MODULE

SALES AND DISTRIBUTION

MODULE LEADER

DR. ROHIT SINGH

A CASE STUDY ON

TIFFANY & CO.

By: Shaily Shah
Himanshu Mittal
Mayur Kothari
Dhruv Patel
Kaushal Lathiya
Naman Jain
 INDEX

1 Introduction to Luxury Industry

2 Introduction to Tiffany & CO.

3 Rationale of entry

4 Luxury industry in India

5 Entry in Indian market

6 Distribution channel system

7 Distribution channel used by Tiffany & Co. globally

9 Suggested distribution channel

10 Conclusion

11 Reference
 INTRODUCTION TO LUXURY INDUSTRY

Today the demand for luxury brands is ever increasing and brand offering is continuously on
rise. Nowadays people consider luxury as a way of magnificent living, they look at it as a
experience of gaining comfort, class and pleasures. People take luxury as a kind of personal
indulgence that adds a spark to their everyday lives.
Talking about the present scenario of Asia today not only the glitzy upper crust of society
enjoys luxury but we can see that junior executives sporting their Rolex watches, university
students in ferragamo shoes, countries like Hong Kong and China boasts more about GUCCI
and HERMES stores more than the capital of luxury fashion consumers like New York and
Paris.
And now India being the new kid on the luxury block, has 3 months waiting lists on launch of
new high-end products. The cult of the luxury brand is so powerful that Asian consumers
account for as much as half of the billion dollar global LUXE industry.
http://iosrjournals.org/iosr-jbm/papers/Vol15-issue1/C01511827.pdf

Scenario of Retail Industry across the world-

The jewellery industry seems poised for a glittering future. Annual global sales of 148
billion are expected to grow at a healthy clip of 5 to 6 percent each year, totalling 250
billion by 2020. Consumer appetite for jewellery, which was dampened by the global
recession, now appears more voracious than ever.

But the industry is as dynamic as it is fast growing. Consequential changes are under way,
both in consumer behaviour as well as in the industry itself. Jewellery players cant simply do
business as usual and expect to thrive; they must be alert and responsive to important trends
and developments or else risk being left behind by more agile competitors.

The below figure showcases the growth of branded jewellery vs. non-branded ones.
 INTRODUCTION TO TIFFANY & CO.

Founded by Charles Lewis Tiffany and John B. Young in Brooklyn, Connecticut in 1837 as a "stationery
and fancy goods emporium", the store initially sold a wide variety of stationery items, and operated
as "Tiffany, Young and Ellis" in Lower Manhattan. The name was shortened to Tiffany & Company in
1853 when Charles Tiffany took control and established the firm's emphasis on jewellery. Tiffany &
Company has since opened stores in major cities all over the world.

The company's manufacturing facilities produce approximately 60% of the merchandise sold
the balance, including rose-gold and almost all non-jewellery items, coming from third
parties overseas. Tiffany's oversees a significant U.S. manufacturing base, with jewellery and
silver goods produced in Mount Vernon, New York; majority in Cumberland, Rhode Island;
and Lexington, Kentucky, while silver hollow-ware is produced in Rhode Island. The
company's other subsidiaries, located in facilities outside the U.S., process, cut and polish the
diamonds.

The company may increase the percentage of internally manufactured jewellery in the future,
but it is not expected that Tiffany will ever manufacture all of its needs. Some of the key
factors which management considered prior to its decision to outsource manufacturing
included: product quality; gross margin; access to or mastery of various jewellery-making
skills and technology; support for alternative capacity; and the cost of capital investments.

Product Offerings: Tiffany sells jewellery, sterling silver, china, crystal, stationery,
fragrances, water bottles, watches, personal accessories, as well as some leather goods.
Tiffany is renowned for its luxury goods and is particularly known for its diamond and
sterling silver jewellery. Tiffany markets itself as an arbiter of taste and style, and was once a
purveyor to the Russian imperial family.
 RATIONALE OF ENTRY
Tiffany & CO. chose Indian market because:

Wanted to target big market

India being a subcontinent is seen a big market. With a large population we can view high
demands and opportunities to grow. At the same time India is seen as a fast developing
country. India is already marked its presence as one of the largest growing economies of the
world. It has been ranked among the top three attractive destinations for inbound investments.

