Revenue Premium as an Outcome Measure of Brand Equity - Case Study Example

Country/Product Brief Insert Name Institution Introduction Tiffany & Co is a global corporate that is very successful especially in the jewelry sector. The firm established its headquarters in New York back in 1837. It was founded by Lewis Tiffany and Teddy Young and is specialized in stationery. In 1853, the company concentrated on jewelry and subsequent differentiation of other products has seen the firm successful. Fragrance, stationery, jewelry, china, crystal and silver are some of the items the firm deals with. The market entry of the Tiffany corporate in Philippines would be characterized by many opportunities especially in consideration of the dominance and supremacy that has been successfully established so far. As the company contemplates to go global, they would have to deal with various factors that are responsible for success of any international organization. These factors include; identifying a good market niche, identifying competitors and establishing good political and economic environment for viability of the firm. The paper will discuss the strategies that can be laid down by the firm to ensure maximum penetration in the market of Philippines and secure a large market share. This will be achieved by a critical analysis of the competitive strategies to reduce threat of new entrants and surpass those of the existing firms (Anderson, 2009). PESTEL The Political dimension is very critical in the establishment and the penetration of the markets in Philippines by the firm. Philippines enjoy good political and economic stability, which is favorable environment for investors. Consequently, the policies of the Philippines must support the operations of the firm for it to be successful (Alice, 2006). The policies should ensure that there are no counterfeit products. The economic situation in Philippines is positively correlated with the growth and success of the firm. The country attained 3.7% growth rate as per the year ending 2011. The economy of Philippines is stable with 118$ billion accounting for the gross domestic product as from 2006. (Loring, 2004). It is worth considering that, the firm is well known for luxurious jewelry that is of high quality and expensive. The social perspective is of paramount essence in the success of the business. Events like parties and weddings positively influence the sales of the jewels and vice versa. Technologically the cost of production is cut down while there is a rise in the innovation and the quality level that will positively influence the firm (Cahney, 2009). The company must also ensure responsible mining thereby ensuring sustainable environment and present success as well. The legal permits and licenses can enhance this, which will ensure that there is safety in terms of health in Philippines. Demographic market segmentation Philippines have a population of slightly over 100 million of people with 61% aged between 15-64 years while the remaining 39% is between 0-14 years. Tiffany Company has the advantage of targeting over 60% of the total population. Income in the urban areas is high than rural areas and rural to urban migration is frequent. This therefore means that the area of precedence as a target by Tiffany would be the urban areas. Majority of those who live below poverty line reside in rural areas and some in the slums of urban centers. The very affluent 10 % earn twice as much as the poor 55% and should be the main target by the firm. Majority of residents in rural areas are employed in fishing and farming arena while those in urban are in services and manufacturing arena. Literacy levels are at 97% with non-significant variance across the genders. Christian religion dominates Philippines therefore events like church weddings are greatly advocated for and would be an opportunity for the firm the population median is 23 years with 62% aged between 15 -64 years. The total population is 94.5 million with life expectancy of over 70 years (Hessen, 2009). This strategy aims at identification of the strengths and opportunities that can be utilized by the firm to ensure maximum economic gain. When done in the beginning it serves as a determiner of whether the establishment process of the firm will be carried out or stopped. This means that this would be carried out in the case of Philippines and depending on the findings the firm will be established or not. The strengths of any firm ensure increased chances of success as opposed weaknesses (Samuels, 2004). The strengths of the firm should be well utilized to mitigate the effects of the weaknesses. Distribution channels Tiffany Company should ensure strong direct sales strategy well outlined in four different sectors that involve multiple direct distribution channels in Philippines for optimum results. The company should use joint ventures in order to attract many customers. Joint ventures have the advantages of capital contribution and if successful may command the economy if the integration is done properly. The Philippines retail would be the first channel that would involve direct selling of the products of the company to the Philippines customers. International retail sales would be the second distributing point that would ensure constant supply of the products worldwide. The direct marketing strategy would involve the online activities that would ensure low cost of the products and that the value of time and place utility is maximized in Philippines. Specialty retailing would involve promotion of different products produced by the firm to create emphasis and ensure brand salience. The many sites of the distribution of their products would increase the brand salience by increasing the number of people who consider the products for purchase leading to high revenue in the company (Hessen, 2009). Tiffany Company should ensure that there are directly operating stores in many strategic places that will increase the level of the consumption of the product in Philippines this would ensure that the sales procedures are simple and therefore encourage the consumer to engage in the activities of the business increasing profitability. The direct marketing strategy would be beneficial because it would incorporate the online activities like shopping and the communication services thereby broadening the business scope even further in Philippines. The company is also well specialized and deals with the selected merchandise that increases the quality of the products due to concentration on an area of specialization increasing innovation and creativity. The differentiation of related products is a strategy that has been well utilized by the firm and much success would be