Chapter 7. Business Marketing

Tiffany & Co. is a holding company that operates through its supporting companies. The company's main subsidiary is Tiffany and Company. Through Tiffany and Company and other subsidiaries, the company is involved in product design, manufacturing and retailing activities.

Besides consumer marketing, Tiffany & Co. is heavily included in business marketing. Tiffany & Co. is actively involved in selling its products through Internet, business-to-business and wholesale operations. It sells its merchandise on the wholesale basis to independent distributors for resale in emerging markets such as the Middle East and Russia. Additionally, the company sells diamonds that are obtained as a wholesale purchase and then resold not being suitable for the company's needs. 

There are subsidiaries of the company that process, cut, and polish diamonds at facilities outside the U.S. The company created diamond processing operations that purchase, sort, cut, and polish rough diamonds. The businesses that are involved in these operations are located in countries such as Belgium, Botswana, Mauritius, Namibia, South Africa and Vietnam. For example, Namibia is well-known for its gem-quality diamonds, which explains Tiffany's interest in this country for stones. In 2010, Laurelton Diamonds, a division of Tiffany & Co., connected with Namibia Reigh Investments to open a new cutting and polishing plant, which allowed the company to increase its workforce in Namibia. This kind of strategic alliance gives Tiffany & Co. opportunities to access rough diamonds locations reserved for local manufactures. 

Despite the fact that the patnership between Tiffany & Co. and the Swatch Group was ended, it is a good example of a strategic partnership. In 2009, Tiffany & Co. signed a 20-year license and distribution agreement with the Swatch Group. According to the agreement, the Swatch Group started a new watchmaking company in Switzerland to design, engineer, manufacture, market, distribute and serve Tiffany & Co. brand watches. The new company was completely owned and controlled by the Swatch Group but was given the right by Tiffany & Co. to use its certain trademarks. Plus, it operated under the Tiffany & Co. name as Tiffany Watch Co., Ltd.

Chapter 8. Segmenting and Targeting Markets

There are a few bases for segmenting consumer markets. They are geography, demographics, psychographics, benefits sought, and usage rate. 

Analyzing Tiffany & Co. market segmentation, I would like to look first at demographic segmentation since there are several bases such as age, gender, income, ethnic background, and family life cycle. First of all, Tiffany's main market target is women, who buy and receive as gifts these beautiful jewelry. So, even though men are involved in the purchasing of Tiffany's products, women remain to be the main influencers. With its various design collections and price range, the company meets wants and needs of consumers of different age and income. Tiffany services generations X, Y and baby boomers. While generation X, who are working women, earn enough money to pay for high-quality goods, baby boomers buy the luxurious items even despite insufficient funds. But, generation Y consumes the product because they enjoy to follow the celebrity trends.

 

Despite the fact that originally Tiffany's jewelry were created for high-class women, now its product becomes more affordable as the company always looks for the way to expand its market. Now even lower income women can buy Tiffany's product because of the addition of collections such as made from sterling silver.

Since Tiffany & Co. is a specialty company that sells mainly jewelry, customers turn to its product for celebration of some significant events such as engagement, wedding , anniversary or birthday. In this case, this kind of purchase may include people of different family life cycles such as young single, young married with/without children, middle-aged married with/without children etc. 

People buy Tiffany's product basing their purchasing decisions on motives and lifestyle.

Besides that women are the primary users, Tiffany services other businesses also. The company sells its products to businesses to promote some program or give gifts to dignified employees. The company regularly designs trophies for some special events. Plus, Tiffany & Co. are deeply involved in charitable activities giving generous donations for the support of arts, education, health and environment.

Chapter 11. Developing and Managing Products

To sustain growth and increase revenues, Tiffany, as any other company, constantly works on creation of new products. Just last year, for Tiffany's 175 year celebration, the company released a new metal called Rubedo, which means "red" in Latin. According to Tiffany's website, it is among the most beautiful metals in the world. "This unique alloy is lightweight yet strong, polishes to a smooth luster and is exceptionally flattering to the skin," these are the words describing this new metal. Rubedo represents a mixture of gold, silver and copper, where the last component gives to the metal a nice pinkish color. The metal has been fashioned into jewelry pieces priced from $200 to $7,500 and the new collection has been announced to be made of a "new jeweler's metal." Since this new product line is Tiffany's innovation and has been introduced to the market just last year, it is still in the growth stage and does not have many competitors yet. 

