Selling Luxury to the Masses...

Tiffany is a great example of offering the affordable luxury to its new target segments, young fashionistas, Tiffany released a collection of its silver accessory designs, providing customers with lower entry price. Since the richest customers are becoming harder to please. Finding the balance between an item's price and its perceived worth is increasingly important in the luxury market. In an attempt to market goods with a high-end feel to both wealthy and not-so-rich consumers, Tiffany started to open approximately 170 small format stores in smaller US markets to make its products more available, cooperate with swatch and launch a product line with lower entry price.  

By doing so, Tiffany has a strong growth in its revenue, however, it has diminished Tiffany’s well-known brand. According to a recent study by the Luxury Institute in 2008, Tiffany didn’t rank in the top three luxury jewelry brands.  Harry Winston was first, followed by Buccellati and Van Cleef which tied for second place.  Graff placed third in a list of twenty jewelers.  That’s in contrast to an earlier study that placed Tiffany in the top three brands.            

It is because Tiffany was selling too much product to a particular market segment, which could hurt the brand in its core customers’ perception. Many people argued that brand dilution is evident everywhere in the new Tiffany strategy, and this could weaken customers’ perception with respect to Tiffany’s pricing strategy, where customers may think Tiffany should not charge such a premium for its merchandise. Further, the dilution of the Tiffany brand name among ultra luxury consumers could severely hurt Tiffany’s brand equity. Therefore, Tiffany adjusted its brand strategy and start not dropping prices and trying to go mass-market.

           I think here is a quite interesting observation that Tiffany adopts different strategy outside the U.S. so Tiffany still perceived high-end product in the emerging markets. In Taiwan, the price of Tiffany’s jewelry is almost one and half times than in the U.S, even for the entry product line of the silver jewelry. Moreover, the distribution channel selection of Tiffany still remains the exclusivity, which still represents prestige and targets at high-end consumers. Hence, when I first time read the article about Tiffany’s brand dilution, I couldn’t believe it, and I started to think what kind of role do emerging markets play in Tiffany’s brand strategy. Cash cow maybe? Great markets to exploit?  I felt a little bit disappointed about Tiffany and the high-end brand image developed by Tiffany was broken.  I will still buy Tiffany’s accessories but only in the U.S, not in Taiwan.