The drive to make more money is the engine of capitalism. A momentary blip on the graph cannot bring the entire market economy into question. Of course, plain common sense and decency does demand that, within industry, high salaries be coupled to commensurately high achievements.
British newspapers are screaming blue murder as news leaks out of the extravagant 300.000 pound parties thrown last week by the Royal Bank of Scotland and HBOS for their executives. The celebration of their ‘successes’ over the last year, despite the 32 billion pounds of taxpayer’s money the two institutions together received in a government bailout just last month, is symptomatic of the real gap existing between the front and behind the counter at banks in general.
Coming after the scandalised public reaction to the infamous banker’s bonuses, this story will only strengthen the case for government caps on executive salaries in failing concerns, and high time too. It would be wrong however to perceive these highly paid and spoiled executives as the root of all evil. Indeed one could argue that without them the world would be a poorer place. Literally!
Members of the boards in the diamond bourses and federations are neither overpaid nor unduly extravagant with their organisations’ money; an invitation to participate in the IDMA Shanghai conference even stipulated that I pay my own travel and accommodation. The boards and committees of practically all the diamond bourses consist of unsalaried men who do not get paid at all.
With their own businesses to run, their own agendas and as often as not their own axes to grind, it is hardly surprising really that the interests of the wider market, not to mention the weaker players on the field, do not feature highly on the daily agenda., One wonders whether it is not time to replace these elected bodies, apparently incapable of turning a profit even from the snack bars in their own buildings. At the very least it might be time to swell their ranks with professional executives who have proven skills and track records.
Since De Beers wisely, if reluctantly, relinquished their leadership mantle and set its course for pastures new with their exclusive Forevermark, the diamond industry’s only leadership is these committees and federations, leaving the market unmanaged, rudderless and confused. Even once the need for new leadership is universally recognised within the industry, and the noises being made by De Beers, Alrosa and even Dilip Mehta are encouraging. it will take time and resources before any other organisation develops the ability and the clout to assume the leadership role De Beers used to fulfil.
The AWDC, whose charter dedicates them to supporting the entire diamond industry in Antwerp, do have a professional executive who are currently busy fighting a heroic, if probably doomed, campaign to protect the already stricken large traders from over-zealous policing. They have displayed a certain amount of interest in supporting industry initiatives. However lack of support from their elected (read unpaid) board has meant these projects tend to get shunted into a siding when issues of greater immediate concern to them arise.
De Beers, on the other hand, is a commercial organisation whose executives are patently and acutely aware their continued employment depends upon their turning ever larger profits. They are letting no grass grow under their plan to transfer their accumulated name recognition and goodwill (if you can call it that) from the best part of the 20th century into their new Forevermark brand.
A peek into their newly launched consumer website confirms all my predictions. With their hallmark slick advertising and terse pronouncements they are predictably throwing all their accumulated might into convincing the hapless consumer that a ‘Forevermark diamond’, is superior in every possible way.
With non-Forevermark manufacturer goods effectively demoted to second rate by the very firm that until recently supplied them, the crisis of leadership must be apparent and acute, to all but the schleppers, whistling ‘If I was a rich man,’ while Antwerp burns...
Next issue I will be taking a closer look at the new forevermark strategy, De Beers' continuing leadership role and the effects these might have on the market.
Tuesday, 18 November 2008
Friday, 4 July 2008
The Mark of Cain
The launch of the De Beers Forevermark as a consumer trademark, slipped by remarkably unremarked within the industry. Notwithstanding the devastating effects the most fundamental change to the De Beers marketing strategy in the past half century could signal to the selling power of those not within the syndicate’s orbit.
Already, a glance at the De Beers literature shows a new and highly exclusive language developing. On the Forevermark website I see that Pluczenik are offering for sale a matching pair of 26 carat brilliant cut stones. They are described as the “largest matching pair of brilliant cut Forevermark diamonds in the world”, insinuating that diamonds branded in this way are in some fundamental way different from all others. What should be more worrying, to those not plugged in to the DTC marketing machine, is the implication that all non-Forevermarked diamonds are somehow inferior for being unbranded.
