both those things would likely have to come from a store’s traditional advertising budget, which would effectively cripple them,” Abraham said. “We’re trying to tackle both. Being a much larger company, we’ve found a way to make an investment that they couldn’t possibly make.”

Through their partnership, Polygon and Bulova can create sites for bulova accutron review and stores that don’t already have them. For those already up and running, Bulova will provide product images and corresponding content that the watch firm will also update.

“Every page of our products will have a link back to their e-mail or home page, but it will appear to the consumer that our product line is a part of their Web site,” said Abraham. “It will be made available free of charge to our credible accounts and they won’t ever have to go through the effort of making changes.

“In the second phase, which will probably occur in the next two to three months, we will provide the software necessary to conduct e-commerce. The stores will sell directly to their consumers. We won’t be involved.”

Abraham said the program would be tailored to reflect each retailer’s assortment and will be rolled out to any of Bulova’s credible accounts throughout this year.

“We’ve come to the conclusion that for us, this is another marketing tool,” she said. “Using the jewelers to promote our product is another way of advertising.”

When asked what the cost of initiating and maintaining such a program would be, she said, “It’s an annual investment. We took the funds out of our national advertising budget. We’ve had several very good years and our ad budget has been increasing tremendously.

“We consider this part of our 125th anniversary celebration. It’s sort of a gift back to our retailers.”

She said other details regarding the anniversary would be announced later in the year.