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Marketing Example
Tiffany & Co: Recession Marketing Success
Price is also an incredibly important factor in times of recession. Most people assume that luxury brands are at a significant disadvantage during a down economy. Although the low cost leaders may have an advantage in regards to price, luxury brands have pricing options as well. With an innovative pricing strategy, even luxury brands can overcome the lack of consumer confidence that plagues a recessionary period. One example is Tiffany & Co. who dropped the price of their high-end fashion jewelry by an average of nearly nine hundred dollars (Jeweller, 2010). As a result of their pricing strategy the company was able to quadruple the average profitability in their industry.
While some retailers may be totally dependent on the price, offering coupon innovative coupon deals, the perceived value of the consumer is the primary factor to consider. For example, even though Tiffany's luxury products were still significantly more expensive than other brands; consumers valued their pricing strategy and felt that the total value that they were receiving was worthy of a purchase. The most effective pricing strategy varies depending on the company's specific circumstances however the company should always consider price vs. value.
Tiffany's & Co was able to capitalize on their brand equity to drive profitability in a recession. This position was created by years of differentiation efforts which established Tiffany's as a premium brand in the luxury segment. Therefore Tiffany's was able to launch an effective campaign because of the perceived value associated with their products even despite the goods being more expensive in relation to the competition. As a result, Tiffany's was one of the few retailers in their industry that actually profited when the economy was in a slump.
Works Cited
Jeweller. (2010, July 7). Tiffany Reveals Recession-Busting Strategy. Retrieved October 19, 2012, from Jeweller Magazine: http://www.jewellermagazine.com/Article.aspx?id=814&h=Tiffany%E2%80%99s-reveals-recession-busting-strategy
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