The only product I know of that doesn’t really need continuous promotions is bread. This is one product that will sell itself even in the most adverse market conditions simply because it is essential for human survival. For every other manufactured thing, it is a constant battle for survival in a crowded marketplace.
Promotions are an essential part of producing any product. You can’t run a business in any sector without promotions. This is so not only within the product’s own segment, but outside it as well. Many of the offerings threatening the market share of our own product are not even in the jewellery or fashion sector.
For the gem and jewellery industry, the competition for a share of the consumer’s wallet comes from such varied products and services as ever-more-dazzling consumer electronics, exotic holidays, fine dining experiences and other products that make the buyer feel he or she is doing something to make the world a better place.
All of these products and services spend heavily on promotions, with some putting in as much a fully one quarter of their revenue to keep the product or service front and centre in the consumer’s perception. People like Apple and Samsung, who make some of the most sought after consumer electronic products, spend literally hundreds of millions of dollars a year on promotion.
The heavy spend on promotions is also true for every other category of product or service from holidays to fine wines and dining.
The diamond industry’s outlay on promotions is minuscule. Apart from the $70 million that the Diamond Producers Association is going to spend this year, there isn’t much else in the way of product or category promotions.
The fact that the global industry has actually got together and recognised the need for promotion is a great start. But a $70 million annual budget is about a third of what De Beers used to spend all by itself when it did generic promotions. We have to grow the effort worldwide and this means generating more funds for it.
I’m glad the Indian industry has got behind the global promotional effort and its need for funding. Right now, we are being asked to make a voluntary donation towards DPA promotions in the form of a ?% cess on rough diamond imports. Just a handful of companies are actually contributing to this. And even if every rough importer began paying the cess, it wouldn’t be enough.
Everyone who has a stake in the diamond and diamond jewellery business must pitch in with funds for the promotional effort. This means the jewellery manufacturers, wholesalers and very importantly, the retailers as well. We are all dependent on the perceived value of the diamond to impart value to our own businesses. We have to all contribute towards raising the perceived value of the diamond.
We need to understand one thing clearly — jewellery as a product category has a solidly entrenched perceived value in the minds of consumers. But in the two fastest growing consuming markets — China and India — much of that perceived value is pegged to the perceived value of gold. As diamond industry stakeholders — and this includes the retailers who sell diamond jewellery — we are actually piggybacking on the perceived value of gold, which is not a product itself but a commodity that is subject to all the volatility and vagaries of a commodities market.
Diamond jewellery retailers have carved out a niche for themselves in a crowded and competitive market by offering a product that has the added value imparted by the DPA’s efforts. The diamond jewellery retail niche is a lucrative one when the product’s perceived value gets an extra impetus. So even at the retail counter, the DPA’s promotional efforts are impacting business.
For years, all of us sat back a reaped the benefits of the global efforts of De Beers to get consumers to view diamonds as something really precious and special and worthy of being a symbol of something as important as the relationship between men and women. De Beers is once again behind a global promotional effort, but this time as part of an industry collective.
The success of this effort depends on its financial muscle. This muscle can only come from all the stakeholders in the global diamond industry. We have to all contribute. And this isn’t such a big deal. We already spend such a lot on really wonderful charity works and on social occasions. Surely we can spend a reasonable amount on ensuring the survival and well-being of our own business.
Remember, people will keep buying bread no matter what. That isn’t so with diamonds.