Rolex: How a Little Known Watchmaker Elbowed Its Way To the Top

Because of the upswing in the economy, the market for luxury goods is booming both here in the states and around the world. There are approximately 2.2 million people in the US who have liquid portfolios of over $1 million and thousands of less wealthy consumers routinely spend money on luxury items.

But anyone who studies marketing knows that psychology plays more of a role in a person's buying habits than does actual need. After all, why would any rational person choose to pay $10,000 for a watch when they can get one for $30 that is just as accurate?

Why not ask Rolex. They're the Swiss company that has been in the position of selling high-end watches over the past century. They've weathered both good and bad economies and have resisted the urge to merge with other companies when times got tough like many of their competitors have done.

Today, Rolex is the single largest luxury watch brand in the world. It's name is known worldwide. Even people who know nothing about watches, know the name Rolex. The company boasts revenues of nearly $3 billion and annual production of up to 800,000 watches. We have found some great sellers of authentic Oyster Rolexes on Ebay under $1200 and would like to share their offerings with you (below.)

So how did a relatively newcomer to the timekeeping scene carve out their place in history as the world's foremost luxury watch provider?

The company was founded by a 24 year old Bavarian named Hans Wilsdorf along with his brother-in-law in London in 1905. Although there is some dispute as to where the name Rolex came from, one story suggests that Hans felt the name sounded like the noise a watch made when being wound.

While the period during the two World Wars was particularly tough on watchmakers, Rolex started to build its reputation for making high-performance timepieces during this time. In 1914 the company was awarded a Class A precision certificate from the British Kew Observatory, which was previously reserved for marine chronometers. The first truly water resistant watch was patented in 1926 by Wilsdorf and was dubbed the Oyster. Mercedes Gleitze wore this watch when she made her amazing 15 hour swim across the English Channel and Rolex used this event to advertise and market their watches. In addition, Rolex used displays in which the watch was submerged in a tank of water to further illustrate the durability of their timepieces.

During World War II Rolex was so well known that the British Royal Air Force pilots bought them to replace the cheaper watches that they were issued. Many POWs had their watches confiscated, but in an act of charity and great PR, Rolex later replaced the watches free of charge. It was American servicemen who were stationed overseas who first opened the market for Rolex watches in the US.

After the war, Rolex decided it was time to expand while continuing to build its reputation for high-performance watches. The Datejust model came out in 1945, which was the first chronometer with a date changing mechanism. This was followed eight years later by the Submariner, which was both water and pressure resistant up to 330 feet.

Rolex gained popularity when they gave Sir Edmund Hilary one of their watches to wear when he made his historic climb to the top of Mt. Everest in 1953. This event, along with all of the advertising Rolex made out of it, helped to seal the brand as one of the most durable on earth. While there’s some controversy about whether Hilary actually wore a Rolex on his famous climb, that didn’t stop Rolex from capitalizing on the event. We have found some great sellers of authentic Rolexes on Ebay under $5000 and would like to share their offerings with you (below.)

The post-war years saw some of the biggest challenges for Rolex as a Norwegian born engineer named Joakim Lehmkuhl came up with a more dependable and inexpensive watch by improving the pin-lever technology in 1950. This watch was marketed as Timex. In 1968 the first prototype quartz crystal watches came out. These watches offered extreme accuracy at low manufacturing costs. By the end of the 1970s almost half of the watches sold in the world were based on quartz technology.

Rolex smartly used this period to emphasize quality in their watches as opposed to being mass-produced commodities like the competition. They used materials in their watches like gold, platinum and jewels and they stressed old fashioned craftsmanship rather than quick production times.

Rolex also started to limit the production of their watches, which helped to increase demand and create scarcity in the marketplace. This further drove home the idea that Rolex watches were luxury items that were tough to get hold of and ripe for collectors. Anytime you can market your product as a collectible you're able to charge a much higher price.

Today Rolex continues to maintain its brand integrity and independence by limiting the number of retailers that can sell their products. And Rolex aggressively goes after those who market imitation and knock-off Rolex watches. In fact they likely spend more money policing fakes than any other brand.

Today, with a unique combination of marketing savvy, engineering capability and timeless designs, Rolex controls a major chunk of the world’s high-end luxury watch business. And while the debate can go on forever as to whether they're worth it, people with money will continue to seek out what they perceive as the best of the best.

We have found some great sellers of authentic Rolexes on Ebay under $7000 and would like to share their offerings with you (below.)