Tiffany & Co. Maya Alexandria Curtis Introduction to Marketing the Arts 16 October 2010
History • Tiffany & Co. was founded in 1837 in New York City by Charles Lewis Tiffany, trademark blue box introduced the same year
• Fifth Ave. location in 1940 • Entered European markets in 1986 opening a store in London • Listed on the New York Stock exchange in 1987 • Ecommerce website launched in 1999
Mission Statement At Tiffany & Co., it is our mission to craft objects of captivating beauty in ways that maintain Tiffanyâ€™s high standards of social and environmental responsibility. Our goal is to preserve the environment while ensuring that the precious gems and metals gracing our creations are acquired through responsible mining. We are committed to conducting our business with integrity and that extends to everything we do. From cultural conservation to paper packaging and recycling, sustainability is our best design.
Corporate Goals • • • • •
Continue to recover from an economy in hardship Building the brand Open 17 new stores in 2010 Expand ecommerce reach Decipher a way to draw in prospective clients from competition that has been forced to shut down due to difficult economic times
Strategic Business Units • TIFFANY & Co. • THE TIFFANY & CO. FOUNDATION – The mission of the Tiffany & Co. Foundation is to protect the beauty of nature and the creativity of human nature. The foundation provides grants to nonprofit organizations dedicated to environmental and cultural preservation, coral conservation, responsible mining and design and the decorative arts.
Management Organization • • • • • • • • • • • •
Michael J. Kowalski- Chairman and Chief Executive Officer Rose Marie Bravo- Director Lawrence K. Fish- Director James E. Quinn- President Beth O. Canavan- Executive Vice President James N. Fernandez- Executive Vice President and Chief Financial Officer John M. King- Executive Vice President Pamela H. Cloud- Senior Vice President, Merchandising Patrick B. Dorsey- Senior Vice President, General Counsel and Secretary Patrick F. McGuiness- Senior Vice President, Finance Caroline D. Naggiar- Senior Vice President and Chief of Marketing Officer John S. Petterson- Senior Vice President and Chief Marketing Officer
Customer Profile •
Geographic Segmentation: – Tiffany & Co. does business with United States, Canada, Japan, China, Australia, United Kingdom, Austria, Belgium, France, Germany, Ireland, Italy, Netherlands, and Spain. Residing in both urban and suburban areas.
Demographic Segmentation: – – – – – –
Age: 20’s to early 40’s Gender: female Household size: 1 to 3 Income: $ 60, 00 plus annually Occupation: Working professional Education: College graduate Sociocultural Segmentation: Culture: American and European Sub Culture Religion: Raised in a Christian household
Customer Profile Continued National Origin: European Race: Caucasian Social Class: Upper middle class, Upper class Marital status: Married Psychographics: Affective and Cognitive Segmentation: Degree of knowledge- novice Benefits sought- prestige and beauty Attitude- neutral Behavioral Segmentation: Brand loyalty- divided loyalty Store loyalty- divided loyalty Usage Rate- medium Usage Status- current user Payment Method- credit card Media Usage- magazines Usage Situation- vacation
Psychographics • • • • • • • • •
Tiffany’s customer is a married woman, she has one to two kids. She prefers to drink a cup of Chai tea while reading The New York Times and Vogue Customer enjoys the classics: A day watching Turner classic movie Channel is idea, amongst her favorites are Sabrina, and of course Breakfast at Tiffany’s She enjoys travelling: favorite locations include Paris, London, Rome Customer is a frequent shopper and enjoys stores such as J. Crew, Chanel, Luis Vitton She leads a very healthy lifestyle, frequents the gym at least four times a week, and takes classes like pilates, and cycling. She is very health conscious and makes sure that she always has a nutritious and balanced diet. She gets manicures and massages bi- weekly She is a strong believer in self worth and luxurious jewelry suits her lifestyle.
SWOT Analysis External Forces: Competition- Bulgari, Chanel, LVMH, Cartier Tiffany & Co.
Engagement Ring 18 kt white gold, circular diamonds on the band
$12, 500 Prices must be determined
Prices vary due to carat, clarity of the diamond, etc.
