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Company Snapshot
• Founded in 1837 in New York City by Charles Lewis Tiffany
• CEO Michael Kowalski• Headquarters in NYC• Makes over $2 billion in sales annually• 220 stores worldwide• 8,400 employees worldwide
Snapshot Continued
• Segments: Americas, Asia-Pacific and Europe• Target market: women with a higher household
income and a taste for the finer things in life, and men who buy for those women
• Products: jewelry, timepieces, sterling silverware, china, crystal, stationary, fragrances and accessories
PEST TableFactor Trend Evaluation Impact (1 = low, 5
= high)Rank in terms of importance
Political -Unrest in diamond-producing countries
-Threat 3 2
Economic -Growing international sales--International economic recession-Earthquake in Japan
-Opportunity
-Treat
-Threat
3
4
3
1
Social -Trend towards “pinching pennies”-Changing roles of women-Consumers spending on items that last
-Threat
-Opportunity
-Opportunity
3
4
3
3
Technological -e-commerce for sales of jewelry
-Opportunity 3 4
Political Factors
• Threat of conflict diamonds from diamond-producing countries in political unrest
• Availability and price of these diamonds depends on political stability of country
Economic Factors
• International sales of luxury goods is on the rise–Emerging markets included, where Tiffany is
already established• International economic recession• 2011 earthquake in Japan, reducing purchases of
luxury goods in region
Social Factors
• There is a trend of rising female employment, allowing women their own income to purchase Tiffany products
• Changing roles of women means changes in mindsets of working women
• Because of the recession, consumers want to spend their money on products that will last, which includes Tiffany products
Technological Factors
• E-commerce makes purchasing of products easier for customers
• E-commerce makes it easier for Tiffany to reach international customers
Industry Analysis
Factor Evaluation
Intensity of Rivalry Strong Force
Buyer Power Strong Force
Supplier Power Benign Force
Threat of Substitute Products Strong Force
Threat of New Entrants Benign Force
Intensity of Rivalry
• Strong force• Louis Vuitton Moet Hennesy owns over 60 luxury
brands • They compete directly with Tiffany & Co• LVMH has a good deal of power in the industry
Buyer Power
• Strong force• Market demand determines supply• Customers demand high quality from Tiffany,
therefore they must produce it• Tiffany must find a way to keep buyers purchasing
their products even during times of recession
Supplier Power
• Benign force – not a threat to Tiffany• Possibility of depletion of nonrenewable resources,
such as diamonds, but not an immediate threat
Threat of Substitute Products
• Strong Force• Many possibilities for substitutes• Examples: Vacations, home renovations, car
purchase, etc.
Threat of New Entrants
• Benign force• Not difficult to establish a jewelry store, but more
difficult to establish a luxury goods store• Very difficult to establish a high quality luxury goods
store on the level of Tiffany & Co• Takes years of recognition to be considered high
quality
Blue Ocean StrategyBlue Ocean Strategy Tiffany & Co
Create uncontested market space Successful
Make the competition irrelevant While Tiffany has a secure place in the market, they haven not made competition completely irrelevant.
Create and capture new demand Demand for jewelry and luxury goods is not a new demand
Break the value-cost trade-off Tiffany products have very high value at reasonable cost to the company – sold at a high price to customers
Align the whole system of a firm’s activities in pursuit of differentiation and low cost
The Tiffany brand strives on differentiation, but not low cost
Blue Ocean Strategy
• Tiffany does not need to offer discounts to keep making sales or fight to be noticed in the marketplace
• Tiffany focuses on differentiation rather than cost cutting
• Tiffany experiences high growth in a high growth market and does not rely on mergers or acquisitions
• These shows Tiffany has a high possibility of a BOS
Conclusions
• Economic factors have the largest impact on Tiffany & Co
• The growing markets offer a large opportunity for the company with possible further expansion into international markets
• A blue ocean strategy could help Tiffany, but they already have an established place in the market with little threat of new entrants
• Tiffany is a consistently growing company established worldwide in stable countries with growth potential
Key Competitors
• High-end competition– Louis Vuitton Moët Hennessy
• Lower-end competition– Signet Group– Zale– Blue Nile
Comparison in RevenuesCompany 2010 Revenue
Tiffany & Co $2.71 billion
LVMH $24.5 billion
Signet Group $3.16 billion
Zale $1.63 billion
Blue Nile $314 million Market
Tiffany & Co 4%
LVMH 36%
Signet Group 2.4%
Blue Nile .5%
Other 57%
Louis Vuitton Moët Hennessy
• Made up of over 60 luxury brands• Recently acquired Bulgari• High international sales• Smallest division of company is watches and
jewelry• Consistent customer base: wealthy individuals
($100,000/ year or more)
Signet Group
• World’s largest specialty jewelry retailer– Kay Jewelers & Jared The Galleria of Jewelry
• Has 4.4% of total jewelry market• Sells “affordable luxury”– Middle class customers
• Sales only in US (75%) and UK (25%)
Zale
• Focuses on middle income and young adult customers
• Extremely vulnerable to economic downturns• Operates abroad (Puerto Rico & Canada)
Blue Nile
• Largest online diamond retailer • Primary business in the US– Operates websites in UK and Canada– Ships products to over 25 countries
• Positioned as a high-end jeweler, but majority of sales are below $5,000
• Vulnerable to economic downturns
Geographic Scope
Stores in the US Stores outside of US
Tiffany & Co 91 129
LVMH 543 1,827
Signet Group 1,401 558
Zale 680 567
Blue Nile - -
Business SegmentsSegments % of Sales
Tiffany & Co Non-gemstone & sterling silverGemstone & band ringsDiamond Rings & wedding bandsNon-gemstone, gold or platinumOther
31%27%21%12%9%
LVMH Fashion & leather goodsSelective retailingWine & spiritsPerfumes & cosmeticsWatches & jewelry
36%28%16%16%4%
Signet Group Jewelry, watches & associated services 100%
Zale Fine jewelrykiosk jewelryother
86%13%1%
Blue Nile Online retail jewelry 100%
How Companies Compete
Company Competitive Position
Tiffany & Co High-low products: high-priced products next to low-priced products
LVMH High quality, high-priced products: luxury
Signet Group Affordable luxury
Zale Low-priced products
Blue Nile Online retailer: convenience
Jewelry Market
• $58.8 billion market• Customers less price sensitive – looking for quality
rather than focused on price– Lower-end retailers more sensitive to economic
downturns than the high-end jewelers• Experienced decline during 2008 recession, but has
risen since then
Target Market
• Women & Men who buy jewelry for women• For the high-priced jewelry, target market is
individuals with household incomes of $100,00+• Wealthy customers lead to consistent sales even in
tough economic times
Social Media
Social Media Site? Useful?