The use of exclusive branding techniques to sell diamonds is not only desirable in the current market but inevitable. As the supply market fractures into more and smaller pieces, each supplier is going to feel forced to find ways of differentiating his product.
The Forevermark as we now see it, is indeed a top rate branding, completely unlike the artificially nurtured non-brands that so spectacularly misfired following the introduction of the DTC’s SOC program four years ago. Even within the marketing community, where much criticism was levelled at the mark following its B2B launch, a grudging respect is beginning to emerge as details of the new consumer brand emerge.
The surprise announcement last year that even non-sightholders, and stones supplied by other producers, would be eligible for branding, despite the understanding from the beginning that Forevermark would distinguish sightholders from the riff-raff, is clear confirmation that much more lies behind this innocuous mark than at first meets the eye.
Indeed this mark, supported and promoted by the sightholders for years now, might not, in the end, serve to encourage and promote new demand for the sightholders benefit, as they fondly cared to believe up till now. Nor is it really needed to boost consumer confidence. I have seen no significant research indicating that diamond consumers are massively bothered by the moral implications of buying diamonds, before the issue is forced onto them by those manipulating the media for their own nefarious ends. However, Forevermark, if it is a success, will consolidate De Beers' own market share downstream. and it could well help shore up its dominance of the marketplace even as its market-supply share wanes.
True, De Beers first responsibility is towards its own shareholders. One can hardly fault a company for taking advantage of its residual name recognition and influence to solidify a hold on the consumer market. Even when that far outweighs its actual current clout.
Moreover, one must admit that the Forevermark campaign shows flashes of sheer genius, albeit that we are still early days yet and it remains to be seen how the market will react to a marking system that effectively demotes to plonk status all diamonds previously obtained.
The regrettable passivity of the organisations whose job it is to represent the rest of the industry becomes more understandable when you realise that the executive leadership, clearly convinced of the need for an answer to the Forevermark, have the disadvantage of being forced to persuade their traditionally sceptical voting membership to devote the necessary effort and resources to a long term plan. This at a time when the future is uncertain and money is tight. However, doing nothing is the luxury of sinecures.
If the market is to remain independent and fair, it must be led by a body unaffiliated to any government or commercial entity. It is clear that as long as membership to the Forevermark club remains elusive to some, and to be effective it must, it is in the interests of the wider market to have some form of alternative mark or else risk having all stones not entered into the program perceived as second rate, or worse, as suspect.
Marketplaces being what they are, I have no doubt that alternatives will emerge. Human ingenuity being what it is I have confidence that the marketing community will find a ways to counter the threat of a new emerging monopoly. But that process will only start following realisation of what is actually happening. The chorus of silence that greeted the new Forevermark release does not auger well in that respect. Just mark my words.
Already, a glance at the De Beers literature shows a new and highly exclusive language developing. On the Forevermark website I see that Pluczenik are offering for sale a matching pair of 26 carat brilliant cut stones. They are described as the “largest matching pair of brilliant cut Forevermark diamonds in the world”, insinuating that diamonds branded in this way are in some fundamental way different from all others. What should be more worrying, to those not plugged in to the DTC marketing machine, is the implication that all non-Forevermarked diamonds are somehow inferior for being unbranded.
The use of exclusive branding techniques to sell diamonds is not only desirable in the current market but inevitable. As the supply market fractures into more and smaller pieces, each supplier is going to feel forced to find ways of differentiating his product.
The Forevermark as we now see it, is indeed a top rate branding, completely unlike the artificially nurtured non-brands that so spectacularly misfired following the introduction of the DTC’s SOC program four years ago. Even within the marketing community, where much criticism was levelled at the mark following its B2B launch, a grudging respect is beginning to emerge as details of the new consumer brand emerge.
The surprise announcement last year that even non-sightholders, and stones supplied by other producers, would be eligible for branding, despite the understanding from the beginning that Forevermark would distinguish sightholders from the riff-raff, is clear confirmation that much more lies behind this innocuous mark than at first meets the eye.
