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Tiffany & Co By: Kelli Monk.

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Presentation on theme: "Tiffany & Co By: Kelli Monk."— Presentation transcript:

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 Factor 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 4 1 Social -Trend towards “pinching pennies” -Changing roles of women -Consumers spending on items that last Technological -e-commerce for sales of jewelry

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 Factor Evaluation Intensity of Rivalry Strong Force
Buyer Power Supplier Power Benign Force Threat of Substitute Products Threat of New Entrants

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 Blue 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

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 Tiffany & Co Analysis of Competition By: Kelli Monk

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

20 Comparison in Revenues
Company 2010 Revenue Tiffany & Co $2.71 billion LVMH $24.5 billion Signet Group $3.16 billion Zale $1.63 billion Blue Nile $314 million

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 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 -

26 Business Segments Segments % of Sales Tiffany & Co
Non-gemstone & sterling silver Gemstone & band rings Diamond Rings & wedding bands Non-gemstone, gold or platinum Other 31% 27% 21% 12% 9% LVMH Fashion & leather goods Selective retailing Wine & spirits Perfumes & cosmetics Watches & jewelry 36% 28% 16% 4% Signet Group Jewelry, watches & associated services 100% Zale Fine jewelry kiosk jewelry other 86% 13% 1% Blue Nile Online retail jewelry

27 Tiffany & Co Signet Group Blue Nile LVMH Zale

28 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

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 Social Media Site? Useful? Tiffany & Co Facebook, Twitter Yes LVMH Facebook No Signet Group Zale Blue Nile 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 Tiffany & Co Internal Analysis 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 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

37 Distribution Tiffany products are only sold in Tiffany stores

38 Resources Resource 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

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

40 BCG Matrix Tiffany’s

41 Value Chain Primary 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

42 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

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 Product Development
Continue 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

46 Grand Strategy Continued

47 SWOT Analysis Strengths 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 Expansion into retail outlets Decline in Japanese market due to tsunami Product differentiation Counterfeit products (small threat)

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

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