Patek Philippe

First off Dje - I sincerely hope this post is not breaking any rules. If it is, I sincerely apolgise. I am posting in the belief that this is valid discussion about one our favourite brands - it has nothing to do with specific numbers which is NOT what I want here.

I wanted to put something in front of my fellow Patek fans:

I think it would be fair to say that Patek is widely regarded as the finest timepiece manufacturer in the world. Certainly the brand positions itself as such and more to the point this brand perception is certainly mirrored by the pricing as well - I think that's fair to say.
Well it's my belief that this brand positioning necessarily draws away from purest possible love for the pieces themselves. What I'm trying to say here is this: "it is because of Pateks brand and commensurate pricing, that we see more financial consideration being attributed to the brand than any other." Or put another way, if Patek prices halved, value considerations would be half as important etc etc - we could more easily spend more time thinking about the beauty, quality and joy of the pieces themselves.

We have to be realistic here. With the current Patek collection priced the way that it is, you'd have to be insane not to ask deep searching questions about the rarity, residual values and tradeability of a timepiece. It's just not good enough to say "if you love it, buy it" - that's just not realistic nor sensible - and this is regardless of net worth or income (because even if a 5016 is mere chump change to you, it's simply bad business to not consider the numbers behind its purchase
So you then have to ask the questions no-one wants to hear on this board....

My point is this:

Patek is a victim of it's own marketing and brand perception - when Thierry Stern talks about "other brands being unable to retain their value" then what are his collectors going to think? When the AD says to you "it's a Patek, it's an investment" then what are you going to think?
Pateks marketing, pricing and perception itself is actually taking away from the beauty and production of their own pieces and binding it closer to value and financials and THAT is the problem and the company itself is responsible.
No fine swiss timepiece is truly cheap but with PP at the top of the tree and aiming to stay there in the future, it is more vulnerable to value considerations than any other brand especially if its making deliberate efforts to put financial arguments in the heads of its customers (which it will NEED to do with their ever more increasing prices.)... This message has been edited by Dje on 2011-06-20 23:06:02 This message has been edited by Dje on 2011-06-21 12:25:28 This message has been edited by Dje on 2011-06-21 12:25:48

1.) The price increas has been produced by, let us say 20-30, "top talented" bankers around the world, not by Patek!

Why?

The current financial mess that leads to the strong CFH is only due to the currency mess that evolved from this global gambling.


2.) That the Ad is saying it is an investment ... I mean that does need no comment actually as it is a simple selling point, nothing else.


3.) There are two people that buy a Patek: people who can afford and people who want to afford a Patek.

People who have money in abundance will buy a Patek, possibly any, like the "mortal" buy a Swatch.

People who do not have that spending power and belong, let us say to the middle and upper middle classs, forget simply about the finance

and fulfill themselfs a long planed dream, or buy this a treat, a special occasion piece ... .


I, personally, bought my Patek regardless the gain or loss or what so ever: my stunning Golden Ellipse.

What the icing of that particular purchase was: the discount that I managed (it was actually great fun!) and in hindsight:

to have done the right decision in buying my dream Patek before the increases.

There you see: it does not matte, financial consideration, when it comes to a Patek, ANY Patek!



Regards

Moritz

I question whether Patek is the finest timepiece manufacturer in the world today, certainly most people who own them hope and believe that is the case. A fine manufacturer? Yes, of course.

Patek is relatively new to the marketing strategy that we see today. Twenty-five years ago, they were very far removed from what we see now. Attempt to sell a watch without the benefit of SOMETHING to help make sense of those price levels was an enormously difficult task. Prior to the watch explosion in the mid to late eighties, it was very hard to convey the "value" of Patek because there was not the benefit of what folks have at their fingertips today. I had to prove to clients what was unfolding at the time because sales talk certainly did not do it. So I subscribed to every auction catalog and buried myself into learning as much about the brand and what was happening so my clients could see for themselves and understand there was more to it than just sales talk. Patek was using terms like value, built to levels far beyond others, etc.

I believe Patek soon recognized the value of this information and today you see the result in their advertising campaign. Value, longevity, the Patek Seal, all marketing that not only helped to substantiate prices but at the same time create an overwhelming demand for the product. The production and sales of special pieces 30 years ago (special pieces were all complicated pieces including enameled pocketwatches, etc.) was an absolute fraction of what is today. People were not calling and asking if I had a 3450 in stock or can I get on a list.... they didn't know or understand anything about them. And at that time, Patek didn't do a great deal in terms of marketing or much of anything else to convey value to the product other than brochures defining the seven crafts of Patek Philippe and showing a brief list of famous people who had owned a Patek Philippe in the past. The straps were awful, the boxes were not much better, not even instructions on how to set a 3450. I'm amazed that they sold what they did, but the company seemed to be a watchmaking firm with more interest in doing what it did best.. make fine timepieces than creating a marketing machine like Rolex did.

There is a saying that "success is a well placed mistake" and Patek had to have recognized the success of the auction market as an incredible marketing tool and the 1989 auction, I think, bears this out. Afterwards, record prices at auction were hitting the news on a regular basis and Patek was at the top of the heap reaping the recognition and interest in their product worldwide which equated into a demand never before seen by the small, quiet Geneva based firm who had never put together a marketing plan remotely as successful as what they were and now experiencing. Did they dream up this strategy or simple back into it? They certainly did help the record prices by acquiring the Packard watch which all three major networks covered extensively at the time and possibly others. The Wall Street Journal wrote an article wondering about the roles watch firms, not only Patek, were playing in these auctions.

The point is that the "value" or its perception was then well understood in the marketplace and with the increased demand and limited production... prices began to move up. And the market did not recoil at all, instead the appetite continued to increase. And as these price points continue to move up as quickly as they have since Feb '08, then I do agree with you that "perceived value" and price will become a more constant source of controversy. And maybe a price to value balance will emerge when the market begins to say no. As long as there are folks willing to pay premiums above list for the product and the demand is high, then expect this to continue. Obviously, some parts of the world will feel the pain more than others as the shifting of money travels the globe.

I read the Count's post regarding his purchase on an ellipse acquired with a rather attractive discount at the time, and is delighted he did considering the price levels today. But it raises another point.. the dealer evidently did not share the same view of "value" of the ellipse that Patek did regarding the price point and neither did the Count, by receiving the discount. What will happen If only the hard to get pieces represent "value" that is understood by the manufacturer, the dealer and ultimately the client while all others are viewed differently with respect to their value by the three parties? Patek is obviously concerned with the perception of value of their high profile pieces given what one is subjected to in attempting to acquire one as compared to something like a 5919. If a 5919 shows up in the gray market, I wonder whether anyone bats an eye or really even cares, but a 5078 or something of that type? The internet and the gray market exists because of this conflict of perceived value.

Making yourself a collectors product has its benefits and I'm sure a wonderful position to be in, but thinking that other brands are unable to retain their value and yours is the only one that does only opens the doors for someone else to surprise you one day, and there is always a "someone else"... Philippe Dufour comes to mind.

You mentioned tat the price or perceived value "take away from the beauty and production of their own pieces and binding it closer to value and financials and THAT is the problem and the company itself is responsible."

I have to say that I sightly disagree. For me, when looking to buy a Patek the price makes me look harder at the finer points of the watch. Because of the price I need to make sure that I love every little nuance the watch.

Very interesting reading about the comments of PP's residual value being stronger than that of other brands, which is fuelled further whenever this topic is posted on any horological forum (be it this or otherwise).

A self perpetuating prophecy if you like......and I'm sure one that PP themselves are not too unhappy about.