Monday 10 December 2007

Hard Rock Cachet

I was born in England to an Austrian-born father with Israeli nationality and a German mother of Polish descent, and I live in Belgium. Whenever I am asked what nationality I feel, I point to my disdain for the French to prove that at heart I am British. Nevertheless, I must confess to harbouring a sneaking admiration for the Gallic marketing savvy.

Sparkling wine, as we know it, was probably first invented at the end of the seventeenth century by an Englishman, Christopher Merrett. It is however a Benedictine monk or Dom, Pierre Pérignon, born around the same period in the Champagne region of France who has taken much of the credit for creating this fizzy beverage. It was probably to play into this legend that in 1936 Moët & Chandon chose his name to grace what would become one of the world's best known extravagant tipples. In the late 1800s Dom Pérignon's producers shrewdly ran an ad campaign establishing the myth that the eponymous pastor cried out "Come quickly - I am drinking the stars!" when he first tasted what we now know as champagne.

The claim that it was he who discovered it is actually quite important to the Champagne region. An area in Fance that dominates the world market for sparkling wines, in prestige if not quantity, to the extent that it has managed to make those from any other place seem second rate. Indeed, it isn't the bubbles in the wine that make it suitable, even vital, for any festivity, but the magical word champagne that injects the mood of celebration into any event.

There are more regions well known for their produce. In France alone think of Cognac and Roquefort to name but two more of many. And it was the fiercely chauvinistic French, as early as 1824, who were the first to register a Geographical Indication, or a GI in legal parley, in a bid to legally protect their region-distinctive cheese varieties from copycats abroad. Today the French GIs are valued at almost 200 million Euros.

Marketing techniques have developed since then and GIs are an integral part of our consumer lifestyles today. The Scots have made Whisky their very own although if you want to call it Whiskey you can make it anywhere you like. Scotch smoked salmon is recognised as superior too, and it seems many consumers agree it is worth paying a premium for. Interestingly, GIs remain respected and perceived as relevant despite the intelligent consumer being well aware that with modern science and production techniques there is no reason why practically any product cannot be reproduced identically almost anywhere else in the world.

GIs are mostly limited to food, maybe reflecting the French priorities in life. However there are many examples of the same methodology being used to promote both a region and its produce at the same time with one reinforcing the other. The Japanese very successfully harnessed their national reputation for technical prowess and excellence, to launch the Lexus, a top level car brand that shot almost effortlessly into a position other and equally good carmakers have struggled for years to attain.

Taiwan is successfully building its reputation as a manufacturer of quality goods as its sister, China, struggles with its shoddy image. The tagline 'Made in Taiwan' is usually prominently displayed even as Chinese-made goods languish on the shelves. The Swiss have cleverly parlayed their national passion for pedantic, mechanical perfectionism into the recognised world benchmark for watches, while their German cousins, no less meticulous and equally technically proficient, have been far less successful in marketing this fact, maybe due to the fact that the eastern half only relatively recently fully entered the western marketplace.

With the steady deterioration of the cartel for diamonds and its associated promotional clout, the onus has fallen on the individual companies to market their own wares. Branding is indeed one way of generating prestige and exclusivity, but as all those who have tried it will know, it is prohibitively expensive and risky. One alternative could be to set up mechanisms that would allow groups of companies to pool their expertise and muscle into a single marketing umbrella that would add value to their wares without arbitrarily dividing up their market and setting competitors in head to head conflict.

The circumstances exist, yet for this to happen and in the absence of a declared leader, authorities that have hitherto been passive participators are going to have stand up and start pulling their weight for the common good. So, for the sake of an industry that is waiting for a guiding force, isn't it time for he who has clout within to please cast the first stone?

Thursday 1 November 2007

benefishyation

Beneficiation has become the new buzz word of the diamond industry, as was amply illustrated by the recent conference in Antwerp. So, as the politicians, major producers and overpaid celebrities battled it out for brownie points in front of the world press, local diamantaires, justifiably more interested in the black on their balance sheets than in African empowerment, bemusedly asked each other how one makes money from it.

Though this perspective might sound cynical, I personally believe it is a valid perspective and one that should be explored for the sake of the industry as a whole. The DTC has long been complaining that the diamond industry’s management behaviour is insufficiently corporate. That is changing under their coercive guidance, and the structure and approach of most middle and large sized diamond traders today is palpably closer to that of other industries. Still, most diamond trading companies trail far behind companies of comparable size in other industries in their middle to long term focus and vision. Their new obsession with beneficiation for Africa is, in my view, a good example of a lack of both.

