Final answer:
Blue Nile's cheaper diamonds need not threaten Tiffany because the two companies cater to different market segments. Tiffany's high-end luxury positioning and brand reputation, combined with a loyal customer base, allow it to maintain its market share despite the presence of more affordable alternatives.
Step-by-step explanation:
Blue Nile's cheaper diamonds need not threaten Tiffany because the two companies cater to different market segments. While Blue Nile offers more affordable diamond options, Tiffany positions itself as a high-end luxury brand. Tiffany's target customers value the brand's prestige, craftsmanship, and unique designs, and are willing to pay a premium for that experience. Blue Nile, on the other hand, appeals to customers who are more price-conscious and prioritize value for money.
By targeting different customer segments, both Blue Nile and Tiffany can coexist and thrive in the diamond industry. Blue Nile's cheaper diamonds provide an accessible option for customers who may not be able to afford Tiffany's higher-priced offerings. Additionally, some customers may choose Blue Nile for more casual or everyday diamond jewelry, while reserving Tiffany for special occasions or milestone celebrations.
Furthermore, Tiffany has built a strong brand reputation over many years and has a loyal customer base. This brand loyalty insulates Tiffany to some extent from direct competition. Customers who are specifically looking for the Tiffany experience, including the iconic blue box, will be more likely to purchase from Tiffany rather than from Blue Nile, regardless of price.