Taken in its entirety from www.hodinkee.com which I seem to be looking at more and more often.  


STRUGGLING TO SELL CHRONOGRAPHS

“A tough year, 1971.” With these four words, Jack Heuer—then the 38-year-old President of Heuer Leonidas—opened the 1972 case study on his company by the Swiss business school IMEDE.
The Heuer Time and Electronics Corp (HTEC), the American branch of the company, had enjoyed 11 consecutive years of increased sales heading into 1969. By 1970, the US had become Heuer’s largest market, with $1.2 million in sales. However, 1971 was a different story. US sales declined 19 percent (to $952,000) and HTEC suffered a loss of $154,000.

“Retailers were afraid of the chronographs.”
— Jack Heuer
Today’s collectors may imagine that entering the 1970s Heuer was enjoying momentum from introducing the world’s first automatic chronographs in 1969. But the IMEDE case study tells the story of a stopwatch company struggling to sell chronographs at all.  Despite the introduction of the Autavias, Carreras, and Monacos, Heuer was still selling ten times as many stopwatches as chronographs.   
Priced from $185 to $220, the chronographs were relatively expensive, complicated, and far more difficult for dealers to explain to customers than simpler watches or stopwatches. Jack Heuer thought Heuer’s retailers—primarily specialty retailers of scientific, industrial, and educational supplies, as well as racing, flying, and boating equipment specialists—were afraid of the chronographs. Whether it was the price, the competition, or the complexity, HTEC sold fewer than 500 automatic chronographs in 1971. 
Not surprisingly, Jack Heuer closed his recap with another four words—“I’d rather forget 1971.”

STRUGGLING TO SELL CIGARETTES

But if you think Heuer was having a tough time selling chronographs, imagine the plight of the Brown & Williamson Tobacco Company. Sales of cigarettes had been virtually stagnant since 1964, when the US Surgeon General released his report linking smoking to cancer. And a ban on tobacco television advertising went into effect on January 2, 1971. Like with Heuer’s stopwatches, Brown & Williamson’s leading brand Kool was selling well, but its number two brand Viceroy was in the third position in the full-flavor filter segment, and was sinking fast.
For years, Viceroy’s advertising theme had been balance—“not too strong, not too light, Viceroy’s got the taste that’s right.” A normal ad might depict a woman offering her companion one of her cigarettes, and he, surprisingly, enjoys the taste. The Viceroy was “less masculine than its key competition,” and the brand had a “feminine orientation,” according to internal documents. While the Viceroy couple shopped for flowers, the Marlboro man rode his horse straight into more market share.
"Vague, Passive, & Neuter" is how Viceroy was described prior to the Heuer promotion.

MEET THE AUTO RACER

In 1972 Brown & Williamson decided to change all that. In place of the gardener or the shopper, Viceroy would be the brand of the “Auto Racer,” who would symbolize personal pleasure, physiological satisfaction, tension release, and self-indulgence. A real 1970s man’s man.
The Dream Team
To support its Auto Racer campaign, Viceroy became a sponsor of the Parnelli Jones Racing Team, which would field the “Super Team” of Mario Andretti, Al Unser, and Joe Leonard in the Indianapolis 500 and other races. Viceroy’s advertisements would use dramatic photos of handsome racers with dirt on their brows, wearing their racing suits.
Official Brown & Williamson documents read, “This campaign . . . aggressively goes after men. It is advertising that is felt to be unique, memorable and will give Viceroy a needed personality.” Viceroy’s promotions team determined that one of the racer’s symbols was the chronograph, and that a top quality chronograph, sold at a bargain price, would appeal to their target audience: men who enjoy adventure, thrills, and gratification.

THE WATCH FOR THE AUTO RACER

Brown & Williamson contacted Heuer in late 1971 with the idea of offering the Heuer Autavia in a Viceroy promotion. Throughout the 1960s, Heuer was a dominant presence at the racetrack. Its stopwatches, handheld chronographs, dashboard timers, and timing systems were the gold standards in their respective categories.
Ronnie von Gunten, then Executive Vice President of HTEC, reflects, “They [B&W] knew of our dominant position in motorsports timing, and must have assumed that we had this same strength in selling chronographs. As you might expect, we were not inclined to correct this picture."
The Viceroy Promotion
Viceroy would offer a special version of the Autavia automatic chronograph for $88 with the end flap from a carton of Viceroy cigarettes. At this time Heuer was producing two versions of the Autavia, one with a black dial and minute/hour bezel (Reference 1163 MH) and one with a white dial and tachymeter bezel (Reference 1163 T). Both models were priced at $200.
For HTEC, the proposal from Viceroy seemed too good to be true. Brown & Williamson sought assurances that Heuer could deliver 16,000 chronographs over the seven-month life of the promotion, a volume that would have more than doubled HTEC’s revenues. Hans Schrag, HTEC’s Vice President and Technical Manager, asked Jack Heuer how they could possibly make money selling chronographs at such a low price. Jack Heuer responded confidently, “Don’t worry. I know what I’m doing.”
Heuer realized that even if he only broke even on the watches, the company would benefit enormously from the Viceroy promotion. In 1971, Viceroy had spent $12.3 million on advertising and sales promotion, and its magazine advertising allowed the brand to reach 70% of the US adult population an average of more than 3 times per month. With the launch of the Auto Racer campaign, this budget would increase to $13.9 million for 1972. Heuer’s advertising budget was less than one-half of one percent of these amounts, with its placements limited primarily to specialist magazines.
The Viceroy Voucher Close-Up
Viceroy would place advertisements showing the Heuer logo and the Autavia chronograph in leading national magazines. Point-of-purchase displays–featuring a life-size Auto Racer–would bring the Heuer Autavia to hundreds of supermarkets and convenience stores. Heuer would become a household name.

