De Beers' marketing strategy and diamond market segmentation

Marketing

De Beers; Segmentation and Target Marketing

De Beers is a well-known diamond firm. Founded in 1888 by Cecil Rhodes, the company dominated the diamond industry for many years, with activities in the exploration, mining, sorting and marketing of diamonds (De Beers, 2013). For many years the organization has an effective monopoly, controlling the supply diamonds. While aspects of the operations and in control exercised may be controversial, coming to an end in recent years following a number of court cases as well as increased competition (Zimnisky, 2013), it is undeniable that the company has been extremely successful in its marketing. In 1999, the publication "Advertising Age," named the companies advertising campaign which developed the slogan "a diamond as ever" one of the top 100 advertising campaigns of the 20 century, placing it in second position (Garfield, 1999). The success of marketing indicates is the company that understands its target market and various market segments. By looking at the company is possible to identify the target market in segmentation.

Demographics

The demographic profile of the target market may be assessed looking at product which is sold and the associated demographic requirements for potential purchasers to be attracted to that product (Baines et al., 2010). A diamond is an expensive and non-essential decorative item, therefore, the demographic profile of the potential target market will consist of adults with sufficient disposable income to purchase a diamond, either directly, or through the provision of the financing agreement. The most common diamond purchases include diamond rings for engagements, as well as items of jewelry, principally for women. However, although the majority, but not all, items are targeted at women, the target market also incorporates men who purchase diamonds for women.

The aspect of affordability is likely to indicate that the target market will either be working full-time, or of independent means with access to a significant level of disposable income. The company seeks to appeal to both the mass market and the upper affluent market, seen in the way that the company is undertaken its advertising. A particularly successful marketing campaign was based on the concept of the engagement ring, advocating that it was worth a whole month's salary. This campaign is targeting the mass market, where the price of an engagement ring could be equated as one 12th of the target markets annual earnings, importantly this did not differentiate between high earners and low earners, as engagement rings come in a wide variety of shapes and sizes to suit different budgets. The advertising campaign supporting a one-off purchase was emulated with other campaign supporting the purchase of eternity rings and trilogy rings. These campaigns typically targeted couples, where the male would purchase a ring for the female, although maybe argued with a greater level of acceptance of same-sex couples the target market has expanded. These advertisements were able to target middle and upper class segments of the market.

Different products may also be seen as targeting people at different stages of relationship life cycles and therefore resulting in target demographics of consumers within different age groups. While singular purchases such as rings target specific life events, the development of the brand, differentiating itself by creating an image associated with high quality, also targets more frequent purchases by more affluent individuals. These will be professional people, or individuals of independent means, that have a high level of disposable income, and may be classified in the upper or affluent sectors of society. In many instances diamonds would be purchased as a gift from one person to another; however there was also the targeting of individuals who are making purchases for themselves. For example, females were targeted with the development of the concept of the "right hand ring," a ring worn to show independence (Michault, 2005).

De Beers has sought to appeal to a wide range of demographic groups, however they have tended to focus on the middle and upper segments of the market, targeting singular life events as well as regular on impulse purchases of jewelry, from impulse purchases through to carefully considered gifts.

Psychographics

As the demographic profile of the potential consumers is broad, it maybe argued that the psychographic profile is more important. A diamond purchase is non-essential, and therefore it is purchased at a discretionary income. This means that any individual making a purchase is likely to be considering a number of different choices, for some choices, such as engagement rings, there are few acceptable substitutes which would serve the same purpose. However, for other types of events, such as birthdays, celebrations, and gift-giving all personal purchases, there are many other types of product, from jewelry with other types of precious stone through two completely different products or services (Baines et al., 2010). Those who purchase diamonds are likely to value them, believing that they have an inherent significance or associated worth. Those who purchase diamond jewelry not only purchasing something which is attractive; they are purchasing the associated values. The "diamond is forever" tagline developed by De Beers has been highly influential in creating the association of value and longevity with diamond products.

The motivations of those purchasing diamonds for others may include a desire to impress the recipient with their affluence, taste and social generosity. Likewise, they may be seeking to engender good feeling, establish or demonstrate commitment. In most instances, it may be argued that the purchase is endowed with emotional meaning. When individual purchases a diamond themselves there may be some similar characteristics, including a desire to demonstrate their affluence, taste and/or confidence or independence, as seen with the "right hand ring" (Michault, 2005).

Geographic

De Beers is a global company, and as such it maybe argued that the organization adopts a geocentric approach, targeting no particular area or country, and seeing the globe as a singular market with similar needs and desires (Baines et al., 2010). However, on a practical level, a greater level of marketing is likely to be directed to geographic areas where there is a higher level of disposable income facilitating the purchase of their products. As De Beers is a South African company, the natural focus for the target market has been the Anglo-American markets, due to the established political and economic links that are present from the company's founding.

Examination of the current map of operations indicates a wide presence, across many areas of the world, but no operations exist in South America, significant areas of central and Eastern Europe, much of Africa, especially sub-Sahara Africa and the Middle East (DeBeers, 2013). This does not necessarily indicate the target markets for the products, as this reflects operations, but it does emphasize the interest the company has in the more economic developed areas of the globe.

Therefore, the geographic focus of the company has been developed Western nations, and more recently a strong presence in many Middle Eastern developed areas. This does not mean there are no target markets in developing areas, as affluent purchasers exist in all economies, but the focal point has been within the developed world.

Positioning statement

De Beer has positioned itself very strongly as the preeminent supplier of quality diamonds. The company may be credited not only with successful marketing, but even creating some of the markets through its successful marketing campaigns, such as the trilogy ring and the right-hand ring. The advertising is undertaken in a manner that will support perceptions of class and quality, associated with a premium product. Therefore, the company is positioned itself as a pre-eminent premium supplier of diamonds for high-quality jewelry. The company is carefully positioned itself to tap into the mass market, by creating image of a high quality product for a one off purchase, which is not undermined the positioning of the firm for more regular purchases to more affluent members of society; the product is positioned as a premium and desirable product.

Therefore, De Beers has been able to achieve a feat which has eluded many companies, able to create a jewel position, appealing to the mass market and the affluent market, both of which are based on the premium nature of the product and the association the firm has been able to create with diamond products. Ironically, with the loss of the monopoly and increased competition, it may also be argued that much of the previous marketing, undertaken in monopoly or near monopoly conditions, is now benefiting other purveyors of diamonds.

Conclusion

De Beer has been highly successful, a success which may be argued as resulting from the understanding of the target market and the segments, with the innovative marketing even creating new segments and purchase patterns.