Tiffany’s Little Blue Box Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

BACKGROUND:

Tiffany and Co. was founded in 1837 by Charles Lewis Tiffany and John Young. It is located in New York City. Initially it started as a retail store of finished goods and was costume specific. In 1840, the company printed its first catalog and by 1845 the company had already started selling everyday fine jewelry. Since then, the company has expanded enormously, but the main aim to not compromise the brands name and quality of products has always been ensured.

The company is very sensitive of which products to select for its blue book catalog, website and its retail stores. Apart from that, the company has also expanded its product base. In 2006, Tiffany joined hands with luxury eye wear company, Luxottica, to launch its own eye wear collection and in 2009 it launched its own handbags and footwear collection,Lamberton Turrex, from Samsonite in 2009.

The product line of Tiffany now includes hand bags, key chains, eye wear, leather goods, vases, tableware and other items excluding men’s and women’s jewelry.[1] The company has also made a variety of silver products since 1860 for sports events like eight foot trophy for the Indianapolis 500, NFL Vince Lombradi Super Bowl Trophy, the first world championship baseball trophy since 1988, the world series trophy since 2000, U.S. Tennis Association, the PGA tour and continues to make Nascar Sprint Cup till today along with many other sporting events.

MARKET ENVIRONMENT:

The diamond industry of the U.S. is a booming thirty billion dollar industry with an annual growth rate of 3.1% since 2011. Jewelry companies face immense competition from non-traditional jewelry retailers like superstores and online retailers. These companies threaten the growth and profitability of traditional organizations like Tiffany,as they offer drastically lower prices and they offered one stop shopping. In case of online retailers, one can even go through all the products, their prices and their four C`s(carrot, color, clarity and cut) just by sitting at the couch on their home[2]. This increased challenge from non-traditional jewelry retailer entities have caused the expansion, profitability and sales growth to decrease. The latest recession has also contributed its part but the sales growth rate is still expected to be around three percent till 2016. Although the industry is still in a mature age however,the predicted growth potential and positive costumer sentiments will keep the industry running.

ISSUES:

The top 10 traditional jewelry retailers account for only 28% of the total revenues of the industry, which gives an alarming proportion of revenue to be targeted by non-traditional firms therefore; this is a serious cause of concern. Nowadays,for a significant proportion of diamond buyers, Tiffany’s little blue box is not a priority but the products with lower costs are.

KEY POINTS:

The company has shown immense growth potential post-recession crisis and this is good for its future.

Statistics show that almost 70%of the markets costumers represent the highest and second highest income circles.

Only 6% customers of the jewelry market represent people from the lower income circles.

The increase in the price of gold caused the revenue of the industry to decrease by 5.1 % from 2006 to 2011.

The number of weddings in the country is on the decline and this might affect the revenues of the industry as marriages represent the second highest proportion of sales.

Tiffany represents 18% of the total of jewelry sales for the year 2011 and is expected to maintain a growth rate of around three percent.

COMPANY STRATEGY:

The main principle of the company’s strategy is to expand its products base and revenues, but not in a way that harms its reputation and brands name. Although the company suffered from the recession crises however,the company was able to recover by increasing the product prices and pursued its objective by marketing and targeting financially fluent costumers. It was able to compete with competitors mainly because they were also hit by recession crisis.Tiffany’s Little Blue Box Case Solution

DEVELOPMENT:

Tiffany has always given priority to best quality products and maintained its brand name to where it belongs. It has enormously raised itself from first day sales of five dollars to becoming one of the leading jewelers. It was in 2008 when the company witnessed financial loses as its sales decreased by 4.9%. However,it stood better financially as compared to its competitors with its revenue decreasing by a mere 2.7% but the company rebounded by outperforming its competitors with a growth rate of 10.9%............................

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