The men of the diamond business mostly deal diamonds the way their ancestors did: in a small, no-frills office, with a loupe, a pair of tweezers, and a parcel of stones in hand—and perhaps a glass of tea or schnapps afterwards to celebrate a day’s dealings. About the only recent changes are that daughters now join the family business alongside sons, and there might be a cappuccino maker where the old teakettle once sat. Traders in New York’s diamond district may sit mere blocks away from Madison Avenue, but their attitudes are worlds apart.
Even today, diamond marketing remains mostly word-of-mouth, perhaps aided by the odd ad in a trade magazine or booth at a trade show. Until recently, most diamantaires never thought of a diamond as something that could be branded for itself. If their name could be considered a “brand,” it was because of their reputation for honest dealing and high-quality goods. Few spent even a penny on advertising outside the trade. Their names never graced the pages of Town & Country, InStyle, or any other media.
De Beers’ announcement last summer that it wants its 125 sightholders to help bear its marketing burden sent seismic tremors through the trade. Could people who’ve never had to worry about anything more than whether they had the right stone at the right time suddenly learn the ins and outs of advertising and promotion? Especially when they were still puzzled by De Beers’ new Supplier of Choice program and its sudden morphing into the Diamond Trading Company?
Enter Diane Warga-Arias, best known for her Diamond Promotion Service presentations at trade shows. After leading a series of marketing seminars specially designed to teach sightholders, the Florida-based education consultant gave JCK an exclusive behind-the-scenes peek at these sessions, which many in the industry think could change the diamond world as we know it.
What is marketing? The sessions first reviewed why De Beers has moved marketing to the top of its agenda. Research shows that diamonds as a category haven’t kept pace with the growth of other luxury products. Consumers in search of a success symbol are more likely to think first about a fancy car, watch, or handbag. “That has a lot to do with the lack of marketing spending,” Warga-Arias says.
This is what the DTC (De Beers’ new “trade name”) wants to change. The DTC has four key goals for the diamond industry—and everything is geared to achieving them. It wants to:
Ensure that diamonds are always “in,” both from a fashion perspective and a societal trends perspective.
Ensure that diamonds are and always remain an item highly coveted by consumers.
Reinforce the image of diamonds as a positive and powerful symbol. Obviously they’re already a symbol of love, but they can also symbolize elegance and success.
Ensure that diamonds are always visible and at the top of consumers’ minds when it comes to spending discretionary income.
De Beers thinks a renewed focus on marketing—by all links of the supply chain—will not only boost overall demand for diamonds but also eliminate the trade’s flea-market mentality.
“The industry is too price-point driven,” Warga-Arias says. “Diamonds haven’t found a way to rise above the democracy of information.” When diamonds are caught in a price war, it dilutes the idea of a rare, coveted, luxury product, she says. Consumers go shopping for a diamond armed with a price sheet. Retailers try to meet or beat those prices, so they cut margins, which means they then pressure their diamond dealers for ever-better pricing.
This doesn’t happen in other industries, Warga-Arias notes. Top luxury brands like Gucci or Prada have waiting lists for their most popular products. So why, she asks, do consumers haggle over diamonds—a much rarer and longer-lasting investment than a handbag or a suit?
Mostly, because they can. In consumers’ eyes, there’s not much difference between one GIA-certified G VS1 and another, so they comparison-shop. The key is to differentiate the products—and to make consumers covet those differences. People who come looking for Coke don’t want Pepsi.
Bass-ackwards. This requires a change in mind-set. The traditional jewelry approach is to create a product, then whip up demand for it. Proper marketing, however, uncovers consumer desires first. The new DTC wants everyone in the supply chain to wake up each day thinking of the consumer. “Marketing is the business seen from the point of view of the consumer,” Warga-Arias says. “You need to know who your customers are and how you can best serve them.”
“Marketing” also means more than just shelves full of new brands. “In some groups people were having this knee-jerk reaction that they have to start brands, without understanding the long-term investment that’s required,” Warga-Arias says. “Everyone is not equipped to create a brand. You can’t slap a brand on a diamond without thinking through what a brand means. You need to do a real analysis of what your business is and how you can best serve the consumer.”
Complying with the DTC’s wishes may not mean inventing a new cut or new product, but rather giving consumers a novel reason to buy diamonds—or, as they say in marketing-speak, “redefining how an occasion-based product is used.” Warga-Arias notes that this happened in the liqueur market: When Bailey’s Irish Cream advertised its product over ice, it gave consumers a new way to enjoy an old favorite, seen previously as an after-dinner drink. That can be done with diamonds, she says. “Clearly, diamonds are the ultimate luxury product, but why aren’t they [targeted] for female self-purchase?” she asks. “That has not been explored enough in this industry.”
SWOT analysis. The second day of the seminar examined not only marketing but also sightholders’ individual businesses. Warga-Arias encouraged sightholders to do a SWOT analysis—a study of strengths, weaknesses, opportunities, and threats. A proper SWOT analysis takes time, diligence, involvement, and discipline as well as the willingness to look objectively at one’s own organization. She recommends this be done internally, although if an organization cannot adopt a fresh perspective, outsiders can be brought in to help.
The SWOT analysis is organized as a brainstorming session: Everyone tosses out ideas, they are scribbled on a chalkboard, and their merit is debated later.
“These are tools to bring out their best,” she says. “It’s a different model of business. The old, traditional model is like a ‘war room,’ where the leaders closeted themselves in a room and handed out dictums. But the new organizational model is more like a ‘think tank,’ where everyone has something to contribute.”
The SWOT analysis looks at how companies can be more efficient and how to boost consumer demand. After the SWOT analysis is complete and ideas are posted on the wall, Warga-Arias finds that the fundamental entrepreneurial spirit common in this industry often takes over. Some companies are good at taking an idea and running with it; others need outsiders to implement ideas.
Some nervousness. Not all sight-holders embrace the new thinking wholeheartedly, Warga-Arias admits. “They are experiencing every emotion you can think of,” she says. “Sometimes one sightholder goes through all the emotions. It takes a lot to change.” Many worried that this new thinking would be a passing fad on the part of De Beers, but Warga-Arias stresses that De Beers is committed to the new course. “I don’t think we’ve ever seen so much critical mass dedicated to a new strategy,” she says.
She knows the industry never invested in marketing in the past because the business lacks sufficient margins. But she argues it’s a chicken-and-egg situation, as only marketing brings better margins. “There are no margins because there’s no demand,” she says. “Brands raise the level of price in all categories. It’s as natural as the sun setting and rising.”
But what’s natural in other industries requires a new set of skills in the diamond industry. In many cases, the new mandate has forced diamond manufacturers to bring in consultants for the needed know-how and a fresh perspective.
“There’s clearly a group of sightholders that are progressive,” Warga-Arias says. “But some are not ready for the changes. For years, most just bought diamonds, then sold them and didn’t think twice about where they were going. Not that they were doing anything wrong. They were very successful at it. But now it’s the 21st century, and it’s time to reinvent ourselves. This is an industry with a lot to learn.”