HMN 2025: How media shapes the luxurious watch market

Have you ever puzzled why some luxurious watch manufacturers promote for such excessive costs at auctions? While paid promoting helps make these manufacturers extra fascinating, new analysis from the SC Johnson College of Business reveals that nonpaid media protection—akin to information articles and opinions—additionally performs a major function. Specifically, the best way media promotes luxurious watch manufacturers—whether or not it teams them collectively or treats them as fully separate—can truly have an effect on how they carry out available in the market and what costs they promote for at public sale.

Kim Claes, visiting assistant professor on the Samuel Curtis Johnson Graduate School of Management, and Frédéric Godart, affiliate professor at INSEAD, study the difficulty of their paper “What Keeps the Market Ticking? The Role of Third-Party Audiences and Cognitive Embeddedness in Shaping Competitive Dynamics in Luxury Watchmaking,” published within the Strategic Management Journal.

The researchers discovered that manufacturers carry out higher after they’re talked about alongside different manufacturers which might be regularly grouped with many others—no matter how prestigious these manufacturers are. This could seem stunning since in crowded markets, manufacturers normally attempt to stand out. But Claes and Godart argue that there is worth in being seen as a part of a well-connected group of manufacturers.

The researchers’ major discovering is {that a} agency’s “coreness”—how central a agency’s identify is in relation to others talked about in media experiences—positively impacts the public sale costs of its merchandise. The extra regularly a agency is talked about alongside different distinguished manufacturers, the extra it’s perceived as consultant of the trade. This notion can result in greater costs at auctions for his or her watches. This constructive impact is amplified when a agency receives frequent and favorable media protection.

“Market interactions are cognitively embedded,” mentioned Claes. “Market members’ perceptions and actions are formed and constrained by structured regularities of psychological processes which might be partially influenced by the media. We argue that companies are perceived and evaluated not solely in isolation, but additionally by their relationships with different companies as present in media narratives.”

While earlier research solely targeted on particular person companies’ traits, this analysis emphasizes the significance of network-level properties—how companies are linked via media protection.

Claes and Godart analyzed a complete dataset from the luxurious watchmaking sector, protecting media experiences from January 2001 to December 2009 and public sale knowledge from January 2002 to December 2010. They constructed networks primarily based on comentions of agency names within the media, permitting them to evaluate these relationships in opposition to public sale costs. Some of the manufacturers they studied embrace Cartier, Omega, Patek Philippe, Rolex, and Tag Heuer.

Their findings spotlight the significance of understanding how manufacturers are positioned inside media narratives. Being regularly talked about with different core gamers not solely enhances a model‘s personal visibility; it additionally improves its worth amongst customers, as greater coreness will increase a model’s conspicuous and funding worth. This understanding can probably assist luxurious watchmakers strategize their advertising efforts and handle their public relations extra successfully.

“This analysis gives priceless insights into how third-party audiences—just like the media—form aggressive dynamics within the luxurious watchmaking trade,” Claes mentioned. “By specializing in cognitive embeddedness and the idea of coreness inside networks of name names in media tales, we illustrate how media representations affect purchaser perceptions and market outcomes.”

For luxurious watchmakers, understanding these model value-enhancing dynamics can result in higher efficiency not solely in secondary markets, however in major markets, as these can spill over onto agency gross sales. This study not solely enriches an understanding of market interactions but additionally presents sensible implications for managers looking for to navigate the nuances of name notion in a aggressive panorama.