Marketing Diamonds: One of the Best Marketing Success Story
The De Beers Company’s success in selling diamonds has long been one of the legends in the business industry.They have actually convinced many couples that a diamond ring is a requirement to be engaged. Many Fiancés have been convinced by De Beers that they should spend at least “two-months salary” for a diamond ring in order to show their love to their fiancée.
De Beers have convinced many in the public that diamonds are “rare, precious and a status symbol. In fact, the average diamond engagement ring today is sold at around USD 3,000 (in the US) just based from this public perception.
However the reality is very different from the public perception: Diamonds are not rare and are also not in short supply: In fact, during 1999, Nicky Oppenheimer, the chairman of De Beers, even stated that:
”Diamonds are intrinsically worthless, except for the deep psychological need they fill.”
But why in spite of this fact, are diamonds still highly valued? Is the advertising of diamonds so successful that generations of people still believe that they are very valuable? Find out in this article.
Summary of Marketing Diamonds: One of the Best Marketing Success Story:
1. Diamonds were Not as Valued Before2. The Diamond Ad Campaign
3. The Push to Make Diamonds as Family Heirlooms
4. How the Price of Diamonds is Controlled
5. The De Beers Marketing Strategy
5.1 Control the Supply to Control the Market
5.2 Sell the Idea Behind the Product
5.3 Target the Actual Customer
5.4 Influencer Marketing
6. New Diamond Ad Strategies
Final Words
The Details:
1. Diamonds were Not as Valued Before
If you think that the giving of diamonds by fiancés to their fiancées is an age-old tradition, think again. The practice only became popular starting from 1947.
Prior to the 1930s, diamond rings were rarely given as engagement rings. People preferred opals, rubies, sapphires and turquoise as engagement rings because they were deemed exotic gems which were suited for showing one’s love.
Since then, diamonds have gone in popularity thanks to the clever marketing strategy that De Beers has employed. The image of diamonds as a must-have jewelry for women continues to this day.
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2. The Diamond Ad Campaign
A lot of people around the world, especially from western countries have heard the popular diamond ad slogan: “A Diamond is Forever.” This ad campaign slogan was invented by the N.W. Ayer Advertising Agency in 1947.
This ad campaign slogan proved to be so popular that they created tremendous demand for diamonds back then which still continues today.
During the year 2000, the Advertising Age magazine named the ad campaign as the slogan of the 20th century.
De Beers used the same ad campaign in Japan during the 1960s, it also successfully captured the Japanese public the same way it captured the American public.
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3. The Push to Make Diamonds as Family Heirlooms
De Beers further increased their diamond sales by convincing families that diamonds should be cherished heirlooms. This strategy worked as well.
By doing so, De Beers nearly eliminated the aftermarket for diamonds, which further strengthened their control of the market.
With very few people selling their diamonds back to jewelers, the market for new diamonds was secured and even increased.
Parents of brides instill the same thinking about diamonds to their soon to be married sons and daughters, which continues the cycle going.
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4. How the Price of Diamonds is Controlled
There are fewer than 200 people or companies that are authorized to buy rough diamonds from De Beers. These people are referred to as ”sightholders”. They purchase the diamonds through the Central Selling Organization or CSO.
CSO is a subsidiary of De beers that markets about 70% to 80% of the world’s diamonds. This is how much they are in control of the market.
De Beers sells parcels of rough diamonds to sightholders who in turn sends the diamonds to cutting facilities. Afterwards, they are then sent to distributors.
There are some rough diamonds which are sold outside of the CSO. These diamonds are from small producers in Australia, Russia and some African countries. However, the price of the diamonds are still largely influenced by the prices set by the CSO.
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5. The De Beers Marketing Strategy
As we can see, the De Beers company which is actually a mining company is the undisputed leader when it comes to diamonds. They nearly control almost the entire global diamond industry.
But how did De Beers convince people that diamonds are rare and scarce, when they’re not? Here is the successful marketing strategy that the company employed:
5.1 Control the Supply to Control the Market:
Being able to control the supply of the product means that a company would certainly also have control of the market and can even dictate the prices of the product.
De Beers did this in the early 1900s, when it bought up all South African diamond mines. This enabled them to control 90% of the world’s diamond production.
It bought out independent producers, produced similar diamonds when competitors refused to join, as well as bought out all their competitor’s diamonds.
Also, during the Great Depression, De Beers bough diamonds at significantly lower prices.
Their main aim was to ensure that no other person or company is able to resell diamonds, and they have been largely successful at doing this.
5.2 Sell the Idea Behind the Product:
While most companies and advertising agencies back then were selling the actual merits of a product like its appearance, taste, size and/or price, the De Beers and N.W. Ayer Advertising Agency concentrated instead on its perceived “intrinsic value.”
They have the idea that diamonds should be perceived by the public as a “symbol of love and lasting commitment”.
By imparting this idea, it tells the public that symbols of love and lasting commitment should not be resold by anyone.
They especially targeted people who have dreams or are about to be married. They know that marriages are very serious social commitments and couples who participate in them are serious about proving their love to each other.
De Beers have actually convinced the public for generations that a diamond ring given during marriage ceremonies is a symbol of one’s love and long term commitment to the marriage.
5.3 Target the Actual Customer:
De Beers and N.W. Ayer Advertising Agency found out that their actual customers are not the women who wear diamond rings, but it was the men who gave it to them.
They found out that when couples buy a diamond ring, women tended to select diamond rings which were the least expensive. This is due to the practicalness of many women.
So what did De Beers and N.W. Ayer Advertising Agency do? They targeted men more than the women.
This is because they know that men by nature are less-cautious spenders and are more than willing to spend big money just to show their love to their female partners.
5.4 Influencer Marketing:
The N.W. Ayer Advertising Agency knows that influencers or celebrities as they were called back then were critical in the mass acceptance of a product.
Back then, they used famous influential ladies to promote their diamonds. They sent diamonds to leading ladies of media, the leading ladies of the state, as well as famous socialites.
During the late 1940s, the agency also arranged for 125 newspapers to cover the diamonds which these women wore.
Soon, diamonds became associated with fame and luxury and have been even immortalized by Marilyn Monroe’s hit song as well as a name of a James Bond film.
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6. New Diamond Ad Strategies
Even today in the 21st century, De Beers is still continually trying to convince the public to buy diamonds:
6.1 During 2001, they introduced the three-stone “Past, Present, and Future” ring. It was specifically marketed as an “essential” anniversary gift.
6.2 During 2004, they introduced the “Right-Hand Ring” campaign. It was supposed to encourage single women to buy diamonds as presents to themselves.
6.3 During 2006, they introduced a ring where a series of multiple diamonds are linked from small to large. It was called “Journey”. It was supposed to signify that: “love is growing”.
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Final Words
Today, De Beers’ share of the diamond market has significantly declined. However, it is still the biggest diamond company in the world, Although its market share is only 35% now, way down from its height of 90%.
But one thing that can’t be taken away from De Beers and the N.W. Ayer Advertising Agency is their long lasting impact on the diamond industry.
Although many people today already know that diamonds are not rare and are not scarce, a lot of them still continue to value diamonds highly.
This is due to the brilliant marketing strategy that was employed by the De Beers and the N.W. Ayer Advertising Agency which has endured the test of time.
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