Marketing Schemes Of The Diamond Industry Essay

1398 WordsDec 7, 20166 Pages
History Founder Cecil Rhodes, an English Businessman, started with renting water pumps to miners during the diamond rush in 1869 and eventually sensing he had ventured into an untapped market, bought diamond fields by securing funding from the Rothschild family and founded De Beers in 1888. The name "De Beers" was derived from the two Dutch settlers who owned a South African farm which the British government upon discovering diamonds on their land, forced them to sell in 1871, to a merchant for 6,600 GBP. Diamond monopoly Until mid-1800s, diamonds were a rarity and could only be seen on the hand of a monarch. But diamond rush in the latter part of 19th century in South Africa flooded the market with diamonds, which was not ideal for De Beer’s business. So, De Beers in turn did some ingenious plotting, came up with unforgettable marketing schemes and negotiated with foreign governments to maintain their control over the diamond market. Several ways were employed to manipulate the market. In 1888, De Beers Consolidated Mines, Ltd. was formed, creating a monopoly on all production and distribution of diamonds coming out of South Africa. Cecil convinced independent producers to join its single channel monopoly. Diamond claim holders and distributors joined because their interests were aligned to create a scarcity of diamonds in order to demand higher prices. So while other commodities’ prices fluctuated, diamonds prices kept climbing since the Great Depression. When

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