Website Print ads ( magazines)
Website Print ads (magazines)
Purchase is not available online Store
Purchase is not available online Store
Situational Analysis External Forces: (Macroenvironment) Competition Opportunities There is limited competition from online retailers Take over jewelry wedding segment Unique marketing outlook
Threats Competitive prices from other jewelry companies Competition has wider selection of merchandise Ad campaigns of competition feature celebrities
Economics Opportunities Recovery in the US market Rationalization of competitorâ€™s operations will boost revenues Asian luxury market will drive top line small store format facilitate higher store productivity and lower investment
Threats Market is recovering but still unstable, opening new stores is risky Luxury goods are not top priority of consumers that are becoming more thrifty
Jewelry alone may not bring in enough revenue, consider expanding into other product lines Nature Opportunities Public environmental concern- everyone is going green High standards of social and environmental responsibility as stated in Tiffany’s mission statement Promotion of The Tiffany & Co. Foundation Threats Resources limited More expensive when selling non- conflict diamonds Remaining a positive contribution to the environment Politics Opportunities Top of the jewelry luxury market Tiffany’s Business Accounts Investors Threats Competition from other jewelry companies Investors buying Tiffany’s & Co. Tiffany’s stock decreasing Regulations (laws, duties, taxes) Opportunities
Trademark State of New York laws apply Local taxes if applicable apply to online orders. Tiffany & Co. collects sales tax for all states and the District of Columbia, except for Delaware, Montana, New Hampshire and Oregon.
Threats Increased counterfeit crime will hurt brand image and will convert into losses Corrupt management Thievery
Technology Opportunities Create a more interactive website for customers Expanding Tiffany’s presence in Social Media Creating apps for iPhones and Blackberries
Threats Not utilizing technology to the best of its ability Loosing elder customers who are accustomed to a more simplistic Tiffany’s Producing a more technologically savvy Tiffany’s that is counter efficient then Tiffany’s prior to any enhanced features.
Expansion of luxury market Highly sough after merchandise expanding the merchandise sold to reach other social classes as well. Incorporating Tiffanyâ€™s into other aspects of tiffanyâ€™s customers lives. (expanding the brand into home goods)
Threats Society is hesitant to spend their money on luxury items Needs to create an image for the company more appealing to young adults Maintaining the importance of prestige and the lasting value of luxury good items
Internal Forces: (Microenvironment) Product Mix Strengths Wide selection of engagement jewelry Merchandise for men and women Accessories along with jewelry
Weaknesses Not a wide selection of lower priced merchandise Merchandise has not branched far out of the jewelry market, when competitors are investing in other product lines Products are not evolving as readily as competitors.
Pricing Strategies Strengths Customers are aware that they are buying quality items that will be more sustainable. Prices are equally competitive with other luxury brands Prices of diamonds cannot always been given online, must go into the store to get a pricing assessment.
Weaknesses Non-participation in sale promotions will reduce the addressable market. Increase in debt and interest payments to $400 million and $26 million, respectively, impact net margins. Prices may be to high for some clientele need to create a better range.
Promotion Strengths American made company, with a rich history and background that appeals to the customer. Never utilizes celebrity endorsements Improving brand values in a fragmented luxury market.
Weaknesses Not appealing to the mass markets Not utilizing all given resources
Not running adds where Tiffanyâ€™s customers will readily view them
Suppliers Strengths Seventy percent of diamonds sourced directly from mines and sixty percent of merchandise sold produced in- house Majority of manufacturing takes place in America Online revenue
Weaknesses Japanese luxury market set to decline, negatively impacting Tiffanyâ€™s sales. Need to expand more in foreign luxury markets Mining is a dangerous form of supplying diamonds.
Product: skincare, leather goods, accessories, watches, jewelry fragrances Price: competitive prices with other luxury jewelry companies Place: locations in the U.S, Italy, England, France, Asia Promotion: utilizes celebrity endorsements for ad campaigns
ANALYSIS OF COMPETITION
A. Objective: Company will increase the selection of product available to the customer; Beauty product- skin care products, cosmetics, brush set, and nail polish. New Beauty line will be ready for release in May 2012. Products will be sold exclusively online at Tiffany&Co.com and at Sephora stores. Strategy: Create a separate division of the company, where we will hire in an outside resource to head the Beauty Department. Tactics: The head of the beauty department will create a collaboration with Sephora and work out an agreement for Tiffanyâ€™s products to be sold in Sephora stores. Newly created Beauty Department will create three teams. One team will design a line of skin care products, one team will design cosmetics and brush sets, and the other team will design nail polish and manicure sets. Head of the beauty department will take new beauty line designs over to Sephora so that concept and ideas can be viewed by Sephora, Tiffanyâ€™s will enter into a contract with Sephora. The new beauty products will be reviewed by the product development department. Product development department must first approve the new products before they are ready to be released and they should be finished reviewing the products by March 2012. The beauty line will be ready to be sold online by April 2012 for a test trial of the products. When customers purchase products online during the test trial a survey of the product will be sent to their e-mail account. Upon completing the survey the customer will receive 30% off their next purchase in the beauty department of Tiffany & Co. Discount will be redeemable until May 29, 2012. The surveys that are completed will be directed to the e-mail accounts of the marketing research team. They will compile and evaluate the data. The data will then be reported to the Beauty Department, any adjustments that need to be made to the beauty line will be altered within a months time span. Then the products will be sold online and exclusively at Sephora stores by May 2012. The expansion of products sold by Tiffany & Co. will expand their revenue by 20% by January 2013.
