Even after the near-fall of the U.S. luxury-products industry in 2009, the industry continues to exhibit positive growth. The U.S. economy, although coming out from a recession is better off than it was in 2008. Jewelry companies are fighting to return to the positions of profit they enjoyed prior to 2008. Online jewelry and diamond retailers reported an increase in sales. The mid-market jewelers are, however, showing more hope with significant growths in this sector. Demarco, A. (2012).
Tiffany &Co, one of the luxury-items retailer jewelers has performed well throughout the recession. The company has a strong brand associated with romance, quality and style. Some of its major strengths include: strong direct selling strategy, wide variety of offerings, strong brand name, and a strong balance sheet. The fact that Tiffany & Co has strong direct selling strategy is because of its retail stores in the U.S. and abroad. The firm has also incorporated online selling of products. The company has also been in the industry for long thus giving it an enviable product name. The company’s strong balance sheet is another major strength. In 2012, the company had total assets worth $4.16B against total liabilities of $1.81B. The company continues to experience several weaknesses which include declining cash flow, low profit margins, and increased scarcity of raw materials. The company has several opportunities that it can exploit to change its fortunes. One opportunity is in the male toiletries market. Damassa, Hyder, and Wilcox (2007) assert that there has been a new lifestyle for men to spend more on appearance and that this market continues and will continue to show huge prospects year in year out. This market has been very resilient to the financial climate and is set to blossom in the next couple of years. The industry has to date been dominated by big brands among them Unilever and Procter & Gamble. Tiffany & Co has chances of succeeding by targeting niches such as skin care and eco-friendly products. The best product to launch would be a male moisturizer that is not only eco-friendly but has a ready and untapped market.
Expansion through online sales is another opportunity. Online shopping is now a global phenomenon and in keeping with this trend, the firm should expand their online sales. Expanding can be achieve by launching an e-commerce website where customers can buy products online, or through online promotions, e.g. on Twitter. This would not only increase sales but also increase profit margins by reducing the operational costs. There also exists a huge opportunity in new markets such as men fragrances and in the low-end products market.
The low-end silver styles basically comprise the non-gemstone, sterling silver jewelry of a $200 price. These pieces are mainly intended to younger women, an example being the open-heart Elsa Pertti necklace. This piece accounted for 30 per cent of annual sales in 2007. However, Tiffany & Co continues to face threats from counterfeit goods more so in the online market where most online sales under the Tiffany & Co are normally counterfeits. The unstable and poor economic situation in the U.S and in the Eurozone continues to cause worry and anxiety for the firm. The increasing rental rates in the U.S also threaten the situation as the company continues to lease stores. Increased rates means the operating costs will rise thus declining profit margins. The jewelry industry has several competitors with select few firms having the brand recognition to command large portions of the market. While as the market has some regional players, Tiffany’s high-end reputation enables it to maintain a national and international presence. However, the firm faces stiff competition in the sale of watches where it has not been able to stake a substantial claim. It is important to note that unlike other industries, entry in to this market is very prohibitive. There is a lot of capital needed to enter the industry thus shielding established players like Tiffany & Co from new competition. Procuring raw materials for a new player would also be difficult since most producers of diamond sell it in bulk.
The luxury jewelry market has few substitutes given. However, within the industry, there are substitutes between different types of products. Tiffany & Co has established itself as the leading player in engagement rings. Mikimoto dominates the luxury pearls while Rolex leads in luxury watches. These companies pose a threat of indirect competition to either of Tiffany & Co.’s products. There is also changing symbols of luxury and exclusivity which pose an indirect threat to Tiffany & Co. Some wealth people will buy cars or homes as a symbol of their wealth more than they are likely to buy jewelry. Organizational mission
Committed to the provision of high quality luxury to the satisfaction of our esteemed client.
Performance Goals
Increased sales, by introducing a new product targeted for the low end market.
Increased profit margins
Strong brand name
Expansion to other geographical areas.
Marketing strategy
Tiffany & co has a strong and unique brand name. This makes it a market leader in the jewelry market both in the U.S and internationally. If the company were to introduce high quality skin care products targeted for men both in the low end and in the high end markets, such products would be awfully successful. The broad target here is men. As discussed earlier, men are changing trends and are more mindful of their image. There has also been an increase in the male population across the world. For example, U.S sales in men toiletries reached $2,392.7 million in 2006 and continue to grow to date. McDonald and Dunbar (2013). A generation of men has come up that is metrosexual, this generation is willing and able to spend, time and money on looks, skincare and accessories that have hitherto been the preserve of women. Tungate (2008) says that that explains the increase in men magazines. It is important to consider that in keeping up with the company’s brand and exclusivity such items should be targeted more to the high end market with no limitation to geographical locations, however, the change in economic situation has shrunk this market too much for it to be relied on solely. Thus, I propose that Tiffany & Co launches male moisturizers in two forms, one intended for the high end market and different products that are affordable to the middle income class.