Rising disposable income of Indian middle-class

Indian middle class constitute around 25% of total households and account for 44% total
disposable income. It has also been predicted that by 2025 the figures are expected to go up
to 46% and 58%. Hence these figures will drive the Indian retail growth.

Less direct competition faced.

Secondly the competition in India is with the local stores as tiffany is a concept of luxurious
market for American diamond and it itself is a well established named in the luxury brand
segment. Hence indirect competition with other brands which are into production of real
diamonds, and direct competition with brands like Swarovski. In this competition the
competitive edge will be the high quality of the diamonds and designs provided by the brand.
Also the store will not only provide the imported products but also the local products hence
capturing the market share of the local convenient stores.

Lifestyle.

Young consumers who turn to brands as a means of self-expression and self-realization, for
whom established brands inspire trust and the sense of an upgraded lifestyle. new money
consumers who wear branded jewellery to show off their newly acquired wealth (in contrast
to old money consumers, who prefer heirlooms or estate jewellery).
 LUXURY INDUSTRY IN INDIA
Fashion and accessories brands from around the world are waking up to the spending power
of the aspirational Indian consumer.

Over the past few years, brands such as Michael Kors, Calvin Klein, and Kate Spade have all
set up shop in big cities, providing discerning consumers with the affordable luxury styles they
could previously only pick up in the West. As a result, this segment of Indias retail industry is
booming, estimated to be worth around $200 million, and growing at a rate of 40% every year,
according to a June 2016 report by market research firm Euro monitor International. And while
affordable luxury constitutes a small part of Indias overall luxury goods market, which was
worth around $3.4 billion in 2016, experts say its growth is outpacing the rest of the sector.
Foreign firms arent the only ones out to capitalise on the opportunity, though.

Shopping in India has witnessed a revolution with the change in the consumer buying
behaviour and the whole format of shopping also altering. Industry of luxury in India which
has become modern can be seen from the fact that there are multi- stored malls, huge
shopping centres not filled with local brands but promoting international luxury branded
products, and sprawling complexes which offer food, shopping, and entertainment all under
the same roof.

India retail industry is expanding itself most aggressively; as a result a great demand for real
estate is being created. People now in India have become more conscious about their lifestyle.
Now in this era in India luxury is not only limited to the royals.
 CHALLENGES FACED BY THE INDIAN LUXURY JEWELLERY
MARKET

The challenges facing the Indian jewellery sector are various and these are stopping the
Indian branded jewellery industry from reaching its full potential. The behaviour pattern of
the Indian consumer has undergone a major change. This has happened for the Indian
consumer is earning more now, western influences, women working force is increasing,
desire for luxury items and better quality. He now is not impressed by the heirlooms or with
the traditional heavy jewellery. All these have lead the luxury market to give more in order
to satisfy the Indian customer.

Services provided by the retailers to the consumers:-

They anticipate the needs of consumers and accordingly assemble goods of different varieties.
Thus they satisfy their demands and provide them a wide choice of goods.
They sort out goods supplied by the wholesalers and keep them in convenient packages for the
benefit of the consumers.

They even act as an advisor and guide to the consumers by bringing new products to their
notice and educating them about its diverse uses. They keep the consumers informed about the
changing trends in the market about the different varieties of products. They also provide other
services to the consumers such as free home delivery, aftersales services, credit facility, etc.

Small-scale retailers:-

Small-scale retailers are those retailers whose scale of operation is restricted to a small segment
of the market and to a narrow range of products. They generally hold small stocks of the
products of regular use. Such retailers are very large in number but account for a small portion
of the total retail business. But, small-scale retailing is a very common, simple and flexible way
of distributing the products to the final consumers. It incurs low operating costs and is usually
owned and operated by a proprietor. The most important feature is that the small-scale retailers
have a direct and personal contact with their customers. This form of retailing faces the
problems of small capital, lack of professionalism and low purchasing power.
The two prevalent forms of small scale retailing in India are:-

Itinerants or Mobile traders: -Itinerants or Mobile traders are those retailers who carry on
their business by moving from place to place for selling the products and have no fixed business
premises. They change their place of business according to their convenience and sales
prospects. They serve either at the consumer's doorsteps or on busy places frequently visited
by the customers.
Fixed Shop Retailers: -
Fixed Shop Retailers are those retailers which have fixed business premises and operate
through unit stores or small shops located in residential areas or markets. They mainly include:
-
Street stalls: - are the small shops on the roadside, street-crossing, bus stops, etc. They sell a
limited variety of products of regular use like stationery, grocery, etc.
Dealers of second hand goods: - are engaged in purchase and sale of used goods like books,
clothes, etc.
General stores or variety stores: - are the shops which deal in all types of general consumer
goods of regular use like bread, butter, paper and pencils, etc. They are set up in residential
areas or busy markets. They provide services like goods on credit and home delivery to their
customers
Specialty shops: - are the shops which deal in only one or two special types of goods. They are
generally located in shopping centers. For example, chemist shops, grocery shops, readymade
garments shop, sweets shop, etc.

