Tiffany & Co. is a company with a strong brand name, and famous for its luxury goods. The company was started in 1837 by Charles Lewis Tiffany and John F. Young. They opened a store in New York that was intended to sell stationery and costume jewellery. In 1845, the store began dealing in high-quality silver pieces which up to now remains its speciality. Later in 1853, the company was renamed to what is now Tiffany & Co. Over the years the company would become strategically tied to the political leadership in the country which contributed to its immense growth and success. After a fall in profits during the great economic depression, the new management changed tact by getting rid of goods it deemed unworthy of its reputation. They cleared goods such as diamond rings for men, leather goods, silver plate, and antiques. In turn, new goods were introduced.
They were high quality but of lower price. The change of tact was immensely successful stretching to 1978 when it was sold to a world leading manufacturer of cosmetics: Avon products Inc. Avon would later sell it in 1984. The new management embarked on a path to regain the high end image. It would go public in 1987 which enabled the new management to introduce new products which included fragrances, silk scarves, handbags, and briefcases. They also opened new stores in London, Zurich and Munich. Tiffany & Co continues to enjoy a strong brand name and customer loyalty which accounts for its large growth and strength even in the face of the economic downturn. For the company to continue to enjoy growth, the management must consider certain alternatives.
Tiffany & Co. should review their strategies to embrace such value disciplines as operational excellence, customer intimacy and product leadership. For operational excellence to be upheld, the company must modify to keep up with the changing economic fortunes in both the local and international markets. However, this must be a delicate balancing act. In the jewellery market is hinged on exclusivity and luxury. While an introduction of affordable items to the middle class market will increase sales, it is bound to turn away the high-end market to the competition. Opportunities that the company can undertake to achieve operational excellence include expansion in retail outlets, increasing online sales, growing the men’s market, and introducing a new business venture. It is important to note that with the changing economic climate, the traditional market will continue to shrink as the government seeks to end cuts previously enjoyed by high-income earners.
What probably makes Tiffany & Co a fist among equals is its brand name. Therefore, the management should embrace their customers. The company has introduced a new plan to open low end stores in the USA. According to Damassa, Hyder, Wilcox (2007), such a plan that focuses solely on lower price products may hurt the brand beyond repair and cripple long term sales. The smaller store format enhances customer enhances. Damassa, Hyder, Wilcox (2007) propose that Tiffany & Co should consider opening stores in new markets instead of focusing too much on the US and Japan markets. On product leadership, the company continues to face competition. It is noteworthy that the brand name continues to be the most important asset for Tiffany & Co, to achieve growth, the company should consider ways of maintaining that brand. The company may consider hiring more famous designers as well as introducing more high-end products to keep up its brand name.
Tiffany may also have to adapt generic strategies to achieve maximum growth. They may include differentiation, low-cost leadership and focusing on their cost or differentiation strategies. Pearce & Robinson (2006).With the threat of fake products and imitations, Tiffany & Co should adapt the strategy of differentiation. It must be such a recognisable brand that no imitator can pose any challenge to its brand. In 2005, research shows that 90% of items sold under Tiffany & Co label on eBay were counterfeit (Tiffany & Co: SWOT Analysis, 2007). It is therefore prudent to boost efforts to strengthen product name and authenticity. Another generic strategy could be low-cost leadership. However, as discussed earlier, such a move should be made carefully not to hurt the brand name in the long term. The company should consider opening stores that deal exclusively with affordable but high quality items so as to reach the lucrative middle-class market. To avoid confusion and loss of exclusivity the company may open the stores under a different name. The company may also consider the focus strategy, which in my opinion is the most suitable for Tiffany & Co. Botten & McManus (1999) assert that it is better to focus on a narrow market, serve it perfectly than to target the broad market. However, this strategy has its own disadvantages in that the company may not make enough profits in the short term thus making it hard to survive the recession, also, the target audience may no longer be different from the rest of the market especially in these hard economic times. The competition may also pose a challenge by filling the market gap that would occur if Tiffany & Co was to focus-strategize.
All in all, Tiffany & Co is a strong brand and should continue to do what it does best.Among the grand strategies that will best help Tiffany & Co achieve maximum growth include: concentrated growth, market development, product development, innovation, integration and concentric diversification. As discussed, it is best if Tiffany & Co continue to do what it does best- production of luxurious and exclusive goods. The company should introduce more of such high end products for both their local and international markets. More resources should be put to ensure that in the long term, Tiffany & Co will retain its brand name. As the US market is fast becoming saturated, the company should strategize on market development in new areas such as Switzerland, Germany and South Africa. Integration is another important strategy, given its advantage as a market leader, the company should consider integration, either vertically or horizontally; which would help tame competition.
Conclusion
Tiffany & Co remains a well placed company with an admirable pedigree. However, to survive the changing economic environment, the company should adapt some new strategies and value disciplines. In view of that situation, my observation is that the greatest threat facing the company is loss of status. if the company is to introduce stores exclusively for the low-end market, then it should be very careful on the impact that will have on the long term sales. The most feasible step that tiffany should consider is a focus strategy on its high-end market which guarantees good returns in the long run.
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