Indeed this mark, supported and promoted by the sightholders for years now, might not, in the end, serve to encourage and promote new demand for the sightholders benefit, as they fondly cared to believe up till now. Nor is it really needed to boost consumer confidence. I have seen no significant research indicating that diamond consumers are massively bothered by the moral implications of buying diamonds, before the issue is forced onto them by those manipulating the media for their own nefarious ends. However, Forevermark, if it is a success, will consolidate De Beers' own market share downstream. and it could well help shore up its dominance of the marketplace even as its market-supply share wanes.
True, De Beers first responsibility is towards its own shareholders. One can hardly fault a company for taking advantage of its residual name recognition and influence to solidify a hold on the consumer market. Even when that far outweighs its actual current clout.
Moreover, one must admit that the Forevermark campaign shows flashes of sheer genius, albeit that we are still early days yet and it remains to be seen how the market will react to a marking system that effectively demotes to plonk status all diamonds previously obtained.
The regrettable passivity of the organisations whose job it is to represent the rest of the industry becomes more understandable when you realise that the executive leadership, clearly convinced of the need for an answer to the Forevermark, have the disadvantage of being forced to persuade their traditionally sceptical voting membership to devote the necessary effort and resources to a long term plan. This at a time when the future is uncertain and money is tight. However, doing nothing is the luxury of sinecures.
If the market is to remain independent and fair, it must be led by a body unaffiliated to any government or commercial entity. It is clear that as long as membership to the Forevermark club remains elusive to some, and to be effective it must, it is in the interests of the wider market to have some form of alternative mark or else risk having all stones not entered into the program perceived as second rate, or worse, as suspect.
Marketplaces being what they are, I have no doubt that alternatives will emerge. Human ingenuity being what it is I have confidence that the marketing community will find a ways to counter the threat of a new emerging monopoly. But that process will only start following realisation of what is actually happening. The chorus of silence that greeted the new Forevermark release does not auger well in that respect. Just mark my words.
Friday, 1 February 2008
Hind Sights
Despite its waning influence on the diamond market the DTC remains the largest, if not the only player on the field able to affect change. It is their victory of sorts, albeit a dubious one, that much of the industry is in a state of limbo and disarray since the 'reorganisation' (to use one of the sanitised euphemisms for the first phase of their pruning operation) threw almost thirty sightholders out into the cold.
The anger, resentment and despair are understandable in some of the rejected. Those who helpfully tell them 'I told you so' are not only lacking in tact but are also missing the point. Despite the grumbling and groaning of many, the truth is that the industry could not forever remain stuck in the colonialist era, with a small club of the elite obtaining goods through special privilege and distributing it at a profit to the hungry masses. The ball that the DTC started rolling a few years ago when they first introduced the SOC program, is now gaining momentum and inevitably the face of the market is changing.
Their strategy for dragging the diamond industry into the twenty-first century was either devilishly clever, naïve and simplistic or a blind knee-jerk reaction. We, of course, can only guess. But some results are beginning to show and its effects can be seen beyond the select group of sightholders. For, not holding a sight, no longer condemns a player to second tier status, any more than having the privilege guarantees success.
Indeed, by dropping their overt drive towards branding and downstream influence as the only acceptable way forward, the DTC have plugged the one really glaring fault in their program. By promising to reward success, attained by whatever method or strategy (and I have reason to believe that is ultimately their new position) they are finally allowing the full arsenal in the market's forces to be unleashed. With a torrent of energy welled up behind some of those now at a crossroads, they have created a climate where imaginations will have to be taxed for the fittest to survive and prosper.
In line with other industries, success in the diamond manufacturing of the future will belong to those who are best able to bring goods to the market consistently, efficiently and cost effectively. And regardless of what the DTC will have their sightholders believe, supply will somehow always be available to those who have their demand lined up.
I once spent a few days under observation in a hospital sleep clinic to see if the insomnia that allows me to get by on 3 to 4 hours of sleep a night is damaging my health. It was a nightmare. The long hours between when the last visitor is forced to leave at midnight and the blessed rude entry of the first nurse at 5am with a determinedly cheerful 'Good morning!’ felt like solitary confinement. I took to roving the corridors in the small hours searching for other signs of life.
