Thursday, December 24, 2015

Diamond marketing - fantasy and self-delusion

On this day before Christmas 2015, I am cogitating over the seeming mountains of flyers that have arrived in the mail, the paper kind, in the last few weeks.  I do not recall it ever having been that intense, and I can only attribute it to a soft season that pushed so many retailers to offer big discounts so early in December, even in November.  I recall that years ago, no discounts showed up until January.  Long gone, those days.

In all of it, jewelry was almost entirely missing.  Yes, I received flyers from Macy's that included jewelry, but they do that all year round.  Signet had plenty of ads on TV for Jared and Kay Jewelers.  And there were a few promos via e-mail.  After that, zip, at least as I can recall.  Worse yet, as I have noted before, the big fashion magazine issues were nearly devoid of jewelry.  The apparel ads were great, but almost none showed a model wearing jewelry.

Oh yes, and Forevermark showed up in some magazines and newspapers with full page ads.  But those, as was the pattern in the past, did not promote a particular retailer of even a new product.  It was De Beers' effort to do image advertising, as they said they would, using their classic line, 'A Diamond is Forever.'  More on that shortly.

Within the trade, by contrast, I read in many posts about how important it is for everyone to join an industry-wide diamond image building effort; how essential it is for diamonds to be front of mind among consumers; how we need to compete aggressively for the luxury dollar, etc, etc.  Apparently not this year.  At the same time, there is nearly endless hand-wringing, not unfounded, over a constant run of publicized abuses within the trade.  Fake and doctored grading reports, continued mixing in of man-made diamonds with naturals, evading KP requirements, tax evasion, human abuse, environmental depredation, manipulated transfer prices, and straight out fraudulent business dealings, all seem to be daily occurrences.  People are looking around, talking about how we can stop all of it (not easy at all), and wondering who they can comfortably do business with.  Then add in that profits have become razor thin, or have disappeared.

So we are attacked from three sides.  Poor marketing is being blamed for tough sales, which in turn means that competition has badly eroded profits, which in turn leaves everyone reluctant, or unable, to spend on image marketing.  And hanging overhead is the prospect of the whole business getting a serious black eye.

All of these issues are addressable.  What is lacking is an open and realistic discussion of conditions and what industry associations can and cannot do, and what individual companies can do, or are even capable of doing.  There are complaints everywhere, with great descriptions of the problems. I am not privy to what is said privately, but I almost do not need to be.  Publicly, the proposals I see are flat as pancakes, or latkes in this season.

But let's talk frankly about 'diamond marketing.'  A real plan to promote diamonds in the leading markets would take hundreds of millions of dollars to execute.  And it would have to be pressed all year long, and year in and year out.  A flurry in the last month or so of the year is truly a waste of money.  It will need a dedicated paid staff to run it, and first class brand building consultants to create the program.

The chances of this happening are nearly nil, at least in the way it is being pursued.  Why?  Because those with the money upstream, primarily the producers and the handful of large diamond companies are not unified in their objectives and never will be.  The producers are already acknowledging that their futures are limited because their assets will be played out over the next decade or two.  They are concentrating on maximizing profits and thinking about their next life, if there is one.  The large diamond companies primarily deal with majors, and have to deal with extremely thin margins.  Why would they contribute to marketing that benefits other channels?  One cannot expect a good plan to be developed at that level.

As for the retailers, they already know what they have to do, and the good ones, the successful ones, do it well.  They market to their targets, be it local, national or global; be it Graff or Tiffany or a local guild jeweler.  They would have to be shown how a plan would benefit them, and that would mean actually putting the horse before the cart - somebody expending the time and effort to develop a plan that would be compelling enough for those people to join in.

As for jewelry manufacturers, designers, wholesalers, dealers, contractors, etc, we have handfuls again that are capable of it, and they would need to be convinced by a great program.

I have probably only stated here what everyone knows anyway.  Maybe it's a waste of my time.  But so are the calls to arms by various entities and people who then go home and essentially, I imagine, forget about it, because they do not take the time to think it through creatively.

So is there hope?  I believe that leaning on the producers to lead the way and put up much of the money is the wrong way to go.  A plan must come from those without an ax to grind, and that means the institutions that have (or should have) broad membership, even those that have seen declining membership.  If all the bourses, retailer groups, diamond groups, manufacturing groups, got together - and there are lots of them - and put up the money to develop a plan, we would have a great starting point.  It would, in total, cost each member of all those organizations a tiny amount of money, as this would be to see what kind of a plan could be developed.  And even just to see if a reasonable one could be developed.  It makes sense to spend very little, relatively speaking, to assess feasibility.  Much better that then mindless, pointless, ineffective, shortsighted and short-lived advertising.

To close, a thought about Forevermark ads.  When I saw them, my immediate thought was how out of date they were.  (Never mind the video, which I found to be bizarre.  These frantic people racing across some desolate rain-swept landscape, desperate, it seemed, to escape some tsunami or other disaster.  All of it transformed into a dream diamond in a man's hand. Desperation leading to romance. Really?)  When De Beers ran those successful product programs decades ago, which everyone coat-tailed, the format was effective.  But now, with only a season's greeting from Forevermark included, and no call to action of any kind, it seems very out of tune with today's focus on offering people immediate means for action.  Has ADIF seen its day?  Perhaps, and it makes me a bit nostalgic.