Tiffany & Co

1. Tiffany & Co By: Kelli Monk

2. 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

3. 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

4. PEST Table

5. 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

6. 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

7. 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

8. Technological Factors • E-commerce makes purchasing of products easier for customers • E-commerce makes it easier for Tiffany to reach international customers

9. Industry Analysis

10. 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

11. 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

12. Supplier Power • Benign force – not a threat to Tiffany • Possibility of depletion of nonrenewable resources, such as diamonds, but not an immediate threat

13. Threat of Substitute Products • Strong Force • Many possibilities for substitutes • Examples: Vacations, home renovations, car purchase, etc.

14. 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

15. Blue Ocean Strategy

16. 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

17. 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

18. Analysis of Competition Tiffany & Co By: Kelli Monk

19. Key Competitors • High-end competition • Louis Vuitton Moët Hennessy • Lower-end competition • Signet Group • Zale • Blue Nile

20. Comparison in Revenues

21. 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)

22. 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%)

23. Zale • Focuses on middle income and young adult customers • Extremely vulnerable to economic downturns • Operates abroad (Puerto Rico & Canada)

24. 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

25. Geographic Scope

26. Business Segments

27. Tiffany & Co Signet Group Blue Nile LVMH Zale

28. How Companies Compete

29. 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

30. 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

31. Social Media 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.

32. 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

33. 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

34. Internal Analysis Tiffany & Co By: Kelli Monk

35. 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

36. Company Performance • 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

37. Distribution • Tiffany products are only sold in Tiffany stores

38. Resources

39. Key Assets • High quality commodities • Brand image • High revenues • Product expansion

40. BCG Matrix Tiffany’s

41. Value Chain

42. Value Chain Cont’d.

43. Competitive Position

44. Generic Strategy • Somewhat of a niche player • Targeted towards higher-income customers, but offers lower priced items for middle-income customers

45. Grand Strategy

46. Grand Strategy Continued

47. SWOT Analysis

48. 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