There are surprisingly few! Most hospital staff on wake aren't actually awake most of the time, I noticed. They bumble around like glassy-eyed zombies whenever some piece of technology forcibly drags them from the chair they are semi-dosing in and they return to it with alacrity, only staying awake for long enough to stare at me resentfully before their eyelids start hooding and their heads start a graceful bobbing ritual as their brain, from wherever their consciousness is sliding to, convinces them they are really awake.
A doctor in casualty with whom I shared forbidden smokes outside, explained that the long shifts are designed for a purpose. Apparently, medical staff must sometimes work 18 or 20 hours in a row, twice a week, with limited sleep time in between and under horrendously stressful conditions just to see if they are able to operate under duress. Rather than fail the weaker elements in exams, the Darwinian selection procedure is designed to make them crack and leave of their own volition. Soldiers, he assured me, undergo similar procedures in training.
The diamond industry has no head doctors who can force executives to show they are capable. The DTC and its brokers are far too busy placating their golden-egg-laying geese to encourage them to explore pastures new or deviate from their prescribed line, even when toeing it becomes obviously unrealistic. The diamond bourses and other players on an institutional level have little power to affect change on their own and the implementation of mid to long term strategic planning requires much more coercion and resources than they will bring. We marketing advisers meanwhile, tend to be far too busy protecting our own behinds to be able to afford to kick sense into our clients'.
It is comforting to think that the drive to separate the mice from the men, intentionally or otherwise, might provoke some into proving themselves, by succeeding in defiance of the hitherto accepted guidance, for the good of us all.
The anger, resentment and despair are understandable in some of the rejected. Those who helpfully tell them 'I told you so' are not only lacking in tact but are also missing the point. Despite the grumbling and groaning of many, the truth is that the industry could not forever remain stuck in the colonialist era, with a small club of the elite obtaining goods through special privilege and distributing it at a profit to the hungry masses. The ball that the DTC started rolling a few years ago when they first introduced the SOC program, is now gaining momentum and inevitably the face of the market is changing.
Their strategy for dragging the diamond industry into the twenty-first century was either devilishly clever, naïve and simplistic or a blind knee-jerk reaction. We, of course, can only guess. But some results are beginning to show and its effects can be seen beyond the select group of sightholders. For, not holding a sight, no longer condemns a player to second tier status, any more than having the privilege guarantees success.
Indeed, by dropping their overt drive towards branding and downstream influence as the only acceptable way forward, the DTC have plugged the one really glaring fault in their program. By promising to reward success, attained by whatever method or strategy (and I have reason to believe that is ultimately their new position) they are finally allowing the full arsenal in the market's forces to be unleashed. With a torrent of energy welled up behind some of those now at a crossroads, they have created a climate where imaginations will have to be taxed for the fittest to survive and prosper.
In line with other industries, success in the diamond manufacturing of the future will belong to those who are best able to bring goods to the market consistently, efficiently and cost effectively. And regardless of what the DTC will have their sightholders believe, supply will somehow always be available to those who have their demand lined up.
I once spent a few days under observation in a hospital sleep clinic to see if the insomnia that allows me to get by on 3 to 4 hours of sleep a night is damaging my health. It was a nightmare. The long hours between when the last visitor is forced to leave at midnight and the blessed rude entry of the first nurse at 5am with a determinedly cheerful 'Good morning!’ felt like solitary confinement. I took to roving the corridors in the small hours searching for other signs of life.
There are surprisingly few! Most hospital staff on wake aren't actually awake most of the time, I noticed. They bumble around like glassy-eyed zombies whenever some piece of technology forcibly drags them from the chair they are semi-dosing in and they return to it with alacrity, only staying awake for long enough to stare at me resentfully before their eyelids start hooding and their heads start a graceful bobbing ritual as their brain, from wherever their consciousness is sliding to, convinces them they are really awake.
A doctor in casualty with whom I shared forbidden smokes outside, explained that the long shifts are designed for a purpose. Apparently, medical staff must sometimes work 18 or 20 hours in a row, twice a week, with limited sleep time in between and under horrendously stressful conditions just to see if they are able to operate under duress. Rather than fail the weaker elements in exams, the Darwinian selection procedure is designed to make them crack and leave of their own volition. Soldiers, he assured me, undergo similar procedures in training.
