How should Tiffany & Co. revamp its image and to return to its former glory by assessing the competitive forces that are affecting the luxury jewelry and specialty retailer industry. Case A woman strolls to the display window at the flagship Tiffany store in New York City, gazing longingly inside. She fantasizes about owning a luxurious piece of Tiffany jewelry. Women dream in Tiffany blue. Their little blue boxes contain merchandise that women of all ages aspire to. She pictures the love of her life on one knee, asking for her hand in marriage, offering her a little blue box containing a beautiful Tiffany engagement ring. In another dream, the little blue box contains a pearl bracelet to celebrate the birth of her child. Or, perhaps a luxurious tennis bracelet is enclosed in the box, purchased by the woman herself. These are what the dreams of luxury are made of. Mike Kowalski, CEO of Tiffany & Co. needed to stand his ground. He knew that the Tiffany brand was at risk. To refurbish the brand image, he had just executed another price increase on Tiffany’s highly profitable line of silver jewelry, much to investors’ dismay. Mr. Kowalski believed this was the first step to preserve the highest reputation for the luxury goods brand. But people across the business world and on Wall Street questioned whether this move was a good one for Tiffany & Co. History of Tiffany & Company 1 Tiffany & Young was founded on Sept 18, 1837 by schoolmates Charles Lewis Tiffany and John B. Young as a stationary and fancy goods store. The store’s revolutionary policy of non-negotiated pricing created headlines and generated a first day’s revenue of $4.98. In 1853, Charles Tiffany gained ownership of the entire company and officially changed the name to Tiffany & Co. One of the company’s earliest effects on American business was the introduction in 1845 of the first retail catalogue, which is still in circulation today. They continued to define the jewelry and luxury goods market when Tiffany’s personal quality standard for silver eventually became the U.S. Sterling Standard in 1851. Tiffany’s silver became the first American enterprise to win an award for excellence in 1867 at the Paris Exposition Universelle. Later, in 1907, a Tiffany gemologist helped define the metric caret as the standard weight measurement for diamonds and other gems. The unique jewelry and luxurious pieces caught the imaginations of the New York City elite and wealthy, making Tiffany jewelry and diamonds a visible symbol of status and wealth. Tiffany’s focus on quality and beauty was integral to their product line’s developments and innovations. In 1886 the company introduced the “Tiffany Setting” which created a revolution in engagement rings by positioning the diamond high above the band, thus catching more light and enhancing its beauty. Tiffany & Co.’s history is rich with instances in which their brand spoke of luxury, exclusivity, and prestige. Some of their most notable achievements include designing an inaugural presentation pitcher for President Abraham Lincoln, creating presentation swords for Generals Grant and Sherman during the Civil War, revising the Great Seal of the United States, as seen on the $1 bill, and ownership of the “Tiffany Diamond,” the largest yellow diamond in the world at 128.54 carets with 90 facets cut to focus on the gem’s beauty, not size. The company achieved international recognition in 1887 when Charles Tiffany acquired a collection of French crown jewels, officially solidifying Charles Lewis’ position as the “King of Diamonds.” 100 years later Tiffany & Co. went public with an IPO on the New York Stock Exchange. The first Tiffany & Co. retail store outside of New York opened in 1963 in San Francisco followed by their first international retail presence in Tokyo in 1996. Today, Tiffany & Co. stores can be found in most major cities around the world, as well as in many smaller markets across America. The Little Blue Box In 1837, the year that Tiffany & Young was founded, a shade of blue as unique as the pieces the store carried was chosen to represent Tiffany’s focus on quality and sophistication. Today known as “Tiffany Blue,” the color defines the brand’s exclusivity and elegance. Charles Lewis Tiffany instructed that never was one of the “Little Blue Boxes” to leave the store unless a purchased Tiffany piece was contained within. Tiffany & Co. has long enjoyed a gilded reputation, conferred by its association with the happy things in life: engagements, weddings, babies, trophies, retirements, anniversaries and romantic Hollywood movies. 2 Tiffany’s little blue box represents quality. Consumers aspire to be associated with this brand and are willing to pay a premium for it.