Pandora Jewellery with its logo statement “Unforgettable moments” displays a distinctive brand offering and a distinctive product range. Undoubtedly Pandora is one of the worlds’ recognised jewellery brands. A key reason for this success is the business concept that allows customers to design her article in unique, personalised and individualised style; this concept finds expression in its business model.
Founded in Copenhagen Denmark in 1982 by jewellery artist Per Enevoldsen and his wife Winnie in modest manner, Pandora (www.pandora.net) sells more than 6 billion Danish Kroner worth of jewellery pieces including charms, bracelets, rings, earrings, necklaces, pendants et cetera in exquisite designs. More than 10,000 outlets in about 65 countries cater to the sophisticated needs of women who love jewellery that tell a story. A work force of 5,300 people participates in this colossal and global enterprise guided by Allan Heighton Chairman of Board of Directors and Bjorn Gulden CEO and Henrik Holmark CFO.
Business Model
Pandora operates under a vertically integrated business model built literally and meaningfully around a forward looking pair of mission that offshoot from an ambitious yet achievable vision:
Vision: “to become the world’s most recognised jewellery brand”
Mission: 1. Offer women across the world a universe of high quality, hand-finished, modern and genuine jewellery products at affordable prices.
2. Develop jewellery portfolio in keeping with core values of affordable luxury, contemporary design and personal storytelling
Predictably, the business model speaks of the logic of a business in terms of creating value, delivering value and capturing value. Let us see how the business model of Pandora stands on these limbs.
Creating Value
Primary focus on creating value is design and product quality parameters. The business concept that consumer is allowed to morph her own design is the integral part woven into the system. This gives rise to expression of individualised and personalised product design cherished by the buyers. Nevertheless, pre-designed in-house jewellery articles continue to be the main stay of the product portfolio. Strict quality standards are enforced so that articles coming out of the manufacturing facilities chiefly located in Thailand conform to spotless product quality.
Delivering Value
Elements framed in connection with delivering value are shown below:
1. Product offering of charms, bracelets, rings, earrings, necklaces, pendants and watches are packaged into the business motto of unforgettable moments, so that women who wear a piece of Pandora has lingering thoughts of the one she has purchased
2. Broadening of jewellery portfolio through specialised collections. Some of these collections are noteworthy: Compose, LovePods and Liquid Silver launched in 2007, 2008 and 2009 respectively. The company envisages to launch potential collections captioned Moments and Stories both in existing and new markets shortly
3. Brand perception and promotion are finely balanced resulting in what we call as “brand consistency” that ultimately leads to customer loyalty and repeat purchases
4. Sales outlets either using franchises or direct operations are established in delivering the products. Out of these about 700 are termed as “concept shops” that account for about 43% of sales volume
5. Expansion of Pandora product range in existing and selected markets involves branded points of sale with a view to strengthen the perception of the brand by customers as well as to permit wide array of Pandora pieces
6. Expansion of Pandora products in new markets is tackled either serving them from existing outlets from nearby areas or setting-up branded sales outlets. Although most of these are to be directly operated, franchises would also be considered
7. Finally, customer loyalty is the ultimate component in the business model. Attracting and retaining customers takes place in multiple ways. Pandora Club and social network such as Facebook are chief among these methods.
Capturing Value
Revenue generation from operation has the following highlights:
1. Branded distribution is emphasised, consequently as per 2012 first quarter (1Q12) interim financial statement branded distribution accounts for three fourths of sales revenue
2. Direct distribution either using franchises or own operation is given pride of place; the figure of 96% of sales emanating from direct distribution in 1Q12 lends credence to this fact
3. A healthy net profit ratio is a must; for 1Q12 revenue is 1,424 million Danish Kroner and net profit is about 338 million Danish Kroner.
Integration
The business model of Pandora is integrated properly by linking with strategy and tactics. The company reports that feedback from major markets confirms that the strategy adopted by them is working successfully. Moreover, the recent stock re-balance in USA and UK as a tactical measure proves that business model allows leeway in handling operational issues and market challenges in cost effective manner.
Muthu Ashraff
Business Adviser
Mobile : +94 777 265677
E-mail : cosmicgems@gmail.com
Web : http://www.cosmicgemslanka.com
Blog : http://cosmicgemslanka.com/blog/
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