With over $4.4 billion in net sales for 2018, Tiffany has brand awareness and a perceived sense of luxury and quality thanks also to strategic marketing, PR, and media relations activities. Many of these activities are focused around the iconic Flagship Store located in 727 of Fifth Avenue.
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Tiffany business model
Tiffany’s business model is based on three primary products that range from jewelry collections, designer jewelry, and engagement jewelry. With its iconic brand, Tiffany made over four billion dollars in net sales in 2017. Tiffany operates in four main geographical areas reported separately:
Americas
Asia-Pacific
Japan
and Europe
Jewelry represented 91%, 92% and 93% of worldwide net sales in 2017, 2016 and 2015.
A vast range of jewelry products
Tiffany sells three main kinds of products:
Jewelry collections that comprise a wide range of products like Tiffany Victoria, Tiffany Soleste, Tiffany Keys, and Return to Tiffany, among others
Engagement jewelry comprise engagement rings (about 60% of the total collection for this category) and wedding bands
Designer jewelry comprise jewelry that is attributed to one of the Company’s “named” designers: Elsa Peretti, Paloma Picasso, and Jean Schlumberger
The key to Tiffany’s success? Advertising, Marketing, PR and Media Relations
Tiffany’s brand has managed to keep its iconicity for decades. Today the company still invests massive resources in marketing and PR programs to maintain and enhance its brand awareness. The critical association that Tiffany tries to establish in the mind of its customers in the sense of luxury. That is not by chance that Tiffany silver products cost way much than any other competitor. Thus, Tiffany has been able to create this powerful sense of luxury and quality in its customer’s minds.
This kind of association requires massive investments of resources, Indeed, in 2017, 2016 and 2015, the Company spent $314.9 million, $299.0 million and $302.0 million, representing 7.6%, 7.5% and 7.4% of worldwide net sales in the following activities:
advertising
marketing
and public and media relations,
Other key activities are about creating new product offerings and engaging in-store and online environments. Tiffany is also working on a multichannel strategy that together with print media leverages digital and social media.
Tiffany control over its supply chain
A key ingredient for Tiffany is represented by its ability to maintain control in its supply chain by leveraging internal jewelry manufacturing and direct diamond sourcing. For instance, Tiffany manufactures jewelry in New York, Rhode Island, and Kentucky, which produces about 60% of the jewelry sold by the organization.
The iconic flagship store in New York CityÂ
The iconic store located at 727 Fifth Avenue, with about 45,500 gross square feet and its “The Blue Box Cafe” opened in 2017, are both a key ingredient to Tiffany marketing and public relations efforts. Sales in this store represent less than 10% of worldwide net sales.
What’s next for Tiffany?Â
Other vital activities Tiffany will be focusing on the following areas:
Compensation composition for executive management
Source: Tiffany Annual Report 2017
Tiffany top three institutional investors
Source: Tiffany Annual Report 2017
Business strategy lessons learned from Tiffany
Tiffany has been able over the years to keep its brand awareness strong, and nonetheless its higher prices it managed to keep its sales growth over the years. A few of the lessons to learn from Tiffany:
If you want to give a perception of luxury and quality, create a sense of scarcity through pricing.
invest in PR and media relations by creating a strong brand in the minds of people. This requires an important investment of resources to create a continuous buzz but also sustained.
keep tight control on the supply chain, by sourcing the best products and internalize manufacturing to have as much control as possible on the quality of the final outcome.
LVMH Empire taking over Tiffany
With an all-cash deal, Bernard Arnault from LVMH offered $16.6 billion for Tiffany in November 2019. According to the FT, a first letter offering $14.9 billion was placed by Antonio Belloni, group managing director at LVMH, to Alessandro Bogoglio, chief executive, which valued the company at $120 a share, until the deal closed at over $130 a share.
The deal closed in mid-2020.
Tiffany’s Value Proposition:
Iconic Brand: Tiffany has established itself as an iconic brand known worldwide for its fine jewelry and luxury goods. The brand itself is synonymous with elegance and sophistication.
Exquisite Craftsmanship: Tiffany is renowned for its exceptional craftsmanship and attention to detail in creating high-quality jewelry pieces. Customers trust the brand to deliver excellence.
Unique Designs: The company offers a range of unique and timeless jewelry collections, often featuring innovative and distinctive designs that set it apart from competitors.
