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DiamondGuy

Marketing "

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Sorry, I wanted the title to be Marketing "Tricks" but it appeared differently; seems users cannot edit the title(?)

 

...Anyway ... Another user wrote, "We learned about all the marketing tricks that are used."

 

What are the most common marketing tricks that buyers need to be aware of?

Edited by DiamondGuy

Diamonds are as impressive on men as they are on women!  :)

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Where do you want to start?

 

Some sellers describe as "man-made diamonds" things that are not diamonds - such as CZ, possibly coated.

 

Some sellers will sell you an EGL-Israel graded stone which could be 3, 4, 6 10 grades out of what GIA would grade it, and pass it off as a bargain, and tell you that all lab reports are equal.

 

Some sellers will tell you that a D diamond is "better" than a K, when it's actually whiter (or to be technically precise, less tinted), and there are people that prefer the yellow tint when shown both stones together.

 

Some sellers tell you that an appraisal issued by an unknown appraiser, working for them (the seller) and quoting "retail replacement value" is a fair estimate of the value of an item. They will then proceed to offer you a price that is 75% below the appraisal.

 

Some sellers will make the sale of an item they have on memo a "final sale" as soon as you decide to buy.

 

Etcetera, etcetera. Some times the line between "marketing" and "fraud" is fine indeed.

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Davide - Specialised Consumer Information and Assistance,
Diamonds by Lauren (http://www.diamondsbylauren.com)
davide@diamondsbylauren.com

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Marketing 'tricks' aren't even all bad.  Selling is a lot more difficult than it looks.  How to take good pictures.  How to safely do a presentation.  What sorts of paperwork customers want and which are likely to pay off.  How to avoid getting scammed in the delivery or payment.  All could quite reasonably fall into the category of 'tricks'.    


Neil Beaty

GG(GIA) ICGA(AGS) NAJA

 

There's never a crowd when you go that extra mile.

Professional Appraisals in Denver

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I was expecting much more complicated "tricks" with serious deceptions.  It seems only naive buyers would fall for any of the ones listed above.  But I'm sure there are a lot of naive buyers.  I've seen people buy a diamond ring without even looking at it through a loupe.


Diamonds are as impressive on men as they are on women!  :)

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Plenty of naive buyers - though the amount of information available with a little research is incredible, it seems the vast majority of people do not even know how to do that or are not bothered. Then the horror stories make it to the net...

 

I would hesitate calling anything more serious/deceptive than the stuff I mentioned above as "marketing"; in my opinion some of the practices above are already bordering with fraud.

 

(Believe it or not, from some sellers I will buy (for myself) without a loupe inspection. But I can count them on the fingers of one hand. ;))


Davide - Specialised Consumer Information and Assistance,
Diamonds by Lauren (http://www.diamondsbylauren.com)
davide@diamondsbylauren.com

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I was expecting much more complicated "tricks" with serious deceptions.  It seems only naive buyers would fall for any of the ones listed above.  But I'm sure there are a lot of naive buyers.  I've seen people buy a diamond ring without even looking at it through a loupe.

 

I think people need to be aware of 'misinformation' as much as marketing gimmicks or blatant fraud. There are a whole lot of so called 'experts' (both within the industry and well meaning public online) that sometimes aren't as knowledgeable as they think they are...or should be. What a lot of people don't realise is that there can also be very significant financial and emotional consequences from being misinformed, or by giving someone the incorrect info.

Once scenario I see quite often in online forums (not this one of course :) ), for example, is a consumer going online to show off their new diamond ring, only to be told that because it doesn't fit x,y, and z parameters that they've been ripped off and need to return the item immediately! In some cases it is justified, and the person has avoided potential disaster...but in many cases it's only because the diamond doesn't meet the narrow opinion of what constitutes a good diamond for the person giving the feedback. So it's a good idea to make sure that any advice you're given, and your resulting decisions, when buying diamonds, are based on verifiable facts rather than everyones 'expert' opinions.


