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Diamond Engagement Rings - Analyse Consumer Behaviour / Profile the Market

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  • 1. ANALYSE CONSUMER BEHAVIOUR / PROFILE THE MARKETDiamond Engagement RingNominated product: Diamond Engagement Ring (high involvement product with high level of ego,social and economic risk).Diamonds originally catered to an elite niche market consisting exclusively of royalty and the superrich. Annual diamond distribution is now based on projected engagements in the United States andJapan (according to Rio Tinto total global diamond retail sales for 2003 as a percentage of total retailsales occurred thusly USA 48%, Japan 16%, Europe 12%, Middle East 8%, Asia Pacific 5% and rest ofthe world 11%) . To create, grow and maintain the value and demand of this intrinsically worthlessstone the diamond industry has cautiously and artificially controlled the supply, image, relativeimportance and price of diamonds, whilst simultaneously minimising the market for second handdiamonds and repelling the uptake of identical quality lab-produced compressed-carbon“manufactured diamonds”, through careful and uniform manipulation of consumer attitudes todiamonds.The ritual of a diamond engagement ring is an American construct; there was no establishedEuropean tradition of a diamond engagement ring. Following World War I, European diamondprices collapsed. By 1938 three quarters of all diamonds were sold in the United States, making itthe largest consumer market; but between 1919 and 1938 the volume of diamonds sold in the UShad declined by 50% and the quality and price had declined by almost 100%.During the 1930’s in the US the common law tort known as Breach of Promise to Marry (where,consistent with hitherto contemporary sexual inferences, a no longer engaged female could sue herformer fiancé on the break-up of an engagement; for damage to her reputation), was graduallyabolished. There was impetus to provide females with a pre-wedding tangible surety and thediamond industry (monopolised at the time by De Beers) moved in. The positioning of diamondengagement rings, embedding their role en masse in US courtship rituals by attitude formation, wasorchestrated by US advertising agency N. W. Ayer for diamond miner and distributor De Beers.PART AIndividual (internal influence): AttitudesThe nature of attitudes is possibly the single most critical factor in the enduring success of thediamond engagement ring and its transplant into the pre-wedding ritual (and gradual usurping oftraditional, cultural pre-wedding engagement rituals).Repetition and association.Diamonds = Romance + LoveExploiting the new medium of motion pictures, young men were inculcated with the concept ofdiamond rings as the gift of love (larger & finer=greater expression of love), and young females’attitudes were subtly shifted to view a diamond ring as an integral unassailable component of thecourtship ritual, an indestructible diamond the ubiquitous link to indestructible love. The requisiteelement of betrothal.To reinforce the messages inherent in their screen portrayals, movie starts, as well as stage actors,the wives and daughters of politicians and recently engaged socialites were photographed wearingdiamonds they had been provided with (by De Beers) as sparkling tangible symbols of love in weeklynewspaper profiles titled “Hollywood Personalities” printed in 125 leading newspapers and
  • 2. magazines , depicting detailed descriptions of their individual diamond rings as their new symbols ofromantic involvement to a mass audience, as news coverage. Everyone who mattered was wearinga diamond engagement ring.Between 1938 and 1941 diamonds sales in the US increased by 55%.Operant conditioning.To secure the value (retail price) and position of a diamond engagement ring as an enduring andeverlasting symbol, De Beers needed to set sustainable parameters. Consumers had to beconditioned to realising that their sought after diamond experience could only be achieved with abrand new diamond engagement ring (an individual, unique expression of the love in that particularrelationship), and, it had to be expensive.In 1947 an N. W. Ayer copywriter devised the line “A Diamond is Forever” (in 1948 this became theofficial motto of De Beers) to infer that a diamond engagement ring should not be sold second-hand.De Beers also advised