Question

Synthetic diamonds are now being produced. If they choose to sell these diamonds, how would De Beer's corporate strategy change? How does the Synthetic Diamond industry create demand for their product?

Answer 1

DeBeer’s have relied on the overall strategy of differentiation and exclusivity for marketing their products. They have been able to build a brand and get a premium on the natural diamonds marketed by them. Since the synthetic diamonds are produced in a lab and are much cheaper to manufacture, it will be difficult for DeBeer’s to charge a premium and differentiate it from other synthetic products in the market. In view of this DeBeer’s can market the synthetic products by launching two different product lines:

• Natural Diamonds which follow the older strategy of differentiation and exclusivity and is associated with DeBeer’s brand name and is seen as a premium product.
• Synthetic diamonds by DeBeer’s which is a lesser expensive offering by DeBeer’s but is still more valued due to its brand association with DeBeer’s brand. A high level of marketing and consumer communication has to be done to develop the brand behind synthetics offered by the company. However it is possible and the company can still charge a premium on the synthetics by leveraging the corporate brand.

Synthetic Diamond industry can create demand by following:

• Targeting customers who are environment conscious and telling them that synthetic diamond are prepared by minimizing impact to the environment unlike natural diamond which involves mining and hence adversely affecting forests.
• By targeting price sensitive young customers who cannot afford natural diamonds but can afford the synthetic variety.
• By emphasizing the flawless nature of the synthetic product and communicating to the consumer that it is chemically identical to the natural product.