swarovski: "a diamond for everyone"

“A Diamond for Everyone”

Case Study

“A Diamond for Everyone”

©XPotential 2010 3

Contents

3 Introduction: The Swarovski Story

10 Focus on Innovation

13 Value Employees

15 Multi-faceted business

20 Creating a magical brand through awe, mystery and genius

23 A luxurious relic

31 Bringing joy to people

34 Summary

Objectives

This presentation aims to provide information and insight on the “affordable luxury” brand, Swarovski, and to shed light on the lessons that can be learned from how they have build their brand

The Swarovski Story

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The Swarovski Story

2009 Turnover Figures

Turnover 2009 2.25 Billion Euro

Tyrolit Business (Cutting and grinding) 0.39 Billion Euro

Crystal Business 1.77 Billion Euro

Optic Business (Lenses, binoculars etc)

0.09 Billion Euro

The Swarovski group is a cut crystal manufacturing company who make a variety of crystal products, now famous for their contributions in fashion and jewellery, making crystals with “the splendour of a diamond” but at a far more affordable price

The Swarovski group are a multi-faceted, internationally successful company.

www.brand.swarovski.com/Content.Node/aboutus/.../Facts_Figures_2009.pdf

Although their industrial product businesses are also successful, the name Swarovski inspires a more emotive response. The magic of Swarovski comes from their mysterious and unrivalled craft and the ability to bring a sense of wonder and glamour into the lives of consumers (and not just the wealthy).

Today the brand’s strength lies in its association with the abstract concept of “luxury” thanks in part to strong links to the high-fashion industry.

However, over a century ago, founder Daniel Swarovski started his business with a stronger focus on the tangible; technological innovation and never-before-seen quality.

Daniel Swarovski’s vision: “Create a diamond for everyone”

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Beginnings:

Daniel Swarovski was born in Bohemia in 1862. It was one of the top manufacturing centres for glass & crystal, and Daniel’s father owned a small factory/shop cutting crystal

In 1892 Daniel registered a patent on a machine, which for the very 1st time, made it possible to cut crystal to perfection. It was extremely fast & “clearly” more precise than the manual labour & exhausting work commonly used at the time

In 1895, Daniel Swarovski founded a company based on this machine, in Wattens located in the Austrian Alps, far enough away from their competitors around Bohemia and safe from imitation, and there were excellent trade routes to fashion centres, especially Paris, where crystal jewellery stones were in great demand.

They sold incredibly well at fashion houses as well as to many jewellers. For this reason, Swarovski concentrated initially on the production of jewellery stones & beads. Soon after, many other products were added.

Today, Swarovski is still a private, family-owned company

“Crystal can sound a bit old-fashioned and grandmotherly so we at Swarovski have worked very hard to keep it modern”

Brandchannel review, May 2009 http://www.crystal-emporium.com/the_swarovski_story.html

The Swarovski Story

Swarovski with his invention

The Swarovski factory in Wattens (1900)

http://www.encyclopedia.com/doc/1G2-2844400110.html

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Key Moments

1935: Daniel’s oldest son, Wilhelm, produces the 1st prototype pair of binoculars, laying the foundation for Swarovski’s Optic Products division.

1965: The Company starts producing chandelier crystals & prisms under the Strass trademark.

1976: The 1st member of the Swarovski crystal animal menagerie is created

and production of Crystal paperweight & key rings begins.

1977: The Company launches its own jewellery line under its “Jeweller's Collection” label.

1979: Swarovski establishes itself in North America by opening a branch in Cranston, Rhode Island. Currently, it is the major headquarters for the North American operations.

The Swarovski Story

1987: The Swarovski Collectors Society (SCS) is founded in response to thousands of requests from crystal lovers all over the world. It is now 450,000 members strong and still growing.

1989: The unveiling of the Swarovski line of

Haute Couture accessories and decorative crystal Objects D’arte at the Hotel Crillon in Paris. These pieces were created by the top designers in the world such as Ettore Sottsass, Stefano Ricci, and Herve Leger. This is the Company’s “Top of the Line” product, often produced in limited quantities at prices in 5 figure range, not for the average collector.

1992: The Company launches its 12-piece

Selection Collection by well-known contemporary designers. Produced in limited numbers, more affordable, but still very, very expensive.

