REGENT UNIVERSITY LONDONEUROPEAN BUSINESS SCHOOL

MA Luxury Brand Management

LBM701 & LBM702 : Leading and Managing the Luxury Business & Developing LuxuryBrandsNikita RichardsSerena Gossain

March 13th 2015

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Kamilla Ismailova

S00806778

Summary

The report examines the brand identity of Tiffany & Co inorder to comprehend the underlying reason behind theglobal success of the company. In order to main thisposition the Tiffany has decided develop a new productrange along with the openings of three new stores in anattempt to preserve the global position of the brand. This report draws attention to the 8 pillar of luxury tojustify the reasons behind launching a range of productsdesigned by a celebrity, as well as explain theendorsement powers of using a celebrity to promote newproducts. A consistent believer of Tiffany and a publicfigure selected for this purpose was Sarah JessicaParker, who will launch a new line of fashion jewellery.

In order to find a new location for a new retailrepresentation the net sales of each region was viewed.From this India, Belgium and Qatar were thought to be themost suitable regions. This was followed by a PESTELanalysis of each country to justify its suitability forthe brand and creation of the highest consumer sales.

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ContentsIntroduction:................................................4Brand Identity:..............................................5Store Location:..............................................8India:.....................................................8Belgium....................................................9Qatar......................................................9

Conclusion..................................................12

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References:.................................................13

Introduction:

“Since 1837, the masterpieces of Tiffany & Co. have defined style and celebrated theworld’s great love stories” (Tiffany & Co, 2015).

Tiffany & Co (Tiffany) is a worldwide company with a hugemarket. Its four product segments are, from largest to

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smallest: fashion jewellery, engagement jewellery and weddingbands, statement jewellery, and non-jewellery accessories, asmall category which includes timepieces, leather goods,china, crystal, and fragrances. The aim of this report is todevelop a new range of products to maintain customer loyaltyand brand presence, as well as locating new regions suitablefor opening of three new stores.

This essay provides information about premium class jewelleryof American company Tiffany & Co. Moreover, it’s includinginformation about a new designer, Sarah Jessica Parker.Celebrity was invited to develop new products, the signatureto her new collection. This report also provides analysis ofnet growth and sales of Tiffany products in differentcountries and continents. The three new stores will be locatedin India, Qatar and Belgium. Three countries with a bigopportunities and high targeting market.

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Brand Identity:

Tiffany & Co. is a global, premium Jewellery Company and oneof the most popular American luxury brands. The Tiffany(Tiffany & Co) was introduced into the luxury market over 170years ago, and this heritage has given the brand an advantageover its competitors. Part of Tiffany’s heritage is beingenvironmentally responsible and this means using resourcesfrom mines, which are dedicated towards conserving the habitatof a natural world.

The main revenue source of the company is Diamond jewellery,but the company also designs and retails high quality gemstonejewellery, which has an emphasis on diamonds (Cowen & Co,2014). It is through the design of these pieces which Tiffanyhas created its identity of strong emotional influences andessence of endless love, priceless beauty and elegant romance.A globally recognizable blue box and white ribbon is everygirls dream, representing the heart of the brand where Truelove grows. The strength of the brand identified through a SWOT analysislie in the exclusiveness and lawless craftsmanship ofexquisite pieces, which attract the luxury consumers.Weaknesses of such industry are the uncertainty of the globaleconomy and the change and limited availability of diamonds.However in order to Tiffany to remain its place in the globalmarket it is essential for the company to grow its productrange and product essence in the emerging economies around theglobe. In an attempt to expand and maintain the productessence of Tiffany in the market a new range designed by acelebrity is introduced along with opening of three new storesin these emerging economies, which will be discussed lateron. 

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New Product:

According to Young and Pinsky (2006,) celebrities are known as‘individuals who have achieved a significant level of fame that makes them wellknown in society’ (Young and Pinsky 2006, p.464), allocating themwith a fundamental position in the contemporary culture oftoday, a powerful force use in the marketing of brands in the21st century (Kim, Lee and Prideaux, 2014). A concept to consider before selecting a celebrityrepresentative of the brand is known as the Eight Pillars ofthe luxury brand marketing. This defines what each luxurybrand attempts to achieve through performing superiorexperience through handling such products, the years ofcraftsmanship and mastery put into the heritage of the brandlabelled as its pedigree, the representing personality of thebrand through its persona, emotions and aura associated withsuch brand, retail placement to conclude and ensure theexperience of all of the above, and finally a public figurerepresentative to create an impact on consumer as well asboosting the authenticity and trustworthiness of the brand(Rath, 2008) .

