Finish this sentence for me:
“Diamonds are ______”
If you answered “forever,” then you’ve seen DeBeers’ diamond advertising.
But if you know what really goes on in the diamond industry, then you know the real word that should be inserted there is, “Worthless.”
The most common fallacy about diamond engagement rings is that they’re an ancient tradition embedded in human history around the world.
This is completely false, and in less polite company, we would call it something that comes out of a male cow.
The diamond engagement ring idea is at most a century old, and it was invented not as something lovely and lasting, but rather as a marketing campaign.
The same people who mined diamonds – the DeBeers diamond syndicate – created the myth that you MUST have a diamond engagement ring.
From Edward Jay Epstein, an investigative journalist:
“In its 1947 strategy plan, the advertising agency strongly emphasized a psychological approach.
“We are dealing with a problem in mass psychology. We seek to … strengthen the tradition of the diamond engagement ring — to make it a psychological necessity capable of competing successfully at the retail level with utility goods and services….”
It defined as its target audience “some 70 million people 15 years and over whose opinion we hope to influence in support of our objectives.”
- W. Ayer outlined a subtle program that included arranging for lecturers to visit high schools across the country.
“All of these lectures revolve around the diamond engagement ring, and are reaching thousands of girls in their assemblies, classes and informal meetings in our leading educational institutions,” the agency explained in a memorandum to De Beers.”
You might call it marketing – or brainwashing – depending on your view.
Clever marketing campaigns are great. But this… this is brainwashing people into believing they must spend two month’s salary on something that is totally unnecessary, massively overpriced and loses its value the moment you buy it.
You NEED a car. Car companies compete to get your business. You NEED food, and restaurants and food manufacturers create campaigns to make you a customer. Nothing wrong with that.
But DeBeers took things a step further, turning a useless product into a supposed valuable commodity and requirement for loving someone so much, you want to marry them.
Diamonds, contrary to what we’ve been told, are not an investment. They’re a retail product just like buying a shirt or pair of shoes, only not as useful.
People kid themselves into thinking they are investing in something worthwhile. But are there any other investments where the person selling you the asset makes a 10 to 50% profit margin?
And if you try to sell your diamond, you’ll find you’re lucky to get 10% of what you paid for it, even if it’s just one day after you bought it.
Yeah – great investment.
Spending two months salary on something so ridiculously impractical when you’re just starting your marriage is a terrible financial decision.
And yet people do it all the time. Why? Because DeBeers’ marketing goes above and beyond to make people believe they are doing the right thing.
Now then, I’m not here to bash DeBeers. At least, not too much. The reason they acted like they had a monopoly on diamonds is because they DID have a monopoly on diamonds until the start of the 21st century. Since then they have finally gotten some competition.
In the 1930’s, DeBeers was selling a rather insignificant amount of diamonds in America. By the early 80’s, they were selling close to $2 billion dollars’ worth of diamonds annually in the U.S. alone.
So how did they do it?
Let’s talk about what marketing lessons we can take away from DeBeers diamond history:
Cecil Rhodes, the founder of DeBeers, got his start renting tools to miners during the diamond rush of 1869.
Lesson: Today selling tools to aspiring internet marketers can also give you a great start in your own business.
Rhodes invested the profits of his operation into buying up claims. He could have blown the money, but instead, he decided to compete with the very miners he was supplying.
Lesson: Keep your eyes open for opportunities, and when you see them, pounce.
When there were more claims to purchase than money in his pocket, Rhodes got funding from the Rothschild family.
Lesson: Once you start your business and you want to expand, you can also seek venture capital to make it happen.
Rhodes negotiated an agreement with the London Based Diamond Syndicate to regulate output and maintain prices. When trade slumped, they simply curtailed supply to maintain the price.
Lesson: If you only allow a certain number of your products to go to market, you can command higher prices, especially if you’re in cahoots with your ‘competition.’
When the Premier Mine was producing more diamonds than all of the DeBeers’ mines put together, DeBeers’ ‘absorbed’ the Premier Mine.
Lesson: Have you got stiff competition that’s lowering prices? Buy them out. Fast.
Other than for industrial purposes or to be pretty, diamonds are effectively useless and worthless. Since there was no real demand for diamonds, the demand had to be manufactured somehow. Hence the birth of the engagement ring, along with the slogan, “A Diamond is forever,” coined by a young copywriter.
Lesson: If you have a product that most people don’t want, find a way to make them want it. Seriously, I don’t agree with this at all, but it is how DeBeers was able to sell $2 billion of diamonds a year.
