Even after the near-fall of the U.S. luxury-products industry in 2009, the industry continues to exhibit positive growth. The U.S. economy, although coming out of recession, is better off than it was in 2008. Jewelry companies are fighting to return to the positions of profit they enjoyed prior to 2008. Online jewelry and diamond retailers have reported an increase in sales. However, the mid-market jewelers are showing considerable hope with significant growths in this sector (Demarco, 2012).
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Tiffany to launch male moisturizer
Tiffany & Co. is one of the luxury-items retailer jewelers. The company has performed well throughout the recession period. The company has a strong brand associated with romance, quality, and style. Some of its major strengths include a strong and direct selling strategy, wide variety of offerings, strong brand name, and a strong balance sheet. Tiffany & Co has a strong direct selling strategy because of its retail stores in the U.S. and abroad.
The firm has also incorporated online selling of products. The company has also been in the industry for a long thus giving it an enviable product name. The company’s strong balance sheet is another major strength. In 2012, the company’s asset base was worth $4.16 billion against total liabilities of $1.81 billion. The company continues to experience several weaknesses that include declining cash flow, low-profit margins, and increased scarcity of raw materials.
The company has several opportunities that it can exploit to change its fortunes. One opportunity is in the male toiletries market. Damassa, Hyder, and Wilcox (2007) asserted that there has been a new lifestyle for men to spend more on appearance and that this market continues to show huge prospects every year. This market has been very resilient to the financial climate and is set to blossom in the next couple of years. The industry has, to date, been dominated by big brands such as Unilever and Procter & Gamble. Tiffany & Co has chances of succeeding by targeting niches such as skincare and eco-friendly products. The best product to launch would be a male moisturizer that is eco-friendly. This product will also have a ready and untapped market waiting to be explored.
The expansion through online sales is another opportunity. Online shopping is now a global phenomenon, and in keeping with this trend, the firm should expand its online sales. Expanding can be achieved by launching an e-commerce website where customers can buy products online or through online promotions such as on Twitter. This would not only increase sales but also increase profit margins by reducing the operational costs. There also exists a huge opportunity in new markets such as men’s fragrances and the low-end product’s market.
Essentially, the low-end silver styles comprise the non-gemstone, sterling silver jewelry of a $200 price. These pieces are mainly intended for younger women, an example being the open-heart Elsa Pertti necklace. This piece accounted for 30 percent of annual sales in 2007. However, Tiffany & Co continues to face threats from counterfeit goods. This is especially in the online market, where most online sales under the Tiffany & Co are normally counterfeits.
The unstable and poor economic situation in the U.S and Eurozone continues to cause worry and anxiety for the firm. The increasing rental rates in the U.S also threaten the situation as the company continues to lease stores. Increased rates mean the operating costs will rise, thus declining profit margins. The jewelry industry has several competitors, with select few firms having the brand recognition to command large portions of the market.
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Whereas the market has some regional players, Tiffany’s high-end reputation enables it to maintain a national and international presence. However, the firm faces stiff competition in the sale of watches where it has not been able to stake a substantial claim. It is important to note that, unlike other industries, entry into this market is very prohibitive. There is a lot of capital needed to enter the industry, thus shielding established players like Tiffany & Co from new competition. Procuring raw materials for a new player would also be difficult, given that most producers of diamonds sell it in bulk.
The luxury jewelry market has few substitutes given. However, within the industry, there are substitutes between different types of products. Tiffany & Co has established itself as the leading player in engagement rings. Mikimoto dominates the luxury pearls while Rolex leads in luxury watches. These companies pose a threat of posing competition to Tiffany & Co.’s products. There are also changing symbols of luxury and exclusivity, which pose an indirect threat to Tiffany & Co. Some wealthy people will buy cars or homes as a symbol of their wealth more than they are likely to buy jewelry.
- Organizational mission:
- Committed to the provision of high-quality luxury that will satisfy our esteemed clients.
- Performance Goals:
- Increased sales by introducing a new product targeted for the low-end market.
- Increased profit margins
- Strong brand name
- Expansion to other geographical areas.
Tiffany & Co has a strong and unique brand name. This makes it a market leader in the jewelry market both in the U.S and around the world. If the company wanted to introduce high-quality skincare products targeted at men both at the low end and high-end markets, such products would be awfully successful. Here, the broad target is men. As discussed earlier, men have experienced changing trends and are more mindful of their image. There has also been an increase in the male population across the world. For example, U.S. sales in men’s toiletries reached $2,392.7 million in 2006 and continue to grow to date (McDonald and Dunbar 2013).
A metro-sexual generation of men has come up. This generation is willing to spend time and money on looks, skincare, and accessories that have hitherto been the preserve of women. Tungate (2008) noted that this explains the increase in men’s magazines. It is important to consider that, in keeping up with the company’s brand and exclusivity, such items should be targeted more to the high-end market with no limitation to geographical locations. However, the change in the economic situation has shrunk this market too much for it to be relied on solely. Thus, I propose that Tiffany & Co launches male moisturizers in two forms; one intended for the high-end market and different products that are affordable to the middle-income class.
It is estimated that, by the year 2015, the total market for men’s toiletries and fragrances will reach £1.10 billion in the United Kingdom. In Brazilian, the market for men’s products was valued at USD 3.28 billion. In every country, including the U.S., the U.K., Italy, Spain, and even Japan, there exists such a huge market that is untapped. The benefits are immense as this provides new markets, increases the flow of money, builds the brand name, and increase profit margins for the company.