2000: The Daniel Swarovski Paris Paradise

Line is introduced. 2006: Launch of current brand campaign,

“The three graces” – based on the mythological embodiments of radiance, joy and opulence, reflecting Swarovski’s strategic platform, “Poetry of precision”

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The Swarovski Story

The Brand Strategy:

To achieve growth with passion for brand, excellence for consumer and innovation for business

Passion for brand – need for brand identity and unique brand language with quality PR collaboration and consistent implementation on communication front

Emotionality of products - medium (jewels with a soul) lots of levels and light effects

When Swarovski started, branding was not a core concern for the company. However, nowadays with growing competition from cheaper manufacturers in China etc., Swarovski need a brand strategy to stand out, but one that remains true to the values of the company before the brand: innovation, quality and merit

'For a long time Swarovski didn't "brand" its product,' Nadja Swarovski, Vice President of International Communications, says. 'And back then it wasn't really about branding as it is nowadays. We had to develop a hard-core communications strategy – a PR strategy – which we pitched to the editors and designers.'

http://www.youtube.com/watch?v=_uhOAaqcTp0

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Official website: http://www.swarovski.com

http://www.swarovski.com/

Focus on Innovation

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Focus on innovation

The quest for perfection and innovation is one of the main drivers of Swarovski

Swarovski sprung from the innovation of their original cutting technology, and innovation has remained a key aspect to their business throughout; always being open to opportunity and change, which has helped lead them to be a successfully multi-faceted company

http://www.independent.co.uk/life-style/fashion-the-glitter-band-1192411.htm http://www.leadersmag.com/issues/2009.2_apr/style/swarovski.htmll

The Lessons: Continue to invest in advancing your product and making it the best to create a strong foundation for a reputable brand

Swarovski’s Steps: Technological innovation is still one of Swarovski’s greatest strengths. Today, continued research into new technologies and quality of the stones have contributed towards Swarovski’s renowned reputation for quality and workmanship.


Focus on innovation

Swarovski’s Steps:

In the 1970s recession, demand for gemstones depleted. Whilst fiddling with some chandelier components, Manfred Swarovski (then chairman) realised they could be arranged to resemble a mouse and developed this new innovation for use of crystals to prop up the company with sales of figurines. Through this innovation came one of the companies biggest sales-generators. Before this, the company had never ventured into consumer retail market. The collection that developed from this first mouse brought the Swarovski brand name to consumers for the first time

By 1989 the crystal animals were so popular that Swarovski established a Collectors Society, which quickly attracted 300,000. In light of the animals’ success, the company changed its logo (formerly edelweiss) to a more elegant swan symbol – an innovation in itself, showing the company’s embrace of change and evolution

http://www.independent.co.uk/life-style/fashion-the-glitter-band-1192411.htm http://www.leadersmag.com/issues/2009.2_apr/style/swarovski.html l

In the 1990s, the company had to evolve its positioning again, this time to pick-up the glamorous fashion aspect that had become over-shadowed by the successful but “kitsch” figurines.

Swarovski had a history in fashion that consumers were unaware of (e.g. working with Coco Chanel), which Nadja Swarovski pushed the company to redevelop, through targeting young and edgy designers to work with the products

This new strategy was a real departure for the traditional, conservative company (much of Swarovski's profits come from its cutting machinery and the fibre optics in cat's-eyes).

The Lessons: In order to continue growing, companies need to be open to change and to new opportunities and invest the efforts in them to reap the rewards

Value Employees


Value Employees


Swarovski’s values of bringing luxury and joy to normal people extend beyond the product. From the start, Daniel Swarovski showed consideration and class in business.

Swarovski's corporate culture: Daniel Swarovski, technical genius, humanitarian, and founder of the company, had a crystal-clear vision that went far beyond financial or corporate ambitions. He wanted to build a democratic company that could offer all employees a life of dignity and self-respect, of social harmony and cultural experiences.

“Our fellow workers are our fellow humans. We need to value each individual as a human being, and help him or her to lead a fulfilled life in honour and dignity.”

http://www.independent.co.uk/life-style/fashion-the-glitter-band-1192411.html

The Lessons: A considerate corporate culture make the company more appealing on a holistic level, with employees performing better in a positive environment. The brand message will be stronger if it is honest and consistent with all aspects of the business.

