Tiffany & Co. is a company that deals with jewelry and was founded in 1837. It has changed owners several times but has retained most of its traditions (Strickland et al, 2012).
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The “Tiffany Little Blue Box” is a gift box that was created by the founder of the company and all products bought from Tiffany & Co. are usually wrapped in this little box. Some of the other traditions that have been upheld are production of fine jewelry that targets the top most in society. This case compares Tiffany with other companies that produce jewelry.
Problems or issues arising in this case are that during hard economic times customers opt for other cheaper companies rather than the products of Tiffany which are quite expensive.
Another problem is that the 4Cs of purchasing diamond when compared between Tiffany and its competitors, the products of Tiffany are substantially more expensive than those of the same value in other companies. Tiffany’s target of consumers is limited as they only target the upper class in society and have no products for the middle and lower income earners.
The strengths of Tiffany & Co. include the fact that they have been able to maintain production of standard items throughout the years. The company has focused mainly on production of fine jewelry and its target has been the upper class in society.
One of the chief executive officers, Avon attempted to lower the standards by increasing Tiffany’s line of less expensive products but he failed since many people criticized his move and it was his successor was able to take back Tiffany & Co. to its original glory (Strickland et al, 2012).
The company’s strategy across the years has also remained the same in line with its mission statement of being the world’s most respected jewelry retailer. The company expands its line of products in such a way that its quality and standards are still maintained. It has also maintained its blue book catalogue and upheld the blue box throughout the years. Finally, Tiffany has been able to maintain customer loyalty to its brand of jewelry.
The change in management and ownership has not affected the way the business is run since the strategy and the quality of products has remained virtually the same. In addition to jewelry, the company has also invested in other products. This is commendable since if one line of products faces problems the other products will ensure the company maintains its profits and revenues.
Their staff is also well trained to ensure that they give quality services to the customers. The company has also had increased revenues overtime except for a few mishaps. According to their financial records, the last year recorded, 2011 had the highest revenue collection.
Tiffany & Co. also has weaknesses. Their prices are specifically high as compared to the prices of their competitors. These prices are almost of the same product in other stores but Tiffany’s is higher by a big margin. This extra price is attributed to their blue box and the prestigious trade name which comes with experience.
Tiffany & Co. has targeted the upper class in society for their commodities which is reasonable as they form the highest percentage of those who buy jewelry. The upper class forms 48% of the population that buys jewelry composed of households with the highest income quartiles. The other 52% are the households with the second highest, third highest and the lowest are not part of their target (Strickland et al, 2012).
The upper class in society forms a very small percentage of the population. This further decreases the target population of Tiffany & Co. The products of the company are susceptible to changes in the world economy.
When there are tough economic times, people reduce their purchases of luxury goods and this affects the sales of the company. Tiffany has not been able to come up with strategies to compete in the market as they only rely on their experience and the Tiffany box to provide an edge.
One of the major products of Tiffany is their engagement rings and the wedding bands which are dependent on weddings. The numbers of weddings in the USA have been reducing across the years from 2.3 million in 2001 to 2.0 million in 2010 (Strickland et al, 2012). This is despite the increase in population. This indicates that the market for these products is reducing by the years.
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The company has opportunities such as tapping into the market of the low income earners by increasing their line of less expensive products. They should increase their line of products to include other jewelry and not just major on their engagement ring and wedding bands.
They can also expand their products to other things and not just jewelry. They should also consider changing their strategy. A strategy that worked more than 100 years ago may not necessarily work with the current generation. They should offer prices that compete with the prices of their competitors. This can be done by reducing the margins between their prices and their competitors.
Threats faced by Tiffany are that increasing their line of products of inexpensive items may see them lose their loyal customers because of reduced quality. Their brand name will also be less prestigious as it will be available at a cheaper price. The quality of their customer service is likely to go down as they will have more customers.
The implementation of the changes suggested in the opportunities may be quite difficult and need to be done over time and not instantaneously.
A lot of advertisement may need to be done to inform other customers that there are cheaper products at Tiffany and to reassure the loyal customers that the quality of their choice of products still remains the same. A lot of studies need to be done to determine whether the introduction of a less expensive line of goods will be beneficial to the company or it will lead to losses in the long run.
The company may want to consider setting a price for the Tiffany gift box so that any customer who wants his or her jewelry put in the gift box can buy it rather than adding some hidden charges on the prices of their commodities resulting in pushing away consumers.
The company should offer market prices that are competitive in the market, and not just prices that are far much above what the rest of the jewelry companies are offering. Tiffany should also consider investing more in customized watches as they are the next most sold jewelry after diamond jewelry.
In the implementation of changes, Tiffany should keep in mind that it is their traditions that took them to where they are. Thus, in view of this they should uphold those traditions that are of value to the company and only do away with those traditions that inhibit the company’s potential to grow.
In conclusion, the case study shows that the Tiffany blue box has been a success for the company for many years while the Tiffany brand name is also prestigious and it is understandable when the company wants to maintain it in that state. However, changing economic times require that businesses do things differently, that is why the suggestions above have been put across.
Strickland, A. J., Thompson, A., Peteraf, M., & Gamble, J. (2012).Crafting & Executing Strategy: The Quest for Competitive Advantage: Concepts and Cases New York, NY: McGraw Hill.