retail selling points that confused young men (90% of engagement ringpurchasers at the time) coming in to select engagement rings should be advised that an affordableprice range for an individual was widely accepted to be between 2 to 3 months salary (a totallyarbitrary figure formulated for simple recitation and comprehension in store, by De Beers).To achieve the rapturous diamond experience so voraciously flaunted in all popular media forms themale had a benchmark price he believed was expected of him to unquestionably pay to rightfullyachieve his goal, and the female understood that only a diamond would suffice. And on receipt,there was no way she could ever part with it. The right steps had to be followed, but the guaranteedresult was indestructible love and happiness. He knows what to do to be the hero; and whateverother jewellery she may have in the future, that ring must stay firmly planted on her finger.Modelling.By the 1950s pockets of discontent were emerging at both ends of the market. Lower incomebrides-to-be wanted more for their money than the diamond engagement ring they were getting,and the more affluent began to demand expressions of difference as a means of expressing theirsophistication.And the Soviets discovered vast deposits of smaller, lower grade diamonds in the Siberian tundraand were eager to flood foreign markets with them.De Beers negotiated the exclusive purchase and distribution of the Soviet diamonds, and used theopportunity to diversify their product styles and range. Even small diamonds were diamonds.Reasserting and reinforcing that diamonds were everywhere and anywhere the only recognisedsymbol of betrothal and love De Beers focused on the new mass medium of television to influencepublic attitudes towards them. De Beers arranged for actresses and many other celebrities to weardiamond engagement rings whenever they were in-front of television cameras, and for women’smagazines to be deluged with their images.Cognitive LearningAlso in the 1950s De Beers established the “Diamond Information Center” to provide the perceivedinference of authority, and to endorse the “historical information” and “news” released by De Beers.By the end of the 1950s the consistent message had formed the attitudes of an entire generation ofUS females, and males, and was now considered such a necessary component in the process ofengagement that couples who could not afford a diamond engagement ring up front would deferthe purchase until it could be paid for, not seeing it as conceivable to forgo or substitute.
  • 3. To continue the cognitive process, full page advertisements as information charts deconstructing thecut and dimensions (technical information) of diamonds are placed in male oriented magazines,reducing the confronting complexity of differentiation in diamonds and instilling in males a level ofconfidence and knowledge in diamonds to encourage further investigation and reduce theirapprehension. As an industry, diamond retailers perceive the diamond engagement ring purchase asthe first diamond buying experience for a male and want it to lead to a lifetime of diamond buyingfor gifts, anniversaries, birthdays etc.Industry research suggests that a purchaser spends 6 to 9 months investigating the technical aspectsof a diamond prior to entering a store to make an engagement ring selection. Sales staff are trainedto shift purchasers focus on technical aspects of the diamond and concentrate on its emotional role,to sell the diamond “experience”. The vast array of choices is presented as facilitating symbols ofthis experience. The selection process encourages the channelling of the purchasers diamondinspired emotions and presents the individual flaws and quality, colour gradients as uniqueidentifiers of the relationship’s DNA (originally it was fingerprint, but times have changed). Oncesales staff have artfully extracted the purchasers maximum intended price point they are trained toactively disparage all cheaper in-store options to instil confidence in the purchaser’s choice and inferan act of skill was demonstrated by the purchaser in their final purchasing decision.The characterisation of a diamond engagement ring as integral to the betrothal process, as aconcept, had been firmly implanted in the psyche of the consumer so successfully without the use ofbranding or logos and has transcended the inherent divergence in diamond size and