Multi-faceted business


Present in over 120 countries

Two major businesses: one producing and selling loose crystal elements to the industry and the other creating design-driven finished products. Swarovski’s own brand lines of accessories, jewellery, and home decor are sold in all major fashion capitals

Exclusive Daniel Swarovski accessories collection has become the company’s couture signature.

Businesses also include:

– Tyrolit® grinding tools

– Swareflex road safety reflectors

– Swarovski Optik precision optical instruments


Multi-faceted is a word constantly related to Swarovski, not only to the properties of their cut-crystal, but also to the diversity of the business.

http://www.independent.co.uk/life-style/fashion-the-glitter-band-1192411.html http://www.brandchannel.com/features_profile.asp?pr_id=439

Swarovski’s crystal manufacturing technology stretches across all manner of uses, so the business’s eggs are never all in one basket. Having such a broad offering could lead to a diluted brand, however, the brand strives to maintain a consistent communication and PR that will support all categories, portraying their values of luxury, quality and technological advance

This has helped them become a leader in all divisions. Swarovski is the global market leader in loose crystal; crystal objects, jewellery and accessories; precision optical equipment through its Swarovski Optik subsidiary; bonded grinding and dressing tools through its company Tyrolit; gemstones and created stones; and road safety products through its company Swareflex.



Swarovski’s Steps: Fashion: Trimmings: debuted in 1931, the trimmings provided crystals in ready-to-use

formats for edges, borders and hems. The gemstones were of such good quality, they were often mistaken for diamonds

Chandeliers: Swarovski began producing crystal chandelier components in 1965, which were used in prestigious décor such as Metropolitan Opera House in New York City and France’s Palace of Versailles. In 2009, Swarovski bought Schonbek (major chandelier manufacturer) and is still working with top chandelier designers and hoping for growth in this category, especially having worked with renowned and innovative artists who bring credibility and a modern perception

Miscellaneous embellishment: haute couture dresses, handbags and shoes, license plates, iPod cases, cell phone faceplates, personalized baby bottles, pet collars, Havaianas flip flops, Phillips Swarovski-encrusted USB flash drives and $50-per-bottle Bling H20—water packaged in bottles encrusted with Swarovski crystals.

The Lessons: Be innovative in making your product more

useful to appeal to the consumer. Engineer the best partnerships for vicarious

credibility, creating a versatile, quality and easy to use product will expand opportunities as far as your imagination and open-mindedness can reach

http://www.independent.co.uk/life-style/fashion-the-glitter-band-1192411.html http://www.brandchannel.com/features_profile.asp?pr_id=439




Swarovski have created product lines directed towards teen consumers, such as mobile phone accessories

Tremendous growth in emerging markets such as India and China. Due to the different preferences across international markets, Swarovski have separate design-houses for them, tailor-making collections for different markets (Europe is their strongest market, with the most Swarovski stores)

Allbusiness.com Moodie report 2004 http://www.leadersmag.com/issues/2009.2_apr/style/swarovski.html

The Lessons: Use targeted offerings to intelligently reach different markets

and become multi-faceted, one size won’t fit all Thanks to their many facets, Swarovski’s target consumer is

“virtually every female from 17-71 in terms of either buying or gift receiving”, by bringing considered and diverse offerings to such a broad range of people, the company has great opportunity for sales. However, the core values of the brand are important enough on a universal level to help it cross categories and consumer groups – being an affordable luxury product



Allbusiness.com Moodie report 2004 http://www.leadersmag.com/issues/2009.2_apr/style/swarovski.html

Swarovski’s Steps: Some speculated that the company’s diversification has gone too far, however

competitors are following suit: Waterford, the Irish crystal company, has dramatically expanded its product line in recent years to flatware, perfume and bed linens

Even though more recent efforts have been made to gain fashion credibility, Swarovski’s animal figurines still provide sizeable revenues

“The perception of quality that we’ve worked so hard to convey seems to be understood by the general public. We have always said that our product is truly multifaceted, so is the customer base. This gives us a unique advantage in the current economic climate to reach out to a broad spectrum of people and provide them with a luxurious yet affordable product” Nadja Swarovski