Heritage and Tradition: Tiffany’s long history and tradition in the jewelry industry contribute to its appeal, emphasizing the enduring nature of its products.
Exclusive Shopping Experience: The Tiffany shopping experience is designed to be exclusive and personalized, creating a sense of luxury for customers. With its rich history, the iconic Flagship Store plays a central role in this experience.
Customer Segments:
Affluent Consumers: The core customer base consists of affluent individuals who seek luxury and are willing to invest in high-quality jewelry and accessories.
Engaged Couples: Tiffany’s engagement jewelry collections specifically target couples looking for premium engagement rings and wedding bands. These customers value the tradition and symbolism associated with Tiffany.
Jewelry Enthusiasts: Jewelry collectors and enthusiasts who appreciate unique and designer jewelry pieces form another segment. They seek distinctive designs and exceptional craftsmanship.
Gift Shoppers: Tiffany attracts customers looking for special and memorable gifts, such as anniversary presents, graduation gifts, or tokens of appreciation.
Distribution Strategy:
Retail Stores: Tiffany operates a network of retail stores globally, including its iconic Flagship Store in New York City. These physical locations offer customers the opportunity to experience the brand firsthand.
E-commerce: Tiffany has a strong online presence, allowing customers to browse and purchase its products through its official website. E-commerce provides accessibility to a broader audience.
Wholesale: While Tiffany primarily sells its own products through its channels, it may also engage in wholesale partnerships with select retailers or department stores to expand its reach.
Marketing Strategy:
Advertising: Tiffany invests significantly in advertising campaigns to promote its products and reinforce its brand image. These campaigns often feature high-profile celebrities.
PR and Media Relations: The company actively engages in PR and media relations activities to garner positive attention and maintain its iconic status.
Omnichannel Experience: Tiffany aims to provide a seamless omnichannel customer experience, where customers can engage with the brand both online and in physical stores.
Personalization: The brand seeks to offer personalized experiences to customers, whether through customized jewelry pieces or tailored shopping assistance.
Social Media: Tiffany leverages social media platforms to connect with a wider audience and showcase its products and brand values.
Product Innovation: Introducing new and innovative jewelry collections keeps the brand fresh and appealing to both existing and potential customers.
Event Sponsorships: Tiffany may sponsor or participate in events that align with its brand values and target audience, further reinforcing its luxury image.
Customer Engagement: Building and maintaining a strong relationship with customers is a priority, often through exceptional customer service and loyalty programs.
Key Highlights
Strong Brand and Luxury Perception: Tiffany has a well-established brand with a strong perception of luxury and quality. This is achieved through strategic marketing, PR, and media relations activities.
Diverse Product Offerings: The company’s primary products include jewelry collections, engagement jewelry, and designer jewelry attributed to well-known designers like Elsa Peretti, Paloma Picasso, and Jean Schlumberger.
Geographic Presence: Tiffany operates in four main geographical areas: Americas, Asia-Pacific, Japan, and Europe.
Advertising and Marketing Investments: The key to Tiffany’s success lies in its significant investments in advertising, marketing, PR, and media relations to maintain and enhance its brand awareness and luxury association.
Control Over Supply Chain: Tiffany maintains control over its supply chain by leveraging internal jewelry manufacturing and direct diamond sourcing.
Iconic Flagship Store: The iconic store located at 727 Fifth Avenue in New York City plays a crucial role in Tiffany’s marketing and public relations efforts.
Future Focus Areas: Tiffany’s future activities will revolve around evolving its brand message, providing an omnichannel customer experience, optimizing its operating model, and fostering an aligned and agile organization for sustainable sales growth.
Business Strategy Lessons: Some key lessons from Tiffany’s success include creating a sense of scarcity through pricing to convey luxury and quality, investing in PR and media relations to build a strong brand image, and maintaining control over the supply chain for product quality.
LVMH Acquisition: In November 2019, LVMH acquired Tiffany in an all-cash deal valued at $16.6 billion, which closed in mid-2020.