realized if applied to the Philippines scenario. The differentiation ensures diversity in the market share that would be maintained by continued creativity and innovation. The company has a very strong brand image as compared to other of its competitors that is associated with high quality and elegance. One reason as to why the loyalty level is high in some regions is due to the luxurious jewelry as compared to the cheaper ones that are mostly counterfeit. The brand image needs to be maintained and promoted dynamically especially in Philippines so as to ensure that the threat of new and existing competitors is well matched. This should be done in close monitor to the key competitors in their order of the merit (Zimmerman, 2002). There are also negative traits that concern Tiffany Company increase the instances of failure and should therefore be eliminated in the case of Philippines by maximizing the strengths and opportunities discussed above. The luxury goods only cover up the very affluent while the mid income earners are left out. The strategy in Philippines market should incorporate all people with care because very low prices would compromise the trust of the affluent. This means that the existing customers would pull out in the case of low prices as they would feel that there is a reduction in quality as well (Évelyne, 2004). There is also a lower demand in Asia region as the residents are associated with mixture of different products more than loyalty to a brand. Despite the vertical integration that involve establishment of its own mining industry it has very low mining expertise that has led to incurrence of so many losses (Rosen, Tunick, & Samuels, 2004). Tiffany Company should expand the retail stores and emphasize on the smaller enterprises in the beginning as they require minimum capital when compared to larger ones. There is an annual growth of 5%, which has led to increase in the increase in Gross Domestic products resulting to continued economic growth (Rosen, Tunick, & Samuels, 2004). There is an increase in the online sales due to the increase in the number of people who use internet. Moreover, the inclusion of the men’s fragrance will increase the demand of the products due to the lack of competition. There are also ventures of new businesses as the case 2006 where Tiffany Company signed a treaty that was unite to Luxottica to understand the niche market (Hessen, 2009). There is a threat in the high demand of diamond that can lead to high prices by the suppliers but this can be mitigated by the vertical integration. The incidence of the counterfeit goods is likely to tarnish the brand image especially in the time of economy crises where people always go for the cheaper products. In addition, the economy of a country will be directly proportional to the company profitability (Zimmerman, 2002). Porter’s five sources The power of the buyer is relatively high evidenced the economic stability in Philippines which is an opportunity for the firm. A rise in the differentiation of the product will lead to development of the product and increase the penetration to the market. The threat of the new entrants is low due to the high capital investment that is required, the limited distribution channels as well as product differentiation when compared to Tiffany Company (Hessen, 2009). Threats of the substitute are pronounced due to low brand loyalty, substitution with cheaper goods as well as brand name is tarnished by the counterfeit goods. The direct competitors are well pronounced especially De Beer the largest diamond supplier as well as Cartier the largest jewelers. Tiffany would however be at an advantage in the mitigation of the competitor threats due to the strong brand name as compared to most of its competitors (Cuneo, 2009). Conclusion It is evident that there are various factors that need to be considered by Tiffany in order to successfully market its products and maintain a sizeable market share. In order to obtain a sizeable market share the management needs to understand the dynamics that influence the performance of the product in the market. An analysis of Porter’s five forces as well as a PESTEL analysis shows the situation on the ground and helps to identify means through which the management of this company can be able to maintain success in its operations. Through this market penetration will be enhanced in addition to the maintenance of distribution channels that are crucial to the operations of the company. The economic weighing should be done effectively to maximize the profits and minimize losses. This is very essential as it reduces chances of under exploration and failure of the project. The country need to establish social networks that are supportive in the manufacturing process. Social perspective depending on the season is a guiding principle in the firm. This means that in the season where there are so many events like marriages, the firm is likely to earn more profits as compared to when they are scarce. Technology perspective is very essential in the mining as well as the marketing procedure as well as distribution of the products to ensure timely delivery to the place of need. The labor force that is either skilled or non-skilled is also required for effective production at the lowest costs possible (Ailawadi, Lehmann, and Scott, 2003). Hopefully, by putting into consideration all the identified factors and considering all the threats an challenges alike, the company will be able to increase its market share and increase the distribution channels for its products in the Philippines Market. References Ailawadi, K.L., Lehmann, D.R. and Scott, A.N. (2003), Revenue Premium as an Outcome Measure of Brand Equity’. Journal of Marketing, Vol. 67, No. 4, pp. 1 – 12. Alice .C, (2006). Louis Comfort Tiffany and Laurelton Hall. New Haven, Connecticut: Yale University Press. Anderson, A. Z. (2009). The multinational corporation; Apple Inc Company. New York. New York Press. Cahney, W. (2009). The consumer electronics and related industries. Oxford: Oxford Press. Cuneo, A. Z. (2009). Tiffany & Co., a strong brand with relatively few retail stores, this fall starts selling jewelry online. New York. New York Press Évelyne .P, (2004). The Jewels of Jean Schlumberger. New York: Harry N. Abrams, Publisher. Hessen, W. (2009). A new Tiffany diamond. Women’s Wear Daily, Oxford. Oxford Press Loring. J. (2004). Greetings from Andy Warhol: Christmas at Tiffany's. New York: Abrams press. Rosen, S. M., Tunick, B. J., & Samuels, R. (2004). American gem. New York. New York Press Samuels, R. (2004). American electronics consumption. New York: New York Press. Zimmerman, A. (2002). E-commerce Selling strategies. Oxford. Oxford Press Read More