The Lessons: Investing focus on the growth of one aspect of the business will not

necessarily lead to a decline in other areas, if the brand is strong enough

Investing in strong and universal brand communication so that consumers have clear and positive brand perceptions will leave a business with more options and opportunity in challenging times

When a brand’s values include innovation and creativity, any danger of over-exposure, seems outweighed by the numerous possibilities of ever more inventive, elaborate collaborations. 'You reach one peak and you see the next one ahead,' Nadja Swarovski

Creating a Magical Brand through

Awe, Mystery and Genius



Not only is the Swarovski crystal cutting technology ground

breaking and associated with genius, but it is also mysterious

and unexplained. This combination of genius and mystery

creates an awe in consumers and advances the special position

of Swarovski.

Genius: quality is valued by the consumers as well as designers "We use Swarovski stones because they have the most

glitter. They are the best in the world at what they do”, Phillip Treacy (established hat designer)

The Swarovski Crystal Society, which began in 1987 takes the company’s reputation for quality very seriously. Today it has more than 400,000 members in 35 countries worldwide. These enthusiasts receive a quarterly magazine and can purchase annual editions and exclusive products.

Mystery:

The 79,000 crystals that Swarovski make each day, are made by secret methods.

"It's all very mysterious. Some people do one aspect of the process, then it gets passed onto another division, and never the twain shall meet.” Isabella Blow (fashion consultant)

www.independent.co.uk December 1998



Awe and wonder:

Opened in 1995, Swarovski Crystal Worlds is the most visited cultural-tourist attraction in Western Austria. Over 3.8 million people have toured the 20,000 square foot visitor centre, which is entered by walking under the giant's mouth.

Swarovski calls it “a guided tour through a sensual kaleidoscope.” CNN says it is “as fascinating as one of the Seven Wonders of the World.”

An immersive experience such as this serves to enhance the awe and wonder associated with Swarovski that help their crystals to rival the excitement of diamonds without the price

The Lessons: Creating a brand that can inspire awe and wonder in consumers is an investment worth making, as it adds value to the brand far beyond its physical properties

http://www.brandchannel.com/features_profile.asp?pr_id=439


Invested in creating a sense of genius (through innovation and technology to achieve the best quality), mystery (by making a point of keeping their methods secret) and awe (through the creation of beautiful products and the popular KristallWelten)

A Luxurious Relic


A Luxurious Relic

A relic is historically an object that connects the earthly to the holy. Many brands operate on the same principle, by creating a link for the consumer between the product and an abstract concept (e.g. Nike trainers link to urban cool). Through Swarovski’s visible involvement with glamour and luxury, their products connect the consumer with the luxury lifestyle as ancient relics helped people to connect with “heaven”. The brand strategy even talks about medium - “jewels with a soul”. Swarovski’s links to the aspired world of glamour and luxury have taken the following forms:

http://www.screendaily.com/news/production/swarovski-moves-into-film-with-shekhar-kapurs-paani/5013889.article


The movies:

Gentlemen prefer blondes

Phantom of the Opera movie chandelier

Wizard of Oz

Moulin Rouge

Titanic

Disney Alice in Wonderland collection

The film stars:

Marilyn Monroe sang happy birthday to JFK in a dress with 10,000 Swarovski crystals

During Oscar season Nadja sets up camp in Los Angeles, and stylists can browse the Swarovski jewellery, shoes and handbags with a view to dressing their clients on the red carpet.

A Luxurious Relic




Having a product with the splendour of a diamond but a much lower price, Swarovski earned a place in glamorous industries such as film, fashion and culture. This might not have been a strategic step at first, but when Nadja Swarovski sought to re-establish and publicise these links, she had a view to heightening the brand’s luxury links to give it extra market value for consumers who want to feel connected with the worlds of fashion, film and glamour.