Celebrities have a strong influence on the on the sellingpower of the associated brand creates a level of appeal toparticular markets, endorsing the product, service and thefirm. Consumers connect with the celebrity in many differentlevels giving the firm an opportunity to associate theconsumer with certain quality, reputation and essence of thebrand, in an attempt to gain leverage in the desired market.This identifies the celebrity as a promotional tool used byorganizations to maintain in the global market and achievetheir goals (Kim, Lee and Prideaux, 2014).

Introducing a new produce range through a celebrity like SarahJessica Parker (Sarah), who is followed by many through her

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reputation as an urban-chic fashionista. The “Sex and thecity” actress, known as a glamorous figure often spottedwearing Tiffany jewellery both on screen and off screen. Shehas been a fan and a believer in the brand previous to thislaunch. Sarah will produce new collection for Tiffany consisting of arange of fashion jewelleries including necklaces, bracelets,rings and earrings. The signature to her collection are theuse of red gemstone in every piece to represents passion,love, and romance a true representative of the Tiffany brandwhich Sarah strongly believes and publicizes. She will keepTiffany’s reputation and idea of “Will you?” but in a new wayand with a new range of products. In order to represent theessence and emotions of the collection the launch will takeplace on Valentine’s Day 2016. The advantage of using acelebrity as a designer is notion of advertisement, Sarah willalso promote her collection by making it seem as a part of herlife, by representing the pieces in events and red carpets andtherefore creating a positive affect towards consumer’sattitudes, purchase intention and brand value showing off. The prices are of existing products from Tiffany: bracelets,necklaces, rings and earrings are offered from just over $150to over $1,000,000. Tiffany & Co. sales professional will bepleased to work within price range (Tiffany & Co, 2015).

Sarah Jessica Parker at Oscar 2012,wearing sets of Tiffanyjewellery

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Store Location:

As mentioned earlier an important feature of any brand isretail placement. Currently Tiffany operates 122 stores in theAmericas, 72 in Asia Pacific, 38 in Europe, 56 in Japan, 5 inthe UAE, and 1 in Russia (Bloomberg.com, 2014). The advantageof such global presence is the fact that exposure to multiplegeographies minimizes single region dependence, and Tiffanyhas achieved profitability in Asia and Europe. Net sales roseby 5% in the Americas, 18% in Asia Pacific, 11% in Japan and7% in Europe. Asia Pacific was the area with highest growth(Tiffany & Co, 2015).

In addition to owned stores owned in existing geographicregions, other emerging regions are offering future growthopportunity, these include India, Russia and the Middle East;Tiffany does not currently operate stores in India but haslimited wholesale distribution, which represents less than 5%of total sales (S&P CAPITAL IQ, 2015). In case of Russia andMiddle East limited numbers of stores are present, but due tothe fast growth of economy and luxury spending in particularfor Middle East these areas are potential regions of growth(Macquarie, 2014).

Asia pacific had highest sell rice of 18% in the past yeargiving it the highest potential for consumers (Cowen & Co,2014). A promising country within Asia pacific is India. Indiais one of the richest countries with a high luxury spending(Macquarie, 2014). The absence of a Tiffany store in the

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region means that company is missing out one of the largestmarket within this area. Therefore India could be an entrypoint for Tiffany as a joint venture initially giving therequired structure of foreign ownership.

I will be using the PESTLE analysis in this report to trackthe external macro environment in which Tiffany & Co iscurrently operating as well as their future plans on their newproducts in India, Qatar and Belgium.

India:

The Indian Gem & Jewellery Sector is one of the most dynamicand fast growing sectors of the Indian Economy. The fact thatIndia is the world's largest source for trained, skilled andadaptive manpower along with liberalized government policiesthat provide a conducive environment for bi-lateralbusinesses, is what contributes to the continuous growth ofthis sector.