To tap this market, the company must consider opening several stores in strategic cities so as to market these products easily. With Tiffany & Co already having many stores in Japan and the U.S, it will be prudent to open in unsaturated areas such as Switzerland, Germany, and Italy. Some of the best marketing methods Tiffany can use include advertisement, direct marketing, viral marketing, and public relations.
After the identification of our target market, the next step is to segment the target market. As Tiffany & Co, we can segment first by geographical locations and then by demographic aspects of our clients. The most important is the observation of demographic variables. The luxury-items industry is quite exclusive and quiet. Thus, any attempt to make it easily accessible to everyone devalues the luster associated with the firm. On this aspect, Tiffany & Co stores should be stocked with high-end male toiletries and fragrances.
This is to serve the already tapped high-end market that is looking for exclusivity and prestige. This should serve as the most important for the long-term survival of the firm, given that any association with a lack of class will completely destroy the company. However, it is important to realize there is another huge market in the middle class that may have previously been in the high–end bracket, but with the economic downturn in the U.S and Europe, cannot afford the high-end products. This market should not be ignored. The company should open new stores under a different name, such as Tiffany Men, and stock these stores exclusively with high quality but affordable male items.
This not only guarantees booming sales but also safeguards the company from the risk of losing high-end clients. It is also important to consider the age of customers in segmenting them. It is important to note the demographics in each of these countries in order to market these products effectively. For example, men above the age of sixty will tend to want mature and conservative products. However, the young men are more liberal and whose disposable income may be quite high. It is important to conduct extensive market research so that the company can be fully aware of the situation as it is and effectively market its products.
After segmenting our target audience, it is important to choose a marketing method that is not only cost-effective but also helps in achieving maximum results. One method is advertising. Given the financial clout of Tiffany & Co, the company should embark on a massive advertising campaign to market its new product. In advertising, the male moisturizer is one of the many male toiletries. It should be acknowledged that men are not accustomed to buying or using many toiletries. This is especially products from companies that have traditionally produced products for women.
According to Dines and Humez (2003), the task here can be described as an initiative to market masculine products, which have hitherto been regarded as feminine. It is important to take several factors into consideration in packaging such a product. One of the factors is color. The color of a product may often enhance the qualities of product. Thus, masculine products are often packaged in black, gray, and a muted blue, unlike the feminine products that will often be in soft colors such as pink and blue. Another factor is the information provided. Given that men are less experienced in toiletries, a lot of information will be given to the male consumers as compared to their female counterparts.
The advertisement should also consider the visual pleasures evoked once it is displayed to the consumer. In our case, a male moisturizer should reference freshness and purity. The messaging should also be packaged such that it refers to the third person. This means that the majority of male toiletries is to be bought by females for their male partners. Finally, the advertising should take into account the racial sensitivity issues given Tiffany & Co products would be marketed to different racial and cultural areas. Thus, each region should be given a suitable advertisement plan that suits it favorably.
Effective marketing also involves product branding and pricing. Given the two target groups, one in the high-end market and another in the middle-class market, the products should be priced and packaged to suit these two groups.
For the high-end market, the price consideration is rarely an issue. As such, the product should be set at a high price in the range of $2000 to $4000. Among the middle-class market, the product price should be affordable in the range between $150 and $600. The two products should be distinctively packaged and stocked in different stores, with the high-end product in the traditional Tiffany & Co store while the middle-class product is stocked in exclusively-male stores
The use of male celebrities to advertise comes up. In an era where people see celebrities as role models, getting these celebrities to market our products would be immensely productive. Research has shown celebrity advertising to be highly effective, especially on skin products. In the U.K., there are several icons that could help market these products. They include masculine actors such as Daniel Craig of the James Bond phenomenon, musicians, and footballers such as David Beckham.
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Viral marketing is also one key strategy that should not be overlooked. Given the geographical segmentation of Tiffany & Co clientele, an online marketing strategy helps reach the global village that the world has become in a short while, thus saving time and resources. This may include podcasts, discounts for online shoppers, promotional campaigns on social media platforms such as Twitter and Facebook.
The launch of a male moisturizer at Tiffany & Co is a feasible plan. However, its success will largely rely on an effective execution plan by the company. To execute the plan effectively, Tiffany & Co needs to invest more time and resources in market research to get more accurate information on demographic factors such as disposable incomes in every targeted age-group, as well as in every country. The company will also need good public relations machinery as it seeks to enter new markets. It is prudent that, for the purposes of launching this new male moisturizer, the company should consider hiring a Public Relations firm.
This will be critical in helping the company mount an effective marketing strategy. Given the many stores, the company has opened, distribution of these products will be an easy affair. However, the company should continue opening stores in unsaturated markets.
Damassa, S., Hyder, Z. and Wilcox, J. (2007). Strategic Report for Tiffany & Company. Web.
Dines, G., & Humez, J. M. M. (2003). Gender, race, and class in media: A text-reader. Thousand Oaks: Sage.
McDonald, M., & Dunbar, I. (2013). Market segmentation: How to do it, how to profit from it. Chichester: John Wiley & Sons.
Tungate, M. (2008). Branded male: Marketing to men. London: Kogan Page.