Tiffany--An Amazing Brand

One of the groups in my brand management class did a brand audit of Tiffany that highlighted up some amazing information.

First, the Tiffany blue box was first introduced in 1837 by the founder of the firm. It is amazing to think that he was such a brand genius at a time when few people thought about such things. He determined the color blue that would be associated with Tiffany and introduced the box, knowing that he could differentiate gifts from his store that were presented in the distinctive box. To this day, the blue box is one of the most coveted and most protected brand attributes of Tiffany. Without the box, it is just a piece of jewelry. With the box, it becomes a true piece of differentiated luxury.

Second, the brand value of Tiffany is estimated to be $4 billion. The company itself has a market cap of a bit over $5 billion. This means that the inventory, if sold by someone else, would have less value than it does when sold in a Tiffany store. Also, once again, without the blue box the jewelry looses perceived value.

Third, if one looks at year-over-year sales, one can see the impact of the recession on all luxury, non-essential goods. All of the jewelry chains had declining sales. Even thought Tiffany is at the highest end, it only had a modest decrease in sales versus other major jewelry chains. In terms of return on assets, Tiffany continues to exceed the industry average.

Tiffany shows that a brand can maintain its relevance in a competitive market over more than 150 years by being consistent in its brand attributes and associations. Tiffany retains a differentiation strategy of high perceived value--incremental costs of their jewelry might not be that much higher than competitors, but the perceived worth to customers is much higher and they are willing to pay more to get a Tiffany item.

In the brand exploratory, the student group talked to a few people who felt that Tiffany was over-valued and too expensive--that other stores offer equally high quality and better priced merchandise. If the decision to buy is based on fair price vs. quality, then Tiffany looses. They know they do. The decision must be based upon exclusivity and high differentiation--it's not just jewelry, it's Tiffany. Exclusivity is not for everyone.

Tiffany's ads focus on the giving of a box, not the gift inside. All it takes is the box to drive the familiarity and key attributes. Can anyone else think of another company that has become so intertwined with its packaging that the gift inside becomes almost irrelevant compared to where it was purchased? This is almost a reverse ingredient brand. I had never heard of a packaging brand, but perhaps Tiffany represents one.