Branding Brainstorm, Part 2

June 1999


Branding Brainstorm, Part 2

Small steps toward major branding?

Some New York City diamond dealers fear De Beers' test-marketing of branded diamonds in one small jewelry chain in the United Kingdom and the company's limited-edition branded Millennium diamonds are rehearsals for a large-scale branding program. If that's true, they say, wholesalers and retailers who don't have access to diamonds with a De Beers logo could face extinction.

A large-scale De Beers brand would leave a broad cross section of the industry "disenfranchised," says Eli Haas, owner of ENH International Inc. and president of the Diamond Dealers Club of New York City. "I view the millennium diamond project as a one-time-deal and have nothing against it," he says. "But is this another test case for De Beers for a much broader branding program? If what we hear is true – that these diamonds won't be accessible to everyone – then we have to consider the effect on those who will be excluded."

Other dealers focus on the benefit of branding, including the fact it would give consumers a name to latch onto, not to mention a name with a lot of recognition.

For its part, De Beers says it's too early to know whether its two branding projects will lead to a large-scale program. "We are looking at general branding as a rolling test," says Derek Palmer, De Beers' regional marketing director for Europe and America. "We learn as we go; we're always careful about the next stage."

Here's a closer look at the issues from the dealers perspective and how these issues could hurt or help you.

If De Beers initiates a large-scale program, it would be expected to brand only better-quality diamonds. But demand for a De Beers logo could create shortages in these categories for dealers and retailers who don't get their diamonds from De Beers. "Only De Beers clients would benefit from a De Beers brand, but a lot of people are not De Beers' clients," says Fred Knobloch of Aron Knobloch Inc., New York City.

Eric Austein of Leo Schachter Diamonds LLC, New York City, says branding is inevitable. "Branding is the wave of the future," he says. "It is really a matter of looking where the markets are going. Whether it's watches or perfumes, customers demand brands." His company is a De Beers sightholder who was chosen to market De Beers' Millennium diamonds.

Haves and Have Nots
If the market divides into two segments based on who can and cannot get De Beers-branded diamonds, those who could would benefit from De Beers' yearly $200 million advertising budget. "Do you think De Beers advertising won't be directed at their own branded goods?" asks Haas.

By the same token, a brand could help jewelers persuade consumers to buy jewelry instead of a non-jewelry luxury product. "A De Beers-branded product would enable jewelry retailers to compete with branded non-jewelry items," says Leon Cohen of Codiam Inc., New York City. "Most markets have found that when a brand is created, it accents the market and makes it grow by giving consumers choices."

At What Cost?
Dealers who object to a De Beers brand say prices for these diamonds would rise – and profits would drop – as the limited number of retailers who could carry them compete for them.

Cohen, however, believes branding could boost profitability. "The potential is there," he says, "because branding offers all tiers of the trade a benefit – something that distinguishes the best product from all of the others."

– by Robert Weldon, G.G.

Copyright © 1999 by Bond Communications.


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