Being a responsible company, Tiffany is always aware of its customers' wants and needs.  As Carson Glover, the director of worldwide media relations at Tiffany, reports "When Tiffany began planning our 175th anniversary, we felt the development and introduction of a new metal would be a fantastic way to mark this momentous milestone while at the same time responding to our customers' desire for more blush-colored metals." 

However, there are some disagreements on Tiffany's claim that Rubedo is a new metal since it is an alloy of already existing metals plus the combination is not new either. As reported by Forbes, Rubedo contains only 31% gold, which is mush less than a 14K gold piece would have. Though it is not an issue. Rubedo was very well received by customers. As Forbes states, it has a lot to do with Tiffany's name. Customers love Rubedo because they love Tiffany especially if it is stamped with Charles Lewis Tiffany's ageless signature.

Chapter 16. Promotional Planning for Competitive Advantage

Talking about Tiffany & Co. competitive advantage, we can surely include high product quality and excellent service. Since Tiffany is already a well-known company it does not have to work so hard to promote its product, but nevertheless it always works on promotional programs to remind its audience about its great values and qualities.

Tiffany's mass communication happens through television, newspapers, magazines. 

Tiffany is regularly participating in various PR programs to let its customers know about the company's operation, its goals and values. For example, in the past Tiffany opposed creating pebble mine in Bristol Bay, Alaska, advocating that it would destroy the nature's richest site. Also, the company showed its concern about corals' disappearance, subsequently stopping to use this vital eco-element in its  jewelry designs. This way Tiffany & Co. showed to the public that it cares about the environment where it operates. In addition, customers can see that on top of great product the company is ethically and morally very responsible.

I am sure that the upcoming movie "The Great Gatsby," based on the novel by F. S. Fitzgerald, intrigues many people; moreover it became known that the movie's all jewelry pieces were designed by Tiffany & Co. This cooperation is mutually advantageous as it greatly promotes both sides. On May 10, when the movie will come to theaters, audience will have a great opportunity to observe Tiffany's new jewelry masterpieces, which is another strategic move to promote its product.

Chapter 10. Product Concept

Focusing on jewelry pieces mainly, Tiffany & Co. expanded its product mix over the years of presence. Now, its stores offer us not only stunning rings and necklaces, but high-quality leather goods, beautiful silk scarves, writing instruments, watches, china, fragrances and even sunglasses; this way various market audience's needs and wants can be satisfied. Based on customers' intentions, Tiffany's product falls under the consumer product category as it  is purchased exactly for consumers' personal wants' satisfaction. Tiffany's different product lines, which are mentioned above, are categorized by collections ( Tiffany 1837, Atlas, Ziegfeld Collection, Tiffany Enchant, Tiffany metro etc.) and designers ( Elsa Peretti, Paloma Picasso and Jean Schlumberger). 

One of the greatest Tiffany designers is  Elsa Peretti. Elsa Peretti is an italian designer who worked for the company since 1974. Possibly not all of us know who she is, but her simple and sleek designs are admired almost by every female. The designer said, "Style is to be simple." Her simple and elegant shapes are inspired by nature. Apples, beans, bones, shells, hearts, teardrops are the shapes presented in various Tiffany's jewelry forms that are still the company's bestsellers up to these days. Peretti's jewelry sales bring up to 10% to Tiffany's Net Sales. 

When she moved to New York as a model in 1968 she already held a degree in interior design. Starting her career at Tiffany's, she brought a modern, fresh jewelry design in contrast to conservative jewels of that period. Her jewelry pieces are designed not only in gold but also in silver, so they become affordable to those customers who are not among the elite. As she once said in the interview for People magazine, "I design for the working girl... My objective is to design according to one's financial possibilities." Just in 2012, when her contract with Tiffany was about to expire, both sides decided to continue their relationship for the next 20 years.