Element
Description
Value Proposition
Tiffany & Co. offers a compelling value proposition for its customers, including: – Luxury and Prestige: Providing access to high-quality and prestigious jewelry, timepieces, and accessories. – Timeless Design: Offering timeless and iconic designs that transcend fashion trends. – Craftsmanship: Emphasizing exceptional craftsmanship and attention to detail. – Diamond Expertise: Being renowned for its expertise in diamonds, particularly engagement rings. – Legacy and Heritage: Capitalizing on a rich heritage and brand legacy dating back to 1837. – Customization: Allowing customers to personalize jewelry through engraving and customization services. – Gift-Giving: Offering a wide range of gift options for special occasions and milestones. – Customer Experience: Providing a luxury shopping experience, including elegant stores and attentive service. – Sustainability: Committing to responsible and sustainable sourcing of materials.
Core Products/Services
Tiffany & Co.’s core products and services encompass: – Fine Jewelry: Crafting and selling a wide range of fine jewelry, including rings, necklaces, bracelets, earrings, and more. – Diamonds: Offering an extensive collection of diamond jewelry, including engagement rings and diamond solitaires. – Timepieces: Producing luxury timepieces, including watches for both men and women. – Accessories: Providing a selection of accessories, such as leather goods, sunglasses, and fragrances. – Customization: Offering customization services, including engraving and personalization of jewelry pieces. – Tiffany Blue Box: Iconic blue packaging that is synonymous with Tiffany & Co. – Legacy Collection: Showcasing iconic pieces from Tiffany’s history, including the Tiffany Setting engagement ring. – Customer Service: Delivering attentive customer service and expert advice on jewelry selection and care. – Sustainability Initiatives: Promoting sustainability through responsible sourcing of materials and ethical practices. – Corporate Gifting: Providing corporate gifting solutions for businesses and organizations.
Customer Segments
Tiffany & Co. serves a range of customer segments, including: – Affluent Consumers: Individuals and families with high disposable incomes seeking luxury jewelry and accessories. – Engaged Couples: Couples in the market for engagement rings and wedding bands. – Collectors: Jewelry collectors interested in acquiring rare and limited-edition pieces. – Gift Shoppers: Customers looking for special and meaningful gifts for birthdays, anniversaries, and other occasions. – Businesses: Corporations and organizations seeking corporate gifting solutions. – Fashion Enthusiasts: Fashion-conscious individuals looking for iconic and stylish jewelry pieces. – Tourists: Tourists visiting Tiffany & Co. stores as part of their luxury shopping experience. – Luxury Shoppers: Shoppers who prioritize luxury and prestige in their purchases. – Timepiece Collectors: Watch enthusiasts interested in Tiffany’s luxury watch collections. – Sustainability Advocates: Consumers who prioritize brands with sustainability initiatives.
Revenue Streams
Tiffany & Co. generates revenue through various revenue streams: – Jewelry Sales: Earning income from the sale of fine jewelry, diamonds, timepieces, and accessories. – Customization Fees: Charging fees for personalized engraving and customization services. – Licensing Agreements: Earning royalties from licensing agreements with third-party manufacturers and designers. – Corporate Gifting: Generating revenue from corporate gifting solutions and bulk orders. – Fragrance and Accessories: Selling fragrances, leather goods, eyewear, and other accessories. – Online Sales: Expanding revenue through e-commerce and online sales channels. – In-Store Sales: Earning income from in-store purchases made at Tiffany & Co. boutiques and stores. – Sustainability Initiatives: Showcasing sustainability efforts as a brand differentiator. – International Expansion: Expanding into new international markets and capturing global sales. – Tiffany Blue Box: Monetizing the iconic Tiffany Blue Box through branded merchandise and marketing.
Distribution Strategy
Tiffany & Co. employs a strategic distribution strategy to reach customers and promote its products: – Boutique and Store Network: Operating a network of boutiques and stores globally in key luxury shopping destinations. – E-commerce Platform: Running an e-commerce platform to facilitate online shopping for customers worldwide. – Exclusive Partnerships: Collaborating with exclusive partners for limited-edition collections and co-branded products. – Customer Experience: Prioritizing the luxury customer experience through elegant store design and attentive service. – Marketing and Advertising: Utilizing marketing campaigns and advertising to create brand awareness and drive sales. – Customization Services: Promoting customization services to add a personal touch to jewelry pieces. – Events and Launches: Hosting events and product launches to engage customers and generate excitement. – International Presence: Expanding its international presence to capture a global customer base. – Sustainability Promotion: Highlighting sustainability efforts to appeal to environmentally conscious consumers. – Iconic Packaging: Leveraging the iconic Tiffany Blue Box and branding in marketing and packaging.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
