Diamond Industry-Tiffany And Co - Business Plan Example

DIAMOND INDUSTRY-TIFFANY AND CO By Location Executive Summary The Tiffany and Co. is one of the leading jewelry companies in the globe. The company has existed for long and managed to develop a luxury Tiffany brand and reputation. According to research by ForeSee, Tiffany and Co. is the leading retailer of jewelry and its luxurious products. Other researches have highlighted that the company has registered increased sales in the first and second quarters of the 2014 financial years. However, with the increasing competition, the company needs to increase its sales across the globe in an effort to maintain its position in the market. In an effort to achieve this, the marketing department has identified marketing objectives that will see the company register success in the next three to five years. In the recent past, especially in 2012, the company did not meet the estimated percentage of growth and the profit level. This explains why Tiffany needs to adopt strategies that can ensure increased sales and a higher profit margin in the future. This marketing plan presents the preferred pricing strategies, distribution strategies, promotion, and product strategies. These strategies have their basis on the 4 P’s marketing mix. Worth noting is the fact that Tiffany products will remain premium products with high prices in an effort to maintain the Tiffany brand value. Only members will receive discounts in an effort to motivate them to spend more. Pricing strategies will conform to the company’s target market. In addition, the company will focus on its global expansion ensuring product availability in different places. However, emphasis on online distribution will be of critical importance if the company is to register increases in sales. From the company’s use of Facebook and other social media platforms, there is an immense potential in e-commerce for the company. This means that promotion strategies will also shift to forester online distribution and sales. However, the company will also pursue other promotion strategies and increase the percentage of spending in advertising. Finally, a wider product diversity that meets the needs of the customers will be effective in increasing sales. Tiffany will engage in research and development in an effort to launch new products that conform to the needs of the customers. The assessment of these strategies will take place during each fiscal year. The implementation plan will take three to five years. Therefore, assessment of the company’s performance in each fiscal year will determine its progress. Tiffany and Co. Marketing Objectives Notably, Tiffany and Co. is a luxury brand that focuses on jewelry such as engagement rings, and diamond products. A close analysis of the company’s growth trends reveals that there is a need for the development of a rigorous marketing plan that can help the company register increased growth in the market. One of the marketing objectives in the company’s marketing plan should be the expansion of distribution channels in selected markets across the globe while maintaining the value of the Tiffany brand. Moreover, there is a need to register increased sales in the current stores. This will happen through the development of new products. Tiffany and Co. needs to register a higher level of control in the product supply in an effort to increase the profit margins. This control is achievable through sourcing diamond directly, and adopting internal jewelry manufacturing (Brown 2012, p. 54). Other marketing objectives will focus on enhancing customer awareness through different promotion strategies. Finally, provision of remarkable customer service Is an additional marketing objective as it will maintain the customer’s unique experience when shopping for Tiffany products. Target Market The target market for Tiffany and Co. has always been the upper-upper class women. This is because the company’s products are premium because Tiffany is a luxury brand. This explains why marketing strategies should focus on this specific group. Evidently, in the past, the company has invested in marketing strategies and advertising messages focusing on these women. However, with the salient need of registering improved profits, the company will also focus on men in this class. Notably, the company has launched products targeting males belonging to the upper class from different nationalities. These products, target men who can afford disposable income that can purchase luxury products. Although the main segmentation of the Tiffany and Co. market has its basis on income, other factors such as demographics, geographic, psychographics, and usage-rate are of critical importance in segmentation (Chabbott 2009, p. 1). Understanding the demographic patterns exhibited by Tiffany customers can help with specific marketing to the target market. However, psychographics of the customers are becoming more critical in modern marketing strategies. Therefore, the companys’ target market will depend on the lifestyles of the customers. Lifestyle based segmentation of the market relies on the activities, interests, and opinions of the customers. For example, many of the upper class society members that can recognize luxury products associated with their glamorous lifestyles can form the excellent target market for Tiffany’s products. In the past, the Tiffany Blue Box has succeeded as a symbol of the elegance and glamour associated with the lifestyle of the upper class society. Therefore, expanding marketing strategies and tailoring advertising messages to suit both women and males belonging to the upper class will have the potential of increasing sales. The geography of the target market is of critical importance as well. Focusing on Asian countries such as China, which has the potential of registering increased sales of double digits in a single quarter is likely to increase the profitability of the company (Gomelsky 2003, p. 60). Other regions that have a single store such as Russia can also form the target market of Tiffany’s new products in the three to five years. Pricing Strategy The prices of Tiffany products are premium because its products qualify as luxurious. This means that only the highest society can afford most of the Tiffany products. The prices of their jewelry range from $125 to over $20,000 per piece. With such high prices, the quality of the products must also be high. Worth noting is the fact that Tiffany cannot afford to reduce the prices of the products as that will compromise the quality. However, some pricing strategies such as introducing a reward system can serve as an effective motivation for the company’s customers. The reward system will focus on granting a number of points for a certain level of merchandise. Other pricing strategies will be incorporated in the three types of membership offered by the Tiffany Company (Kell 2014, n.p). The silver, gold, and diamond types of membership will get a certain percentage of discounts for their purchases. These pricing strategies will increase sales, but not compromise the value associated with the Tiffany brand. Free shipping will remain available for all the online purchasers. Although the company intends to register growth, the greatest priority is maintaining the value of the brand by offering luxury prices for the products. Distribution Strategy Tiffany