Are Diamonds Forever?
How much would you spend on a diamond engagement ring? If you answered around the national average of $4,000 then you too have fallen victim to one of the most incredible marketing campaigns of all time. A diamond is intrinsically worthless, and against popular belief, they really aren’t that rare. Their resale value is next to nothing.
So why are we willing to spend so much on a ring? Well, we can trace that back to the 19th century. Before 1866, diamonds had been rare, but when massive discoveries were found in South Africa, the rock was on the verge of losing its value. Thats when Cecil Rhodes stepped in and founded De Beers Corporation – consolidating the mines and restricting supply, maintaining the fiction that diamonds were scarce and had inherent value.
The real change was in 1938, when the company hired N.W. Ayer to increase sales. By tying their product to love, and specifically to a marriage proposal, by the end of the century, over 80% of all brides had received a diamond wedding ring.
The ad campaign a ‘Diamond is forever’ displayed a diamond as a symbol of love, and suggested that a man should spend up to two-month salary on the symbol.
Until 1990, DeBeers had a iron-tight grip on the market, at one point accounting for 90% of all sales, but now this grip is loosening. Using our models for monopoly and
Are these market changes good or bad for consumers?
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