Of all the parts of “rough-jewelry” proceeding chain which consists of “mining – concentration – sortering – cutting – making jewelry with a diamond – sale” you can achieve the biggest profit rate at its last part. If we turn it into absolute numbers the result will be approximately like this: the prime cost of one carat after output is $100-150, sortering, controll, storage - +$100, cutting - +$100, making a jewelry (including cost of case metal) - +$100, so in total the prime cost of a jewelry with one carat diamond will be $500-600. And the retail price of a diamond decoration in total is about $5000.
The turnovers of the leading companies, which supply jewellery to market, are comparable with the turnovers of the major dimond-mining companies. In particular, the Bvlgari’s 2006 turnover exceeded one billione euro with such disposition: Europe excluding Italy 256.5 million, Italy 131.4 million, USA 159.1 million, APR countries excluding Japan 149.9 million, Japan 256.7 million, Middle East 57.1 million. However it is absolutely clear that the jewellery production, support of the trading network and marketing charges are essentially smaller than the producting charges of the mining companies.
At the same time, in contrast to mining and polish branches, the jewellery market has a barrier, which the neophytes, wishing to get in this attractive business, are hardly able to overcome. This barrier is a creation of a brand, in our case “brand” is determined as a good’s identifier system, which makes it possible to connect the brand with a target group awaitings. It is a sucsessfull solution of this question which affords suitable sales lavel and profit norm. Of our opinion, the creation of a jeweller brand does not measures directly niether by the quantity of money, invested in a project, nor by using brand-new sophisticated technologies and styling decisions. First of all it is a creative informational task and it should be tackeled by the relevant means.
“Marketing constants” of jeweller brands
What is the principle difference between Bvlgari and Cartier, or, for instance, Tiffany and Harry Winston? Is it a remarkable quality? Or better starting materials? Craftsmen’s skill? Or an exclusively impressive unique design? Fealty to traditions? New technologies? It is undubitable, that every famous jewellery brand accords to all above-mentioned criterias. It’s impossible to say that the Cartier’s jewelry is inferior to Harry Winston’s decoration by a jeweler’s skill or by quality of diamonds. To say more, all above-listed criterias are the “marketing constants” which are certainly present in the informational stream, projected by the marketologysts of the famous jeweller companies.
As a matter of fact, it is not possible to construct an effective brand using only the above-mentioned “constants” nowadays. There was a sense to talk about any special jeweller skill secrets 50-100 years ago, but in our days the contemprory technologies give us an opportunity to “decode” a new alloy, or a gem-cutting technique, or a fixing system in several hours. A collection style is unique until its decorations appear on the pages of catalogues and on the web-sites in Internet.
However the jeweler “technological complexity” or the “new technology” is a rather nominal thing. The range of limitations, which are set, for example, by the anthropometrical characteristics, makes the jewelry technologies rather primitive in comparance with, for instance, the modern microelectronics. The jewelry equipment is comparatively cheap and easy to buy. By the way, it makes a possibility for APR countries to make a mass fabrication of quality forgeries of the famous brands production. The attention should be payed also on a fact that the companies-owners of the powerfull jewelry brands, as a rule, do not bring into the open the information about the places of their volume production, and it makes to suggest a drift of production to South-East Asia. It’s revealingly that today we can remark the total unification even in the most high-technologyed sector of jewelry – in watch industry. Only three companies are manufacturing the mechanisms almost for all famous watch brands. They’re Miyota, Seiko and Eta. Today jeweller houses cannot have any “long-living” technological and styling “know-how” – their rivals are able to steal every successful novelty almost at the moment when they come into being.
So, a jeweler brand construction relying on the standard “marketing constants” has no sense today – there is no doubt that it is impossible to have “competitive” “quality”, “jeweller skill” and “style” better than Cartier and other leaders of the market. It remains to take this “constants” out of the brackets and see what is in the rest and what factors are really able to determine brand effectiveness.
The “historical” brands
The rating made by Luxury Institute (New-York) showed the leaders of the world jeweller market of 2006 year: Harry Winston (1st place), Tiffany & Co. and Cartier (they shared 2nd place), Mikimoto (3d place). Bvlgari, Carrera & Carrera, Van Cleef & Arpels, Gucci, Chanel, Chopard also were among the best.
