De Beers Group: Marketing Diamonds to Millennials - Analysis

Executive Summary

The Diamond industry is moving towards new trends and has a changing customer base with
preferences different from the older generations. To tackle this change, the De Beer’s, being the market
leader, needs to come up with a solution which will not only ensure that the Company meets the
changing trends but also help the company grow sustainably so that they are not faced with a similar
situation a decade later.

Upon careful analysis of the external and Internal environment it is evident that so far, the Company has
been able to produce good quality product which has appealed to the emotions of its customers and
boasts a strong market presence with marketing campaigns that have influenced a large consumer base.
However, with the emergence of the next generation of consumers – Millennials the trends are set to
change. Millennials have a very different lifestyle from the previous generations and value personalized
products and experiences. Moreover, they have an increased regard for environmental sustainability
and prefer products which comply with their beliefs. This has led to the emergence of synthetic
diamonds and other alternatives as a preference. This has also led to a change in market sentiment in
the Diamond industry and De Beer’s being the leader is considering a change in strategy to tackle the
forecasted drop in revenues.

Although De Beers has tried to adapt to the changing market by starting their own industrial synthetic
diamond division and entering the second-hand diamond market to sell the same at a cheaper price
point. These strategies are not considered by the company as revenue booster. Analyzing the market
and the company situation we recommend that De Beers follow the strategy of expanding their
synthetic diamond business into retail. This strategy allows the company to tap the preference of the
next generation of consumers while maintaining their status as the pioneers in the diamond industry.
Moreover, it opens doors to consumers with income levels slightly lower than your “traditional”
consumers thus expanding their customer base and leading the way towards sustainable growth.
Problem Statement

What is the best way for De Beers to tackle the changing consumer trends to grow sustainably and
remain leaders of the Diamond Industry.

Situational Analysis

To recognize the key issues that De Beers is facing and recommend a solution for the same, we need to
thoroughly analyze the current situation the company is in and the internal and external factors that
play a role in the success of the company, going forward.

Analysis of External Factors – PEST

P – Political E – Economic S – Socio-cultural T - Technology
 Set up of the  Economic slowdown  Millennials  Advancement in
Kimberly process to due to the financial preference towards technology has led to
tackle the problem of crisis in 2000’s experiences than the development of
“Conflict Diamonds”. leading to a delay in physical goods. synthetic diamonds
 Anti-Corruption financial maturity of  Delay in marriages which simulate
campaigns leading millennials which and a change in the organic diamonds,
to a decrease in significantly affects outlook of being in a are higher quality and
show of wealth, their purchasing committed inexpensive in
affecting sales of power. relationship has comparison. This
diamonds in China  Increase in household affected sales of combination has led
 Formation of DPA to incomes in China, Diamonds. to increase in
enhance India and Japan have  Higher regard for purchase of synthetic
development of the led to increased environmental and diamonds.
diamond sector. diamond sales and social sustainability
jewellery is regarded also makes
as top gift option. alternatives an
attractive option.
 Preference towards
products which are
customized and not
mass produced
Alternatives and Evaluation

The Diamond industry is moving towards new trends and has a changing customer base with
preferences different from the older generations. After careful analysis of the current situation, the
following are the alternatives suggested:

1. Pursue Retail Operations in the Synthetic Diamonds Industry

De Beers has a strong presence in the Synthetic Diamonds industry but only on the industrial side.
Expanding their operations to the retail segment will enable them to tap into changing consumer
preferences and increase their customer base to include customers who earlier could not afford
diamonds due to their price point. Further, since these diamonds are lab made it would also be easier
to customize them thus addressing Millennials preference towards customized products.

2. Focus on the Second-Hand Diamond Market

De Beers can leverage their reputation as a trustworthy and authentic diamond seller in the second-
hand market. Since the market also offers higher markups and boasts an impressive revenue growth,
De Beer’s using their reputation can become a pioneer amongst the big brands to venture into this
market. However, entering this market puts a doubt over the Company’s motto of Diamonds are
forever and even though there has been an increase in the overall worth of the market, consumers
maybe hesitant to buy “pre-loved” diamonds.
3. Continue their current strategy with a focus on emerging markets
India, China and Japan are considered as the emerging markets for sales of diamonds and account for
a clear majority of diamond purchases. The economic growth of these countries and their
preferences towards receiving jewellery as gifts make them a very attractive market to pursue.
Moreover, since economic markets in their countries are still in the growth phase, forecasted sales
will show a positive trend. However, consumers in these markets have also shown to accept the idea
of synthetic diamonds and maybe more inclined towards the purchase of the same due to a lower
price point.
 Strategy Attractiveness In-Line Ease of Environmentally Price Barriers
to Millennials with the implementation friendly point to Exit
Company’s
motto
Synthetic High Medium Medium High Low High
Second- Low Low High Medium Medium Low
Hand
Emerging Low High Low Low High High
markets

Recommended Solution, Implementation and Rationale

From the analysis above it is recommended that De Beers pursue retail operations in the Synthetic
Diamonds Industry. Millennials account for 39% of the potential customers for De Beers. Keeping in
mind their lifestyle, purchasing power, affinity towards products that are more sustainable and
environment friendly and their preference towards customizability and differentiation, Synthetic
Diamonds can tap on all these aspects.

Since De Beers already has operations on the industrial side of the synthetic diamonds industry it
would not be difficult for them to expand towards the retail side. The investment required for doing
the same would be less as there would be minimal purchase of technology required. The major costs
incurred by the company for implementing this strategy would be the advertising costs.
This strategy allows De Beers to pioneer the change in the Diamond industry and shift the trend
towards sustainability. Moreover, the inexpensive price of Synthetic diamonds in comparison with
Organic diamonds opens the gate to consumers at a lower income level that consumers who typically
buy diamonds which will drive the growth in revenues.
80 years back De Beers was on the forefront of establishing a completely new industry, changing
market trends, building emotional connections between customers and their products and cultivating
desires. If they follow the above-mentioned strategy, 80 years later, they will again be on the
forefront of establishing a completely new industry, changing market trends, building emotional
connections between new customers and new products and cultivating desires.
References:

De Beers Group - Marketing Diamonds to Millennials (pp. 1-10, Publication No. 9B17A057). (2017).
ON: IVEY Publishing.