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International Business
2016
2
VAASAN AMMATTIKORKEAKOULU
UNIVERSITY OF APPLIED SCIENCES (font size 12)
Name of the Degree Programme (font size 12)
ABSTRACT
This is a marketing strategy for Blue Nile, Inc to enter Swiss market.
Blue Nile, Inc is one of the large online retailers in USA offering diamonds and jewelry
products for individual customers and manufacturers.
The marketing plan consist of company background, SWOT analysis, products offered
as well as various analysis such as customer segmentation, Swiss market and action
plans for entering Switzerland successfully.
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1 BLUE NILE, INC DESCRIPTION
Established in 1999, Blue Nile has become one of the most popular online retailers
providing high quality diamonds and fine jewelry. It is offering the products for more
than 40 countries throughout the world.
With the online business model, Blue Nile operates effectively in avoiding many of the
costs experienced by traditional physical stores. Therefore, Blue Niles business can be
profitable and provides customers with the best quality products and services through
competitive prices.
At the moment, Blue Nile locates the head office in Seattle, Washington and four wholly
owned subsidiaries that are located in main areas to serve customers better (Blue Niles
annual report, 2015)
Blue Nile, LLC (LLC), which serves customers in the U.S., Canada and Asia-
Pacific;
Blue Nile Worldwide, Inc., which serves our customers in Europe;
Blue Nile (Shanghai) Trading Co., Ltd., which serves our customers in China,
and
Blue Nile Jewellery, Ltd (Jewellery), which operates a customer service and
fulfillment center in Dublin, Ireland.
Blue Niles objectives are maximizing profitability and increasing market share both
domestically and internationally by providing high quality products and customer
services based on efficient supply chains, cost structure and excellent customer
experiences.
Blue Niles long term strategy focuses on increasing revenue, profits, cash flow as well
as low fixed - cost expenses. Last but not least is keeping expanding Blue Niles
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international operation. Blue Nile has invested a lot of effort in marketing strategy to
deliver brand awareness and familiarity as well as value to customers. Blue Nile is also
testing several physical retail storefronts (Webroom Concept) to determine whether it
should have physical presence in target markets.
1.3.1 Strengths
Firstly, Blue Nile is one of the largest sellers using online interface in USA. Secondly, it
offers a large amount of various products with more than 33,000 options available,
customers can choose the most appropriate products and designs for their needs easily.
There are no intermediaries between Blue Nile and end users therefore it can offer a
competitive price to customers. Especially, in special occasions, Blue Nile often has
special versions of their products offered as gifts which are so convenient for customers.
Lastly, Blue Nile is a strong brand reputation in USA. (Lifestyle and retail)
All of points mentioned above, Blue Nile has many competitive advantages in entering
Swiss market.
1.3.2 Weaknesses
Online shopping is very convenient for customers to scanning the products, saving time
and money, however, it also has some problems that customers can worry about the
quality of the products. Customers cannot compare the product directly or dont know
whether the products they buy can match with other products until they are being
packaged and sent. (Lifestyle and retail)
1.3.3 Opportunities
With the reputation and brand image in USA, Blue Nile has potential business to expand
internationally, increase its categories and portfolios to increase the sales. (Sneha, 2012)
To build the brand image and reputation in Switzerland, Blue Nile needs to do more
advertisings and promotions which are the best ways to attract customers attention and
boots the sales.
There are still many people wanting to see the products and experiencing the services
given by the company, so that joining the trade shows and exhibitions are the
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opportunities for Blue Nile to introduce their products directly to customers as well as
collect primary information for marketing research. (Lifestyle and retail)
1.3.4 Threats
However, Blue Nile also need to focus on shipping method and choosing good shipping
companies as well as insurance because the products can be destroyed or damaged at
time of shipping. The price of the gold is unstable, therefore this can make company
lose profits of the market and industry researches are not done properly. Moreover, there
are a lot of competitors in the fields of jewelry and online retailers. The last thing will
be the threat for Blue Nile is the currency exchange price between Euro, USD and Swiss
France.
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2 ENTRY STRATEGY
Blue Nile can accept the orders from customers and manufactures in Switzerland then
the products orders will be delivered to them. This is the most appropriate strategy for
Blue Nile because it is an online retailer and it focuses carefully in building and creating
efficient customers buying process and shipping methods are one of the important
things they always improve and innovate with good policies.
Additionally, exporting requires less investment and a first move to test international
business plans whether they are good enough. Moreover, it also lets company
concentrate on the economic scales and control measures. Obviously, all the competitive
advantages brought by exporting are suitable to Blue Niles mission and vision: offer
the competitive prices (low cost of investment) with high quality products and good
customer experience.