The Lessons:

Aside from a product’s physical properties, connections created through branding to relevant and attractive abstract concepts (in this case, luxury and glamour) can contribute greatly to its value, perception and position

A Luxurious Relic



A Luxurious Relic


Culture:

Swarovski Crystal supported the English National Ballet production of The Snow Queen. The costumes are adorned with hundreds of thousands of Crystallized Swarovski Elements, adding light and sparkle to the stage

Royalty:

In the Eighties, Diana, Princess of Wales began a trend for hosiery featuring a glittering bow at the ankle, or a row of sparkle up the back of the leg. Thanks to Diana, the company sold millions of adhesive crystals to the hosiery market

Supplied crystals for Queen Victoria's hair ornaments

For everyone:

In the public eye, for all to enjoy (‘A diamond for everyone’) always in a high-profile way. For example, their Swarovski crystal star on the Rockefeller Centre Christmas tree in New York City

Enhancing public environments such as JFK airport chandelier

http://www.ballet.org.uk/press-releases/swarovski-costume-sponsor.html

The Lessons: Even if a product is used by royalty, designers and film stars, if the right brand communication does not draw attention to this then no link will be made in the consumers’ mind between the brand and luxury. Swarovski make the most of the glamorous associations they establish by making them public, for example placing them in public places such as international airports and publicising cultured sponsorship. Rather than just accepting Diana’s patriotism as “good for brand reputation”, Swarovski took the opportunity to make the link to this advocacy more salient and available to consumers through imitation in high street shops


A Luxurious Relic


High fashion:

Swarovski co-designed Christian Dior's famous aurora borealis stone in 1955

Manfred Swarovski also worked with with Coco Chanel and Christian Dior in the 1950s

"Our product consists of very many facets, but the truth is that Swarovski's heritage really is in the fashion industry."

Although Swarovski had this incredible heritage, nobody really knew about it

"We've always supplied the trade and that's why nobody knew the name until we started to make consumer goods in the mid 1970s”

By the time Nadja joined in 1995, the business was more famous for its kitsch miniature sculptures than anything more serious. Less than ten years later Swarovski was taken much more seriously - a global brand worth €4.6bn, synonymous with cutting edge creativity and high end glamour stretching from fashion clothing to jewellery to red carpet events like the Oscars, with fashion industry supply accounting for more than 50% sales (having doubled), where consumer goods (including the figurines) had been the largest contributor before

Used in collections by Givenchy, Christian Lacroix, Versace, Philip Treacy, Dior, Vivienne Westwood, Thierry Mugler and Julien Macdonald.

The number of “the beautiful people” wearing Swarovski has snowballed, from establishing one admired client, more have followed and will follow

The Lessons:

Make the most of your brands’ existing selling points and invest the effort in nurturing and expanding on them. Publicise your strengths; simply having good selling-points (such as designer patriotism) is not enough if they are not maintained, emphasized and communicated to your audience


http://www.coutts.com/woman/2009/june/features/nadja-swarovski.asp


A Luxurious Relic


Red carpet, branded event:

Swarovski Fashion Rocks, in aid of The Prince’s Trust (debut 2003)

Glitzy fashion and music event that has taken place in the Royal Albert Hall (£1,500 a ticket)

Attracts designers such as Chanel, Dolce & Gabbana and Stella McCartney, has been presented by Uma Thurman and Samuel L. Jackson, had performances from Blondie, Lily Allen, Alicia Keys and Bon Jovi and a guest list of models, royals and celebrities

Designers at the event use Swarovski crystals in their pieces, and all guests and performers wear them too. As Nadja puts it, 'All the talent involved are our clients.'

For the company to build on its success and compete with low-cost rivals from China and the Czech Republic it needs to promote on merit.

Nadja has ensured that Swarovski is at the forefront of cutting-edge fashion; 'We choose very carefully who we work with,' she says 'We work with people where it goes without saying that they're going to create something amazing and beautiful. The designers have complete carte-blanche – but maybe the selection of the designer is Swarovski's quality-control element.‘

"My goal was always to elevate the brand perception, the brand image, to really put the product into the hands of the most creative people in the industries,“

http://www.telegraph.co.uk/finance/2923943/A-very-private-affair.html http://www.telegraph.co.uk/fashion/stellamagazine/3361538/Swarovski-the-glitz-spirit.html

The Lessons:

Take your brand’s attractive characteristics to the next level. By creating their own branded fashion events Swarovski has made their presence in the fashion world un-missable, and worked hard to draw in admired designers and celebrities to all be visible advocates by association.