Currently the fastest growing sector of Indian Economy isrecognized as the Indian Gem and Jewellery section. Thesupport of the government in expansion in this area throughdeclaring it as a thrust area for export, due to itsimportance in the foreign trade of India has helped the growthof this dynamic sector (Jain, 2012). The growth of The Indianeconomy to a GDP growth rate of 4.7 % in 2013 followed by acontinuous growth of 5% in 2014 (The World Bank, 2015). Due tohigh retail spending in this sector, an estimation of IndianRubies 650 billion is made for the market of jewellery inIndia (Jain, 2012). This is mainly due to jewellery beingconsidered as a tradition from ancestral time as a necessityin many of cultural occasion. As a result gold jewelleryshaped 80% of the Indian jewellery market with fabrication ofstudded diamond and gemstone (Jain, 2012).This social trend ofcultural use of jewellery creates a great potential for acompany such as Tiffany and Co in India. Another reason for selection of India is the presence and

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rapid growth of cutting and polishing diamonds. India is thelargest contributor to the world’s diamond processing,controlling 57% of the world’s rough diamond allowing thecountry to claim 80% of the global market of diamond industry.According to Jain (2012) for every 12 diamonds used injewellery 11 of them are processed in India.

Belgium

Europe having only taken 7% of the net sale rises, and havingthe lowest number of store in between all continents, means agreater potential lies in the European market. Belgium beingcountry of highest valued diamond production, with developmentin research and technology (Bain & Company, 2015) combinedwith the image of high-quality diamonds sold by Tiffany & Comakes this region the next location in mind for expansion(Macquarie, 2014). Tiffany having already developed a sortingand polishing facility in Antwerp of Belgium (Macquarie, 2014)means this existing collaboration between Belgium and Tiffanyconfirms the ability of Belgium to apply the strictenvironmental and social aspect of mining measured importantto tiffany’s brand identity, into consideration for thediamonds used. With only 1 store in the region (Macquarie2014) and high exporting rate of Diamond, Belgium has thepotential to increase the market share of Europe. Belgium isthe one of the highly industrialized countries of Europe(Trading Economics, 2015) which produces diamonds forexportation. This means lower manufacturing competition in thecountry, and exportation costs can be reduced if the productscan be manufacture in the home country.

The “Other” geography includes wholesale diamond inventorydeemed not suitable for the company’s needs. It also includesthe stores in the Middle East as well as the newly openedstore in Russia. At some point, I believe these stores will besegmented into a new geography as this region gains scale. It

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is expected that this region is to grow at a 29% CAGR whileincluding the wholesale diamonds. The majority of this growthwill come from new store openings and not the sale of bulkdiamonds deemed (Macquarie, 2014).

According to Global Edge (Insights et al., 2015) Qatar has aGDP growth rate higher than 84.29% in 2013 of all other countries.

Qatar

In October 2008, the government of Qatar issued a long termdevelopment program “Qatar National Vision 2030 (QNN 2030),which is expected to turn Qatar into a very advanced andprosperous country where all the members are believed to havehigh living standards and equal rights.

Marketing is an essential part of economic growth for acountry, particularly through tourism and trade. Nationbranding seeks out a unique, favourable identity for a countrythat will make it attractive. Intercultural exchanges are usedto inform the development of a national brand. In turn, anation’s brand, if strong, can develop a strong competitiveidentity.

Qatar, who won the bid for the 2022 World Cup, is stilldeveloping a brand. As Qatar starts to draw internationalattention, its brand will be able to translate the attentioninto a lasting competitive identity. The development of thenational brand will portray Qatar as a destination forlearning, education, and sporting excellence. Cultural iconscan also contribute to the tourism aspect of the nationalbrand. (Ryman 2010, p.5) Qatar has a chance to launch anational brand and gain a large impact, emphasising theopportunity for brand such as Tiffany to expand in its regionin an attempt to attract wider target audience. However, itneeds to ensure that it seeks out many of the economically andpolitically beneficial items, while remaining unique. With a

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national brand, Qatar can position itself as attractive MiddleEastern nations.

