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“You know it is one thing to think gold has some marvelous store of value because man has no way of inventing more gold or getting it very easily, so it has the advantage of rarity. Believe me, man is capable of somehow creating more bitcoin. … They tell you there are rules and they can’t do it. Don’t believe them. When there is enough incentive, bad things will happen.”
——Charlie Munger 

As the quality of people’s life is getting better off, the demand of high quality product has come at public front. Diamond has been one of those luxury that people seeking for. Some people even save up for years just to buy one single little piece of diamond ring. It does not only represent social status but also the wealth that you have. Women think that diamond is a representation of money and love. This leads diamond to the Top one choice for men for buy a gifts for her, from ring to necklace to bracelet. There is always some meaning behind that. Ring with diamond had been widely recognized as wedding necessary, celebrities always diamond accessories to show their wealth and identity. Some people even take diamond as the value product for trading. But if you had chemistry during high school you must know that diamond is just one of those  minerals which has been widely found over the world since 1870. According to the statistics of Kimberley Process, the global production of diamonds in past 13 years are remained the are over 120 million carats annually, the huge output shows the diamond is not rare as people imagined. But what is the reason that makes diamond so significant? There must be some economics theories behind it. 

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History of the Diamond Invention
At the very beginning, Edward Jay Epstein writes a detailed discussion on the early beginnings of the famous stone in his 1982 article published in The Atlantic. In this article, Epstein explains that up until the late 1800s, diamonds could only be found in India and Brazil, and so the international production of diamonds only totaled a few pound per year. However, in 1870, a large group of diamond mines were discovered in South Africa, and soon there was an outpour of diamonds in the market. The British investors that managed the mines soon realized that this endangers the market value of diamonds, since it was the rarity of the stones that made them valuable to consumers. In order to preserve the illusion of the diamond’s scarcity, these investors acted fast and decided to monopolize the diamond trade, thus forming De Beers Consolidated Mines, Ltd. This organization didn’t just take control of the mines in Africa, they also established different diamond companies in multiple countries across Europe. In order to maintain this amount of power in the market, De Beers even went as far as to control both demand and supply of diamonds. 

Importance of Advertisement
From the year of 1888, the company of De Beer company has set up, they have had a successful development and control of the diamond market. During the time of the 70s when America suffering from hyperinflation, there were even a bunch of people taking diamond as values instead of cash. In August 1938, the son of founder De Beers — Harry Oppenheimer, went to New York to meet with Ayer Advertising. Now diamond prices in the world are falling and as they talked well, Ayer will create a brand new image among Americans for the diamond, and De Beers designated Ayer as an exclusive advertising agency, and pay the cost of planning related market research.

Based on market research, is said that from the end of World War I in 1919 to 1938, the diamonds sold in the United States both fell by more than 50% in terms of carats or sums due to changes in the economic environment, social attitudes and competition in other luxury goods. Although the economic environment can not be changed, social attitudes can be changed through advertising and PR activities to compete with other luxury goods for users and markets. Ayer’s plan is to strengthen the public’s connection to diamonds and romantic love, to convince men that bigger, better diamonds can express stronger love and to encourage women to view diamonds as an essential part of any romantic courtship which is really smart and since then started the game of power.

Firstly they had planted the idea of the importance of diamond in people’s mind. Specific advertising and movie stars from the beginning, to show the public diamond is a symbol of love. Then in the newspaper and magazine create or emphasize stories and photos, strengthen the diamond and romantic  love. News stories focused on the size of celebrities to give them love diamonds, the photo focuses on the well-known woman diamond ring on the shiny hand, fashion designer In an interview, diamond is the fashion trend. The British royal family was also taken into account. Since the British have so much interest in the diamond industry, the royal family should wear more diamonds than any other piece of jewelry to support the diamond industry. The Queen later made a grand visit to South Africa and saw several diamond mines, And  accept diamond as a gift. To reinforce the advertising effect, putting together diamonds and Picasso, Derain, Dali and Dufy’s famous paintings in magazines that represent and shape the elite perspective expresses diamonds as unique as famous paintings (and this is often the case now as well) After this advertisement, within three years, the sold has been raised by 55% , and at this Ayer had his new idea— not just advertising the brand but diamond itself, since then the slogan of  “diamond is forever has come out”, by the year of 1947, audience start to regard diamond as something strong and never broken but in fact it will hang, damaged or faded, still being given the perfect quality of eternity.

On the other hand, after set this idea in people’s head, they started to expand the audience, by the year of 1951, Ayer found two kinds of contradictory who are reluctant to buy a diamond. The wealthy people on the market, hoping to find more interesting things to replace diamond wedding rings, while the poor could not afford diamond wedding bands. However for Ayer, if those problems are being solved, those two parties will be the potential consumer as well. So on the one hand, the advertising company continues their for exaggerating the value of diamond and make it more noble and expensive so it fits the taste of rich, on the other hand they offered the deal of drilled diamond ( little diamond which weighs less than 1g), these diamond actually worth nothing, diamond dealer would not even look at it but it is a good price for poor, as long as they save up for money or years, they can buy a little diamond. At the same time, the advertising of ” diamond means love, no matter how much it worth” has come at the public front as well.

The Games being played
One thing interesting about the diamond is it is a luxury and its supply and demand as different from what we see from necessities and how Ayer played the game turning is elastic luxury into inelastic necessities are paramount as well.