Tiffany & Co Facebook, Twitter Yes
LVMH Facebook No
Signet Group Facebook No
Zale Facebook Yes
Blue Nile Facebook, Twitter Yes
The social networking sites of these brands show pictures of new products, which can help customers to choose the products they wish to purchase. Social Networks are a good way to build brand awareness, but for higher quality luxury brands, they are not necessary.
Conclusions
• The jewelry market is very large, and not ruled by Tiffany or any of its competitors.
• While these companies compete on different stances, they try to capture the same market
• With continuing international growth, expanding further into international markets would be beneficial to each company
Conclusions
• Awareness of companies such as Tiffany and LVMH brands is not an issue, but for smaller companies such as Gordon’s Jewelers (Zale), social networking sites are helpful
• Each company is successful, residing in the ‘star’ category of the BCG matrix, but the percentage of the total market each company holds could increase by a large amount
Business Model
• Tiffany has made its name on product design, manufacturing and retailing
• They thrive on differentiation and quality products• Focus on excellent customer service– Knowledgeable employees
Company Performance
2006 2007 2008 2009 2010
Net Sales $2.561 Billion $2.939 Billion $2.860 Billion $2.710 Billion $3.085 Billion
Net Earnings $273 Million $323 Million $220 Million $265 Million $368 Million
Profit Margins 10.66% 10.99% 8% 10% 11.9%
• Sales were on the increase until 2008 when they dropped due to the economic recession• Sales continued to drop in 2009, but increased again in 2010 with profit margins rising in both years
Distribution
• Tiffany products are only sold in Tiffany stores
2009 Sales by Region
Europe 12%Americas 52%Asia Pacific 35%Other 1%
2006 Sales by Region
Europe 7%Americas 62%Asia Pacific 28%Other 3%
ResourcesResource Advantage
Historic Brand 174 years of quality have established Tiffany as a household name and an iconic brand
Global Brand Tiffany products are sold in 22 countries, thus creating demand in many different markets around the world
Differentiation Tiffany competes on differentiation, thus staking its claim on the highest quality jewelry and accessories
Brand Loyalty Focus on creating brand loyalty with customers
Innovation Tiffany products have always been at the top of the innovation chain
Value ChainPrimary Activities
Inbound Logistics Warehouses and collection of raw materials
Operations Producing the final products from raw materials
Outbound Logistics Distribution of products to retail locations
Marketing and Sales The Blue Book
Service Well-trained employees provide knowledge and assistance to customers before and after the sale
Value Chain Cont’d.Support Activities
Firm Infrastructure Technology direction and solutions, financial planning and analysis, resource management, information security, compliance, operating systems, database, voice and data communications, service and support
HR Management Employee recruiting, compensation and training
Technology Development Global manufacturing and distribution, provide effective business solutions and innovation
Procurement Raw materials and equipment for factories
Generic Strategy• Somewhat of a niche player– Targeted towards higher-income customers, but offers
lower priced items for middle-income customers
Grand StrategyProduct
DevelopmentContinue to develop the newest products and
keep up with product trends to compete
Differentiation Brand is already synonymous with differentiation; continue the trend
Customer Service
Tiffany prides itself on excellent customer service to ensure repeat business
Global Expansion
Tiffany has been expanding into global markets which are growing segments
Store Expansion
New stores are added each year to broaden the brand name
SWOT AnalysisStrengths Weaknesses Opportunities Threats
High quality brand name
Products sold only in Tiffany stores – limited access for customers
Growth in international markets
Rising commodity prices
Growth in sales Recession effects sales: should be a recession-proof company
Internet sales Economic recessions
Growth in international markets
Expansion into retail outlets
Decline in Japanese market due to tsunami
Product differentiation Counterfeit products (small threat)
Conclusions
• Tiffany has been able to differentiate themselves based on high-low cost and high quality products
• Tiffany sales continue to grow– Both domestic and international
• Tiffany continues to expand into international markets– Future growth opportunities
• Business model is based primarily upon differentiation