Thanks to its great designers and craftsmen, who have diligently worked for 175 years, Tiffany & Co. built its brand name and value, which are its greatest assets. Another Tiffany's distinguished trademark is its unique hue called Tiffany Blue or forget-me-not blue that was originally picked for the company's catalog by its founder, Charles Lewis Tiffany. Now, this color is used for shopping bags and advertising, and recognized as a symbol of Tiffany's craftsmanship excellence and exclusivity. At the sight of the famous Tiffany Blue Box every woman holds her breath in excitement. 

Also, it is worth to mention that Tiffany is concentrated on sourcing all its packaging materials from responsible sources. The company's management ensures that its iconic Blue Boxes and blue bags are made with sustainable materials. All Tiffany's packaging is Forest Stewardship Council-certified. The FSC certification reassures that wood and paper products come from renewable and well-handled resources. In 2011, about 90% of the materials used to produce the packaging came from post-consumer recycled sources.

Chapter 18. Sales Promotion and Personal Selling

Tiffany & Co. is probably the only company which does not have any sales and discounts on its products. Tiffany keeps its image and reputation by showing that its price and value are not negotiable.

This policy got its roots from Tiffany's founder, Charles Tiffany, who made some changes in the store's rules that helped to form Tiffany & Young's reputation. As Michael John Burlingham, who wrote a book about the founder's family, tells, "He marked every object in his store with a price tag, ending the undignified, widely practiced custom of bargaining over goods."(Behind Glass: A Biography of Dorothy Tiffany Burlingham, p. 18)

Since Tiffany customers' purchases are more emotional, they require a short-term decision. Thus, there is a traditional personal selling applied. Sales assistants focus on giving to customers information about product and closing sales.

Chapter 17. Advertising & Public Relations

 

Since the company's creation, Tiffany's initial advertising form was its "Blue Book" catalog, which was first published in 1845. The catalog still exists and is available for its subscribers.

However, now Tiffany focuses on various other media types to advertise its product. Nowadays, we can observe Tiffany's ads in the bus stops, recognizable newspapers, popular magazines and, of course, online. Analyzing Tiffany's choice of where to place its advertisement, we can clearly see that the company is targeting certain market segments.

For example, The New York Times, where Tiffany's ads always run on p. 3, is the newspaper that mainly addresses business people of age 35 - 65. Talking about print ads,  Tiffany's ads mainly appear in business and fashion magazines. Some of them are Architectural Digest, The New York Times Magazine, Money, Conde Nast Traveler, Black Enterprise and Vanity Fair.

Tiffany uses both institutional and product advertising. Though in my opinion, it focuses on the institutional advertising more to maintain the corporation's identity. Having strong advertising attributes such as brand name and Tiffany's unique color makes the company recognizable by everyone and everywhere. 

The styles in which Tiffany's ad campaigns are executed are lifestyle and mood/image. Wathching its recent video, "The Dream Maker," that commemorates Tiffany's 175 year existence, we are enchanted by its romantic mood which is associated with beauty and love.

 

And, it is a great example of the institutional advertising as it celebrates its founder, history and the excellent craftmenship.

Chapter 15. Retailing

Tiffany & Co. is a specialty store which has a concentrated product assortment such as jewelry. But, it has a substantial depth since it provides a great variety of designs.

 The company headquarter's location, which is the Upper East Side of Manhattan, was chosen based on analysis of the area's socioeconomic characteristics. Mainly, the upper class people reside in the area which means that the store is located right in the heart of the luxurious life. Also, the store is positioned on the 5th Avenue, which is the city's main shopping site for tourists. 

As mentioned before, Tiffany's prices are pretty high which means that the gross margin is high as well. Plus, it's another indication of the quality's level and its prestigious image. 