The diamond industry has no head doctors who can force executives to show they are capable. The DTC and its brokers are far too busy placating their golden-egg-laying geese to encourage them to explore pastures new or deviate from their prescribed line, even when toeing it becomes obviously unrealistic. The diamond bourses and other players on an institutional level have little power to affect change on their own and the implementation of mid to long term strategic planning requires much more coercion and resources than they will bring. We marketing advisers meanwhile, tend to be far too busy protecting our own behinds to be able to afford to kick sense into our clients'.
It is comforting to think that the drive to separate the mice from the men, intentionally or otherwise, might provoke some into proving themselves, by succeeding in defiance of the hitherto accepted guidance, for the good of us all.
Tuesday, 1 January 2008
Well Oiled Campaign
Salman Rushdie, in his satirical novel The Satanic Verses, describes a carpet manufacturer who made wool from the strands of hair picked off the barbed wire at the bottom of farm fences, caught there after lambs stuck their heads through to get at the grass outside. Instead of admitting his was an inferior product made from the cheapest waste product, he advertised his carpets as 'Made from the wool plucked from the throats of baby lambs,' and sold them at a premium to great success.
In marketing psychology our class discussed if this was ethical. One classmate pointed out it is no less so than selling bits of pebble for thousands of Dollars per carat just because they are perceived as rare. This point, greeted by exaggerated groans from half the class is actually difficult to completely discount, but it does rather miss the point. Because modern advertising is about creating an aura and image the consumer can buy into and substance has nothing to do with that. If I can convince the market my product has indefinable properties that make it worth my asking price, the intrinsic cost becomes irrelevant and the market price becomes its new value. That is why it is not unethical to sell a painting by Van Gogh for USD 60 million when the actual canvas and paint are intrinsically worthless.
The diamond industry were pioneers in the field of marketing when De Beers first launched their Engagement ring. It retained its prominence through the years with campaigns like Shadows - by stressing not only the (debatable) rarity of diamonds but more importantly their almost magical properties as symbols of love or, in today's zeitgeist, forever. Yet they have erred in allowing the retail market to be ruled by specs., which are and should remain essentially the tools of the industry. It is remarkable that most consumers can spout lengthy lists of numbers and letters to describe the diamonds they have bought yet very few will know the torque or horsepower of the car they drive.
Mercedes make great cars and everybody knows it. Great for their superior engines, exceptional design, top quality workmanship and outstanding performance, yet in arguably one of their most successful ad campaigns there was no picture of a car but a cricketer in the locker room, with a tag line that asks simply, 'When did you know you were a Mercedes driver?’
The most common counter argument is that diamonds are in essence a commodity and specs. are what differentiate them. I beg to differ. Petrol is a commodity too. There is no real difference between the juice bought at a Texaco or a Shell station. That does not stop both these competing for your custom using any arguments they can discover or invent.
BP have been trying for the last few years to convince us that the two letters of their name stand for Beyond Petroleum. With slick visuals and clever advertising copy they emphasise all they are doing to achieve environmentally friendly energy and have succeeded in convincing many that the massive volume of fuel comfortable transport guzzles need not be all bad. That it can actually be financing the development of greener gasoline for the pumps of the future. Reason enough for many environmentally concious consumers to insist on the BP brand.
In fact, despite its brilliance, marketing analysts point out that the 200 million USD spent on this campaign was roughly equal to their total six-year investment in the development of alternative energy technologies and merely a drop in the ocean when compared to the billions they still invest in developing new fossil fuel sources.
One might well ask why indeed the major oil companies are investing so relatively little in what are likely to be the money spinners of the future. The simple answer is shareholders. Mammoth companies like Shell and BP have difficulty convincing holders of their stock that it is worth forgoing short term benefits in favour of larger profits much further down the line. A problem they share with the diamond industry who, lacking a central figure with a long term strategic vision, are also falling behind in developing the marketing tools that should be driving the industry forward in our globalised and increasingly savvy economy.
