Sanjay Kothari is on a mission. As vice chairman of the Gem & Jewellery Export Promotion Council (GJEPC), he took every opportunity at the recent India International Jewellery Show (IIJS) to stress the need for effective generic advertising in the diamond industry.
In a challenge to other industry bodies, Kothari announced that the council intends to procure $10 million to spend on diamond jewelry promotion in India over the next three years. The World Diamond Congress (WDC) took the bait and placed the promotion of diamonds on the agenda of its biennial meeting in Mumbai this October
Kothari’s call was natural and necessary given current market conditions.The generic marketing idea tends to gain momentum during a downturn. The now-defunct International Diamond Board (IDB) was born out of the crash of 2008-09. When money’s tight, the industry tends to lament its lack of marketing as consumers cut back on their discretionary purchases, or turn to cooler, trendier and more fashionable items. The latest tablet, phone, handbag and flat screen TV are just some of the competitors facing diamonds today.
There is no doubt, the diamond industry needs to up its game and a generic campaign of sorts would certainly help the cause. But the industry must be careful not to put too much reliance on such a promise, especially given trends in today’s consumer space.
Consumers have become increasingly brand conscious and are looking for real, experience-based products that are authentic, personal and memorable – all of which are inherent in the diamond story . However, the long-term message is much more effectively transmitted through competitive brand-based campaigns.
A 2004 study by researchers at the University of Texas in Dallas and the University of Central Florida, “Generic and Brand Advertising Strategies in a Dynamic Duopoly,” found that generic advertising is proportionally more important in the short term, while there are free-riding effects that lead to sub-optimal industry expenditure on generic advertising that worsen as firms gain a more balanced market share. In other words, while the initial spend on generic advertising helps lift weaker firms, its impact gradually wears off.
“Due to free-riding by the weaker firm, its instantaneous profit and market share can actually be higher,” the researchers wrote. “The effectiveness of generic advertising and the allocation of its benefits, however, have little effect on the long-run market shares, which are determined by brand advertising effectiveness.”
Certainly the industry could do with a short-term push that generic advertising could provide. But as a long-term strategy, it would do better to raise the advertising bar among its own brands as a means to increase its competitiveness against other industries.
While the old De Beers generic campaigns were arguably the most successful in history, the company’s move to brand-focused marketing may well prove to be more effective. In fact, in the few years since De Beers scrapped its generic marketing spend, the diamond trade has made significant strides to becoming more brand-oriented. This year’s fourth quarter holiday season is expected to produce more diamond brand advertising than ever.
De Beers, for one, is expanding its Forevermark campaign beyond the U.S. The company is taking its ‘Forevermark Promise’ idea to other markets, launching television and cinema advertising campaigns in India for the first time. Rio Tinto has also upped its diamond marketing ante – despite its stated intentions to divest from the industry – and also appears to be taking a regional approach.
Rio Tinto has launched its Nazraana brand in India, as it pushes diamond gift giving in the country. It has also teamed up with Hong-Kong-based jeweler Chow Tai Fook to promote fashion jewelry in China, and recently launched its “Diamonds with a Story” initiative at the JCK Luxury show in Las Vegas – a move that aims to inform diamond buyers, manufactures and consumers about the unique source and personality of the company’s diamonds.
A panel discussion at last week’s Rapaport International Diamond Conference (IDC) in Mumbai stressed that branding is the most effective way to create and capture new demand for diamonds, as well as adding value to the product.
“We want to sell each diamond at a better value and this is achieved through branding,” Mehul Choksi, chairman of the Gitanjali Group, said in the discussion. He added that branding is the most effective way to reveal the emotional appeal of diamonds. Rio Tinto’s Vikram Merchant agreed and urged retailers to “sell the story of the diamond, rather than just focus on the four C’s.”
Few argue that diamonds present the ultimate marketing opportunity, given their investment and emotional allure. But only a few brands have been able to capture that in a significant manner, leaving opportunities for others.
Curiously, it is still the mining companies that are leading the branding charge, which may be the root of Kothari’s and other’s frustrations. Perhaps it’s because the mining companies have been down the generic route before. Once IDB failed, they recognized the industry cannot rely on the mining companies to fit the marketing bill. The free-rider effect would be too apparent and too quick to occur.
Rather, the generic campaigns should be industry driven. And there should be more than one, with each of the industry bodies leading the charge in their respective regions. For this the GJEPC should be applauded and encouraged. But it should be aware of the generic limitations that the branded product does not have.
Consider that sales of tablets are not growing because of a new concept they represent. They’re popular because Apple, Samsung, Microsoft, Google and Amazon are competing to make them cooler, slicker and trendier. The more they compete to gain market share, the more they enhance the generic appeal of their product.
It’s a tested theory that will apply to diamonds as it does any other. If the diamond industry is to compete with the hottest gadgets and products in the luxury space, it must show it has any number of equally trendy, stylish and well-designed diamond brands to offer. Consumers, after all, are well aware of the emotional appeal and investment value of diamonds. They just need competitive diamond brands to drive the message home.