Step $1$

Let's delve into more detail for each question:

$1.$ Key Success Factors in Diamond Retailing:

Product Quality and Certification:

Blue Nile: Emphasizes providing high$-$quality diamonds with detailed certification information on its online platform.

Zales: Focuses on offering certified diamonds and emphasizes quality assurance.

Competitive Pricing:

Blue Nile: Stands out for competitive pricing due to its online$-$only model, lower overhead costs, and efficient supply chain.

Zales: Historically known for promotional pricing and credit plans but transitioning towards a focus on competitive pricing.

Customer Education:

Blue Nile: Prides itself on educating customers about diamonds through information on the four Cs and a transparent online buying process.

Tiffany: Known for its knowledgeable staff in$-$store who educate customers about the quality and craftsmanship of its high$-$end jewelry.

Customer Service:

Blue Nile: Offers customer support through online channels, providing assistance in the selection and purchase process.

Tiffany: Known for its personalized in$-$store customer service, providing a luxury experience.

Brand Image:

Blue Nile: Has a strong online presence, known for affordable luxury, and focuses on the transparency of the diamond$-$buying process.

Tiffany: Renowned for its iconic blue box, luxury, and exclusivity, contributing to a strong brand image.

Online Presence:

Blue Nile: Operates primarily as an online retailer, leveraging the benefits of e$-$commerce for diamond sales.

Tiffany: While having an online presence, emphasizes the in$-$store experience for high$-$end purchases.

Product Variety:

Blue Nile: Offers a wide range of diamonds, including engagement rings, and has expanded into non$-$engagement jewelry.

Tiffany: Primarily focuses on high$-$end products, including engagement rings, with a more limited online selection.

$2.$ Blue Nile vs$.$ Tiffany on Product Pricing:

Blue Nile's Strategy:

Advantages: Appeals to online shoppers looking for competitive prices, especially for higher$-$priced stones.

Consideration: Balances the lack of physical inspection with detailed online information and a $30-$day return policy.

Tiffany's Decision:

Advantages: Maintains the luxury and exclusivity of its brand by emphasizing in$-$store purchases for high$-$end products.

Consideration: May miss out on potential online sales, especially as consumer preferences evolve towards digital channels.

$3.$ Tiffany's Decision on Online Sales:

Tiffany's Approach:

Strengths: Maintains the luxury and exclusivity of its brand through in$-$store experiences.

Consideration: Could explore selective online sales for specific product categories to adapt to changing consumer behavior.

Blue Nile's Growth:

Strengths: Diversification into non$-$engagement categories broadens its customer base.

Consideration: Should continue assessing consumer preferences and adapting its online strategy accordingly.

$4.$ Zales' Upscale Strategy Failure:

Challenges Faced by Zales:

Issues: Delays in merchandise, drop in same$-$store sales, loss of traditional customers.

Recommendation: Focus on rebuilding customer trust through effective marketing, emphasizing diamond fashion jewelry, and maintaining competitive pricing.

$5.$ Dealing with Weak Economic Times:

Blue Nile:

Strength: Competitive pricing and online presence can attract budget$-$conscious consumers during economic downturns.

Recommendation: Continue emphasizing affordability and possibly introduce promotions during economic challenges.

Tiffany:

Challenge: High$-$end focus may make it more vulnerable during economic downturns.

Recommendation: Evaluate pricing strategies and potentially introduce more accessible product lines during challenging economic times.

Zales:

Strength: Focus on diamond fashion jewelry and effective cost management.

Recommendation: Continue emphasizing affordability, potentially introducing promotions, and diversifying product offerings.

$6.$ Advice to Each Company:

Blue Nile:

Advice: Continue focusing on competitive pricing, customer education, and online presence. Explore opportunities for further product diversification.

Zales:

Advice: Rebuild the customer base through effective marketing, emphasizing diamond fashion jewelry, and maintaining competitive pricing.

Tiffany:

Advice: Consider strategic online sales for select product categories while maintaining the luxury in$-$store experience. Evaluate product pricing strategies to adapt to changing consumer preferences during economic fluctuations.

Explanation:

Each company must carefully navigate changing consumer preferences and economic fluctuations to sustain growth in the dynamic diamond retailing industry.