Diamond jewellery, lacking as it does the central marketing it relied on when De Beers controlled the lion's share of the market, has lost much of its appeal for the younger consumer. The youth of today spends vast amounts of money on fashion, fad electronics and other non-essentials, yet emphatically skip diamonds on their lists of desirables, unless you count engagement rings. If diamonds are to maintain their value - and beneficiation is useless if they don't - this is what the diamantaires in Antwerp should be concerned with. It is the responsibility of politicians, mining companies and producers on an institutional level, to ensure that the supply is ethically and morally sustainable.

Starbucks do buy Fair Trade coffee to the tune of almost 20 million dollars annually which is marketed separately to those who wish to pay the premium. They are seriously committed to social responsibility and claim to pay, on average, over twenty percent more for all their coffee than the New York going price, yet they do not allow that issue to dominate their marketing. For good reason. Their job is to sell coffee not ethics and most commuters picking up a latte on their way to work might not want to feel like colonial exploiters but nor do they want to be confronted with these oppressive issues along with their morning caffeine fix.

The real market, which is driven much more by the consumer than the creators of campaigns will have you believe, and to a certain extent the diamond industry itself, is hoist on it own petard. The 'Diamond is Forever' campaign that has defined the market and marketing for a long time is also probably part of the reason that youngsters are indifferent towards them. An upwardly mobile twenty-something year old does not think twice about spending a couple of thousand Euros on the latest gadget, must-have shoes or a ridiculously priced fashion accessory; impulsive indulgences the fast earner feels he can afford. And they do so with surprising regularity. Buying a diamond however is seen as a momentous decision that has long-term implications. Thinking of posterity is not in their zeitgeist which might well be why diamonds are indeed not perceived as a regular luxury purchase. Patek Philippe watches, marketed as 'not to be owned but held for future generations' are not targeted toward the youth for precisely that reason.

It is heartening to see that some companies are applying some truly novel and daring marketing techniques to their wares. The latest bombshell from Hearts on Fire to grab the attention of those with ready money to burn is the diamond bra. The garment marketed by Victoria's Secret and naturally targeting the younger wearer, sports over eight-hundred carats of diamonds and has a price tag of a cool six and half million Dollars. It has masterfully and ostentatiously focused the attention of a generation not interested in fogey old diamond brooches, on assets most definitely not stripped from Africa and thereby given a new edginess to diamonds that has been sorely lacking in the mainstream.

The era of Forever is passing. In our fast-changing world the focus of consumers is on the here and now, so if we indeed want to ensure that diamonds are forever we should concentrate first on making them contemporary, fresh and eminently desirable. We should be creating new impetus and new reasons for buying them and, to paraphrase that great campaign for fresh cream in England, if 'naughty but nice' is what the consumers want then that is what they should have.

Sunday 15 July 2007

Branded for Life

There are many kinds of brands out there in the marketplace and the strategy behind them is not always the same.

Take Coca Cola. The sweet, black, fizzy soft drink is a well known product that needs no selling to the public. I was watching the customers at the chip stand of a stock-car racing rally this holidays. Under a faint blue haze of diesel smoke, and with their mouths full of soggy, vinegar soaked, ketchup drenched chips and fiery hot barbecued sausages, I doubt most could have tasted the difference between champagne and shampoo, let alone between Pepsi and Coke. But practically every customer had a clear preference, for Coke.

The brander’s job in these mass market brands, is to convince consumers to choose their product rather than the rival one. In the case of Coke, emotional attributes are used to convince the consumer. Rather than tell us “Coke tastes better”, a subjective proposition the modern consumer would consider patronising, we are assured that, “Coke is it!” Ergo: fun lovers drink Coke. It obviously works, although the physiques of those guzzlers at the stock car rally were rather less persuasive than the models in the Coke ads.

Nike does not praise the workmanship of their sports shoe, nor it's design and durability. Instead they proudly convey to me (or more importantly my neighbour) that they, as a company, promote going that extra mile in sports. They also make sure it is the brand of choice of some of the choicest sports figures of our day, and highly visibly so. Choosing their swoosh on my child's tennis socks almost feels like doing something positive for her.

Both these brand's strategies rely on creating an aura that envelopes their brand and promises to brush some of it off onto those who buy it.

The distinctive Playboy bunny rabbit logo, on the other hand, has the job of sanitising and putting a friendly and playful face onto a company and industry that would otherwise be perceived as sordid and grubby. While IBM relies almost entirely on the quality of their product to maintain their brand. Remember that old adage, “Nobody ever got fired for choosing IBM!”

