I dunno why it works but it does work - people respond to known brand names
(even if you have bought the brand name off the auction block yesterday).
There is something called "brand equity" which is built up over time by the
reputation of products you sell, your past investment in marketing, etc. ,
which enables you to sell your product for a premium over Brand X that has
no such equity. If I call something "Joe's Brown Fizzy Water you don't know
what to make of it, but if I call it "Coca-Cola" you have an immediate
association. You can start with a brand that has a glorious past reputation
(take MZ Berger with Elgin and Waltham and Gruen, once three of the top
American names) and run that equity down to zero (or even negative - Daimler
is effectively PAYING someone to take Chrysler off their hands). Or you can
make up a brand name out of thin air (as Wilsdorf did with Rolex) and turn
it into something that is worth billions, because the name alone enables you
to sell what should by all rights be a $600 watch for 5x that amount. It's
like a house - you can buy a "fixer upper" and renovate and create something
more valuable in the long term or you can buy a house and rent it out to
lots of tenants for the most rent you can get and not put any money back
into repairs, so it's worthless in the end but maybe you have made your
money back in the short term on the rents. So to me it's not so important
where you've obtained a historic name but what you do with it and whether
you live up to that brand's historic reputation or not. For example, Lange
was basically a revival and had only tenuous connections to the original
Lange which had been seized by the Communists 40 years earlier, but the
revival brand has proved worthy of the name and has grown the equity of the
brand further.
Post by Alex W.Post by Jack DenverBy now, all the better known defunct brands have been revived or if the
names are for sale they would be pricey. So if you are starting a new
Swiss brand, your choices are either to name your brand some new name
that sounds vaguely watch-like "Jacquet Girard" or pick up a reasonably
priced older name from the heirs so that you can claim some kind of
connection to history. Or maybe you have inherited the name and decide
that since you own a name you might as well go into the watch business.
As a shortcut into the business, I suppose there is a business rationale
for adopting a name which already has the necessary trademarks and
affiliation attached. But am I alone in thinking it cynical and
disrespectful to do the same with some of the truly great names, heroes of
horology such as Graham, Dent, Arnold or Tompion? How long before someone
decides to cash in on the reputation of Potter, Reed or Fasoldt?
For that matter, why does this really quite transparent trick appear to
work so readily in the luxury goods trade? If you have the wherewithal to
purchase such items, surely you must also have the sharpness of mind to
realise you are being soaked?