The company also work hard to ensure that the people they associate themselves with will bring the brand the image that it aspires to. People working with or using the brand who are not employees of the company can add greatly to its appeal and consumer perception, but with a little less responsibility, being clients and not employees


A Luxurious Relic

Swarovski’s Steps: Luxurious retail: Travel retail is a key target market as for most luxury and lifestyle

brands Swarovski enjoys success in travel retail (shop-in-shop, stand alone, on

cruise ships and in-flight). Their first aim in travel retail is a qualitative one; to improve, renew, upgrade and expand the physical presence of the brand. They expect quantitative targets will follow naturally

Travel retail – a growth area because of the growth of travel. Especially in emerging markets, notably China where there is a strong affinity for crystals relating to feng shui

The expanding number of Swarovski boutiques are the key consumer touch points for experiencing the brand, with a new retail design concept created by admired Japanese designer, Tokujin Yoshioka. They showcase the Swarovski collections in a unique environment. The new Oxford Street flagship store emphasizes the white glove treatment – a more “special” experience for shoppers. Products are also distributed through department store and independent retailers

The Lessons: Swarovski have put consideration into their retailing, choosing design,

shopping experience and store placement that enhance the brand’s associations with luxury and glamour (such as designer store layout and travel retail for connections with the high-flyer lifestyle), continuing the products position as a relic linking the consumer to the world of luxury

Moodie report 2004

http://www.leadersmag.com/issues/2009.2_apr/style/swarovski.html

Bringing Joy to People



Swarovski’s Steps: Creative Service Centres in fashion centres around the world, aimed at

fashion designers and creative people, and they house every crystal available. They provide trend consulting, inspiration and product information. "Together we can discuss ideas, create new relationships in fashion."

Nadja began to re-establish the company's links with the fashion world, beginning with younger designers who lacked the capital to take their label to the next level. ‘We felt there was so much talent that was not necessarily being supported in the right way and it was only the established houses that constantly got the stage, the acknowledgment.'

A little money can make a huge difference. It might mean the designer can now afford better make-up, or lighting for a show. But “It's not just a one-way street where we provide the product and financial support. We expect innovation in return.” While the collaborations with young designers have done wonders for Swarovski's street cred, the work it does with the fashion heavyweights retains its association with old-school glamour.

The Lessons:

Giving a chance to new talent will help to improve brand awareness, create affiliations at the seed of something that could grow much bigger and create a positivity around the brand through helping others


Swarovski Crystal (excluding Tyrolit and Swareflex) is not a brand that sells on function, the products are intended to make people feel good, and as Daniel Swarovski envisioned, to create a “diamond for everybody”. This sentimental and humanitarian approach is also adopted in the companies efforts to provide opportunity for up-and-coming designers, with the mutual benefit of association.




Creating a diamond for everyone, not just a product with the aesthetic appeal of a diamond, but with association of glamour and luxury to rival a diamond and to bring that feeling of glamour to a much wider audience

'It never ends, it never stops. My great-great-grandfather's motto was "create a diamond for everyone". It's the democratisation of luxury.'

The Lessons:

The appeal of a product extends far beyond its physical properties (though if they are already beautiful then this is a good start!), but investing exhaustive efforts in creating visible associations with attractive concepts such as couture fashion can create a very powerful pull






Summary

Swarovski have enjoyed success and market leadership across a plethora of categories through their innovative technology and business approach, maintaining a consistent brand communication through a focus on PR

Although Swarovski’s offerings are diverse, leading to a varied target audience (geographically and otherwise), and their products are tailor-made to appeal to each different audience, the over-riding brand communication of quality, beauty and credibility link the different markets

After coming off the tracks a little and getting over-looked as a maker of twee crystal animals (though dearly beloved by some consumers) Swarovski has successfully re-established its connections to the fashion industry, this time drawing attention to the brand name (where before they were simply a supplier) through designer sponsorship and high profile events. This brand awareness has given the products more value for the consumer, as they are recognisably linked to the world of glamour and high fashion

Swarovski is a good example of living the values of your brand. Daniel Swarovski aimed to create a diamond for everyone; to make a splendid product more affordable in order to bring joy and luxury to people’s lives. In the same vein, Swarovski maintains a considerate corporate culture, and gives a chance to up-and-coming designers.


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