BVLGARI is one of the masters of diversification in the jeweller business. It has continually reinvented itself since the 1920s, following Sotirio Bvlgari’s decision to start developing luxury watches alongside the previous family business of making high-end jewellery (Hotinceanu 2021). The organization was created in 1884 and has continually exhibited its successful diversification strategy as a critical component of the company (Muñoz-Bullon et al. 2021). The first diversification instance involved making watches, followed by contemporary alterations such as developing Haute-parfumerie line and accessories such as small leather items and scarves.
BVLGARI has a positive diversification strategy when it opened the Condotti store, an iconic store that remains open to date. BVLGARI’s earliest diversification included embedding Islamic and Byzantian art in its silver pieces that were merged with floral motifs. In this way, the company exhibited its trend-setting design while freeing itself from a set definition with sensible and subtle cues (Carney et al. 2017). The second world war saw many jewellers turn to gold for crafting as gems became scarce while designs gained a naturalistic feel. By the end of the 1940s, BVLGARI had developed a serpenti bracelet-watch and captured significant customers such as Ingrid Bergman, Anna Magnani, Gina Lollobrigida, Sophia Loren, and Elizabeth Taylor.
Furthermore, BVLGARI sought to enter the watch manufacturing field by introducing the BVLGARI. It founded the BVLGARI Time in Switzerland to run its production of these watches. The company continued its diversification trend in 1993 when it launched its first perfume through the formation of BVLGARI Parfums and fragrance, Eau Parfumée au The Vert (Carney et al., 2017). 1995 saw the company aggressively develop a growth program that was listed on the Italian Stock Exchange. The organization founded its accessories collection line in 1996, starting with silk scarves and delving into eyewear and leather accessories. In this instance, BVLGARI saw a tremendous rise in profits and revenue from diversification, growing by 150% between 1997 and 2003 (Bulgari Hotels & Resorts, 2018).
In 2000, BVLGARI made radical changes to its structure, focusing on aggressive verticalization by acquiring watch makers brands Gérald Genta and Daniel Roth (Hotinceanu, 2021). Furthermore, it acquired Crova, a jewelry firm, while making more purchases related to leather-making and watch-making companies. In this way, the organization emerged as a high-end and prominent player in the world of Haute Horlogerie. This came as the organization was acknowledged for its performance, mainly attributed to developing the thinnest tourbillon watch, the BVLGARI Octo Finissimo Tourbillon Automatic watch.
Figure 1: Perception Map
The first instance is the domain encompassing BVLGARI’s industry. The company provides high-end jewelry, fragrances, wallets, sunglasses, watches, handbags, and other accessories in this scenario. In the figure 1, it is seen that the company has experienced a rapid growth in the years it implemented diversification strategy. Moreover, it shows that customers perceived the diversification positively and embraced new products. BVLGARI is connected to a particular group of customers through its values, relating its products and services to luxury and exclusivity (Baron, 2021). High-income earners can afford the organization’s products. At the same time, they remain out of reach for low-income earners, or middle-income earners may find it challenging to purchase its products without incurring huge losses. However, its focus on the high-end income percentile sets it apart as a sought-after luxury goods provider.
The organization is well-known for successfully diversifying its portfolio since its formation in the 1800s. BVLGARI does not leave an industry but focuses on adding more items to its portfolio. These changes have been successful and elicited high growth. BVLGARI has a diversification process that also includes using its power and influence to buy out competitors, as was the case with watchmakers (Baron, 2021). Nonetheless, it does not lower the quality of the products, aiming to improve them and build its brand perception in these businesses. Furthermore, BVLGARI has developed a personality associated with movie stars and other celebrities that are likely customers of its high-end goods. These icons help propagate its image as a luxury brand and market its products based on quality. Individuals such as Elizabeth Taylor are the perfect example of good marketing as they have a large following and would promote the purchase of BVLGARI’s products by their fans and friends. Finally, BVLGARI is reflected with a significant connection to royalty. Its designs and fashion are related to powerful empires and utilizes high-end materials such as gold and gems to develop expensive products associated with royalty.
Figure 2: Ansoff Matrix
The Ansoff Matrix presented above illustrate different product lines that the company has. The diversification strategy used by BVLGARI was successful as it now includes many products that are popular in the market. BVLGARI began using an internationalization strategy at its formation. Its founder moved the company’s business to Rome despite the original owner’s Greek heritage. Nonetheless, the family did not renege on its previous business and would move to other areas based on its hotel locations and other aspects, such as the sale of watches and perfume in Switzerland and other European countries (Gibson, 2019). In this way, the internationalization strategy allowed BVLGARI to develop its portfolio as a major player in global business.
BVLGARI further deals with luxury items in its field, incorporating high-end materials to create products. In this way, it sells its products relatively pricey, with the world’s thinnest watch mentioned in a previous section going for about $4,000 (Lojacono & Pan, 2021). It is essential to note this is not one of the most expensive items on BVLGARI’s list, illustrating its focus on the high-income earners in society. This focus means it operates using high-profit margins as its goods and services are tailored for the rich.
Strategic management is another crucial component of BVLGARI’s business due to its highly competitive market. Various organizations have similar properties to BVLGARI, eliciting why it bought out competitors in the watchmaking industry (Jhamb et al., 2020). In this instance, the company’s strategic management entails using acquisitions and creating high-end products to deal with its competitors.
Finally, BVLGARI utilizes the diversification principle effectively in its global growth and expansion. Its focus on different products and services has enabled it to carve out niches in its industries. It is a significant competitor in various fields such as watchmaking, hotel and accommodation, and perfume development. In this case, the organization mitigates the risk of losing revenues if some of its businesses are affected by macroeconomic or microeconomic problems. It is prudent to consider diversification as the best strategy for BVLGARI to improve its long-term business further.
Reference List
Baron, M.D., 2021. Big picture strategy: The six choices that will transform your business, Wiley.
Bulgari Hotels & Resorts, the success behind the jeweller becoming a true luxury hotel brand. 2018. Cpp-Luxury.Com. Web.
Carney, M. et al., 2017. Family firms, internationalization, and national competitiveness: Does family firm prevalence matter? Journal of Family Business Strategy, 8(3), pp.123–136.
Gibson, A., 2019. Bulgari’s accessible luxury: Handmade chocolates. Jing Daily. Web.
Hotinceanu, R.H., 2021. Reading Quest EXPERT, 다락원.
Jhamb, D., Aggarwal, A., Mittal, A., & Paul, J. 2020. Experience and attitude towards luxury brands consumption in an emerging market. European Business Review, 32(5), pp. 909-936.
Lojacono, G. & Pan, L.R.Y., 2021. Resilience of luxury companies in times of change illustrated., Berlin: Walter de Gruyter GmbH & Co KG.
Muñoz-Bullon, F., Sanchez-Bueno, M.J. & Suárez-González, I., 2018. Diversification decisions among family firms: The role of family involvement and generational stage. BRQ Business Research Quarterly, 21(1), pp.39–52.
The Moodie Report News Room. 2016. Bvlgari Q4 2002. The Moodie Davitt Report. Web.