Blue Nile can cooperate with some existing retailers in Switzerland to launch their
products in this country. The advantages of this entry strategy are the capital outlay will
be share Blue Nile doesnt have to invest a large amount of money in entering the
market. Risks will be reduces due to the domestic companys right such as there is less
government intervention. The result of market research will be more accurate and
suitable to the needs, trend and culture of local customers.
However, Blue Nile will lose its control to their business strategy in Switzerland and the
conflicts between parties might happen due to the profit shares, marketing strategy and
marketing management as well as business operation.
Blue Nile income statement shows that they have a lot of cash on hand. This is a bad
thing because money cannot make more profit for company if it is not invested. That the
reason why Blue Nile should use this money as an opportunity to acquire other online
jewelers in Switzerland to expand its market share and enter Swiss market in a fast and
convenient way.
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All of three entry strategies above are good for Blue Nile to expand their business in
Switzerland. However, according to the companys vision, mission and objective,
exporting directly is the best entry strategy for Blue Nile to make the first move to reach
Swiss market audience.
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3 MARKET OVERVIEW
As known all over the world, Switzerland is famous for its distinctive feature in
powerful watch making industry specialized in products made by precious metals and
gems (Teslenko, 2010).
Switzerland is also a country having high portion and fast growth of importing gems
and precious metals.
(Source: http://www.worldsrichestcountries.com/top_switzerland_imports.html)
GDP capital of Switzerland is 86,468 USD which is considered good. High standard of
living is also a potential opportunity for operating business offering luxury products.
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(Source: http://www.coface.com/Economic-Studies-and-Country-Risks/Switzerland)
Country risk assessment and business climate are both ranked A1 good for doing
business.
Business climate. Switzerland has many associations established to protect and make
the watch making as well as jewellery industry survive during the Great Depression
such as The Federation of the Swiss Watch Industry, the Union of Jewellers and Watch-
Makers of Switzerland - Union de la Bijouterie et de l'Orfvrerie Suisse, the Association
of Suppliers of Jewelry and Watch Products - Association suisse des fournisseurs de
bijouterie et d'orfvrerie (Teslenko, 2010). The main tasks of these organizations are
assisting the members, upholding the industry interest in international environment and
protect members benefit in laws and regulations. Swiss market has many advantages
such as political, economic and social stability. Especially, taxes are relatively low.
Obviously, entering Swiss market is a good choice because it has good conditions to
make the industry steady which guarantees a stable market to do business with.
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3.1.2 Customer profile
Blue Nile is an online retailer so that it will focus on individual customers who want to
purchase luxury products (diamonds, pedants and earrings) as well as have them
customized.
However, watch making industry in Switzerland is also a potential section for Blue
Nile to do business with. Therefore, the second target customers of Blue Nile will be
companies and organizations producing luxury watches want to import gems and
precious metals (rough diamonds, customized diamonds) for customize their products.
Chopard is a well known fine jewelry brand in Switzerland which has had a high
profile on red carpet with many famous events such as the Oscars or the Cannes Film
Festival (Coulson, 2014)
Strengths Weaknesses
- Good brand values and product - Watch makers that are also
placement. jewellery brands do not give a
- The Official partner of the Cannes
strong positioning of being watch
film festival
making experts.
- High quality product and good
- Due to their segmentation, they
brand presence
have a limited audience (high
income group men and women)
(Source: http://www.mbaskool.com/brandguide/lifestyle-and-retail/3446-chopard.html)
Strengths Weaknesses
- The first company to institute - There is lot of competition
- Hasnt been able to have its brand
the 925/1000 silver standard
presence felt in the emerging
adopted by United States.
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- Broad offerings and huge economies.
- Limited target customers (Women
product portfolio.
- It is available through exclusive form the upper-middle and upper
70 stores and also through 100+ class)
international stores
(Source: http://www.mbaskool.com/brandguide/lifestyle-and-retail/3403-tiffany-and-co.html)
Bulgary is an Italian brand that offers product lines including jewelry, watches,
fragrances, accessories, and hotels
Strengths Weaknesses
- 230 retail locations worldwide. - Hasnt been able to penetrate the
- Good brand presence and popular
emerging economies as compared
global name
to a few other brands
- Good marketing strategy to create
- Designs and fashion accessories
and add brand value such as
are easily copied by competitors
advertising and marketing through
hence exclusivity is lost
TVCs, print ads - Limited target customers (Woman
- A diversified portfolio of jewellery,
clientele fond of high quality and
watches, luxury goods, leather
high design.)
products
(Source: http://www.mbaskool.com/brandguide/lifestyle-and-retail/3405-bulgari.html)
The Blue Nile's marketing objectives are expanding its channels of distribution in
Switzerland (individual and corporate customers); increasing sales by offering new
customized products; increasing its control over product suppliers and achieving target
profit margins by maintaining competitive prices; especially, enhancing customer
awareness through marketing and public relations programs as well as providing
excellent customer service.