Australian Diamond Network

www.AustralianDiamondNetwork.com.au

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That's an interesting "marketing by proxy" (or "marketing by orthodoxy"?) point, but it's absolutely true. To expand slightly on it, beware that it's not just well meaning consumers or advice from forums. There are people that go to the extent of writing books like that (a chap called Fred Cuellar is quite (in)famous in that regard). Always try to understand what a claim of superiority is based on, and decide whether you can share/agree with the premises.

 

BTW, Welcome to the forum, ADN!


Davide - Specialised Consumer Information and Assistance,
Diamonds by Lauren (http://www.diamondsbylauren.com)
davide@diamondsbylauren.com

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That's an interesting "marketing by proxy" (or "marketing by orthodoxy"?) point, but it's absolutely true. To expand slightly on it, beware that it's not just well meaning consumers or advice from forums. There are people that go to the extent of writing books like that (a chap called Fred Cuellar is quite (in)famous in that regard). Always try to understand what a claim of superiority is based on, and decide whether you can share/agree with the premises.

 

BTW, Welcome to the forum, ADN!

 

Thanks for the warm welcome davidelevi...very kind of you  :)

One 'scam' i will mention is 'investing' in diamonds...that you're never going to see a return on.

I remember quite a few years ago there was a push on by some pretty unscrupulous people promoting diamonds that were 'sealed' HRD certified commercial grade diamonds being passed off as 'investments'...

Don't get me wrong...there are plenty of opportunities to make money by investing in diamonds - but if you're looking to invest in diamonds, they need to be something really special to see a return on your investment - like tendered Argyle Pinks for example.


Australian Diamond Network

www.AustralianDiamondNetwork.com.au

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Diamond promoted as investments are almost always a scam. I've written about this quite a few times here and elsewhere and no, I don't think Argyle pinks are any exception. 

 

For example.  Rio Tinto, the company that owns the mine, is down 50% this year.  The folks who own DeBeers are even worse.  They're the worst performing major stock on the London exchange.  

 

For consumers it's downhill from there.  Everybody's got a guy.  Buying at retail and selling at below wholesale is a formula for financial disaster and no, your "guy" doesn't have better sales channels than the people who own the mines. 

 

http://www.bing.com/search?q=rio+tinto+stock&form=MNMTDF&pc=MANM&src=IE-SearchBox

Edited by denverappraiser
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Neil Beaty

GG(GIA) ICGA(AGS) NAJA

 

There's never a crowd when you go that extra mile.

Professional Appraisals in Denver

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Diamond promoted as investments are almost always a scam. I've written about this quite a few times here and elsewhere and no, I don't think Argyle pinks are any exception. 

 

For example.  Rio Tinto, the company that owns the mine, is down 50% this year.  The folks who own DeBeers are even worse.  They're the worst performing major stock on the London exchange.  

 

For consumers it's downhill from there.  Everybody's got a guy.  Buying at retail and selling at below wholesale is a formula for financial disaster and no, your "guy" doesn't have better sales channels than the people who own the mines. 

 

http://www.bing.com/search?q=rio+tinto+stock&form=MNMTDF&pc=MANM&src=IE-SearchBox

 

Hi denverappraiser

 

I think we’re going to have to agree to disagree about the Argyle pinks… :)

 

To say that Rio Tinto is down 50% doesn’t really have anything to do with the value of the pink diamonds that they are producing. Yes Rio Tinto posted a first half underlying earnings of $2.9 billion, which is 43% less than the $US5.19 billion for the same period a year ago - but this was driven by falling iron ore prices (down about 46% on average) and doesn’t really have anything to do with pink diamonds.

 

Rio Tinto’s Argyle Diamond Mine is only a very small part of their operations, and yes, there is no question that the mine is marginal…at best - - most of the goods that come out of there are rated as industrial and used in saws and drill bits, and the pinks are too few in number to make a significant contribution to profit

 

But the rarity of Argyle pinks (moulded of course by the forces of supply and demand) speaks volumes about their potential for investment and wealth creation.

This year, at the Argyle Pink Tender, pinks continued their double-digit price growth trajectory, reaching the highest average price per carat since the tender began in the early 80s. And overall pink diamonds have surged 315% over the ten years to June 30, (and blue diamonds 154%)...I’d say that’s a pretty good return on investment in any ones opinion. :D

And with the mines life expectancy looking to produce for only another 6-10 years, well, after that pink diamonds will practically disappear.


