Tiffany & Co, Inc. was a leading Jewelry retailer. It sold jewelry products across the world. As of December 2014, the company run 296 stores spread in America, Asia-Pacific, Japan, Europe, United Arab Emirates, and Russia and employed 10,600 workers worldwide however, the corporation’s net sales for the year that ended 2014 were 1.02 billion U.S. dollars, which represented a 1% drop from the previous year. Tiffany’s brand signified the quality and luxury of its products, but a section of the jewelry products consumers believed that the products were exorbitantly high (David, Fred, and Forest 446). The main issue is the year-over-year drop in sales in spite of expansion to emerging and existing markets. The letter by the chairman and CEO of Tiffany & Co, Mr. Michael Kowalski, purportedly correcting what he termed as a misconception about the company’s products sparked more discussion regarding the quality of its products. The letter potentially reduced consumer confidence and could be attributed to declining sales.
Identification of Problems
Tiffany & Co.’s series of problems began with the letter in which the CEO moved to assure the customers through, a letter, that the firm was committed to crafting and designing products that inspire elegance and style. Although it was an ethical issue, it turned out to be an internal matter that reduced the sales drastically (David, Fred, and Forest 446). Observers termed the move as a strategic decision to protect the Tiffany brand against more harm from a section of consumers, who had begun associating the enterprise with low-quality yet high-priced products. Given that most of Tiffany’s customers still had high expectations of its products and the manner in which the company conducted business, the letter was the most ethical thing to have happened.
Given that the rumors had threatened to diminish the company, the response was long overdue. However, the fact that the response was made at the backdrop of declining sales only worsened the situation (David, Fred, and Forest 447). Instead, the company should have responded by decreasing the prices to tap a section of customers who believed that a lower-priced diamond could bring just as much happiness. The declining sales could be partly due to the lack of strategic marketing and advertising plan. Therefore, the company could have committed more funds to marketing and advertising to reach as many customers as possible.
Although the CEO acted in the best interest of the company, and the letter was the most ethical thing to do, the effects were detrimental as evidenced by the all-time decrease in sales by 5% in the first quarter ended in April 2015. Instead, the directors should have considered more defensive mechanisms, such as reducing the retail prices of its products or focusing more on marketing and advertising.
Tiffany & Co. should have implemented the recommendations mentioned above in its new and existing markets. For example, it could have advertised through modern mediums, such as websites, social media platforms, and the mainstream media. The new low-prices for Tiffany’s products should have been announced on shareholder releases and letters during. As a matter of urgency, the board of directors should have convened a meeting to announce the strategic decision.
David, Fred R., and Forest R. David. Strategic management: Concepts and cases: A competitive advantage approach. Pearson, 2013.