Names: Susan Tartara, Christina Caamano, Sara Birnbaum, Corinne White

Emails: "Susan Tatara" <STatara@stanfordmed.org>, "Corinne White" <corinnewhite76@hotmail.com>, "Sara Birnbaum"

birnbaum.sara@gmail.com, Christina Caamano <christinacaamano@yahoo.com>

MBAE 2010-2

http://www.youtube.com/watch?v=PluRW3_FEt0

http://www.last.fm/music/Marilyn+Monroe/+videos/+1-nZtGybjFjOU

Tiffany & Co.

Susan Tartara, Christina Caamano, Sara Birnbaum, Corinne WhiteMBAE 2010-2

Business ModelAnalysis

Agenda• Company Overview• Brand Overview• Business Model • Financial Overview• Porter’s Five Forces• S-Curve• Co-opetition• Dent’s Demographic Analysis• Mass Customization • Christensen’s Theory• Overview

Company OverviewPRODUCTS-Fine jewelry-Engagement/bridal jewelry-Timepieces-Sterling silverware-China-Crystal-Stationery-Fragrances-Accessories

Tiffany Product Sales

Luxury Goods Retailer

To be the world’s most respected jewelry retailer

Tiffany & Co.’s Mission

History

1837 New York City

Charles Lewis Tiffany and John F. Young

Founded Tiffany & YoungSelling Stationary and Costume

Jewelry

Tiffany & YoungIntroduced its signature

Little Blue Box as a presentation box during

itsfirst year of operation

Brand Overview

Brand Overview1880 Tiffany originated its six-prong setting with the first diamond setting the diamond

away from the band, Expanding the diamond’s brilliance.

Permitting light to shine through the setting

InnovationIntroduction of lower-priced items to create an

“Aspiration Brand”

Brand Overview

“We believe that the Tiffany blue box and the Tiffany & Co. brand have developed into one

of the best-known symbols for quality, prestige

and value in retailing, and that the value of this brand will continue

to increase over the long term” (Kletter, 1999, ¶16)

The Tiffany Experience

Focus is on customer service6 – 8 weeks training for store representatives

Training on how to prepare the Blue Box

Business Model - Financial Overview

Revenue Streams:87% of Net Sales Jewelry13% of Net Sales Timepieces, tableware

and all other products

Sales Mix by Geography:57% of Net Sales Americas33% of Net Sales Asia

Pacific10% of Net Sales Europe

Tiffany & Co. Brand Jewelry Sales by Type FY08

Type of Jewelry

Description Average Price Percent of

Total Sales

A Gemstone

jewelry and band rings

$3,300 27%

B

Diamond rings and wedding bands

$3,000 20%

C

Non-gemstone

gold or platinum

based jewelry

$700 11%

D

Non-gemstone

silver based jewelry

$200 30%

Tiffany & Co. Brand Jewellery Sales by Type FY08

Financial Overview

Financial Overview

-Threat of substitutes – EBay-

-Threat of new competitors- Blue Nile

-Sustainable competitive advantage – Brand power

-Bargaining power of buyers- displaced decision-making

- Bargaining power of suppliers - They do their own diamond cutting and polishing, jewelry crafting and distribution – limited vendors.

Porter’s Five Forces

Porter’s Five Force’s Model

S-Curves

WEAKNESSES: - Currently they have very few

partnerships

STRENGTHS: - Famous Artists as Designers who also

make their own jewelry lines- Elsa Peretti – Bean, Tear drop- Paloma Picasso – Loving Heart collection

Co-Opetition

Dent’s Demographic Analysis

TIF’s Main Revenue Source: Engagement Rings

-Average U.S. Marrying Age : Men 27.8, Women 26.0

-Next Boom?Per Dent will be 2023 (population median age of 48)

-Per Dent’s theory: TIF’s spike in growth happened in 2003 (when the population was getting engaged)

-Solution; TIF should be Lean and Innovative

-New Target Market; TIF should also target an older demographic to meet the needs of the next large boost in population

-Tiffany &Co. embraces Martha Roger’s theories

-Online customization: For all Customers

-Personalized shopping: For Corporate Accounts

-B2B channel : Creates custom pieces to meet customer’s needs

Mass Customization

Christensen’s Theory-Tiffany is a market leader

-Tiffany’s needs to protect their dominate market share

-Competing with retailers with lower price points, less features, and solely an online business (ex: Blue Nile)

- High Quality Vs. Lower Quality Dilemma:

• Some consumers want high quality mounting, others only need a lesser product

-Market Cap Comparison:

• Blue Nile market cap = $719.6 million VS.

• Tiffany’s market cap = $5.85 billion

-Blue Nile’s net income grew 47 % in 2009

(could surpass Tiffany)

Diagnosis:

200 year old successful company with endurance & strong brand

Increased competition in the market and threats

Overview

Prescription:

Tiffany’s to continue their product image of exclusive high end brand through target market and brand managementExpand target market to older generation, future purchases

Projection: Will Achieve Competitive Edge through Brand awareness Market expansion and innovation

Questions