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4 MARKETING STRATEGY
4.1 Vision
To offer high quality diamonds and fine- jewellery at outstanding price and to continue
our leadership in our core business
Blue Nile is one of the largest online retailers on the world, therefore they always want
their customers to reach them in the most convenient ways. From their visions
perspective, it is easy to see the goal of the company in the future: customers trust their
brand and their product quality. Customers can make their shopping decision
confidently regardless to what event they are celebrating without coming to the stores.
(Hoffman, 2010)
In addition, there is another vision that Blue Nile also wants to focus on. It is making
the company to be seen as a smart way to buy diamonds with competitive price which
can save customers budget from 20% - 40% comparing to going to a typical physical
store. (Hoffman, 2010)
4.2 Mission
To build the premier specialty retailer of jewelry by offering consumers high quality
products at compelling values through an empowering shopping experience
Blue Niles mission statement is short and clear. It states effectively that the company is
going to stick to their objectives and vision. Moreover, the mission statement combines
all products and services offered by Blue Nile: high quality of the products, added value
for consumers and good shopping experience.
4.3.1 Product
Blue Niles products include engagement and non engagement product categories.
Engagement product category consists of a platinum or gold ring with a diamond. Non-
engagement products are more diversified with rings, wedding bands, earrings,
necklaces, pendants, bracelets, gifts and accessories containing precious metals,
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diamonds, gemstones, or pearls. The products can be customized by consumers
interest.
In another hand, Blue Nile also offers special diamonds that are required in shape, cut,
color, clarity, and carat weight to manufactures. All diamonds of Blue Nile are certified
by independent third party therefore, the quality of Blue Niles products is specified and
guaranteed in a high level.
Just in time is a maxim that is used by Blue Nile to level up their customers shopping
experience. The finished products are delivered to customers within three to seven
business days from the order date and within one business day for diamonds held on
consignment in Blue Niles fulfillment facilities. (Blue Nile annual report , 2015)
4.3.2 Pricing
Figure 4
(Source: http://www.bluenile.com/uk/engagement-rings/blue-nile-experienc)
Figure 5
(Source: http://www.slideshare.net/lokre_sneha/blue-nile)
According to Blue Niles product offers, customers can choose their products based on
their preference, basic of cut, clarity and color so that the prices will be various.
Customers can choose a high quality product with an affordable price.
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The main criteria in pricing strategy of Blue Nile is offering a competitive price which
is 20% - 40% lower than traditional jewelers and passing the savings on to its
customers.
4.3.3 Position
Blue Nile is an online retailer, there are no physical stores. Blue Nile also has small
inventory and small efficient webrooms which can help it to reach customers insight as
well as establish brand awareness.
4.3.4 Promotion
4.3.5 People
Blue Nile has good training method for staff to serve customer at the highest
professional level. (Blue Nile annual report, 2015)
In special holidays, the amount of temporary staff can be increases to make sure that
customer is supported effectively.
4.3.6 Process
After being consulted carefully by diamond and jewelry experts, customers can choose
appropriate items, place their orders, choose payment methods and shipping services.
Choose
Choose Choose Receive
appropria Place
payment shipping the
te orders
methods services products
products
Blue Nile makes sure the products delivered in time to customers. In addition, the
company also offers 30 day return policy.
Blue Niles focuses on internal development. The company will continue to improve and
innovate the features and functions of website to make it possibly operate in various
platforms as well as make user interface more accessible and efficient to enhance
customers shopping experience.
Customers wants and needs will be collected in trade shows, fairs and exhibition. The
information will be analyzed to find the industry trend, buyer preference, like or dislike
regarding to the designs, services, quality and prices of the products.
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4.5 Marketing expense budget
The purpose of this marketing plan is as a guide for Blue Nile, Inc to enter the market of
Switzerland with the target customers are individuals and organizations. The
performance of the company should be review monthly and quarterly to find the
problems as well as the solutions to make the business go smoothly and earn more
profit.
Coulson, C. (2014). The Swiss jewellery industry. Global Blue. Accessed on 11.12.2016
http://www.globalblue.com/destinations/switzerland/the-swiss-jewellery-
industry/#slide-2
Hoffman, A. N. (2010). Blue Nile, Inc.: Stuck in the Middle of the Diamond,
Engagement Ring Market. Strategic Management: Concepts and Cases:
Competitiveness and Globalization.
http://www.tradefairdates.com/Gems-and-Jewellery-Trade-Fairs-Exhibitions-
Switzerland-FSL305-L42-S1.html
http://www.mbaskool.com/brandguide/lifestyle-and-retail/3526-blue-nile.html
http://www.international-strategy.com/2014/12/exporting-franchising-joint-venture-
wholly-owned-subsidiary-international-market-entry-method-right-business/