What is there advantage of the other market participants? (We put “a remarkable quality” and other constants out of the brackets). The evaluation of the informational stream, projected by the marketologysts of the mentioned companies, makes it evident that the most essential element of this stream is a “History of a family business”. Indeed:
- Harry Winston “The Harry Winston jeweller house history is a history of three generations of jewelers. Harry’s father – Jakob Winston – opened a jewellery shop on Manhattan in 1890. A great number of the biggest diamonds that ever belonged to collectors, royal families and even to states are related with the name of Harry Winston. It were the Harry Winston’s cutting workshops where the celebrated diamonds "Jonker", "Vargas", "Star of Sierra Leone" and "Тhe Taylor Burton " came into being. Harry Winston was the first one who dressed movie-stars with the sparkling diamonds. Since that time Oscar ceremonies never do without the magnificent decorations with a Harry Winston’s brand. In 1990 The Harry Winston jeweller house celebrated its centenary with a royal eclat. During the celebration the "Centennial Tiara" was introduced to the guests. It was decorated with seven diamonds full weight of 100 carat: “100 carat in honor of 100 years”.
- Tiffany & Co. “In 1837 the natives of New England, school-mates Charles Tiffany and John Young moved to New York. They borrowed 500 dollars from their wealthy parents and opened antiques and bijouterie shop by the name of Tiffany&Young on Broadway. Tiffany&Young are known as a jeweller company since 1851, when their silver decorations met the world recognition. But their real “star point” came after ten years: for the Abraham Lincoln’s inauguration ceremony his wife put on a Tiffany’s pearl set. And some years later Tiffany&Co became the first american company that won a prize on the international jeweler exhibition in Paris…”
- Cartier. “In the commercial recordation for 1837 the founder of the company - Louie Francois Cartier – is mentioned as a “manufacturer of jewellery, the fashionable decorations, fashion merchandise…” Many of classical Cartier’s works were created for his famous contemporaries. For instance, the Santos watches, which were created 103 years ago for one of the main dandies of the Albert Santos-Duemont epoch… In 1933 the unique platinum brooch was created for the Duchess of Windsor. It was decorated with a diamond pave with the black onyx “spots”…”
- Mikimoto. “Mikimoto was born in 1858 in Tobo, Japan in a noodle trader’s family. His way to a pearl throne began in 1888, when Mikimoto took a big interest in a famous local product – the Ize pearl. 101 year ago, in 1893, Mikimoto got his first cultural pearl. In 1927, during his trip around USA and Europe Mikimoto visited inventor Thomas Edison. When he presented his pearl to the famous american, he heard the words, which were the highest estimation, made by a person, who learned the price of many discoveries on his own experience: “It is not cultural, it’s a natural pearl. There are two things, that I can’t get in my laboratory – a diamond and a pearl!”. One of the most dazzling combinations is a union of pearls and diamonds. Mikimoto’s jewelers have a patent for the implantation of diamonds to a “pearl body”. Nothing can bring the natural pearl’s beauty into focus better, than a diamond shine”.
So, all the fanciful stories with the participation of duchess, president’s wifes, Hollywood actresses, great scientists, with a bare biggining and a brilliant success afterwards were happening in about 100-150 years ago. Texts like theese are spread by the “glamourious” magazines, specialized web-sites in Internet, fashion TV programmes and so on, and this texts have nothing in common with the disinterested creations of some admirers–“chroniclers” of the jewellery companies, but this is the elaborately constructed content, which makes the informational base of a brand. The traditional “marketing constants” are put on this base. By the example of the “top ten” of the market we can confirm that the power of a jeweller brand is a direct function of its “History”. Of course, the real history in this case is just a “raw material”, which permanently need processing, updatind and development in accordance with market and commucational nets trends.
If there is no “History of a family business” – there is no brand. This fact can explain the numerous failures of the jeweller market neophytes. You can buy the most perfect technologies and copy a good style (or even to create a unique one), but without “History” a jewelry will be faceless, and, as consequence, it will be non-competitive, because there is no base for the construction of the informational stream (and it is the main jeweller market instrument). In this case “History” is created by the means and methods which have nothing in common with the jeweller market itself, and it is the missunderstanding of this thing that leads to the failures. The alliance of De Beers and Leviev Group with LVMH and Bvlgary “historical” brands is a palliative decision, but there are still no big successes in this direction. As the jeweller brandes «De Beers» and «Leviev» are still the outsiders and their chance to take the leading position is quite doubtful, because the “History” of a mining company, a polishing company and a trader obviously cannot substitute the “History” of a family jeweller business.
In general we should admit that the “historical” brands with the marketing models, affording control of the informational stream based on a “History of a family busines” and permanently adapted to the market realities, are the absolute market leaders today.
Robert Kohn
To be continued