Not satisfied with monopolizing the engagement ring market, DeBeers went on to create the ‘eternity ring,’ a supposed symbol of the past, present and future of a relationship, along with the anniversary ring meant to mark whatever anniversary might be coming up next for a couple.
Lesson: Repurpose your product. For example, do you have a product that teaches marketing to owners of plumbing businesses? Repurpose it to teach electricians, carpenters, general contractors and so forth.
Not satisfied with engagement, anniversary and eternity, DeBeers wanted to sell diamonds to everyone, including single women. So they invented the “right hand ring,” to be worn by women as a symbol of independence. Because a woman cannot be independent until she has a ring on her finger.
Lesson: Who else can you sell your product to? Think outside of your usual market and find the people who need what you have. For example, that marketing course for plumbers we mentioned earlier could be changed and tailored to marketing for people outside of the contractor industry, such as Chiropractors, Dentists, Lawyers, Piano Teachers, Tutors, Arborists, Personal Trainers and so forth.
To maintain its dominant position in the market, DeBeers convinced independent producers to join its single channel monopoly. When that didn’t work, it flooded the market with diamonds similar to those of producers who refused to join in.
Lesson: Invite people in your niche to work with you on projects, or even to come in under your umbrella company. If they don’t, create products that are knockoffs of theirs and sell them for super cheap. (Just Kidding about that last sentence, folks – please don’t plagiarize – ever! And do play nice – reputation is everything in this business.)
De Beers stockpiled diamonds to control prices by limiting supply.
Lesson: Okay, we already do this in fashion, don’t we? We limit how many copies of a product will be sold, or we limit how long we will sell it, or we limit how many special bonuses we’ll give away. Scarcity is a tremendous motivator, which is why so many marketers use it. It works.
De Beers first targeted American consumers through the movies. They opened a Hollywood office, and gave out diamonds to producers. In return, the producers put the diamonds in their films, in a way that was considered very favorable.
Lesson: Give your products to the big names in your industry, and encourage them to blog about them to their readers.
De Beers gave diamonds to the royal British Family, who wore them in public. Queen Elizabeth, for example, frequently wore her diamonds and left her other gems at home. She was also filmed visiting the diamond mines and De Beers’ facilities, looking at piles (literally, PILES) of diamonds. Imagine getting the royal family to act as your sales agents!
Lesson: Consider getting a celebrity spokesperson for your products.
De Beers was afraid of what would happen if the market become flooded with resold diamonds. That’s why they had to create the idea that you should never sell a diamond, even though its value would only increase (and we know that’s not true). And they had to convince people they should store and hoard these diamonds. Hence the slogan, “A diamond is forever,” which was really their hope that people would hold diamonds forever.
Lesson: If you sell a tangible product, what method can you use to get people to buy more of that product, and hang onto it rather than sell it? The answer will vary according to the product, but let’s look at one example: The Book. Not e-books, but books you hold in your hand. As you know, used books sell well on Amazon. How do you convince people to hang on to your book, rather than letting it be resold? Because if you can keep used copies off the market, you can sell more new copies, and make more money. It’s a good question, isn’t it?
In a video created only for its diamond resellers and NOT for public consumption, De Beers stated:
“We’re planning on attracting your customer by building on our rites of passage program. Let’s start with your bread and butter, the support behind the rites of passage; the diamond engagement ring, the diamond anniversary band, and the 25th anniversary diamond. Our goal is to make diamonds a cultural imperative for all these important occasions in a woman’s life. That’s why we’re continuing to support these segments, so that your products like the diamond anniversary band, and the 25th anniversary diamond will become as obligatory as the diamond engagement ring, bringing your customers back again and again.”
As you can see, Diamonds, and all the associations we have with diamonds, are a product of a slick marketing strategy.
Lesson: Right now you might be focused on marketing your next product, but what if you took a step back and instead focused on a long term strategy that wouldn’t sell just your next product, but every product you create for the next decade or two?
As you’ve witnessed, one powerful, long term marketing strategy can mean the difference between selling insignificant amounts of products, and millions (or billions) of dollars of products.
Think big. Be strategic. Ask yourself questions like,
“What else can I sell to my customers?”
“Who can I turn into my customers?”
“How can I differentiate my product from any other in the market?”
“How do I make my products obligatory for my prospects to buy?”
While I think DeBeers lacked ethics, I cannot argue with their results. They took a basically worthless product, jacked up the price sky high, and made it obligatory for young men everywhere to waste two month’s salary on it.
Really, you can’t argue with that kind of success, but you can certainly learn from it.