There are other forms of branding too. Think of how the names in the fashion industry rely on their brand to portray an image. There are a million and one messages that that can be flashed across the room at a party, by a lady's handbag. In this fashion-semaphore, the alphabet is formed, not by fabrics and colours and shapes but, because every brand has it own identity, by designers’ names and brands. Wearing a shirt by Vivian Westwood says something about you because it is by her, despite it looking like something the cat brought in; or even because of it.

Some brands are harder to define. It might surprise you to learn that Google was ranked as the world's top brand in the annual Brandz Top 100, with a brand value of over $66 billion. Ironically their branding has become so successful that it is in danger of actually winning them out of business. As their brand name enters the vocabulary, they face the risk that the word ‘googling’ will become a generic word for searching the web, and that could cost them their entire brand's worth.

Creating and maintaining a brand requires first and foremost a thorough awareness of what the brand is trying to do, is it a quality mark, promising a perfect cut and ideal proportions, or does it have a personality or an aura? Should it exude confidence and assurance, or should it whisper sweet nothings?

Happily, now that the DTC has dropped branding from the list of requirements of their sightholders, the era of failed brands, so damaging to my industry, is probably over. With the pressure now off companies to create brands they are not really passionate about, dare we hope that the industry will now focus its attention and develop those few truly valuable brands it still has in it?

Only time will tell.

Sunday 1 July 2007

The Meltdown

The most vociferous arguments against branding for diamonds come from the sightholders who have tried it and failed. They are no small group. The graveyard of the industry is littered with the remains of many an expensive experiment, often never even officially laid to rest. Most lie, ignominiously discarded in filing cabinets, ignored and forgotten, only to be dusted down every few years when the DTC SOC questionnaire arrives. A name, duly registered and trademarked, a slick print-advert extolling its virtues and of course, a jaw-dropping price tag, jaded testimony to their owners’ commitment to modern and downstream marketing techniques.

To be fair, despite the ongoing hype and the pressure put on the larger players in the market to create branding for their wares, the naysayers are not entirely wrong. The truth is, the days when a (large) budget, crisp and convincing visuals and enough pages and airtime were all you needed to launch and maintain a new worldwide brand, are definitely over.

The global infotainment culture is changing. The big national TV and media channels are steadily losing influence. In their place multiple, localised and specialist channels jostle to provide personalised content direct to users. Meanwhile the Internet is fast becoming the medium of choice for news and information. The captive audience, that we advertisers could once bewitch with our carefully crafted spells, have wised-up and now take their news, information and entertainment on their own terms, in their own time and relatively ad free.

Even the world’s top brands like Coke and MacDonald’s are drastically scaling back their classic advertising budgets. In its place they are concentrating their efforts on more novel and exciting ways of attracting customers to absorb their message. Smirnoff, the vodka people, are paying game developers to incorporate their product in popular video games. Car manufacturers Toyota paid $16 million to have their cars featured on popular the USA TV show The Contenders. Creditcard company AmEx hired popular comedian, Jerry Sienfeld, to play in an extended play, online advertainment campaign. Even more lucrative, for those that can get it, is news placement, although, whether the Hilton chain is cashing in on their name’s antics after (and behind) bars, is debateable.

Diamonds are not like cars or soap powder, it is true. You do not try, or even want to, reach every single household in the developed world with your diamond branding; unless you have come up with an idea as good as the diamond engagement-ring, which has. But the target audience for ‘iced’ jewellery has been extensively touched by the efforts of the industry of the last five years and it is worth noting that most of the successes that have been booked in diamond (jewellery) branding have come at the expense of those before. There is very little actual growth of the market in branded goods and practically no consistent evidence of customers being attracted to buy a diamond instead of some other luxury gift, because of the branding. (A phenomenon mysteriously referred to as ‘increased incremental demand’ in DTC speak, despite there being no increment that I can ascertain).

There is some good news in the market, although not everybody is entirely sure how to deal with it. Bling is in! But, it is not every diamantaire’s dream to feature prominently, as the supplier of diamonds to firms like GangstaGold, selling personalised gold teeth and $17.000 diamond encrusted dogcollar, to the hip-hop generation or itsmybinky.com who do a diamond encrusted baby’s dummy.

The bling revolution is deliberately in-your-face, in line with the whole gangsta rap culture. The fact that the establishment is uncomfortable with it is actually necessary to make it credible. And yes, it does stand in stark contrast to the caring, sharing, family orientated, Love Forever image that the DTC and the diamond establishment promote. But the denim jeans also started out as a protest garment and today it is Versace and Dolce and Gabbana versions, adorning the posteriors that protesting bling-wearers most want to kick.