Where the diamond market does have the edge over the massive oil companies is in their size, or lack of it. Companies like Shell, with the manoeuvrability of an oil tanker, continue to profile themselves as greener and cleaner but still concentrate on selling tried and tested fossil petroleum despite knowing that it is in their best long-term interest to focus on the renewable resources of the future.
The diamond market on the other hand, with its tiny proprietor run companies, has all the handling a nifty Ferrari and if it wanted could turn on a sixpence. It should be a doddle for those with the right vision to reinvent the diamond's image and allow them to be sold, like all good consumer products, for their own real or imagined magical properties rather than an appendage jewellers stick on their branded jewellery. Or, to stick to our analogy; that they be marketed like a car not the contents of a fuel tank.
In marketing psychology our class discussed if this was ethical. One classmate pointed out it is no less so than selling bits of pebble for thousands of Dollars per carat just because they are perceived as rare. This point, greeted by exaggerated groans from half the class is actually difficult to completely discount, but it does rather miss the point. Because modern advertising is about creating an aura and image the consumer can buy into and substance has nothing to do with that. If I can convince the market my product has indefinable properties that make it worth my asking price, the intrinsic cost becomes irrelevant and the market price becomes its new value. That is why it is not unethical to sell a painting by Van Gogh for USD 60 million when the actual canvas and paint are intrinsically worthless.
The diamond industry were pioneers in the field of marketing when De Beers first launched their Engagement ring. It retained its prominence through the years with campaigns like Shadows - by stressing not only the (debatable) rarity of diamonds but more importantly their almost magical properties as symbols of love or, in today's zeitgeist, forever. Yet they have erred in allowing the retail market to be ruled by specs., which are and should remain essentially the tools of the industry. It is remarkable that most consumers can spout lengthy lists of numbers and letters to describe the diamonds they have bought yet very few will know the torque or horsepower of the car they drive.
Mercedes make great cars and everybody knows it. Great for their superior engines, exceptional design, top quality workmanship and outstanding performance, yet in arguably one of their most successful ad campaigns there was no picture of a car but a cricketer in the locker room, with a tag line that asks simply, 'When did you know you were a Mercedes driver?’
The most common counter argument is that diamonds are in essence a commodity and specs. are what differentiate them. I beg to differ. Petrol is a commodity too. There is no real difference between the juice bought at a Texaco or a Shell station. That does not stop both these competing for your custom using any arguments they can discover or invent.
BP have been trying for the last few years to convince us that the two letters of their name stand for Beyond Petroleum. With slick visuals and clever advertising copy they emphasise all they are doing to achieve environmentally friendly energy and have succeeded in convincing many that the massive volume of fuel comfortable transport guzzles need not be all bad. That it can actually be financing the development of greener gasoline for the pumps of the future. Reason enough for many environmentally concious consumers to insist on the BP brand.
In fact, despite its brilliance, marketing analysts point out that the 200 million USD spent on this campaign was roughly equal to their total six-year investment in the development of alternative energy technologies and merely a drop in the ocean when compared to the billions they still invest in developing new fossil fuel sources.
One might well ask why indeed the major oil companies are investing so relatively little in what are likely to be the money spinners of the future. The simple answer is shareholders. Mammoth companies like Shell and BP have difficulty convincing holders of their stock that it is worth forgoing short term benefits in favour of larger profits much further down the line. A problem they share with the diamond industry who, lacking a central figure with a long term strategic vision, are also falling behind in developing the marketing tools that should be driving the industry forward in our globalised and increasingly savvy economy.
Where the diamond market does have the edge over the massive oil companies is in their size, or lack of it. Companies like Shell, with the manoeuvrability of an oil tanker, continue to profile themselves as greener and cleaner but still concentrate on selling tried and tested fossil petroleum despite knowing that it is in their best long-term interest to focus on the renewable resources of the future.
The diamond market on the other hand, with its tiny proprietor run companies, has all the handling a nifty Ferrari and if it wanted could turn on a sixpence. It should be a doddle for those with the right vision to reinvent the diamond's image and allow them to be sold, like all good consumer products, for their own real or imagined magical properties rather than an appendage jewellers stick on their branded jewellery. Or, to stick to our analogy; that they be marketed like a car not the contents of a fuel tank.
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?
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.
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.
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.
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