There is no secret that I love BRANDS. Every once in a while I like to do a “brand breakdown” on Twitter. The public perception toward some of the world’s everyday brands truly surprises me. After getting hundreds of comments, I decided to put it all together, break it down, and write a blog entry on my findings and thoughts.
I hope you all enjoy it, and I look forward to getting your feedback.
The old saying “a diamond is a girl’s best friend” is probably one of the most accurate statements ever made. Think about it. Have you ever met a woman who didn’t like diamonds? I know I haven’t. The “bling” era was poppin way back in King Tut’s gold-filled Ancient Egypt. It goes way back to European royalty, the Vanderbilt’s, and the Hutton’s. Even before Slick Rick or LL Cool J was talking about it on their records. You see my point?
But when you talk about diamonds and jewelry from a business perspective there is one name that stands alone and above the rest in its own space, Tiffany & Company. Let’s take a quick look at the world famous jewelry company from a branding, business, and consumer standpoint. First, let’s consider the historical facts about Tiffany’s.
The company was founded in 1837 by Charles Lewis Tiffany and Teddy Young in New York City. Believe it or not, they didn’t start out selling jewelry whatsoever but rather a wide variety of stationary items and silverware. About 16 years later they shortened the name from Tiffany, Young, and Ellis to Tiffany & Company and shifted their focus on jewelry. Since then the company has been mentioned in classic movies, books, and songs by some of the biggest names in the business, such as Marilyn Monroe, Eartha Kitt and books like the James Bond novel Diamonds Are Forever. (See, Kanye did his homework). Also, all of the prominent families already mentioned were huge customers of the legendary jewelry store as well as other notable families like the Astor’s, The Post’s, and the Morgan’s.
You may say to yourself, “I don’t hear any radio commercials or see any big print ads about this company anymore. I definitely haven’t heard anybody in the hood talking about the ice they copped there. So, are they still relevant?”
Well, its revenues from 2009 were $2.86 billion. That seems pretty relevant to me. Agree? Also, I think it’s safe to say, it’s a conservative company that plays it safe by primarily marketing to the conservative market only. Now, although Tiffany & Company is and has been successful with this approach, perhaps, the company could have exceeded its margins by thinking outside of the box and marketing to more “hip and colorful” demographics such as the African-American and Latino markets. So many companies make the huge mistake of not targeting these markets that it’s painful. I guess some of them believe by doing so it will cheapen their brands, but that couldn’t be further from the truth. Besides the bottom line of a business is increasing the “bottom line” right? The facts speak for themselves: News reports forecast in the US alone, African-American buying power will hit $1.1 trillion by 2012. Here is something else to consider: Amongst the 39 million African-Americans in the US, 2.4 million of them have households with income of $75,000 or more, yet they account for a whopping 45% of African-American buying power. Also, the data shows that companies offering luxury items and financial services that market to the African-American communities perform extremely well because this demographic is more likely than other affluent cohorts to spend money on luxury items, such as jewelry, cars, and designer clothes. In 2009, Hispanic purchasing power surged to $700 billion and by 2012 is expected to peak at $1 trillion, making them the largest multicultural market in the United States. There is absolutely no reason major corporations should overlook these statistics or take them lightly because at the end of the day, besides the money, they are major influences in everything from clothes, cars, jewelry, and even alcoholic beverages. After Busta Rhyme’s hit song, “Pass the Courvoisier” climbed the charts, clubs couldn’t keep enough of the liquor on the shelf. That’s power!
Now, on the flip side, maybe Tiffany’s is satisfied with its customer base and will continue doing what got the company where it is in the first place. That’s playing it safe, but what happens if John Lowe Jr. and Neal Goldberg, the chairman and CEO of the Zales Corporation respectively, one of Tiffany’s chief competitors, decides, “Hey, we need to tap into the African-American market to step things up and get hip,”? It probably would be a great business tactic for Zales, considering in 2008 it sold 105 of its locations, a staggering 12% of its total stores, and also sold Bailey Banks and Biddle, the company’s upscale jewelry chain to Finlay Enterprises.
To sum it up, these companies would fare much better if they paid attention and executed marketing campaigns that targeted this demographic. One jeweler who paid attention and made a fortune off of this market is Jacob Arabo, known by many as “Jacob the Jeweler”. If you listen to rap music, you’ve probably heard his name mentioned at one time or another in a song. He’s probably the most sought after jeweler amongst rappers and professional athletes. Big names such as Jay Z, Nas, The Game, Sir Elton John, and even David Beckham copped bling from him.
In addition to the hundreds of millions of dollars he amassed from the market, he also got years of practically FREE promotion. Think about it. Most likely you have never seen a television or heard a radio commercial by him, yet since 1999 there have been at least 70 songs by music artists that mention his name. Given that some companies pay upward of $100,000 for product placement or product mention in a video or song, which means Jacob received over $7 million of FREE advertisement! He wasn’t the only one benefiting from free promotion and reaping tremendous reward. Add Bentley, Maybach, Four Seasons, Gucci, Prada, and Louis Vuitton to this fold. The list goes on and on from all type of companies.
