A Great Ad Campaign Can Last

Forever
Pratik Daga (13BEC0494)
Tarun Parbhat (13BEC0417)
for MGT307 [SLOT A1]

VIT UNIVERSITY

Objective of the study

The primary objective of the study is focus on how creating and
manipulating demand by De Beers Co. led to beginning of an entire
market for diamond and what it says about the
concept of marketing to values.

Review of Literature
Bergenstock, D. J. & Maskulka, J. M. (2001). The De Beers
Diamond Story: Are Diamonds Forever? Impact Factor: 1.42 DOI:
10.1016/S0007-6813(01)80033-1
The commercial diamond industry has an intriguing and rich history
often compelling to economists and historians alike. De Beers is at
the helm of the advertising communitys best campaign slogans of
the century, A Diamond Is Forever. Conceived by N.W. Ayer in
1948 this simple four word proclamation has survived over 50 years
of social, cultural and economic upheaval to remain a potent
example of the power of persuasion. Combining near monopoly
distribution with an intractable advertising slogan has elevated the
De Beers brand to unreal proportions. The emergence of new
diamond supplies coupled with increased public scrutiny of the
diamond industry and escalating marketing expenses are
challenging DeBeers traditional market dominance of the diamond
trade.
This literature review will discuss history of marketing that went
behind the creation of the idea that diamonds are rare and valuable,
and are essential signs of esteem, with focus on the work of De
Beers Mining Co., which popularised the concept of creating and
manipulating demand.
This study will further advance on the concept of creation of artificial
needs
through marketing and advertising.

Historical Foundations of the Company

De Beers/Centenary controls a producers cartel that operates as a
quantity-fixing entity by setting production quotas for each member.
During the early part of the twentieth century much of the diamond
cartels strength rested with De Beers control of the South African
mines. Today the source of power no longer comes from rough
diamond production alone but from a sophisticated network of

production, marketing, sales, and promotion arrangements all

administered by De Beers.
Throughout the 20th century De Beers has developed and nurtured
the belief that diamonds are precious, invaluable symbols of
romance. It can be argued that every attitude consumers hold today
concerning diamonds exists due to the persistent efforts of De
Beers. Since the late 1800s De Beers has regulated both the
industrial and gemstone diamond markets and has effectively
maintained an illusion of diamond scarcity. Through monitoring of
the supply of diamonds throughout the world, De Beers has
introduced and maintained an unprecedented degree of price
stability for a surprisingly common mineralcompressed carbon.
The unique degree of price stability found in the diamond market
lies within the cartels tight control over the worlds supply of
diamonds. De Beers operating strategy has been pure and simple:
to restrict the number of diamonds released into the market in any
given year and to perpetuate the myth that diamonds are scarce
and should therefore command high prices. To this end De Beers
functions much like any other cartel. What makes the diamond
cartel different from any other organization of this type is their
demonstrated ability to continuously sustain the cartels goal of
price control and the cartels astounding degree of market control. In
essence, De Beers controls both the supply side and demand side of
the diamond market, raising prices at their own discretion while
convincing consumers to purchase and treasure the rare
gemstones. De Beers spends approximately $200 million a year to
promote diamonds and diamond jewellery. Because they control
nearly 75% of the rough diamond market (the demand for which is
derived from the demand for diamond jewellery) they are the
primary beneficiaries of their marketing endeavours. Advertisements
claiming A Diamond Is Forever are not only stimulating consumer
demand they are also subtly reinforcing the immortality of De Beers.
One could claim De Beers Is Forever as well.
To roll this into effect, De Beers hired Philadelphia ad agency N.W.
Ayer in 1938.
The Birth of a Vision
De Beers chose N.W. Ayer because of their ideas on conducting
extensive research on social attitudes about diamonds, and then
strategically changing them to appeal to a wider audience.

N.W. Ayer did exhaustive market research to figure out exactly what
Americans thought about diamonds in the late 1930s. What they
found was that diamonds were considered a luxury reserved only for
the super wealthy, and that Americans were spending their money
on other things like cars and appliances. To sell more and bigger
diamonds, Ayer would have to market to consumers at varying
income levels.
Given a bad economy, they needed to figure out a way to link
diamonds with something emotional. And because diamonds weren't
worth much inherently, they also had to keep people from ever
reselling them. What was emotional, socially valuable, and eternal?
Love and marriage. Bingo.
According to New York Times, N.W. Ayer's game plan was to "create
a situation where almost every person pledging marriage
feels compelled to acquire a diamond engagement ring."
The concept of an engagement ring had existed since medieval
times, but it had never been widely adopted. And before World War
II, only 10% of engagement rings contained diamonds. With a
carefully executed marketing strategy, N.W. Ayer could strengthen
the tradition of engagement rings and transform public opinion
about diamonds -- from precious stones to essential parts of
courtship and marriage. Eventually, Ayer would convince young men
that diamonds are the ultimate gift of love, and young women that
they're an essential part of romantic relationships.

Key variables
1. Price control through administration of a producers cartel
2. Supply control through single-channel distribution
The data will be collected from review of existing research work(s).

Concept
While both creative people as well as those who discover and deliver
value are important, they are rarely interchangeable. The concept
this study is trying to develop is that value is the only
marketable commodity. Find your place in the world, either
creating value or delivering it to others.

Expected Conclusion

Today increased global competition is effecting change in all

industries; even the vaunted diamond cartel has been forced to
respond to market forces. De Beers is facing its greatest challenge
ever as the cost of maintaining the illusion of scarcity exceeds its
financial reserves and public sentiment towards the diamond
industry turns unfavourable with claims of blood diamonds.
The expected outcome is ability to reinforce value as the primary
marketable commodity and marketing strategy is clearly more
market responsive with much less control over the supply of
diamonds and distribution channels.