Large-scale Retailers: -

Large-scale Retailers are those retailers whose scale of operation extends to a large segment of
the market and to a wide range of products. They have a fixed line of business in which they
have invested huge capital. Such retailers are not very large in number. This form of retailing
involves high operating costs and lacks personal contact with the customers. But it involves
more of professionalism in selling the products through the use of various promotional
techniques like advertising, publicity, sales promotion, etc.

The various forms of large scale retailers are:-

Departmental stores
Supermarkets
Multiple Shops or chain stores
Mail order houses
Consumer cooperative stores
Hire purchase traders
Super Bazar
Automatic vending machines
 STRATEGIES TO ENTER IN INDIAN MARKET
There are many ways by which a company can enter in an international market. Some of them
are:-
Selling through a website Selling your products through a website is a simple, low-cost
way of entering the global market. Customers and prospects around the world can visit your
website at any time to select products and place orders. To improve your chances of success
in key export markets, prepare website pages specific to the territory.

Distributors - Working with distributors provides you with a local presence in your target
markets and reduces your own sales and logistics requirements. Distributors buy products
from you and resell them to their own customers. They offer you the benefit of established
local contacts and market knowledge.

Joint Venture - A joint venture with a local business partner also provides the benefits of
local market knowledge and contact. International company sets up a business relationship
with a company in the local market. The local partner may also reduce the risk of
discrimination against international company.

Franchising - Arrangement where one party (the franchiser) grants another party (the
franchisee) the right to use its trademark or trade-name as well as certain business systems
and processes, to produce and market a good or service according to certain specifications.
The franchisee usually pays a one-time franchise feeplus a percentage of sales revenue as
royalty.

ENTRY IN INDIAN MARKET

Tiffany & Co. in India plans to have a joint venture with Tanishq in India to market its
product. Tanishq is a perfect partner for Tiffany as it already has a well established
distribution channel all across India and also it to an extent caters to the same industry where
Tiffany & Co. wants to target.
 DISTRIBUTION CHANNEL SYSTEM

The Distribution Channel

The distribution function of marketing is comparable to the place component of the
marketing mix in that both centre on getting the goods from the producer to the consumer.
A distribution channel in marketing refers to the path or route through which goods and/or
services travel to get from the place of production or manufacture to the final users. It has at
its centre, transportation and logistical considerations.

Business-to-Business (B2B) Distribution Channels

Business-to-business (B2B) distribution occurs between a producer and industrial users of
raw materials needed for the manufacturer of finished products. For example, a logging
company needs a distribution system to connect it with the lumber manufacturer who makes
wood for buildings and furniture.

Business-to-Customer (B2C)
Business-to-customer (B2C) distribution occurs between the producer and the final user. For
instance, the lumber manufacturer who sells lumber to the furniture maker, who then makes
the furniture and sells it to retail stores, who then sells to the final customer.

DISTRIBUTION AND SUPPLY CHANNEL FOR INDIA

Tiffany & Co. as above mentioned will choose Tanishq as the distribution channel and for its
supply channel Tiffany will itself supply its products from its own manufacturing units as it
manufactures most of its products by itself and the cutting and polishing of its products is one
of its biggest speciality.
Conclusion
Entering a market is just a initial step , but sustaining in market and having a constant growth
is also important and this can be achieved only through proper and organised strategic plans
this is a draft of how the company will remain in the market fight the competitors and lead
the way. It is the only luxury jewellery brand after Swarovski to enter this segment in India.
The motive of tiffany & co is indeed clear and positive and it wishes to serve people of
maximum countries and evolve itself globally it wishes indisputably to make them self stand
out in the Indian jewellery market.
 REFERENCE

http://iosrjournals.org/iosr-jbm/papers/Vol15-issue1/C01511827.pdf
www.tiffany.co.in