While most businesspeople think of DeBeers' dominance in the diamond industry as a result of controlling supply, truth is, it is more the result of creating and manipulating demand, thanks to brilliant advertising delivering a consistent theme for half a century.
Finding rocks is easy. Selling rocks, tough. In the last 50 years, only two markets have opened up for stones. You wear them on your fingers when in love; you put them over the head of a loved one after death. The second was mastered by the Rock of Ages Corp. The first by DeBeers and its holding company, a near monopoly. The product itself--diamonds--was a loser. If you apply ordinary supply/demand, every diamond dug diminishes the value of those already dug because, in fact, diamonds are forever. Further, they are plentiful. DeBeers recognized the problem with its mundane commodity, so they took the radical move of ignoring inherent value altogether. Instead they made it ritualistic and metaphoric, its purchase mandatory, without practical purpose. This required the use of advertising to create demand where there was none, and no reason for any. This defies, of course, one of the oldest, most tired business wisdom: Find a need and fill it.
Before the first ad ever appeared, some of the most extensive market research in advertising history was conducted, including direct questioning of thousands of men and women. The researchers determined that women had to be convinced that the diamond was the ritualized representation of love, commitment and marriage. For women, "the diamond is forever" positioning began in advertising in 1914 and has continued unchanged to this day. And, to solve the "forever" problem, DeBeers created the 10th Anniversary, 25th Anniversary, etc., Diamond Ring.
The researchers also determined that men had to be helped past confusion about how to buy this polished rock--for men, the industry's voodoo about carat weight, color, clarity, etc., was created to provide logic where there was none. Men wanted to know what it was worth. Since it was arguably worth nothing, a "logic" had to be invented to assign worth to it. But in the cleverest of all gambits, a simpler shortcut for buying decisions was also created, stating the price in the frame of the buyer's own wages: "How can you make two months' salary last forever?" Today, the two-months-salary-rule is widely accepted by the public.
In truth, what DeBeers did for diamonds, anyone can do for anything.
You're aware there are wines that sell for hundreds of dollars per bottle. But there is a Samuel Adams beer that sells for $140 per bottle. How can beer be worth such a price? You may answer: It can't. Or answer: Why not?
To make a giant income marketing to the affluent you must erase your own deeply ingrained insistence at connecting price to worth and worth to function.
A business associate told me of her neighbors paying a local architect $67,000 to draw up plans for a new house to be built on their beachfront lot. She found an architect to do what she judged to be identical work--if not better--for her new house to be built on her beachfront lot, paying just $7,000. And she questioned her neighbor's sanity at failing to shop around, at paying such an outrageously inflated fee. She was proud of her bargain. But, contrary to protestations of the psychiatric community, there is abundant evidence that, in our society, insanity is subjective. My kudos go to the architect commanding his $67,000 fee. In all probability, he secured it for things other than a tube of blueprints. My associate may very well be correct in judging her $7,000 blueprints just as good as the ones delivered for $67,000. But her $7,000 ones didn't come with the pride, status validation, bragging rights, and other emotional benefits her neighbor derived from searching out and hiring the biggest name, purportedly most sought after architect in the tri-state area, an architect, in fact, who had done the plans for a famous celebrity's new beach house and who had three homes he'd designed featured in Town & Country.
On closer examination, this little story reveals even more. It shows two peoples' very different values, and why what I call "marketing to values" is so much more important and powerful than is the marketing of products. My business associate is a woman who, her whole life, has competed with men, has made herself successful in a field difficult for women, has fought being taken for granted as a "blonde beauty," and prides herself on her mental toughness, shrewdness and won't-take-no-for-an-answer-ism. One of her highest and most important personal values is that "nobody pulls wool over her eyes." Her neighbor is the second, younger wife of a wealthy doctor, from a wealthy family--but she came from a poor family, grew up on the wrong side of the tracks, and, in her first marriage, lived a blue-collar life. Her beauty got her the trophy wife position, but she found herself thought of and gossiped about as a classless bimbo rather than accepted into the rich wives' sorority. She has been a relentless social climber ever since, using donations to charities, sponsoring of charity balls, patronizing the hair stylist, the cosmetic surgeon, the personal trainer, being seen in the most current designer fashions, in an orchestrated effort to force her husband's peers' wives to accept her into their circle. One of her most treasured values is their acceptance or their envy. In reality, neither her payment of $67,000 to her architect and my friend's payment of her negotiated $7,000 to her architect had much to do with the comparative intrinsic or actual value of the work reflected in the two sets of blueprints.
Another way to look at this, as a marketer, is a choice between selling things with ham-handed, brute force, typically against resistance, or selling aspirations and emotional fulfillments with finesse, typically with little resistance. Which seems like it might be more pleasurable? More profitable?