THE VICEROY IS DIFFERENT, BUT THE SAME

However, Heuer found itself on a tightrope as it prepared for the Viceroy promotion launch. Brown & Williamson required assurances that Heuer would maintain the $200 retail price on the Autavias through the end of 1972. Maintaining this price left Heuer’s dealers in a difficult position, as they were already struggling to sell the $200 Autavias. Introducing $88 competition certainly wasn’t going to help. 
Heuer assured its dealers that the Viceroy Autavia would be different from the standard Autavias they were offering. In place of the polished steel hands, the Viceroys would have brushed steel hands with red accents (inserts and triangular tips).  The four numerals (3, 6, 9, and 12)  were replaced by twelve.  The minutes/hours bezel of the standard black Autavia was replaced by the tachymeter bezel used on the white “Siffert” Autavias.
(L) Heuer Autavia 1163 MH / $200 (R) Heuer Autavia 1163 V / $88
Heuer even went one step further, calling the Viceroy an “economy” model. Armed with this label, the dealers were supposed to be able to convince their customers that their $200 main-line Autavias were far superior to the $88 Viceroys.   
But, other than these three cosmetic differences, the watches were identical. So much so, in fact, that Heuer began offering these identical watches through the dealer channel, only with the standard black-dialed Autavias bearing the minutes/hour bezel.
Every reference of the Heuer Autavia automatic with a black dial.

SUCCESS (AT LEAST FOR HEUER)  

Brown & Williamson issued a press release on May 15, 1972 launching Viceroy’s Heuer chronograph promotion, and within three weeks advertisements offering the $88 Viceroy Autavia appeared in the major national magazines: Life, Time, Newsweek, US News and World Report, and Sports Illustrated all bore ads. Advertisements in men’s magazines continued through the summer, and the last advertisements for the promotion ran in August 1972, with placements in Playboy, Penthouse, Car and Driver, and Road and Track. 
The $88 Autavia was a bargain and sales were strong, at least by Heuer’s standards. Whereas Heuer might expect to sell fewer than 500 automatic chronographs per year in the United States, during the first four months of the promotion the Viceroys were moving at a rate of almost 900 chronographs per month, according to B&W. For Heuer, this was almost a year of sales every two weeks.
Surprisingly, the Heuer dealers were thrilled as well. While it may have been challenging to sell the Autavias, the increased awareness of the Heuer brand and the racing imagery boosted sales of other chronographs. Recalls Jack Heuer, “If a dealer complained that it could not sell the Autavias because of the $88 Viceroys, we offered some simple advice–sell the other Heuer chronographs.”
A "Jo Siffert" Heuer Autavia
Soon Heuer discontinued the standard black-dialed Autavia, and the Viceroy made its way into the dealer channel. Heuer maintained the $200 list price, keeping its promise, but reduced the wholesale price so dealers were able to offer discounts. Still, the white dial automatic Autavia, known now as the “Jo Siffert,” retained its original wholesale margins and price, making it a much more costly alternative.

THE VICEROY IS DEAD, LONG LIVE THE VICEROY

The Viceroy promotion expired on December 31, 1972, and von Gunten estimates that Heuer sold approximately 5,000 of the Viceroy Autavias during the seven month promotion. While the campaign was a flop for selling cigarettes, it did one hell of a job moving chronographs.
Heuer’s production of the Viceroy Autavia continued for over a decade. With abundant supplies of left over parts, it only made sense to continue. In late 1972 the Viceroy Autavia moved from the original Reference 1163 case to the larger Reference 11630 case, and in 1984 made its final move to the Reference 11063 case. This 12-year-plus run was the longest for any dial/hand combination in Heuer’s history. You can find more on these references here.
The Viceroy took the Heuer chronograph from a limited market at the racetrack to a much broader audience.  von Gunten notes the irony that, “It took a deep discount promotion with the number three cigarette brand for the American public to see the Heuer chronographs and for these watches to find their place in jewelry and retail stores. When we were struggling in the early 1970s, we always thought that the perfect watch at the right time would give Heuer the place it deserved in the U.S. market.  We never saw it coming, but 40 years later, we can say that watch was the Viceroy.”

ADDENDUM

For additional information about the Viceroy Autavias, including detailed photos and serial numbers, see the companion OnTheDash posting "Absolutely Everything About the Heuer Autavia Viceroy Chronograph".
Special thanks to Jack Heuer, Ronnie von Gunten, and Hans Schrag for their invaluable contributions to this story.

BEHIND THE SCENES