distributes its products across the globe, relying on direct distribution channels. The company has a physical store in different regions. There are 122 stores in America, 72 in Asia Pacific, 38 in Europe, 5 in the Middle East and a single store in Russia. Tiffany also relies on exclusive distribution because it focuses on luxury products. Therefore, its products are only available in specific stores. The exclusivity of luxury products means that Tiffany stores are only available in metropolitan cities. With the emergence of online marketing and e-commerce, the company has also focused on developing online stores (Leibtag 2013, p. 76). Direct marketing through the internet, direct mails, and catalogues is also an effective distribution strategy for the company. However, research reveals that the company can register increased sales if more efforts of establishing online stores are evident. This means that, the company should invest in developing its website to promote higher conversion rates. After the launching of mobile application that increased the online presence of Tiffany, the company registered a 20% sales increase. This serves as evidence that investing in online distribution channels and e-commerce is likely to place the company in a better place in terms of profitability. Promotion Strategies The Tiffany Company has developed numerous promotion strategies. The company places adverts in some of the upper class magazines such as Seventeen, Glamour, Self, and Instyle. The target audience for these adverts remains to be the upper class women and men who exhibit interest in luxury brands. The exclusivity of luxury brands also demands for advertising in upper class magazines. Moreover, product placement, especially in movies has helped Tiffany in increasing sales. Finally, word of mouth strategies by opinion leaders in the target market have proved effective (McGrath 2014, p. 4). However, the company needs to adopt new promotional strategies in an effort to register increased sales. In the next three to five years, Tiffany will venture into sponsoring Miss USA and Miss Universe beauty pageants. The glamour associated with these events as well as the social status of the models conforms to the luxurious image of the Tiffany brand. Online marketing strategies are likely to present more effects in the future. Evidence from the continued use of social media and paid online advertising strategies proves that online promotion strategies have the potential to register increased sales. Therefore, the company will invest more on Facebook, Instagram, Pinterest (Michman & Mazze 2006, p. 68). Notably, the company has only been spending about 6% of its revenue in advertising. In the next 3 to five years, the company can raise this percentage to about 10%. This is because investing in online marketing strategies can serve to increase the conversion rate and eventually sales. Other strategies of online marketing will involve the launching of different applications defined by a high level of creativity in an effort to promote the emotional and sentimental attachment of customers to Tiffany products. Product Strategies Tiffany and Co. has proved to be design driven over the years. It has a wide range of products from which customers can choose. Some of the collections include the Tiffany legacy collection, the ATLAS collection, Elsa Peretti Diamonds, and the 2010 Tiffany collection. Each year, the company launches new products (Okonkwo 2010, p. 88). However, in an effort to register increased sales, there is a salient need for the company to invest in research and development. This is because modern customers exhibit different emerging needs. Understanding their specific needs will serve as a platform for developing products that can satisfy such needs. Although the company focuses on the upper class individuals who can afford luxurious products, there is a need for further research in understanding the emerging needs of this group. With the emphasis based on lifestyle marketing strategies, understanding the needs of the target market cannot receive any form of underestimation (Pinkhasov, Nair, & Palgrave Connect (Online service) 2014, p. 91). In addition, the packaging is a critical part of the Tiffany product design. The Blue Box used in packaging Tiffany products has remained a critical aspect of the product identity. Therefore, this trend of elegant packaging designed to appeal the emotions of the customers can serve to increase the number of the sales in the future. In an effort to diversify the products, Tiffany will need to spend a remarkable percentage of its revenue in research and development, as well as capital required for the purchase of diamond, and other materials. In the next three years, the company is likely to register over $10 million expenditure in labor cost; this is in accordance with the 8% increase exhibited in the second quarter of 2014. However, since its products have premium prices the company is likely to register a remarkable percentage of increased sales in 2015. Performance Matrix In the first year, the performance of the company in terms of percentage sales and the profit margins as well as the position in the market will occur in each quarter. After the fourth quarter, annual calculations presented by the finance department in the annual report will serve as a reflection of the organization’s progress. By the second year, it will be possible to project the percentage of sales increase that will occur after three years. The full implementation of the marketing plan will take place in three years. Realizing the impact of the plan is likely to be towards the completion of the five years (Research and Marketing 2001, p. 67). However, analysis of the growth exhibited by the company in each specific quarter should determine the next move taken by the marketing team. The sales team should focus on the trends of increase or decrease of sales in different regions and strategize on how to register growth in each of the highlighted areas. The company executives and the shareholders are some of the critical stakeholders who will determine the available capital and the allocation of resources in an effort to meet all the objectives (Tiffany & Co 2014, p. 6). Customers are the most important stakeholders and their needs, and how the company can meet such needs will determine its success. Proper monitoring of the company’s performance in each quarter of the fiscal year will present data that can assess the efficiency of the marketing strategies defined above. Conclusion Evidently, the Tiffany and Co. needs to register improved sales and profitability in the next three to five years. The company intends to focus on its diamond products by implementing the marketing plan described above. The company will target upper class women as well as men who can afford its products. The pricing strategies will remain premium, with benefit on the products to ascertain the premium price. The company will also extend its distribution channels by opening more stores in identified regions. The Tiffany Company will increase its spending in promotional activities and venture into sponsoring events such as miss universe beauty pageants. Assessment of the implementation process of this plan will take place annually based on the quarter report in each fiscal year. 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