Evaluation: The director of the Marketing research team will monitor sales data of the new beauty product line will be monitored closely for the first year of being in the market with an in-depth analysis being administered to the director of the beauty department the first Friday of every month until May 2013.
B. Objective: Create more Tiffanyâ€™s merchandise at a lower price point to increase revenue. The creation of 25 new items in the lower price point merchandise category will be ready to be sold by August 2012 Strategy: Pamela H. Cloud, Senior Vice President of Merchandising will create a merchandising team to decipher where Tiffanyâ€™s can create lower priced merchandise. Tactics: Merchandising team will expand on the key chain lines, bracelet charms, pens. Merchandising team will work closely with the product development team to expand on these accessory lines. The merchandising team will also collaborate with the beauty department to ensure that some beauty products will retail at a lower price. Merchandising team will compile a list of products that the beauty department is creating that will retail at a lower price point. Expansion of lower priced items should expand customer base and simultaneously expand revenue and be ready for release by April 2012. Evaluation: Did the revenue increase? Evaluation and comparison of sales reports from this year to the same time last year will be conducted by Patrick F. McGuiness- Senior Vice President of finance at the end of a years time span on April 2013. .
C. Objective: Hire a new designer to expand home goods line; bedding, lamps, rugs etc. Expanded home goods line will be ready for release by January 2012. Strategy: Collaborate with Vera Wang to design home goods line. Tactics: Vera Wang will be employed to design home goods: Bedding, lamps, carpets, etc. She will be given a team of five designers to assist her with the new line. Any resources that are needed will be at Vera Wangâ€™s disposal. Vera Wang will present her design ideas to Tiffanyâ€™s & Co. by June 2011, the designs will be ready for production by November 2011, and will be ready for release by January 2012. Evaluation: Customer response to the Home Goods line, are they purchasing the products? Evaluation will occur in the sales reports conducted by Patrick F. McGuiness- Senior Vice President Finance on January 2013.
A. Objective: Increase revenue by 15% by expanding products available at a lower price Point by April 2012. Strategy: Senior Vice President of Merchandising, Pamela H. Cloud is heading a team that will create a list of products that will be available at retail for a lower price range between $30- $60. Tactics: Beauty Department and the Merchandising team are collaborating to develop products at a lower price point. Pamela Cloud will have a list of at minimum twenty- five products that will be sold between the price range of $30- $60. Products will be ready for review by the board by February 2012 Evaluation: Does the revenue increase by 15%, Patrick F. McGuiness- Senior Vice President, Finance will analyze sales reports and decipher if revenue increased by the goaled 15% and report the information to the merchandising department by February 2013.
B. Objective: Maintain higher priced items without raising any prices continuously for two years. November 2010 to November 2012. Strategy: Higher priced items will be maintained be expanding Tiffanyâ€™s revenue by creating a wider variety of lower priced items, and expanding other product lines such as home goods and the beauty product lines. Tactics: New home goods line will be ready by January 2012 and Beauty line will be ready by April 2012. By bringing in revenue from other areas, prices of luxury goods will not fluctuate for the next two years November 2010November 2012 Evaluation: Patrick F. McGuiness- Senior Vice President, Finance will monitor if luxury items fluctuate within the two-year time span (November 20102012)
C. Objective: Raise the sales goal of luxury priced items by 20% by January 2013 Strategy Raising the sales goal of luxury priced items through promotional material, increased presence online through social media and increase ads in online magazines. Tactics: PR department will create a special division just for social networking. Social networking team will be in charge of creating and maintaining Tiffany & Co. Facebook, Twitter, Tumblr, Flickr, and blog. PR department will also make sure that Tiffany ads are in all major online magazines and newspapers. The team will make sure ads appear in Womenâ€™s Wear Daily, New York Times, Vogue, and Elle. Sales goal of luxury priced items will increase by 20% by January 2013. Evaluation: Patrick F. McGuiness- Senior Vice President, Finance will monitor luxury items sales to decipher if the sales were raised by 20% by January 2013.
