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Sign of the Time
By Ben Chapman
IncentiveMag.com

JANUARY 01, 2006 - -- If you haven't been paying attention to the timepieces in your incentive or recognition program, it may be time to look again, because new merchandise trends are shaking up this traditional award category.

Incentive managers are responding to developments in branding, as well as demographic preferences and the latest trends in motivational management. Here's everything you'll need to know about gift watches—at least for the time being.

Shifting Markets

In today's lively incentive marketplace, watchmakers are competing with each other as well as with other merchandise categories, including electronics, luggage and sporting goods. "We're all fighting for space!" says Adrienne Forrest, national director of special markets for Woodside, N.Y.–based Bulova Corporation.

Many watchmakers have become more fashion-oriented and are trying to capture market share by introducing new models more frequently. "Brands like Tommy Hilfiger introduce eleven new watches each year," says Joe Zanone, senior vice president at Paramus, N.J.–based Movado Group Inc., which manages a family of watch brands that includes Movado, Concord, Ebel, ESQ SWISS, Coach and Tommy Hilfiger. "The updated versions really boost interest," he says.

And incentive programs themselves encourage the frequent product launches by updating their redemption catalogs more frequently. "These factors create an environment where program participants are always looking for the latest trends," says Bulova's Forrest.

To stay on top, suppliers stoke consumer demand with slick advertisements and celebrity endorsements, like Tiger Woods' association with TAG Heuer. That kind of marketing doesn't come cheap, but it may work, says Andy Finn, Tourneau's vice president of corporate sales in New York, who says he's seen "tremendous" growth in demand for brands with celebrity endorsements.

Enamored incentive buyers are willing to spend more money on the trendy pieces they know will be popular with recipients. "It's got to be a name brand," says Carol Ivcich, head merchandiser for St. Louis–based Maritz Rewards. "A company may go down to ten recipients instead of twenty so they can afford a better brand," she reports.

Barbara Sanders, president of Canton, Ga.–based boutique firm S&A Incentives, puts it this way: "If it's a low-end watch, it doesn't have as much power for the program." The key is to tap into a recipient's desire. Sanders says the best items are things that recipients wouldn't "necessarily buy for themselves. Making the right purchasing decision is crucial, because incentives should be luxurious, but they must also be something the recipient can relate to in their daily life."

Demographics Count

There is no doubt that the need to anticipate trends makes settling on a watch incentive a complex decision. To keep abreast of the latest fashions, more motivation experts are turning to demographic research. Incentive participants' preferences for certain timepieces generally reflect trends in the larger retail environment, and savvy buyers use information about the habits of various consumer groups when designing a program that caters to a diverse workforce. "Manufacturers are incredibly sophisticated in how they go after their demographics," Ivcich observes. "It's incredibly valuable to understand who they appeal to."

Across many industries incentive managers are faced with the problem of motivating a greater number of younger workers. "One of the most interesting challenges in motivation is the entry of Generation Y in the workplace," Ivcich says. She defines Generation Y as recent college graduates just joining the workforce. "They require performance, multifunction watches—like dive watches—watches that connect to the Internet, or watches that play MP3s. And they like the brands with strong showings in the electronics market, like Casio."

Some of the best high-tech wristwatches available today are remarkably functional, Ivcich says, citing the electronics maker Suunto, which has a line of multifunction digital watches called wristop computers. "The technology is stunning, with sophisticated software specifically designed for things like skiing or diving."

Ivcich says MP3 capability is a buzz technology in personal electronics, and the ability to play MP3 digital music files is a sought-after function in high-tech timepieces. With technology similar to iPods, MP3-playing watches with starting prices under $200 can download and play back music. "Several electronics and watch makers are getting into the MP3 category," Ivcich says, "and young people love it."

Age isn't the only demographic that buyers should consider; job category counts too. Some industries align themselves with specific types of watches, says Colleen Finch, vice president of corporate markets for Shelton, Conn.–based Swiss Army Brands Inc. "Our waterproof dive watches tend to be popular in agriculture," she explains, "while our shock-resistant sports watches tend to be popular in construction. [These models] are often chosen as incentives for safety programs."

Changing Programs

Of course, simply keeping abreast of the latest fashion trends in merchandise isn't enough. Although trend savvy helps, motivators have to make sure their timepiece incentives are administered properly. As Jim Purdy, director of product strategy and development at Marketing Innovators International in Rosemont, Ill., says, "Many companies have traditions of giving watches, but to stay competitive, they've got to find better ways to manage their programs."

Many of the most effective watch merchandising programs today are led by managers who have closer contact with relevant areas of company operations, says Gerry Ragucci, director of special markets for Mahwah, N.J.–based Seiko Corporation of America. "Managing these programs, which was traditionally a human resources role, is now becoming more the domain of sales managers, or even business unit vice presidents," he explains. "Even the presidents of medium-sized companies became intimately involved in some programs we've seen."

Maritz's Ivcich says the shift is even more pervasive. "Almost every company has restructured," she says. "We were seeing the trend to procurement after 9/11, but now the reins are being loosened, and we're seeing purchasing decisions being made more on the marketing side, as opposed to being made on just the procurement side."

Lasting Impression

The goal for any program is to keep participants motivated, says Marketing Innovators' Purdy. A little creativity in a program can build on the award's lasting impression. Purdy cites one company's sales incentive, in which the initial gift of a watch can be enhanced with diamonds, added as participants reach milestones. "The beauty of it is that the timepiece presentations are usually made in the presence of other employees, in the office or at celebrations, with some pomp and circumstance," he says.

In addition to an effective presentation, classic touches like inscriptions are still important, says Swiss Army's Finch. One energy company recently inscribed Swiss Army watches for its employees when the company changed operations, she says: "It was a remarkable date in the company's history, and that date was memorably inscribed on the watch."

Of the Moment

Trendy timekeepers reign supreme in today's motivation and recognition programs. To keep up, it helps to have good relationships with the major makers, says Joe Zanone, senior vice president at Paramus, N.J.–based Movado Group Inc., but a real expert can identify the design trends behind the brands. Here Zanone identifies five of the most important design developments in timepieces:

Heavy Metals

New materials are being used in the construction of some of the top performance watches for men and women, says Zanone, and high-quality "heavy" metals have special cachet. "Tungsten carbide is very popular," Zanone explains. "It's steely blue, very shiny and virtually scratch-proof."

Hot Rocks

Today, timepieces with diamonds make up one of the hottest categories of high-end watches. "Women have always loved them," says Zanone, "but today more men are wearing diamond watches."

Thin is In

Thinner, dressier timepieces are making a strong showing, especially in high-end programs, as formal fashions become more popular in the workplace and after hours. "Men are dressing up more formally in the workplace and also outside the office," says Zanone. "Wristwatches are following that shift, with a trend toward thin, elegant pieces."

Oversize Styles

On the flip side, bigger, heavier cases and oversized faces are more popular in both men's and women's timepieces. More women are wearing men's watches, says Zanone, and some manufacturers make certain models in large sizes only. Often these bulkier watches take advantage of larger faces to add multiple dials or chronograph functions.

Automatic Movements

Self-winding, or automatic movements, are the last word for elegant, upscale timepieces, says Zanone, "especially when it comes to Swiss makers." Instead of being powered by batteries, self-winding watches are powered by the normal movements of the wearer. The watches stop ticking if they remain completely still for over 17 hours, but manufacturers sell special holders that provide periodic agitation in storage.

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