quality withsuch precision through the formation of attitudes towards diamonds that it no longer matters that:Between 1939 and 1976 the size of the average diamond engagement ring fell from onecarat to 0.28 of a carat.Their connotation as a perceived substitute for potential damages under the abolishedBreach of Promise to Marry tort had also faded away; it has been established at law thatengagement rings (even diamond ones) were one of the few legally recognised “conditionalgifts” and in the event that an engagement is terminated the ring must be returned (thoughit should be noted that in divorces their value is not commonly pooled in the combinedworth of matrimonial assets to be divided).There are estimated to be 500 million carats of diamonds owned by the public today (inrings and jewellery). That is 50 times annual global diamond production. When femalesforget that a diamond is forever and start re-selling their engagement ring (or not buyingone, or instigating a shift in trends to using inherited diamond engagement rings for theirown betrothal rather than as family heirlooms) in large numbers, the value of diamondswould collapse.Diamonds do not hold their value; retail diamonds are not investment grade diamonds. Anew diamond engagement ring would have an immediate resale value of 30% its originalprice. Despite popular assertions to the contrary, diamonds are not a commodity.The intrinsic strength of consumer’s positive attitudes linking diamonds to love and romance hasbeen tested and proven all but impenetrable:When initially entering the mass consumer US market, diamond engagement rings werecrudely thought of as the price (or relative worth) of a female’s virginity.Feminism has gained no traction in identifying and eliminating the engagement ring(diamond or otherwise) as a symbol of male ownership.Following a recent New York Times article on blood diamonds, researchers found thatalthough consumers had a high awareness of the issues surrounding conflict/blooddiamonds as little as 5% of respondents who were in the market for diamonds believed thecontroversy would have any influence on their purchase.
  • 4. Japan followed as the next target of De Beers’ diamond engagement ring phenomenon. But in Japan,the glamour of diamond engagement rings was conveyed by being associated with invigoratingoutdoor activities and perceptions of “Western” lifestyles. The force of the attitude changesprouted a billion dollar industry in Japan, revised a 1500 year old betrothal tradition and by thefourteenth year of their introduction 60% of new engagements were undertaken with diamond rings.PART BGroup (external influences): Reference GroupsDiamond engagement rings have a high social risk and a high symbolic value. Family, friends andwork colleagues constitute powerful reference groups that exert an enormous normative influence.In addition to symbolising love and romance a diamond engagement ring conveys:StatusEsteemMale income and future earning potential (financial commitment to relationship)Relative value male has for femaleTangible symbol of strength of relationshipApproval of the ring determines approval of the betrothal; what the male is willing to pay and whatthe female is willing to accept are closely scrutinised by the engaged couple’s reference groups withthe attributes of the ring extrapolating a sense of the integrity of the male and female.Post proposal, showing the ring to family (mother’s approval of the ring is critical), friends and workcolleagues and gaining their positive endorsement is crucial for the ritual to be validated. A smalldiamond will be received with ridicule and shame and has the real potential to terminate theengagement. A newly engaged female would feel intense disgrace at having to show her workcolleagues a diamond ring that did not adequately convey what she believed she was worth.Additionally celebrities function as a credible reference group for popularising and giving personalityto acceptable variations to the traditional solitaire engagement ring. Celebrities exert anidentificational influence on consumers. Individuals express their identity and sense of self throughtheir cut of dress, hair-cut, accessories, footwear, emulating the style of their idolised celebrity. Thepopular culture and media exposure of celebrities provides a safe point of reference for theaspirational consumer’s otherwise apparent expression of an