Not that I am promoting a massive rush to push for delights like a diamond studded ‘IceBox’ for storing crack cocaine. I do not believe it is necessary or desirable to destroy the very successful link that has been made in human minds, between diamonds and eternal love. I am saying that the brands of tomorrow will probably not fit into the mould that has been constructed. The ‘I love you’ part of the human relationship has practically been covered ad nauseam and it is up to the industry to create the new buzz that will lure new customers to the diamond counter.

As long as diamonds are available, creative minds will be searching for ways to convince consumers to buy them. But it will be totally new concepts and novel new uses that will capture the hearts and wallets of the cyber generation, not pretty pictures of beautiful jewellery with inventive names.

Friday 1 June 2007

The Branding Iron

With the amount of money spent on diamonds per annum, it is truly surprising that so few successful diamond brands exist. I would venture to say that no diamond brand commands enough market recognition to allow it to be considered a household name. This is not for lack of will. It is no secret that the DTC has been urging its sightholders to consider the branding route as a way of cementing market share, and thereby SOC status, since beginning with that scheme.

To be fair, it is far more difficult to brand a diamond than to brand a new face cream or sport shoe. Consumers do not usually buy diamonds, they buy jewellery. Most could hardly care less which company supplied the sparkle. Computer chip powerhouse Intel faced a similar problem when their chips were put into branded computers. Their novel approach was to have a distinctive ‘Intel inside’ sticker on new computers. This exposed many consumers to their brand and established their dominance, even for many who had never come across the name before.

De Beers, with their Eternity, Journeys, Trilogy and similar projects, have cleverly managed to franchise lines of jewellery with precisely defined groups of stones into the De Beers brand. Incorporating the stone into jewellery and branding the combination can also work.

The qualities, however, that make a successful diamond trader, are not necessarily those that make a good jewellery brand. Over the last five years, too many have attempted to widen their scope in that direction, only to hastily withdraw with much licking of wounds. I sympathise with the sightholders who resist the urge to tread into an area they know little about and concentrate, instead, on seeking a solution that involves branding the stone itself.

Vodka is often held up as an example of what branding should be. Vodka is colourless, flavourless and devoid of any aroma. In a blind taste, most of the people who insist on Absolut or Smirnoff would be unable to identify their own preference from a rival brand. Yet the Absolut drinker will not trade in his young, artistic and slightly avant-garde tipple for the imperial snobbery of tsarist Smirnoff nor the raunchy chutzpah of Eristoff’s identical beverage

The fact that a supermarket brand tastes, looks and smells the same too, at half the price, does not affect these buyers, because it is not just vodka they are buying. What they are buying into is the brand’s image. Having the distinctively shaped bottle on your table, identifies you to your fellow connoisseur, or exposes you to pitying glances from proponents of a rival brand.

Unlike vodka, however, diamonds are an industrial ingredient, only coming into their own for the consumer, when set into an attractive piece of jewellery. Whether you bought it in a lavish box, reading Hearts on Fire, The Love Diamond or just a much scribbled on diamond envelope, it can look identical once it is calling for attention from on your loved one’s finger or throat. This is a commonly aired argument against branded stones. The independently owned websites I visited advised consumers to ask to be shown a non-branded stone of similar specs and compare look and price.

The most obvious method route for creating distinction is by marketing a unique cut. The Buddha Cut (www.buddhadiamond.com), developed and marketed by Albert Haberkorn, is one good example of a diamond brand that is distinctive enough by virtue of its shape to make it appealing to a certain segment of the market. By registering the patenting rights to cutting diamonds in Buddha form, Haberkorn have shrewdly given their stone total dominance in that market and they can thus define their own pricing strategy, regardless of the cost of the raw material.

The Web Cut from Dali Diamond Co (www.webcut.com), and The Escada cut from the house Pluczenik (www.pluczekink.com) are two more examples of brands relying on a distinctive cutting shape in combination with established names for the visibility of their brands within the jewellery. However, it takes a lot a passion to develop a special cut and I do not think one should set out to do that, just for the purpose of having something to brand. It can be too painfully obvious when a diamond cut has simply been slightly manipulated, its difference noticeable only to a connoisseur, then marketed as better. The consumer has proved, moreover, by voting with its wallet, that it does not prefer diamonds looking like upturned pineapples, to the classic diamond cuts.

The real challenge out there is to create a brand name for a classic cut diamond, whose value supersedes the price of the goods producing it. With a name able to dominate its field in any given market, to the extent, that consumers within it will recognise that name as a synonym for diamond. And I am confident that what was done for vodka, for blue cotton trousers, and for the carbonated extract of cola nut juice, will be done for polished carbon too.