Shauna Brown Marketing Project ??? Part Two Principals of Marketing Dr. Sarah Williams, Instructor October 28, 2011 How the Economic Environment Impacts Tiffany & CO Economic environment consists of the totality of economic factors, such as employment, income, inflation, interest rates, productivity, and wealth that influence the buying behavior of consumers and institutions (businessdictionary, 2011). Tiffany & Co contributes to the economic growth of the community around them by opening stores in the states; in 2004 the company opened ten stores four of which were located in the United States.
That year sales increased 2. 2 billion which means some of that revenue was filtered through the communities that the stores were opened in. As of January 31, 2007, the Company operated 64 Tiffany & Co. stores in the United States (answers, 2011). Business has done well for the companies even through the recession shares have gone up 6. 4 % to 67. 18% which has led the company to raise their yearly predictions because of the success. Stocks for the full year have risen 1. 4% but dropped 21% this month assuming that financial, and other economic changes are affecting upscale shoppers.
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The company must also factor in the price of materials, within the past year the company has seen almost a 40% increase in rough diamond prices. Even with the increase in material prices the companies second-quarter gross margin widened to 59% from 57. 8% which is good news for the business (marketwatch, 2011). How the Socio-Culture Environment Impacts Tiffany & CO Social culture is defined as the explanation of two aspects of culture, Cognitive Culture or Worldview and Social Culture, the public patterns of relationships and interaction (yahooanswers, 2011).
Being in the jewelry manufacturing business, worldly changes also have impacts on sales and profits. Americans want to see that the business helps and supports our economy while keeping ethical standards, bad social reputation hurts sales. Tiffany’s employee satisfaction surveys are outstanding, employee retention is over 90 percent, and the company generally promotes from within. This is very good statistics on the company showing they care about their employees and keep revenue in the communities they serve (about, 2011).
How Technological Environment Impacts Tiffany ; CO Technological impact is defined as external factors??in??technology??that??impact??business operations. Changes??in technology affect how a??company will do??business. A business may have to dramatically change??their??operating strategy??as a??result??of changes in the technological environment (businessdictionary, 2011). Social media plays a large part in technology changes for all companies, with internet users now estimated to be in the two billion range businesses must advertise to reach more consumers (physorg, 2011).
Keeping up with technology is something the company does well, Tiffany has a Facebook and Twitter page that outlines new products and promotional events while letting consumers post their comments, concerns and compliments about the product. Recently added was a smartphone application which is direct customer interaction from their cell phones. This application lets customers search for the perfect ring, view love advice and even send their diamond pick directly to a Tiffany ; CO diamond consultant for immediate purchase (westonjewlery, 2011). How the Global Environment Impact Tiffany ; CO
Global environment is the environment in different sovereign countries, with factors exogenous to the home environment of the organization, influencing decision making on resource use and capabilities. This includes the social, political, economic, regulatory, tax, cultural, legal, and technological environments (answers, 2011). Diamonds have a big global impact, they are derived from the earth and many controversial issues surround them including conflict diamonds which are diamonds smuggled by rebel forces causing deaths while retrieving diamonds.
Tiffany assures that their product does not participate in unjust mining procedures nor do they purchase from suppliers that do. On the Tiffany web site they clearly outline who they purchase their diamonds from, Laurelton Diamonds with known sources across the globe, primarily in Africa, Canada and Russia. They work to eliminate the flow of “conflict diamonds”???rough diamonds that are smuggled by rebel movements to finance wars against legitimate governments. Tiffany also does research on countries they purchase from to make sure they follow the guidelines of?? ??Kimberley Process Certification Scheme??(KPCS).
This is an international cooperative monitoring system created by governments, industry and civil society to eliminate the flow of “conflict diamonds. To comply with this process, rough diamonds may only move among participating countries in sealed containers with accompanying documentation evidencing that the diamonds are conflict-free (Tiffany, 2011). How Competitive Environment Impacts Tiffany & CO Competitive environment describes how strong the battle in a market for the favor of the customers is or in other words shows how intense the competition is (12manage, 2011).
Tiffany’s competition comes from many different areas such as small department retail shops and specialty jewelry chains; they also face competition from exclusive retailers such as Bulgari and Cartier. Direct competition comes from distributers like Signet Group, Zale and Blue Nile. Signet Group is the world’s largest specialty jewelry retailer in terms of sales. The company is based in the United Kingdom and operates stores in the U. K. and the U. S. , including Kay Jewelers in the United States.
Signet Group exceeds Tiffany’s in revenue and size; however the company currently lacks a presence in Asia. Tiffany, on the other hand, is in a good position to take advantage of new wealth developing in Asia due to the fact it already has stores in that region, this helps Tiffany keep its edge in that market. Zale’s specializes in diamond jewelry and operates mostly mall-based stores as well as mall kiosks only in North America. It lacks an international presence, however makes up for it through volume in North America.
Both Zale and Tiffany sell low-priced jewelry, but Zale only extends to moderately-priced pieces while Tiffany seeks to maintain a “high-low” approach by selling $200 pieces next to $50,000 ones. Blue Nile is the largest online-only retailer of certified diamonds and fine jewelry. The company’s sales are much smaller than Tiffany’s. The fact that the company sells its goods exclusively online makes it available to a wider audience than Tiffany’s, whose goods must be purchased through its own stores.
Tiffany keeps up with the competition by offering things they do not and marketing in areas other companies do not (wikiinvest, 2011). How Governmental Regulations Impact Tiffany & CO Governmental regulations that face Tiffany are the clean diamond trade act of 2003 and the Kimberley Process mentioned earlier in text, which work together to ensure that all diamonds are not being purchased from rebels who go into civilian mining areas killing innocent unarmed civilians to take over mining space.
Regulations are put on all manufacturers to include proper paperwork on where diamonds originated from as well as how they are packaged is important to stop conflict diamonds (usdepartmentofstate, 2011). The company also addresses these regulations on their website to let their customers know they are also concerned with these important government issues. Tiffany joins with other responsible jewelers in condemning those abuses and urges other industry participants to refuse to purchase diamonds sourced from this district and advise all business partners of their zero tolerance policy for diamonds of conflict origins (tiffany, 2011).
Informing customers that the issues they are concerned with are also a concern to the company gives them an ethical and business advantage. References http://www. businessdictionary. com/definition/economic-environment. html http://www. answers. com/topic/tiffany-co Cheng, A. (2011). Market Watch. Retrieved from http://www. marketwatch. com/story/tiffany-sparkles-as-global-demand-lifts-profit-33-2011-08-26 http://answers. yahoo. com/question/index? id=20110116192008AAzCjug Hess, D. E. , (n. d) Wholesome Organic Profits. Retrieved from http://humanresources. about. com/od/managementandleadership/a/growth_2. htm http://www. physorg. com/news/2011-01-internet-users-worldwide-billion. html http://www. westonjewelry. com/news/2011/06/27/tiffany-co-using-technology-to-promote-diamond-engagement-rings/ http://www. tiffany. com/sustainability/mining_diamonds. aspx http://www. 12manage. com/description_competitive_environment. html