whose diamond is it anyway?

DE BEERS DIAMONDS

Akshat Jain 147106

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WHO OWNS ALL THE DIAMONDS?

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In 1870, huge diamond mines were discovered near the Orange River, in South Africa, where diamonds were soon being scooped out by the ton.

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Suddenly, the supply of diamonds shot up.

The market was flooded with diamonds, which would have driven down prices and killed demand.

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De Beers’ solution:

Extensive Advertising

Collaboration

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They eventually merged in 1888, into the De Beers Consolidated Mines, Ltd. creating a monopoly on production and distribution of all diamonds coming out of South Africa.

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1888

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De Beers owned all the diamond mines in Southern Africa and controlled trading in England, Portugal, Israel, Belgium, Holland, and Switzerland.

1888

This led to a monopoly like situation where diamond prices hardly fell, with few exceptions.

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1902

1888

De Beers controlled 90% of the world’s diamond trade. However, they felt controlling supply was not enough. They wanted to control demand as well.

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1902

In Europe, diamond prices collapsed during the depression.

Further, diamonds were still presumed to be jewels for aristocrats rather than the masses.

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1938

This left the United States as the only real market for De Beers's diamonds.

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1938

De Beers engaged N.W. Ayer to advertise diamonds to the Americans and a very effective game plan was formed.

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1938

In their market research, the staff of N. W. Ayer found that since the end of World War I, in 1919, the total amount of diamonds sold in America, measured in carats, had declined by 50 percent; at the same time, the quality of the diamonds, measured in dollar value, had declined by nearly 100 percent.

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1938

CARAT VOLUME

50%

DOLLAR VOLUME

100%

THE STRATEGY

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“

- N.W. Ayer

We have to change the social attitudes of the public at large and thereby channel American spending toward larger and more expensive

diamonds instead of other "competitive luxuries."

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1938

It was identified that young men buy over 90% of all engagement rings.

It would hence be crucial to inculcate in them the idea that diamonds were a gift of love: the larger and finer the diamond, the greater the expression of love.

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FOR MEN1938

1947

Similarly, young women had to be encouraged to view diamonds as an integral part of any romantic courtship.

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FOR WOMEN1938

1947

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The agency engaged fashion designers, celebrities, magazines to endorse diamonds.

They advertised in magazines read by the elite, featuring reproductions of famous paintings by such artists as Picasso, Derain, Dali, and Dufy. The advertisements were intended to convey the idea that diamonds, like paintings, were unique works of art.

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1938

1947

They organised a weekly service called "Hollywood Personalities," which provided 125 leading newspapers with descriptions of the diamonds worn by movie stars.

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1938

1947

This is similar to inbound marketing today as there was no direct sale to be made. There was no brand name to be impressed on the public mind.

There was simply an idea, the “eternal emotional value” surrounding the diamond.

Every one of De Beers' advertisements featured an educational tip called, "How to Buy a Diamond."

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1938

1947

In just four years between 1938 and 1941, they reported a 55% increase in U.S. diamond sales. Riding this success, N.W. Ayer began perfecting their marketing strategy in the 1940s.

They wanted to convince Americans that marriages without diamonds were incomplete.

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1938

1947

THE SLOGAN

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In the 1947 plan, they defined their target audience as male and females, 15 years - 35 years. That meant over 70 million people.

This is when they came up with the slogan:

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1947

“A diamond is forever.

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The slogan perfectly captured the sentiment De Beers was going for, that, a diamond, like your relationship, is eternal.

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1947

It also discouraging people from ever reselling their diamonds, as mass re-selling would disrupt the market and reveal the alarmingly low intrinsic value of the stones themselves.

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1947

The ‘A diamond is forever’ slogan is still used by De Beers.

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1947

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A diamond is forever

1947

De Beers now set its sights on newer territories like Japan, Brazil and Germany.

Japan never had a tradition of romantic marriage, making diamonds a tough sell for brides.

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Searching for greener pasture

1965

By using slick advertising, playing up diamonds as a symbol of the modern West, or a way to break from traditional Japanese norm, De Beers was able to build a billion-dollar-a-year industry in Japan. 

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1965

1980

By 1980, almost 60 percent of Japanese brides wore diamonds, up from 5 percent in 1967. Japan became their second biggest market.

Share of diamond engagement rings in Japan

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1965

1980

In the 1980s, De Beers introduced a new series of ads:

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1980

“ Isn’t two months’ salary a small price to pay for

something that lasts forever?”

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According to a 2014 report, Americans spend an average of $4,000 on a diamond ring.

The average monthly salary is around $3,000.

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1980

However, since the ultra rich have a distorting impact on the salary average, it can be said that Americans do spend around 2 months of salary on that diamond ring.

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1980

In 2003, De Beers launched a campaign whose idea was to encourage women to empower themselves by buying diamonds to express their individuality.

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2003

“ Raise Your Right Hand”

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The target group for this campaign, women aged 35 to 64, were slightly older than in other campaigns.

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2003

The campaign was a massive success, increasing diamond sales by up to 15% in the non-bridal segment and winning the ad industry’s prestigious Gold EFFIE Award.

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2003

Conclusion

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De Beers still sells diamonds worth billions annually.

It still controls a significant part of the Diamond industry, which it rightfully founded, expanded and dominated for years.

All this was possible by the decision:

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To market an idea, an emotion around the product rather than the

product itself.

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THANK YOU!

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1. http://www.theatlantic.com/magazine/archive/1982/02/have-you-ever-tried-to-sell-a-diamond/304575/

2. http://www.businessinsider.com/history-of-de-beers-2011-12

3. http://www.bbc.com/news/magazine-27371208

4. http://www.penduluminaction.com/de-beers-halts-its-successful-ad-campaign-to-align-with-we-cycle/

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References