STORY #1:This Christmas, I received a Tiffany’s lock charm sterling silver bracelet from the Return to Tiffany collection. Speaking from a girl’s point of view, I guess it is important to have a piece of Tiffany jewelry sometime in a girl’s life. Tiffany & Co. is most known for their sterling silver collection (yes, that charm bracelet with the heart that every girl has) and for that aqua colored box. When you receive a gift in an aqua colored box, you immediately know it’s from Tiffany’s. Tiffany & Co. was established in 1837 by Charles Lewis Tiffany and John B. Young. This makes the company 171 years old! This alone shows that Tiffany has competitive advantage that allowed them to be around for so long and also stand out from their competitors.
As I was on Fifth Avenue one Saturday afternoon, I saw a bunch of tourists gathered around Tiffany grasping for air from the sight of the store. I started to wonder, how do these people, who look like they’re from Minnesota (no offense to anyone from there) know about Tiffany’s? How is it that people immediately attribute that aqua colored box to Tiffany’s? What gives Tiffany & Co. such a competitive edge among other jewelry stores?
There are three ways that Tiffany & Co. follows to ensure a competitive advantage over other jewelry stores:
1) “We were here first!”
According to their website, www.tiffany.com, Tiffany became the first company in the United States to use the 925/1000 sterling standard, which was adopted later as the United States Sterling Standard. Since their sterling silver jewelry collection is the most popular among consumers, Tiffany & Co. was the first firm in the United States to use a sterling standard in their jewelry. They were also one of the first companies to market their elite image effectively through the eyes of the consumer (hence why Tiffany is recognized worldwide).
2) “We are unique!”
Through their product/service differentiation, everyone recognizes the aqua colored box. This color symbolizes the company’s reputation as being known for their craftsmanship and quality of their products. Their products itself is marketed effectively where it helps Tiffany & Co. establish a reputation for luxury and fine jewelry. This is why people would pay extra just to have Tiffany & Co. engraved on their jewelry piece. Only Tiffany can charge $200 for a sterling silver bracelet whereas you can practically buy a white gold bracelet for the same price at small local jewelry stores. People are willing to pay money for their products because they perceive Tiffany & Co. jewelry to be better than jewelry from regular stores based on Tiffany’s reputable image.
3) “We have the most market share!”
(Information courtesy of http://www.smu.edu) According to J.P. Morgan analysts Sagra Maceria de Rosen, Brian Tunick and Robert Samuels, the jewelry sector is the largest in the luxury goods industry with sales that total $150 billion a year. A writer of Forbes, Richard Heller says that Tiffany has a 19 percent market share of the $50,000+ jewelry industry. Other competitors in the jewelry industry such as Cartier, has 11% market share while Bulgari has 3.5% market share. Having said this, Tiffany clearly has a strong market position, giving them a competitive advantage/strength in the jewelry sector compared to its competitors.
STORY #2:
Who just doesn’t love shoes?
This brings us to our next company who has secured a competitive advantage in the women’s shoe industry through cost leadership.
A couple of months ago, I was chatting with a friend of mine who happens to be a fellow BPL classmate as well. We were talking about our significant others when I looked down and saw her adorable black leather boots adorned with patent leather on the tip of the shoe and on the heel. I interrupted our conversation and asked, “Where did you buy your boots because they are simply beautiful! I have to have it! She replied, “Nine West.”
Of course, being me, 4 hours later, I was at home searching for the boots online and found it on www.piperlime.com (started by parent company Banana Republic and great site by the way). Within 3 days, my boots arrived in perfect condition and I became a proud mother of my black leather boots.
Nine West Group Inc. is the parent company of Easy Sprit, Bandolino, Enzo Angiolini and Pappagallo. Their most popular brand, Nine West, carries shoes, handbags, accessories and now apparel as well. Their products are carried in their own retail stores, online and in department stores such as Macys.
According to an article in Business Wire titled “Fashion footwear leader Nine West Group selects MicroStrategy’s decision support technology to improve business processes”, “Nine West Group Inc., with 1997 revenues of 1.9 billion, is a leading designer, developer, manufacturer and marketer of women’s fashion footwear and accessories.” Their shoes are moderately priced, where even the most expensive pair of shoes retail for around $200. This is still a lot cheaper compared to high end brands such as Christian Louboutin and Manolo Blahnik where on average, shoes retail for about $700 a pair.
Nine West is able to use a cost leadership strategy to maintain a competitive edge against its competitors. Based on the U.S. Industry Profile of Women’s footwear on answers.com (Business & Finance), “the publicly-held firm quickly attained a place of distinction by sourcing out many of its manufacturing tasks to factories in foreign counters, which enabled Nine West to offer fashionable products at extremely competitive prices.” By reducing their economic costs below competitors through outsourcing production overseas, Nine West was able to develop strong brand recognition from the public, giving them competitive sustainability.
Ladies, with graduation about a month away, it is time to: a) shop for new shoes and b) tell families and friends that your graduation gift is registered at Tiffany!