Australian Diamond Network

www.AustralianDiamondNetwork.com.au

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The problem with investing in diamonds is in the selling.  That's actually the problem with most investments by the way. 

 

Imagine a scenario.  Imagine a product X for $1000.  The manufacturer has been making them for decades and consistently raises their prices 10% every year.  After 10 years, that should be 'worth' $2000 (I know it's really $2500 with compounding but this will be easier to follow if I ignore it).  Woo hoo.  So now you go to sell it.  You go back to the dealer and ask for a check.  Then you learn some more data.

 

Manufactuer X sold it to the dealer for $500, and the dealer sold it to you for $1000 after paying $200 in sales commissions, advertising, shipping, etc.  He/she made $300 on it.
The dealer at the end could buy a new one, at the new higher price, including warranty and other benefits for $1000 (that's using the same appreciation rate from above),
The dealer gets favorable payment terms from the manufacturer.  They don't from you.

 

When they buy yours they have to have it cleaned and refurbished, sent in to the lab for new paperwork and so on.  Let's say $100 in real costs. It may be more but it depends on the details.

Your payment terms are cash on the barrel-head with no recourse.  You're going to take the money and run.  So they offer you $700.  That's actually fairly reasonable.  They're making $200 for the privilege of putting up with you and doing all of the work. 

That's a 30% haircut on an investment that's supposedly appreciated 10%/year for a flipping decade!  And that's without anyone lying or cheating.  That's also without any fashion changes in an industry where trends come and go.

 

Ah, but what if supplies drop?  The manufacture goes out of business.  New ones will no longer be available.  Surely that will drive the price through the roof.  Maybe, but I wouldn't bet on it.  There's plenty of precedent here, even in diamonds. 

 

A 1.00/D/IF/round was the brass ring diamond 'investment' a few decades ago.  When they come up for sale in estates now, there's a fashion problem.  Labs have become important.  They weren't back in the 80s.  You need GIA papers to sell that sort of thing, and it's far from a given that GIA will agree with that old grader.  That can be arranged, but now GIA has a cut grade, and a D/IF/good is almost unsaleable. E/VVS1/fair is even worse.  That wasn't even one of the questions when it was purchased.  The dealers knew, and nearly all of the investment diamonds I see from the 80's are terrible cuts for this reason, but it didn't even make a footnote mention in the sales presentation.  The dealer who buys it is going to have to do a recut in addition to the new lab papers.  It's still a great stone and it's definitely worth the trouble but that not only costs money, time and risk.  It'll drop weight before they can sell it.  They lose that magic 1.00ct. weight point.  They'll still buy, but yes this is going to affect the price. The investment houses were charging high retail prices, even though they called it wholesale at the time.  They buyer doesn't care, nor should they.  That's your problem, not theirs.  The original sellers are long gone so there's no one to complain to about it, and the new buyers are using a completely different calculus.  Diamonds are WAY up since 1980 but the result of all of this is that sellers are finding they're actually LOSING money on their 'investment'.

Edited by denverappraiser

Neil Beaty

GG(GIA) ICGA(AGS) NAJA

 

There's never a crowd when you go that extra mile.

Professional Appraisals in Denver

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By the way, I'd like to second Davide's welcome to the forum.  The fact that I'm disagreeing with you in no way should be taken that I don't value your contribution or even that you aren't right.  And I agree, Rio Tinto's problems mostly aren't about their diamond holdings. 


Neil Beaty

GG(GIA) ICGA(AGS) NAJA

 

There's never a crowd when you go that extra mile.

Professional Appraisals in Denver

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By the way, I'd like to second Davide's welcome to the forum.  The fact that I'm disagreeing with you in no way should be taken that I don't value your contribution or even that you aren't right.  And I agree, Rio Tinto's problems mostly aren't about their diamond holdings. 

Thanks denverappraiser - it's all good :) - - there is certainly nothing wrong with a bit of healthy debate...all well thought out posts like yours are exactly why people come to this forum...to help them make better informed decisions.

Happy holidays


Australian Diamond Network

www.AustralianDiamondNetwork.com.au

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