In general, for one product, as the price rise up, there are more suppliers but on the other hand, the quantity of demand is decreasing as well. Diamond even as an elastic item( which is not necessarily needed in the real like) should have a more severe phenomenon on that. Just movies and handbags, people would buy if they have the capacity to acquire it they will.

Nonetheless, the Ayer company still made it as the necessity of people’s life and sell it at even higher price than we can imagine.This is because they turned this elastic item into inelastic one and create the monopoly out of it.

After the mid-1960s, the diamond market was further restructured to accommodate the emergence of large numbers of broken diamonds. The Soviet Union discovered diamond mines in Siberia in the late 1950s and mined them. De Beers and their allies no longer have control over the supply of diamonds and realized that competition with the Soviet Union would inevitably trigger price volatility, thereby weakening the well-established public’s perception of the value of diamonds Confidence that Oppenheimer did not want to see the collapse of the diamond image on both sides gave the Soviet Union a direct concession to take all the Soviet Union’s diamonds and to control the world’s diamond supply. After the Soviet Union accepted it, became one of the partners of this cartel, co-protector of the diamond image. Since then, the De Beer company has the overall control of the diamond market, they can rank it to whatever price they want, and from the passage above, it says the successful advertisement has made it a tradition to buy the diamond at the wedding and use the diamond to represent love.

Preservation and Appreciation
As far as we know, there are something valuable while something is worthless in the world, we trade with others for their product which we is not in the position to make it ourselves. While trading, money is the media to sell and buy off things. Except for a very small proportion of the diamonds that have been destroyed over time, every diamond in the world that has been machined inlaid with jewelry exists. Hundreds of millions of women wear diamond jewelry, or be collected and preserved. It is conservatively estimated that the total number will reach 500 million carats, while the diamond cartel has the highest annual output of no more than 10 million carats. In order for newly-produced diamonds to still be sold, it is necessary to consider how to prevent large quantities of existing diamonds from flowing to the market. De Beers began thinking about strategies in 1953 and needed to get diamonds into the hands of a group of people who believed that the value of owning diamonds was much higher than the market price, especially for some women who psychologically resisted the sale of their diamonds Class ideas. However, magazine ads alone can not, because diamonds do not necessarily have feelings for these things, such as inheritance, you must persuade these people to preserve the value of diamonds. The retail market will be in turmoil if they see the diamond market fluctuating and trying to sell diamonds as prices rise. So De Beers always tries to keep the price steady, at least it looks stable.

From the jewelry point of view, especially those famous, usually do not buy back the diamond from the customer, because if you really want to quote, it will be low is ridiculous. Because the repo is calculated according to the wholesale price. Not only to avoid giving customers a shame, but also to avoid discounts on the public’s impression of a diamond appreciation. Jewelers usually get diamonds from wholesalers by consignment and do not need to pay for them before they go out, so they do not risk spending their own money on buying diamonds from their clients, and usually advising their clients to go back to the back Where to buy diamonds. The reason why is because that with the huge mining of diamond, the really diamond actually worth nothing, not even worth more than the silver set care.

At the same time, however, the media often see the story of resale of diamonds. Can not say that these stories are blind, but simply not the usual diamond jewelry, but the real rare diamonds, selling people or people who claim to want to sell are film stars, and in some obvious public relations occasions.

Diamond Nowadays
Diamonds are divided into industrial diamonds and jewelry diamonds according to their functions. There are two types of natural and man-made diamonds. Ordinary people are talking about diamonds refers to a natural diamond jewelry. The first people to find diamonds did not feel special, but that the hardness of the characteristics that can be a bit of industrial use, so glass knives, drawing dies and other diamond products are applied to some areas. But in 1955, GE gained artificial diamond through high-temperature and high-pressure technology, and the last industrial value of natural diamond was lost. Natural diamonds are not particularly useful now unless it is required by some high-precision, high-precision processes. Because man-made costs are getting lower and lower. China accounts for about 90% of the world’s synthetic diamond raw materials. However, De Beers jumped out, telling you a woman can not do without diamonds, diamonds rare, bright, with limitless value, a diamond achievement for some time, a broken stone is a marriage testimony. It is too much for De Beers to do some of the diamond culture .

Conclusion
The case of the diamond industry is just one of the many cases that prove how powerful a good advertising and marketing strategy can be. The success and boom in diamond sales of De Beers from the mid to late 1990s attest to just how much potential the right ad can provide to any business. But more importantly, the fact that the effects of this campaign was actually able to last for more than a century speaks volumes about just how much influence it and power it has over the general public. It also shows how overwhelming the power of the media can be, especially since the campaign was launched almost a century ago – a time when technology isn’t as accessible or as advanced as what we have now. With the current popularity of social media, it’s almost uncomfortable – to some extent – to think about just how much control these advertising strategies have over the public. 

The De Beers campaign also highlights the importance of marketing to value, instead of marketing the product itself. The campaign created value out of a product which was essentially invaluable at the time, which I think is one of the best – if not the best – strategies that all businesses should adhere to. Even though the company wasn’t as transparent as they should’ve been to the public, they were still successful in convincing the consumers to believe and create their own version of value and associate it with the diamond – a feat that although not morally acceptable, is still rather admirable in its own way.

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