A. Objective: Removing print ads from Newspapers that are not mainstream by January 2011 Strategy: Print ads in Newspapers not including The New York Times, Los Angeles Chronicle, The Chicago Tribune, and Women’s Wear Daily will be removed. Budget for promotional material will be redirected into increased presence Online. Tactics: PR department will evaluate what ads are no longer effectively reaching Tiffany’s customer. Marketing Research team will create a survey that will be sent out to the e-mail accounts of all Tiffany’s customer. The survey will ask questions pertaining to our customers lives what they read, what type of phone do they use, where do they spend their time. Customers who complete the survey will receive 10% off any purchase within the next three weeks of completing the survey. The survey will be evaluated by the marketing research team and they will report the data to the PR department. All ads that are going to be pulled will be pulled by January 2011. Evaluation: Patrick F. McGuiness- Senior Vice President, Finance will evaluate if there is an increase in sales reports. By January 2013.
B. Objective: Increased presence online, additional ads in online magazines by January 2012 Strategy: We will increase Tiffany & Co. presence online in addition to the Facebook account we will create a Twitter account, Tumblr, blog. Increase ads in online magazines Vogue, Elle, etc. by January 2012 Tactics: PR department will create a social networking division that will be in charge of monitoring and maintaining Tiffany’s Facebook, Twitter, Tumblr, Flickr, and blog. Taking advantage of new social media will allow Tiffany & Co. to advertise directly to their consumers and develop an interactive relationship with customers. PR department will also be increasing their presence online by buying ad space in online magazines and newspapers. PR department will buy ad space in Women’s Wear Daily, New York Times, Vogue, Elle, etc. Evaluation: Increasing Tiffany’s presence online will be evaluated by revenue. Revenue will be evaluated by Patrick F. McGuiness January 2013.
C. Objective: More interactive features on website, create an app to be used for iPhones by April 2012 Strategy: Create a Tiffany’s & Co. app for iPhone by April 2012 Tactics: The technology department will contact iPhone and they will work together to create a Tiffany’s & Co. app for iPhone. Application will be designed and ready for review by the board by February 2012. The technology department will also be working on creating more interactive features of Tiffany’s website. Both projects will be ready for use by April 2012. Evaluation: The technology department will create a tracker that will be on the website and iPhone app that will show how many times these new functions are used. The count will be sent to the marketing research department so they can decipher how effective the new applications are and how readily they are being used. A report will be sent to the marketing department on the first Monday of every month.
A. Objective Expanding in Asian luxury markets, opening 15 new stores by April 2013 Strategy: Create a marketing team to further research in Asian luxury market. Tactics: Marketing team will research the customs, culture, and retail market in Asia. Research will be presented to Tiffany & Co. by April 2012 and stores will be opened in April 2013. Evaluation: The success of the stores will be evaluated by the sales of the new stores. Patrick F. McGuiness will calculate the success of the new stores from a financial perspective and send his reports to the director of Tiffanyâ€™s & Co.
Objective: Opening 10 new stores in America by September 2013 Strategy: Create a marketing team to further research American luxury market. Tactics: Marketing research team will compile research on the retail market, locations where Tiffanyâ€™s will be prosperous. Research will be presented to Tiffany & Co. by April 2012 and stores will be opened in April 2013. Evaluation: The success of the stores will be evaluated by the sales of the new stores. Patrick F. McGuiness will calculate the success of the new stores from a financial perspective and send his reports to the director of Tiffanyâ€™s & Co.
Objective: Opening 15 new stores in Europe by November 2013 Strategy: Create a marketing team to further research Europe luxury market. Tactics: Marketing research team will compile research on the customs, culture, and retail market in Europe. They will create a customer profile specified to the European customer. Research will be presented to Tiffany & Co. by April 2012 and stores will be opened in April 2013. Evaluation: The success of the store will be evaluated by the success of the sales. Patrick F. McGuiness will calculate the success of the new stores from a financial perspective and send his reports to the director of Tiffanyâ€™s & Co.
Strategic marketing plan created for Tiffany & Co. for Introduction to Marketing the Arts class.