Summary
The marketing campaign can be viewed as a "test" campaign to determine whether other products can be individually branded in this manner.
The question is, does De Beers have enough money to finance an ongoing campaign that it hopes can renew its image?
Analysis
I would surmise, based on my time in De Beers DTC in London (pre/post buyout), that De Beers is feeling the pressure from no longer having a monopoly on the supply of diamonds.
Hence its marketing strategy has to "compete" with other suppliers, in order to attract:
1 Siteholders
2 Retail customers
It is not used to competing in the open market, nor is it (I suspect) comfortable with competing in the open market. I would note that one of the key drivers for the buyout in 2001 was the fact that De Beers never felt that the financial markets "got" De Beers, nor "valued" the shareprice at a level that De Beers felt that it was worth; ie De Beers felt that the markets undervalued the company.
The marketing campaign can be viewed as a "test" campaign to determine whether other products can be individually branded in this manner.
This new approach by De Beers to branding should be viewed in the context of De Beers reported financial problems. De Beers has asked its banks for a covenants waiver on a $3BN revolver debt facility, and is in the process of a wider debt restructuring process.
The question is, does De Beers have enough money to finance an ongoing campaign that it hopes can renew its image?
This author consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
