On the face of it, few companies seem less in need of a marketing department than De Beers.
For one thing, it is fortunate enough to deal in a product which is widely regarded as the world’s most valuable and desirable consumer commodity: diamonds. With that sort of cachet, such a product could surely dispense with all but the subtlest point-of-sale assistance from Bond Street’s most fashionable jewellers. Or so it might be imagined.
This impression would be further reinforced by the knowledge that De Beers operates a virtual monopoly in its field. It not only mines about half the world’s top quality diamonds, but controls distribution of nearly 80 per cent of the total market (worth 31.5bn in 1997) through its Central Selling Organisation. No question here, until very recently at least, of anyone under-cutting the market or stealing significant share.
Yet De Beers has a profound respect for marketing techniques which stretches back more than 50 years. Which is just as well, since its need has never been greater than now.
In a way, the diamond colossus has become a hostage to its own fortune. Ever since it first rolled out its classic advertising slogan, A Diamond is Forever, in 1947 it has been building a market which, though highly aspirational, is also mass in its appeal. That popular image has been carefully magnified over the years by skilful product placement in Hollywood films such as Gentlemen Prefer Blondes and even opportunistic exploitation of a sports tournament like Wimbledon.
The trouble with mass markets (unlike the very rich) is that they are vulnerable to rapidly changing economic sentiment. A whiff of recession and sales may plummet. This is what has happened to De Beers in the wake of the swelling Asian crisis.
A monopoly is, of course, in the privileged position of influencing price by restricting supply. And this, to an extent, is what De Beers has done. Even so, it would be hard pressed to manipulate itself successfully out of the 41 per cent crash in its uncut gem diamond sales during the first six months of this year.
Its marketing solution – at present highly secretive and in its pilot stage – has been to introduce greater segmentation, based around a novel branding idea. Top quality gems are now to receive a De Beers marque of quality, together with a serial number, inscribed not on the diamond itself (which would damage its value) but on a transparent film attached to it. At the same time, there are signs that De Beers is adopting a much more explicit retail presence than ever before.
This is sensitive territory for a market like this. We have yet to see whether De Beers will successfully reinforce the premium, gem, end of the market. But at least it is prepared to market its way out of a recession.
Cover story, page 34