Now, let’s take a look at the jewelry from a consumer standpoint. Good quality jewelry is always a good investment. The reason behind this is diamonds don’t depreciate, as long as they are not damaged, and neither does gold, as long as it is not melted down several times. Truthfully, most people who buy jewelry have little knowledge of what they are really purchasing or its true value until after getting it appraised when trying to trade in or resell. I’ve seen so many guys purchase diamond encrusted rings, chains, and watches for hundreds of thousands of dollars only to have it valued at a fraction of the cost they paid for it. Primarily, this happens for several reasons. One reason is they don’t do their homework on what they are buying before buying it. Another reason is they deal with shady jewelers who have built a reputation and fortune capitalizing off of others lack of knowledge. I’ve seen cats buy expensive jewelry from ‘cash only’ stores or places that have a no refund, exchange only within 30-day policies. Sounds crazy but it happens everyday.
I would advise consumers who are in the market for buying expensive quality gems to view it as an investment using the same sound principals you would use if you were buying a home, a car, or a boat. Here’s a fact for you: If you buried a $100,000 diamond in the ground in 1975 and did the same thing with $100,000 in cash and dug it up today, the cash would barely buy you a Mercedes but the diamond would be worth over $100,000,000! Instead of going to the ‘cash only’ stores, why not buy into a piece of history with an established company like Tiffany’s that has been the cream of the crop for centuries and stands by every piece of jewelry it sells. Its world class recognition as expertise is clear evident considering its standards for sterling and platinum has been adopted as the US standards. That says a lot about its clout, and definitely makes it a company I would feel safe doing business with any day. The Asian and Jewish cultures have been made aware of this for years because they understand the value and the heritage associated with the brand. Mothers hand valuable jewelry down to their daughters, sons, or other family members, and these precious gems become family heirlooms. Other cultures such as African-American and Latino’s would do well by following this tradition.
Look at this way, there are over 35 million Black and Hispanic women living in the US alone. Now, imagine if their mothers raised them and they were raising their daughters to want the perfect Tiffany’s diamond wedding ring. The value would be incredible and would literally carry over through generations. I’ve made some mistakes in the past but now I know better. My jeweler, Alfredo J. Molina, of Molina Fine Jewelry, brought to my attention, the importance of understanding the value of diamonds and precious stones.
Recently, I did a Twitter poll and asked the question, ‘‘When you think of ‘bling’, what is the brand first come to mind?” Surprisingly, out of all those whom responded, only three mentioned Tiffany & Co. All three were women. The irony of situation here is that men buy more jewelry than women do, and if the guys don’t think about Tiffany’s for themselves, it’s less likely they will think of the blue box when purchasing for their wife, daughter, mother, or girlfriend. One female respondent, @giftandcurse, responded, “By Tiffany’s not being exclusive, I think the brand is a bit weakened by the sale of less expensive silver”. Now, I respect her opinion, but if she knew its history, she would have known the company actually started out selling pots and pans.
In a perfect world, you would get what you pay for, but unfortunately, we don’t, so we really need to be consumer savvy. Whether you’re spending a grand or a million dollars on some ice, DO YOUR RESEARCH. Here are a few basic tips: diamonds are valued by the 4’C’s: color, carat weight, cut and clarity. When buying gold, it’s important to learn about karats. Check the current market value to see how it’s performing against the dollar, and remember it’s an investment. Consider this. When the dollar is weak, gold holds it’s value, and when the dollar is strong, gold is still a competitive investment.
Whenever buying jewelry, it’s ALWAYS best to deal with jewelers of good reputation. If they are offering huge discounts or if you can negotiate the listed price, that’s usually a bad sign.
So whether you’re a buyer or seller, educated consumers and reputable companies compliment one another, creating long lasting relationships that can be satisfying to both parties.
Another one of my Twitter respondents, @ya_boy_rio made this interesting comment after I mentioned Tiffany and Co. He said, “Simply put, its old money versus new money. Old money knows about Tiffany’s while new money knows Jacob”. Again, that’s a very respectable point, but here is the bottom line. Whether the consumer is respected or not, all businesses should educate the consumer, because if they fail to do so, once the old money dies so will the brand!
For a more in depth look into the world of branding and on companies such as Pepsi, Sports Illustrated, the Oprah and Tiger Woods brands, as well as others, check out my new book, The Brand Within: The Power of Branding from Birth to the Boardroom, which will be released nationally on April 15, 2010.
I would like to give a special thanks to my Twitter followers for their insight and opinions while putting this together, especially @stylesmedia, @plusologie, @big_Stace, @missrock925, @realnameprinces, @amillb430.
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