#09: From Artificial to Adored 💎
February 12, 2023
What happens when your product innovation falls flat?
This was the conundrum the diamond industry faced with the introduction of lab created diamonds.
Despite the increased value for consumers, couples were hesitant to buy. There was a stigma attached to the newly introduced “fake diamonds.”
And this label was hard to shake. Even as recent as 5 years ago, lab grown diamonds were perceived as second best and rarely found in popular jewelry chains.
Fast forward to today, and not only is the market growing by over 20% annually, but lab grown diamonds are being worn by celebs all across the globe, including Meghan Markle.
So, how did this traditional industry pull off the glow up of the decade?
In today’s edition, we’ll dig into the powerful transformation of lab grown diamonds from “artificial” to “adored.”
The Diamond Dilemma
When lab grown diamonds first hit the engagement ring market, they were positioned as the premier choice for those looking to stretch their budget. The focus was almost entirely on affordability.
But, the challenge with positioning around price is that you risk de-valuing the product itself (even if it is truly more affordable).
Think back to the Van Westendorp question: “at what price would the product be so cheap that you would actually question the quality.”
To make matters worst, the concept of price was already so deeply connected to the engagement ring industry. De Beers had been marketing for decades that men should be spending at least two months salary on their purchases. Now, with the affordability of the the lab grown diamond, buyers could spend significantly less. But just because they could spend less, didn’t mean they felt good doing so. Society positioned this type of thinking as “cheap”, and most people don’t want to be cheap with one of the bigger purchases in their life.
And thus a pivot was in order.
The New Standard
Marketers went back to the drawing board and focused on deeply understanding their target customer.
The ICP for lab grown diamonds was Millennials. After spending more time understanding the challenges this segment had with the current engagement ring market, it became clear that this type of customer was looking for more than just a price cut. They cared about choice, impact and quality.
New value propositions emerged. Today, lab grown diamonds are coveted because of these value pillars:
Artisan creation process: who wants a diamond dug up from the earth when you can have one created by an artisan? The controlled environment leads to better, brighter diamonds with fewer defects.
Political and environmental benefits: lab grown diamonds are marketed as a conflict-free and socially responsible choice.
Affordability: while price still plays a role, it’s no longer the leading value. Today, lab diamonds usually cost about 30% less than a mined diamond, providing the cherry on top of the cake.
The impact? Studies show that 70% of millennials now consider buying a lab grown alternative when purchasing an engagement ring.
Key Takeaways for PMMs
The engagement ring industry is one of the best examples of category creation, and their positioning game is just as strong today as it was when they started building the category in the 1940s.
What can we learn from this particular case study?
Don’t rely on price as your only unique selling point. Price plays a major role in perception of value, and when your product is priced too low compared to alternatives, the market may grow suspicious.
Leverage the power of a name. “Lab created” diamonds evolved into “lab grown” diamonds which eventually evolved into “artisan” and "sustainable" diamonds. At the same time, the nomenclature for regular diamonds evolved into “mined” diamonds, which naturally has negative connotations.
Tap into cultural trends. The Millennial market is particularly concerned with the environmental impact of the brands and products they purchase, and marketers were able to use this rising trend to position their product as the preferred and obvious choice.
See you here next Sunday ⏰