- How to motivate Millenials to buy diamonds?
- How to sustain the competitiveness of diamonds and other jewelry products against other luxury items?
- What should De Beers do to improve the reputation of diamonds as luxury products?
- Should De Beers invest in a rebranding strategy and in new products versus retaining the current marketing model, with diamonds and diamond products as the main selling product?
While the case study focuses on the problems of the diamond industry in comparison to other luxury outlets available to the customer, it is necessary to look at the jewelry industry as a whole. A preliminary search shows that it is not just the diamond segment that has experienced a shortage of customers and revenues. The entire industry has been suffering. According to the North American Jewelers Board of Trade (JBT), over 500 jewelry businesses per year discontinue their operations, and that number keeps growing. These businesses involve diamonds, silver, gold, and platinum retail, as well as gems and other luxury stones. Thus, it is possible to tell that the entire industry is in crisis.
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As it stands, jewelry has a lot of competition in this world. The primary selling strengths of jewelry and diamonds are the following:
- Diamonds are symbols of status.
- Diamonds are beautiful.
- Diamonds provide memories of important events (such as marriage).
If we compare these primary selling points to what the Millenials value and are willing to spend substantial amounts of money on, it is possible to see where diamonds fall short. Diamonds were considered luxury items before the dawn of technology. Before cars, mobile phones, and computers came to be, diamonds, watches, and weapons were considered the only wearable luxury items. As a result, diamonds and companies like De Beers enjoyed a substantial market share.
The modern-day luxury market is filled with competitors that challenge diamonds and jewelry in general in every aspect of their existence. With how sales are going, it is possible to tell that the primary luxury item of the 21st century for Millenials is not a ring or an expensive necklace – it is the smartphone. Smartphones have everything Millenials need – they are status items, they are beautiful, they provide memories (high-quality cameras are a feature of every high-end smartphone for a reason), and they are functional. Jewelry items rarely have any functionality to themselves other than looking pretty.
Another problem outlined in this case scenario is the problem of customer value and brand reputation. Companies that make artificial diamonds provide the same amount of value for customers without marring their reputation with contraband diamonds mined in impoverished countries. Millennials, especially in America, are highly concerned with matters of social justice and the environment. De Beers and other natural diamond-selling companies are suffering from a loss of reputation.
If we consider all of these factors together, it becomes obvious that any efforts to re-popularize diamonds and jewelry are likely to fail. In the best-case scenario, advertising campaigns are going to slow down the shrinking of the diamond market. In the worst-case scenario, these attempts would be a waste of time and money. This is a classic case of the concept known as the “Marketing Myopia” – a term coined by Theodore Levitt in the 1960s.
Instead of trying to force the customer to buy items they have no desire for, De Beers needs to adjust to fit the customer’s needs and wants. Right now, the company has plenty of resources and opportunities to restructure its business. It is a famous luxury company that possesses extra financial resources to afford changes, and it possesses a steady (if shrinking) cash flow from its natural diamond operations.
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The solution is to keep shrinking the production of natural diamonds until the supply matches the demand, catering to a smaller sub-group of customers still interested in inexpensive jewelry, while at the same time investing in other, more marketable luxury items. Some of the potential measures include investments into artificial (cheaper) diamonds, diamond-encrusted smartphone accessories, and the use of diamonds for medical and technological purposes. A diverse product range and exploration of new luxury markets would help De Beers maintain its position as one of the major luxury brands. Otherwise, the company risks suffering a collapse from the ever-shrinking market share, which would not be enough to sustain its large-scale diamond-mining operations.
- Shrink natural diamond-mining operations to match the actual (not the preferable) demand for diamonds and diamond-encrusted products.
- Invest in artificial diamond production not only for jewelry but also for medical and technological needs.
- Shift the focus of the existing marketing strategy from the product and towards the customer. Provide what the customer needs, not what the company thinks they need.
- Adopt a code of marketing ethics. Do not engage in any affairs that could compromise the reputation of the company (blood diamonds).
- Diversify the existing pool of products with consumer behavior and demands in mind. Diamond-encrusted accessories to go along with technological status symbols are likely to have more success than conventional rings, necklaces, and earrings.