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The diamond industry history is the best example of status advertisement.

The diamond invention--the creation of the idea that diamonds are rare and valuable, and are essential signs of esteem--is a relatively recent development in the history of the diamond trade. Until the late nineteenth century, diamonds were found only in a few riverbeds in India and in the jungles of Brazil, and the entire world production of gem diamonds amounted to a few pounds a year. In 1870, however, huge diamond mines were discovered near the Orange River, in South Africa, where diamonds were soon being scooped out by the ton [...]

The major investors in the diamond mines realized that they had no alternative but to merge their interests into a single entity that would be powerful enough to control production and perpetuate the illusion of scarcity of diamonds. The instrument they created, in 1888, was called De Beers Consolidated Mines, Ltd., incorporated in South Africa [...]

The diamond invention [is] a mechanism for converting tiny crystals of carbon into universally recognized tokens of wealth, power, and romance. [Both] women and men had to be made to perceive diamonds not as marketable precious stones but as an inseparable part of courtship and married life. [The] illusion had to be created that diamonds were forever -- "forever" in the sense that they should never be resold.

[In 1938, in Europe,] there seemed little possibility of restoring public confidence in diamonds. In Germany, Austria, Italy, and Spain, the notion of giving a diamond ring to commemorate an engagement had never taken hold. [This] left the United States as the only real market for De Beers's diamonds. [But since 1919], the total amount of diamonds sold in America, measured in carats, had declined by 50 percent; at the same time, the quality of the diamonds, measured in dollar value, had declined by nearly 100 percent.

[Their advertising agency N. W. Ayer] suggested that through a well-orchestrated advertising and public-relations campaign it could have a significant impact on the "social attitudes of the public at large and thereby channel American spending toward larger and more expensive diamonds instead of "competitive luxuries." Specifically, the Ayer study stressed the need to strengthen the association in the public's mind of diamonds with romance. [The] advertising agency strongly suggested exploiting the relatively new medium of motion pictures.

[N. W. Ayer] proposed to apply to the diamond market Thorstein Veblen's idea, stated in The Theory of the Leisure Class, that Americans were motivated in their purchases not by utility but by "conspicuous consumption."

Toward the end of the 1950s, N. W. Ayer reported to De Beers that twenty years of advertisements and publicity had had a pronounced effect on the American psyche. [The] message had been so successfully impressed on the minds of this generation that those who could not afford to buy a diamond at the time of their marriage would "defer the purchase" rather than forgo it.

The campaign to internationalize the diamond invention began in earnest in the mid-1960s. The prime targets were Japan, Germany, and Brazil. [Within] ten years, De Beers succeeded beyond even its most optimistic expectations, creating a billion-dollar-a-year diamond market in Japan, where matrimonial custom had survived feudal revolutions, world wars, industrialization, and even the American occupation.

Quite a fascinating history. De Beers not only had to manage to keep the monopoly, but to prevent trade of the increasing sea of the diamonds in public's hands. (Did you ever try to resell a diamond? Don't assume that diamonds are a good "investment".) You may wonder how sustainable their business is.

by das monde on Sun Oct 21st, 2007 at 11:59:04 PM EST
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