Target audience
It is estimated that, by the year 2015, total market for men toiletries and fragrances will reach £1.10bn in the U.K. in Brazilian market for men’s product was valued at US$ 3.28 billion. In every country, from the U.S to the U.K, Italy, Spain and even Japan there exists such huge untapped market. The benefits are immense as this provides new markets, increases flow of money, builds the brand name and increases profit margins for the company. To tap this market, the company must consider opening several stores in strategic cities so as to easily market these products. With Tiffany & Co already having many stores in Japan and in the U.S, it will be prudent to open in unsaturated areas such as Switzerland, Germany and Italy. Some of the best marketing methods tiffany can use include advertisement, direct marketing, viral marketing, and public relations.
Now that we have clearly identified our target market, the next step is to segment the target market. As Tiffany & Co, we can segment first by geographical locations and then by demographical aspects of our clients. The most important is the observation of demographic variables. The luxury-items industry is quite exclusive and quiet and any attempt to make it easily accessible to every Tom, Dick, and Harry devalues the luster associated with the firm. On this aspect, Tiffany & Co stores should be stocked with high-end male toiletries and fragrances. This is to serve the already tapped high end market that is looking for exclusivity and prestige. This should serve as the most important to the long term survival of the firm given any association of lack of class would completely destroy the company. However, it is important to realize there is another huge market in the middle class that may have previously been in the high –end bracket but with the economic downturn in the U.S and in Europe cannot afford the high-end products. This market should not be ignored. The company should open new stores under a different name, say Tiffany Men, and stock these stores exclusively with high quality but affordable male items. This not only guarantees booming sales but it also safeguards the company from the risk of losing the high-end clients. It is also important to consider the age of the customers in segmenting them. It is important to note the demographics in every of these countries so you can effectively market these products. For example, men above the age of sixty will tend to want mature and conservative products as compared to the young men who are more liberal and whose disposable income may be quite high given the lack of financial responsibilities on their part.it is important to conduct extensive market research so that the company can be fully aware of the situation as it is and effectively market its products.
Marketing methods
After segmenting our target audience, it important to choose a marketing method that is not only cost effective, but also helps us achieve maximum results. One method is advertising. Given the financial clout of Tiffany & Co, the company should embark on a massive advertising campaign to market its new product. In advertising the male moisturizer which is one of the many male toiletries, it should be acknowledged that men are not accustomed to buying or using many toiletries, more so products from companies that have traditionally produced products for women. The task here, according to Dines and Humez (2003) can be described as an initiative to market masculine products, that have hitherto been regarded as feminine. It is important to take several factors in to consideration in packaging such a product. One factor is color; the color of a product may often enhance the qualities of the product. Thus, masculine products are often packaged in black, grey, and muted blue unlike the feminine products which will often be in soft colors such as pink and blue another factor is information provided. Given that men are less experienced on toiletries, a lot of information will be given to the male consumers as compared to their female counterparts. The advertisement should also consider the visual pleasures evoked once it’s displayed to the consumer. In our case, a male moisturizer should reference freshness and purity. The messaging should also be packaged such that it refers to the third person. This means that majority of male toiletries are to be bought by females for their male partners. Finally, the advertising should take in to account the racial sensitivity issues given Tiffany & Co would be marketing to different racial and cultural areas. Thus, each region should be given a suitable advertisement plan that suits it favorably.
Marketing effectively also involves product branding and pricing. Given the two target groups, one in the high-end market and another in the middle class market, the products should be priced and packaged to suit these two groups. For the high-end market, the price consideration is rarely an issue. As such the product should be set at a high price in the range of $2000 to $4000. In the middle class market, the product price should be affordable in the range between $150 and $600. The two products should be distinctively packaged and stocked in different stores, with the high-end product in the traditional Tiffany & Co store while the middle class product is stocked in exclusively-male stores
The use of male celebrities to advertise especially comes up. In an era where people see celebrities as role models, getting these celebrities to market our products would be immensely productive. Research has shown celebrity advertising to be highly effective especially on skin products. In the U.K, there are several icons that could help market these products, among them are the masculine actors; example being Daniel Craig of the James Bond phenomenon, musicians, and footballers such as David Beckham. Viral marketing is also one key strategy that should not be overlooked. Given the geographical segmentation of Tiffany & Co clientele, an online marketing strategy helps reach the global village that the world has become in a short while thus saving time and resources. This may include podcasts, discounts for online shoppers, promotional campaigns on social media platforms such as Twitter and Facebook.
Summary
The launch of a male moisturizer at Tiffany & Co is a very feasible plan. However its success will largely rely on an effective execution plan by the company. To execute the plan effectively, Tiffany & Co needs to invest more time and resources on market research to get more accurate information on demographical factors such as disposable incomes in every targeted age-group as well as in every country. The company will also need good public relations machinery as it seeks to enter new markets. It’s prudent that forb the purposes of launching this new male moisturizer, the company should consider hiring a Public Relations firm to help the company mount an effective marketing strategy. Given the many stores the company has opened, distribution of these products will be an easy affair. However, the company should continue opening stores in unsaturated markets.
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