Today I want to share my thoughts on something that a lot of
people, especially of male gender are acutely aware of. A lot of guys have
either experienced it personally or know of what’s coming down in couple of
years. Its called girl’s best friend and guy’s worst nightmare: diamonds;
alright maybe I’m exaggerating here slightly but none the less it usually ends
up being a larger than expected ouch to our financial well being.
To start lets get a bit scientific here, if you don’t mind,
and understand what are we really talking about here. Diamond is essentially a very old piece of
pencil that has been cut and polished to reflect light. It does help that its
also quite strong due to the long time it was sitting there being compressed
under earth.
For more info see: http://en.wikipedia.org/wiki/Diamond
It sounds a bit simplistic, and it is. The value of the
diamond is actually the marketing behind it.
The greatest gimmick of diamond marketing is that majority
of marketing is done to the user (female) rather than the buyer (male). It is
then the female who takes up a role of an influencer and tell the guy that she
wants a big “rock” as it will reflect on the financial standing and success of
the groom.
DeBeers was the company which initiated this successful
tradition and marketed the diamonds as sign of love and commitment, really
ingenious if I may add. It tricks people into thinking that they are buying a
valuable thing, investing in the future. What you are really buying is a piece
of personal branding, courtesy of the DeBeers. They spend billions of dollars
telling everyone for the best part of the 20th century that diamonds
are forever and are signs of love and success.
So here I was, earlier this year, I was finally in the
market for diamond shopping. Over the years I’ve heard both sides of the story:
girls telling me that they have a “number” in mind, referring to carat and guys
complaining that it’s largely a rip-off. I remember watching Blood Diamond
movie with Leonardo De Caprio couple years back and thinking… oh man, now I get
it why diamonds are so expensive. It did leave me with a question mark in,
about origins of diamonds and at least doing my little bit not to sponsor harm
when I will be in the market for a diamond.
Where could I find some info about Diamonds? Internet was of
course the first choice. Then came a visit to a local branded shops, where I
was starting to get a sense about the price and 4Cs: Carat (size), Cut,
Clarity, and Color. Its quite a process, I tell you. It made me wonder if all
these things were simply invented to increase the value of the stones. And
perhaps I wasn’t very far from truth, majority of these Cs did not exist till
DeBeers introduced them in early 20th century to differentiate their
diamonds (commodities).
OK, let me share why Diamond is really a commodity: there’s
actually a significant supply of them in the world, chemically its not unique
and to majority of people it looks more or less the same.
So why are diamonds so expensive? The answer is simple: there
are essentially price controlled. The couple of very large minding companies
controlling the market set the prices to maintain fat margins. That is possible
as long as people are buying into this trick: the more expensive the more
valuable it must be.
The tricky part is that the resale value of diamonds is
actually quite low and if a lot of people tried to resell their engagement
rings in the market the prices would drop by half or maybe even 80%.
Essentially it’s an artificially created bubble which has been sustaining
itself on marketing for a very long time.
Back to my own experience, after doing the preliminary
research myself I decided to bring my girlfriend shopping for the ring. She has never been much into diamonds and I
thought it would be a relatively easy task to get something reasonable. By that
I mean something that is not going to hurt my savings too bad and at the same
time will make her happy to wear day to day.
I was wrong… the marketing pull proved hard to resist and all of the sudden
I was getting told again of the two month salary benchmark, where girls tell
guys to get them a ring that is at least two months their salary. Guess this is
done so that the girl can show to her friends how successful the guy is, or
something along those lined.
As my shopping progressed so did my stress level, every time
we would walk into a branded shop my heart would skip a beat. “Oh this one
shines so bright” and is only whaaa? Tiffany and Cartier were in particular
pricey. At the same time the branding is so strong that my girlfriend was
telling me that one of the colleagues at work got an Tiffany engagement ring
and how happy she was and how other girls were jealous. The part I found
particularly fascinating is the strength of marketing. After you buy a Tiffany
ring, it looks exactly like any other engagement ring. The dominant part is the
diamond, which the company buys in bulk and cuts, just like majority of other
brands. However, that one simple world: it’s a Tiffany and the fact that it
came in a blue box stays with the person forever and differentiates them. They
can keep piggy backing on the company branding.
Actually the concept is very interesting, so lets take a
second more to discuss it. What you actually buy doesn’t have a value in itself,
it’s a piece of branding. Just imagine a large Blue tiffany box, you throw in
your money and in return you get branding. In this world of marketing this is
actually what sells the best. And companies love it, because the actual product
can be an absolute commodity and the value comes from what’s happening in
customers head. They get your hard earned money and in return you get a little
piece of happiness, because people around you will now know that you have a
successful fiancé and they might even be slightly jealous. So if we think about
it, jealousy and perception is the real currency!
Getting closer to my own finale, I finally decided that
buying branded ring is not for me. I did some more research and found that
there are number of reputable online retailers who sell engagement rings. You
could even customize a ring and the diamond that you are getting. And the best
part was that it’s almost half the price. I did my careful research and picked
a diamond that was exactly the same as the ones sold in Tiffany. It wasn’t easy
but the dimensions, cut and all the other qualities were precisely the same.
The only part I didn’t get was the assurance of the blue or red box. I will be
absolutely honest, I was a bit scared that the diamond was not as shiny or clear,
or the setting not as nice as the one in the branded shop. The only thing that
kept me less worried is the 30 day return guarantee for the online purchase.
Once the ring was delivered to me though I was more than
happy, I kept on looking at it and trying to compare in my mind to all the
rings we saw in the shops. I couldn’t tell the difference. I was brilliant with
all the sparkle that the other ones had.
Having said all of this, the ring was received well by my
girlfriend. Even though I know it’s a piece of marketing that I put on her
hand, she likes it. It makes her happy and I’m happy as the result as well. All
I’m saying is understand what’s going on, as it will help you make a more
conscious decision and hopefully save you some money.
The reference to the dog food was a bit cheeky, on my part.
It refers to my previous post in which I mentioned that the price for the
premium dog food is actually set by the manufacturer and the user (dog) doesn’t
have any way to tell the owner if its really worth the premium. Diamonds are
“sold” to us and the price is set on a subjective set of criteria called 4Cs.
Maybe next stage would be 4Cs of dog food: color, calories, cholesterol and
crunchiness hahaha
Till next time,
George
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