Debeers - Case

De Beers: Diamonds are for Asia

Strengths:

* There are commonalities in diamond perceptions more than differences

* Average price of every piece sold was more than twice of US or Europe as size and quality of diamonds is greater.

* 1990 help the jewelry industry to develop

* Diamond acquisition threshold in China was a house hold income of 250 USD per month.

* Expanding group of newly wealthy people, openness to change

* About status within your peer group. Even people on low monthly salaries would buy a high quality diamond: it was a family driven purchase.

* American market is booming.

* If you are modern women you feel confident and successful if you are a traditional you feel valued and proud.

* For women, jewelry was an expression of self-enhancement, a symbol of femininity.

* Demonstrating the status of the wearer and the family.

* Women buying diamonds for themselves, for the joy of wearing them invested in jewelry in case of emergency.

* Final contribution of de beers to the diamond pipeline is the promotion of diamond jewelry for the industry; through advertising campaigns developed from extensive market research; trade promotional activities and jewelry design competitions

* Slogan "A diamond is forever" echoes durability and appeals to the emotional attachment of the owner to the stone.

* We have to make them want to wear their rings more by encouraging jewelers to create more practical designs which won't frighten off the traditionalist.

Weaknesses:

* Valuing a diamond is a highly skilled task thus not traded on world frequently. (Valued on the basis of four criteria- 4C s carat clarity color and cut)

* Diamonds were not bought as a store of value, they could not be traded in the same way that gold jewelry routinely was.

* The impracticality of the most popular designs.

* Rejection the idea of a diamond symbolizing love: any object could do that.

* Asia was not a homogenous region, regional campaigns would not work. Many local nuances take into account for individual country advertising. In Korea, important market for diamonds, all sales except for the wedding jewelry segment dried up. Sales in Thailand and Indonesia completely disappeared. In Japan, they only wear diamonds on a few occasions and it is hard for them to justify spending 5.000 USD for rare use.

* Market reforms introducing alternative ways of spending money like people starting to buy their own homes. Consumer products such as air conditioners competed for their share of discretionary spending against luxury goods like diamonds. Women in Asia have closed their purses to this type of spending.

* "Gift of love" message does not mean the same thing to everyone. In Japan "symbol of love" message had always projected.

Opportunities:

* China more materialistic than elsewhere in the region. Generation used wealth as the key criterion for judging success.

* Marriage was a partnership towards achieving future success. Motivations in China were driven more by status than emotions.

* Elite population segment in Beijing, Shanghal and Guangzhou- the top %5, with monthly household income of 20,000 RMB indicating %88 ownership among women. (higher than US) Acquisition rate per year in the target group %12, many were multiple owners. (avg: 1,56) Attitudes to diamonds were very positive compared with other gemstones.

* 35-54 age range was the core target group among married women. This group bought more expensive pieces than younger ones, and the population ageing rapidly.

* Once a woman owns a diamond the barriers for future purchase is lowered. Showing prices in the shop windows.

* The size of the stone was very important as a status symbol.

* %60 of all sales of diamonds in Asian countries are diamonds for self purchase.

* As a reward for a particular achievement

* In 1998 Japan was still the world's second largest market with 22-23 %of diamond sales worldwide, and average prices paid were still over 1,300 USD.

Threats:

* De beers had to revise its approach to make the woman feel that a diamond was a meaningful symbol of his true everlasting feelings of her rather than a symbol of social conformity.

1. What positioning and targeting recommendations would you make for China?

1.a. What should be the positioning be? How can diamonds be differentiated from other luxury goods and status symbols?

1.b. What markets in China should be targeted?

We propose De Beers to implement two factor strategy which would lead to the adoption of a market driving approach. Customer familiarity and and the extent of market control. We make use of use market sensing, changing customer preferences, channel control through relationship formation and local sensitivity.

Our study aims to present an empirical study of market driving that generates valuable insights into not only what factors lead a firm into a market driving approach but also how market driving occurs in practice. In Chinese market De Beers should take proactive approach to reshape, educate lead the market.

The reason why De Beers should take proactive approach rather than a simply a consumer driven approach comes from the fact that De Beers serves as the global diamond cartel leader that control over seventy five percent of the global diamond market. of the global diamond market. We can say that De Beers is a not only an international company rather an industry case.

Income and culture play significant roles in the acquisition of luxury goods such as diamonds but since diamond consumption was largely unknown with consumers largely ignorant of diamonds as a luxury