According to the latest market research (2012), Qatar has aGDP of US$171.5bn and an annual growth of 14.2%, which means,that the average level of income in the country is highreflecting on the high luxury spending’s. Thus, according toQatar National Development Strategy 2011-2016, the country’seconomy demonstrates the highest rates of growth.

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Conclusion

In summary Tiffany has a great targeting market and a bigvariety of products, with a wide price ranges. Through thecenturies this company has carried the reputation of romance,love and happiness and imagine hope to continue through thelaunch of Sarah Jessica Parker’s collection which is aimed torepresent passion through using deep red gemstones for eachpiece. These products will launch in three new stores, indifferent countries: India, Qatar and Belgium on Valentine’sDay of 2016. The emerging growth in these countries along withluxury presence is the underlying reason behind the selectionof these locations and a high consumer sale is predicted insuch areas, aiding the growth of Tiffany and co as a brand aswell as maintaining their position as global luxury Jeweller.

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References:

Bain & Company, (2015). Global Diamond Report 2013: Journey through the Value Chain - Bain & Company. [online] Bain.com. Available at: http://www.bain.com/publications/articles/global-diamond-report-2013.aspx [Accessed 13 Mar. 2015].

Bloomberg.com, (2014). Tiffany Reports Solid Third Quarter Results - Bloomberg. [online] Available at: http://www.bloomberg.com/article/2014-11-25/auNBlXRRXCHg.html [Accessed 13 Mar. 2015].Cowen & Co, (2014). Tiffany & Co. Valuation Methodology And Risks. New York: Cowen & Co, pp.8-21.

European Commission, (2015). Belgium - European Commission. [online] Ec.europa.eu. Available at: http://ec.europa.eu/economy_finance/eu/countries/belgium_en.htm [Accessed 13 Mar. 2015].

Globaledge, (2015). Qatar: Economy >> globalEDGE: Your source for Global Business Knowledge. [online] Globaledge.msu.edu. Available at: http://globaledge.msu.edu/countries/qatar/economy [Accessed 13Mar. 2015].

Jain, C. (2012). A TREND ANALYSIS OF EXPORT PERFORMANCE OF GEMS & JEWELRY INDUSTRY IN INDIA. INTERNATIONAL JOURNAL OF ENGINEERING SCIENCES & MANAGEMENT, 2(2), pp.170-174.

Kim, S., Lee, J. and Prideaux, B. (2013). Effect of celebrity endorsement on tourists’ perception of corporate image, corporate credibility and corporate loyalty. International Journal ofHospitality Management, 37, pp.131-145.

Macquarie, (2014). Tiffany & Co. USA: Macquarie, pp.12-14.

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Mark Young, S. and Pinsky, D. (2006). Narcissism and celebrity. Journal of Research in Personality, 40(5), pp.463-471.

Rath, P. (2008). The why of the buy. New York: Fairchild Books.

Roy, I.S., 2007, Worlds Apart: nation-branding on the NationalGeographic Channel, Media, Culture, & Society [e-journal] 29(4) Available through: SAGE Journals.Ryman, A., Does Qatar Need a Country Brand?, Grow, [online] Available at: <http://www.growqatar.com/admin/pdf/80fc63ce87b551b02c8ec1652b66f17b.pdf >

S&P CAPITAL IQ, (2015). Tiffany & Co. USA: S&P CAPITAL IQ, pp.2-4.

The World Bank, (2015). GDP growth (annual %) | Data | Table. [online]Data.worldbank.org. Available at: http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG [Accessed 13 Mar. 2015].

Tiffany.co.uk, (2015). The Tiffany Story | Tiffany & Co.. [online] Available at: http://www.tiffany.co.uk/WorldOfTiffany/TiffanyStory/ [Accessed 13 Mar. 2015].

Tiffany & Co, (2015). Tiffany & Co. Company Profile. [online] Available at: http://investor.tiffany.com [Accessed 13 Mar. 2015].

TRADING ECONOMICS, (2015). Belgium GDP Growth Rate | 1980-2015 | Data |Chart | Calendar | Forecast. [online] Tradingeconomics.com. Availableat: http://www.tradingeconomics.com/belgium/gdp-growth [Accessed 13 Mar. 2015].

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