My experience visiting the store was pleasant and useful. Acquainted with the most influential factors in creating a store's atmosphere, I paid close attention to the store's organization:

• Employee type and density: Sales assistants are very friendly, mannered and knowledgeable about the product. There are a few workers at each counter so customers do not have to wait for the next available one. They are ready to answer to all your questions. Definitely, with this type of organization the customer cannot be overlooked and will be given sufficient time and help to make the right choice when shopping.
• Merchandise type and density: All merchandise is displayed in a tasteful and uncluttered arrangement. Every type of product such as china, leather goods, engagement rings are placed in a certain room or floor. So if a customer knows exactly what he is looking for, he knows where to go. Each item is set in the way that a customer can appreciate its beauty. 
• Fixture type and density: Fixture is classic, elegant and simple. The flagship store kept the 19th century look.
• Sound: I noticed there was playing a flowing and unobtrusive music to create a relaxing atmosphere.
• Visual factors: Dominant colors of the interior are different tones of brown which is a warm color. Thus, it creates a feeling of warmth and coziness.  As the character from "Breakfast at Tiffany's," Holly Golightly, said, "The only thing that does any good is to jump in a cab and go to Tiffany's. Calms me down right away. The quietness and the proud look of it; nothing very bad could happen to you there."

Chapter 6. Consumer Decision Making

As the world's premier jeweler and socially responsible  company, Tiffany sets a great example for its peer industries. Nowadays, consumers become more concerned about the background of a company where they purchase products from. Recent studies confirmed that most of the customers would rather buy the same product at the higher price from a socially and environmentally  responsible company that supports a cause the customers care about. This is the reason why Tiffany & Co. has so many loyal customers who despite high prices devotedly come back to shop.

Talking about the types of consumer buying decisions, to buy Tiffany's product most likely will involve extensive decision making since it is an expensive purchase. Making a purchase for the first time a customer would like to get some information of the quality of gems and metals that the company sells and what is the resource. Plus, shopping in Tiffany often associates with some significant event in life such as an engagement or an anniversary. And, it requires a responsible and right decision to make. 

However, a regular customer, who has all the necessary information about the company's product, probably will use a limited decision making. Having trust and experience, a customer will spend less time on making a choice. 

Tiffany is a symbol of prestige and elegance and this image influences customers' perception significantly. Leaving a certain lifestyle, some customers will shop in Tiffany to obtain a certain image and social class recognition.

Chapter 5. Developing a Global Vision

 

Since the moment of Tiffany's creation, the company expanded drastically not only in the territory of the United States, but globally also. Only in 2012 Tiffany & Co opened 25 stores: 11 stores in the Americas, 6 stores in Asia Pasific, 1 store in Japan, 2 stores in Europe and 5 stores in Emerging Markets. Besides operating retail stores and boutiques, it engages in direct selling through Internet, catalog and business gift operations, which contributes to the market expansion significantly.

 

Producing exclusive product such as diamond rings, Tiffany & Co. has a high degree of global standardization. Tiffany's authentic designs are recognizable around the world. 

Being a high-end company, Tiffany & Co. is always aware of economic development of the country where it is planning to open a new store. As a sophisticated industry, the company picks locations, which are expected to have a good purchasing power. It means that all Tiffany's stores are located in the well-developed countries where customers can afford to spend money on luxurious product.

On January 19, 2012 Tiffany & Co. announced that it entered into a strategic joint venture with Damas Jewellery, a company located in Dubai, the United Arab Emirates. Damas Jewellery was previously related to Tiffany & Co. in operating Tiffany’s retail stores. Now both companies are contributing capital to the joint venture. As Frederick Cumenal, executive vice president, said, "We are very pleased to extend our relationship with Damas Jewellery through this joint venture, which will enable us to better integrate five existing TIFFANY & CO. stores into our worldwide store network and enhance awareness of our brand in the United Arab Emirates. We see very exciting opportunities to expand our sales throughout this important region."

 

Another attempt to expand its market, Tiffany & Co. had with the world’s largest watch maker, Swatch, in 2007 which did not go well. For Tiffany & Co. it was a strategy to distribute Tiffany’s brand watches around the world. In September 2011 the deal was eliminated which caused some legal issues between the two companies.  