individualistic sense of self.Minute details of celebrity diamond engagement rings’ cut, colour, quality, cost and setting areexplored in great length in women’s magazines. Their value is beyond the means of mass marketconsumers, but their coverage has a direct and quantifiable impact on the demand for engagementrings that reproduce elements of publicised celebrity “rocks”. Like other elements of fashion,celebrities project an external influence on consumer choice here also.While the impending 2010 release of Disney’s range of diamond engagement rings (themed aroundDisney Princesses, complementing Disney’s range of Princess bridal gowns and wedding rings) hasyet to impact the design expectations of soon to be engaged females, recent examples of directcelebrity influence on the cut and colour of consumer choices include:Catherine Zeta-Jones’ antique-style diamondJenifer Lopez’ pink diamondParis Hilton’s canary yellow diamondMadonna’s Edwardian style 3 diamond settingBrittney Spears’ cushion cut diamond
  • 5. In addition to diamond engagement ring styles popularised by Elizabeth Taylor, Jacqueline Kennedy,Princess Diana and Princess Grace.Whilst jewellers aim to be prepared with “affordable”, scaled-down versions of celebrity diamondengagement rings to keep up with consumer demands, the engagement ring styles of celebritieswhose relationships end (during engagement or during a period of marriage deemed too short bythe public) and thus whose diamond style fails to embody the tenets of indestructible love, find theirmass replicated styles fall out of fashion very, very quickly, with the perception being that that typeof diamond had failed to live up to the overall diamond ethos.PART CGeneration Y is the targeted diamond engagement ring consumer; tech-savvy, family-centric, flexible,non-conforming and attention-getting, with magazines, internet and commercial television theirmain media sources. Young adults with high disposable incomes, it is males that make the purchasewith females acting as heavy influencers.According to the ABS the average age of marriage in Australia is 30 for males and 28 for females;75% of couples cohabit prior to marriage (almost half for more than 3 years)of all people currently married in Australia 45% did so between 18 and 2442% of current de facto partnerships are planning to marry.Average period of engagement prior to marriage is 16 monthsDiamond engagement ring purchasers straddle the Roy Morgan values segments Something Better,Young Optimism and Socially Aware. The heavy use of magazines in promotions and use ofcelebrities reflects this (Who, Cosmopolitan, Cleo, Marie Claire, InStyle, Vogue, GQ and Men’s Style);for females, magazines are an integral source for comparing popular styles, and being exposed tocelebrity trends; for males, magazines targeted at young men contain diamond industryadvertisements designed as information charts using technical drawings to explain the differentdiamond cuts and physical attributes (with no mention of engagement, romance or pressure of anytype, and no use of photography - if one was not thinking about buying a diamond engagement ringalready, these ads make absolutely no sense).High internet usage amongst Gen Y is catered to; the internet is a crucial (non-threatening) source oftechnical information, to research styles and trends and gradually also to make the actual purchase.Retailer websites contain selection tools that make the process of exploring / selecting / comparingring types akin to playing a game.The strong ethical values and concerns of Gen Y have been mildly piqued by controversy surroundingblood/conflict diamonds. The diamond industry has responded to this by instituting the KimberlyProcess of diamond certification.There is general concern within the diamond industry that Gen Y is not being communicated toeffectively, with too much emphasis on traditional media and not enough activity in social media.There is also concern that global financial circumstances, significantly increased chance that Gen Ywill inherit diamonds and have the stones reset for their engagement ring, unprecedented qualityand price of lab made compressed carbon “manufactured diamonds” will all lead to a downwardshift in demand for mined diamonds by Gen Y and that it may ultimately be this generation thatchallenges the notion and practice of unquestionably choosing a unique diamond engagement ring.
  • 6. BibliographyABS, LIFETIME MARRIAGE AND DIVORCE TRENDS, 4102.0 - Australian Social Trends, 2007,http://www.abs.gov.au/AUSSTATS/abs@.nsf/Latestproducts/26D94B4C9A4769E6CA25732C00207644?opendocument#TRENDS%20IN%20MARRIAGE%20AND%20DIVORCEABS, 4442.0 - Family Characteristics and Transitions, Australia, 2006-07, http://www.abs.gov.au/ausstats/abs@.nsf/mf/4442.0Chang, S., Heron, A., Kwon, J., Maxwell, G., Rocca, L., Tarajano, O. The Global Diamond Industry, Chazen Web Journal of International Business, ColumbiaBusiness School, Fall 2002, www.gsb.columbia.edu/chazenjournalDana, H. Celebrity Diamond Ring Styles, October 2006, www.buzzle.com/articles/celebrity-diamond-ring-styles.htmlDe Beers Group / Ledbury Research, Luxury: Considered, 2008Diamond Promotion Service, Diamond Advantage Series, How To Sell: Using the 4C’s with Romance, Comprehensive Leader’s Guide, 2008Diamond Promotion Service, Promoting Your Reputation: Your Guide to Building Consumer Confidence & Trust, 2008Diamond Wholesale Corporation, The History of the Engagement Ring, www.diamondwholesalecorporation.comDonahue, P.J. Right Hand Rings Ready To Launch, Professional Jeweler, May 2003, www.professionaljeweler.com/archives/news/2003/052003story.htmlEpstein, E.J. An unruly market may undo the work of a giant cartel and of an inspired, decades-long ad campaign, The Atlantic, February 1982,www.theatlantic.comGassman, K. IDEX Online Research: Bridal Jewelry Business High-Growth & Less Seasonal, April 2007, www.idexonline.comGenis, R. Collecting Gems: Recession/Depression, The Gemstone Forecaster, Winter 2008, http://www.preciousgemstones.com/gfwinter08.htmlHM Revenue & Customs, The Jewellery Trade, Inland Revenue, 2001, www.hmrc.gov.uk/bens/ben10.htmHarris, A. The Origins of Many Wedding Traditions, June 2007,www.associatedcontent.com/article/287698/the_origins_of_many_wedding_traditions_pg2_pg2.html?cat=23Hollywoodcrushmtv.com, Disney Princess Diamond Engagement Rings, www.disneydreaming.com/2009/10/23/disney-princess-diamond-engagement-rings/Jewelry.com, Celebrities Engagement Rings, www.jewelry.com/education-bridal-engagement-celebrity.shtmlJohnson, K. Rio Tinto Diamonds, Rio Tinto, March 2005Loring, M. A Take on the Engagement Ring, August 2006,www.associatedcontent.com/article/55529/a_take_on_the_engagement_ring_pg2_pg2.html?cat=23Maniago, B. The Engagement Rings Celebrities Wear, April 2009, www.engagementringsforcheap.com/the-engagement-rings-celbrities-wearMediaedge:CIA, Knowledge Focus: Generation Y, September 2006Monahan, L. UK jewellery "out of touch" with consumers, Hong Kong Trade and Development Council, July 2004,www.hktdc.com/info/vp/a/tjo/en/1/5/1/1X00GXZA/UK-Jewellery-Out-Of-Touch-With-Consumers.htmO’Rourke, M. Diamonds Are a Girls Worst Friend. The trouble with engagement rings. June 11, 2007 www.slate.comPoulos, M. Buyer Behaviour Implications for Marketing, 2ndEdition, Pearson, 2007Richardson, T. Celebrities and Their Diamond Engagement Rings, January 2006, http://ezinearticles.com/?Celebrities-and-Their-Diamond-Engagement-Rings&id=135271Richardson, T. The Diamond Engagement Rings Of The Stars, April 2009, www.engagementringsforcheap.com/the-diamond-engagement-rings-of-the-starsStafford, S. Failures of the Diamond Mining Industry: History of Extorted Prices, Conflict and Genocide, September 2007,www.associatedcontent.com/article/387307/failures_of_the_diamond_mining_industry_pg4_pg4.html?cat=3Taylor, L.W. A Cartels response to cheating: an empirical investigation of the De Beers diamond empire, Southern Economic Journal, July 2006,http://www.allbusiness.com/southern-economic-journal/1190164-1.htmlTruebride.com.au, Wedding Tip Statistics, September 2003, http://www.truebride.com.au/wedding_tip_statistics.aspUnited Nations Department of Public Information, General Assembly adopts resolution on "conflict diamonds", March 2001,www.un.org/peace/africa/Diamond.htmlVeblen, T. Theory of the Leisure Class: An Economic Study of Institutions, Macmillan 1902, www.fordham.edu/halsall/mod/1902veblen00.htmlWard, G. How celebrities influence fashion accessories trends, www.helium.com/items/665724-how-celebrities-influence-fashion-accessories-trends

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