Tiffany & Co. distributes its product only in its own stores. The company has fixed prices on its products, which you would never buy on sale.

Chapter 4. The Marketing Environment

Being a high-quality and luxurious company, Tiffany & Co. mainly is targeting a specific section of the population, which is represented by upper-middle and upper-upper classes of males and females whose income is high enough to shop for high-end products.

Speaking about age groups, Tiffany's consumers consist of a few generations such as Generation X, baby boomers and Generation Y. Having its own values and interests, each generation is motivated to shop in the stores for its own reasons. For example, generation X has sufficient funds to shop for high-end products representing the group's lifestyle as well. Baby boomers like to purchase high-quality products despite their limited income. Meanwhile, generation Y buys Tiffany's products to follow the celebrity trends.

Having a reputation of one of the finest jewelers in the world, Tiffany & Co. has a strong image and position, which provides the company a steady balance sheet. While women are the main users of the product, the company constantly works on new strategies to expand the market by introducing more products for the male gender. Now, the company sells men products - jewelry, cuff links, accessories, leather goods, watches and fragrances. 

Also, Tiffany & Co. is opening new stores outside of the US expanding its radius globally. For the past 15 years it opened about 80 foreign locations, plus more than 60 in the territory of the US. International sales bring almost half of the company's revenues from outside of the Americas. Tiffany's foreign sales are mainly focused in Europe and Asia. David Schick, who is an analyst for Stifel Nicolaus & Co. in Baltimore, says that the company's foreign stores are more profit-making because they are smaller and situated in a very populated areas which bring more sales per square foot.

Tiffany & Co. focuses its marketing on a specific target markets as it specializes in an explicit area and satisfies wants of a limited group of people. For this reason, the company is very wise about where to open new stores, how to evaluate its products to match with its exceptional image and how to sell retaining its high-end customers.

Chapter 3. Ethics and Social Responsibility

Like any other company, Tiffany & Co. is responsible for creating an ethically healthy environment and it believes that its moral obligation to preserve the natural beauty which is so inspirational to the company.

The Tiffany & Co. Internal Audit Department ensures that the company runs in agreement with laws, regulations and company policies. The company Code of Business supplies principles which are expected to be followed and performed in the corporate duties.

Certain expectations are set for employees by the company Business Conduct Policy. The policy restricts an acceptance of any kind of payments such as bribes or gifts. If any ethical issue occurs, an employee can report it anonymously.

The Board of Directors, which is elected by the company stockholders, is in charge for delinquency of the company's strategy and operations.

Corporate Social Responsibility

In 2009, a Corporate Social Responsibility Committee was founded by the Boards of Directors to review and evaluate Management's goals and practices for social responsibilities.

Alaska's Bristol Bay

Tiffany & Co. has promoted a number of significant policy decisions. As an example, the company stands for the environmentally responsible mining standards. It works with nongovernmental organizations (Earthworks and Human Rights Watch) to strengthen responsible mining practices. It was the first jeweler to grasp the goals of Earthworks No Dirty Gold Campaign in 2005 which set up ambitious social, human rights and environmental standards of the extraction of gold that retail jewelers can use when they seek responsible mining sources.

In 2009, Tiffany & Co. put an advertisement in National Jeweler magazine to bring attention in the jewelry industry about Pebble Mine in Bristol Bay, Alaska, which is home of the world's most productive salmon fishery. Plus, same year  the company devoted its store windows to an "Under the Sea" theme to show its concern for coral conservation. The company stopped selling coral products to preserve a vital element of our ecosystem.

Supplier Responsibility

The Tiffany & Co. Social Accountability Program protects basic human rights by scanning its suppliers' performance which includes hours of work, wages and benefits, health and safety, harassment or abuse, disciplinary practices, discrimination and environmental protection.

Chapter 2. Strategic Planning for Competitive Advantage

Tiffany & Co is one of the finest jewelry retailers which has a 175-year history and tradition. Nowadays, Tiffany operates more than 250 stores and boutiques world widely, and it serves its customers with pride and excellence. A great success that the company achieved over the years of existence is connected to a skillful and well though out strategic planning.

SWOT Analysis:

Strengths: Tiffany & Co has a strong direct selling strategy. It has developed several direct distribution channels which are direct sales in Tiffany stores and boutiques, online and catalog sales. Tiffany offers a wide variety of products which meets a wide range of customer needs. Besides jewelry, the company offers products such as timepieces, china, sterling silverware, crystal, stationery, fragrances and accessories. Tiffany has earned a strong brand name in the fine jewelry market that gives the company a great reputation. Strong balance sheet gives Tiffany an opportunity to increase its offerings and expand geographic coverage.

Weaknesses: The fact that the company's main customers are upper and upper-middle class is highly dependable on economic status. If a recession occurs, the company will incur significant losses.

Opportunities: Tiffany is constantly working on expansion strategy. Since 2007 the company has opened new stores in locations such as Japan, Korea, New Jersey, Hong Kong, Las Vegas etc. New stores will develop the company's geographic radius and boost its market scene.
Also, online shopping became very popular that benefits Tiffany in sales growth tremendously. Besides its convenience for customers, online shopping enhances the company's margins by cutting down its operating expenses.
Growth in men's market gives to Tiffany new opportunities to grow. Tiffany & Co. designs new products for men such as men's jewelry and accessories that is expected to boost the company's revenues.

Threats: Because of counterfeit goods appearance, Tiffany stands to lose its brand equity. Also, it may create customers complaints that will harm the company's image.

Chapter 1. Overview of Marketing (Brief History and Mission Statement)

Writing about Tiffany & Co. is very exciting to me since I was always enchanted by its great taste and style. This company is worldwide known by its luxurious jewelry which is designed by the famous artists such as Paloma Picasso, Frank Gehry, Elsa Peretti, Joan Schlumberger etc. Tiffany & Co. headquarters are located on the Fifth Avenue, in NYC. The company specializes not only in diamond jewelry but also in sterling silver, china, crystal, fragrances, personal accessories and some leather goods.

                                                          History Facts:

1837 -   Originally founded in New York City by Charles Lewis Tiffany and Teddy Young 
             and named as Tiffany, Young and Ellis.

1853 -   When Charles Tiffany became a head of the company, the name was changed to Tiffany & 

              Co.

1845 -   The "Blue Book," the first Tiffany's mail catalog, was put in print.

1862 -   Tiffany & Co. equipped the Union Army with swords, flags and surgical instruments.

1867 -   The company became the first american firm that won an award for the outstanding work in   

             silverware in Paris.

1902 -   After his father's death, Louis Comfort Tiffany became the firm's first authorized Design 

             Director.

1919 -   By the United States Department of the Navy request, Tiffany & Co. modified the Medal of 

             Honor.

1956 -   The first-class designer Jean Schlumberger joined the company.

1968 -   On behalf of the US First Lady, Lady Bird Johnson, Tiffany designed a White House service.

1978 -   Avon Products Inc. bought Tiffany & Co. for $104 million in stock.

1984 -   An investor group directed by William R. Chaney bought Tiffany for $135.5 million in cash.

1987 -   The company went public and sold 4.5 millions shares of common stock.

2000 -   The Tiffany & Co. Foundation was formed to contribute to nonprofit organizations working 
              in the environment and the arts.

2008 -   The Japanese mobile phone operator SoftBank and Tiffany & Co. joined together to create a 

              limited edition cellphone that contained more than 400 diamonds and was evaluated in 

             100,000,000 yen.

                                                    Mission Statement:

Tiffany & Co. objective is to maintain an ethical business that is qualitative and sustainable. The company strives to protect the interests of stockholders by making responsible decisions that show the brand's righteousness. Its goal is to improve the communities where the company operates and sells its goods. Also, Tiffany & Co. understands how important is to enhance the environmental performance of the company. It continuously works with the employees, supply chain, stockholders, local communities and civil society to build up the company's social impact and diminish its environmental impact.