DeBeers marketing department are geniuses, but they can't perform miracles.
Nobody, as far as I know, buys luxury goods which are absolutely indistinguishable from cheaper versions. A $300 bottle of wine tastes somewhat better than a $10 bottle. A $5000 watch is better crafted than a $50 watch.
Paying big money for a luxury good only impresses people when they can tell it was expensive without you _actually_ telling them. Ideally the expense will be non-obvious unless you're in the know (which is why rich guys like wearing fancy watches instead of big heavy gold chains around their necks) but there has to be a nonzero difference.
A $300 bottle of wine tastes somewhat better than a $10 bottle.
It also sells for $300, despite the fact that the $10 bottle of wine can be made indistinguishable from the $300 bottle of wine by merely adding a few dollars' worth of chemicals.
chemists are trying to isolate chemicals that produce desirable fragrances and flavors. ...
many wineries are shunning such technology and embracing distinctly Luddite, back-to-the Earth growing techniques such as using things like "Preparation 500," the springtime vineyard spray made from the manure-stuffed cow horns, buried over fall and winter, then ground up and mixed with water.
"We're trying to make better wine through alchemy," joked Jim Fullmer, director of the Philomath, Ore.-based Demeter Association, a non-profit group that certifies vineyards as "biodynamic" — a sort of hyper-organic designation that means the vintner relies on such things as lunar cycles and planetary alignment rather than chemistry.
"Biodynamics is probably the exact opposite," Fullmer said. "Winemaking is an art."
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People do not pay $300 a bottle for wine that tastes better. People pay $300 a bottle for wine that makes them feel romantic -- wine based on such things as manure-stuffed cow horns, lunar cycles and planetary alignment.
But that's perfectly economically rational: a glass bottle is more aesthetically pleasing than a cardboard box. You pay for the whole product, not just the liquid it contains.
Diamonds are just commodities. The original packaging doesn't count for anything. While some customers will believe the DeBeers marketing message that mined diamonds are somehow superior, many will buy purely on price versus cut / color / clarity / carats. This must drive down the price.
Nobody, as far as I know, buys luxury goods which are absolutely indistinguishable from cheaper versions. A $300 bottle of wine tastes somewhat better than a $10 bottle. A $5000 watch is better crafted than a $50 watch.
Paying big money for a luxury good only impresses people when they can tell it was expensive without you _actually_ telling them. Ideally the expense will be non-obvious unless you're in the know (which is why rich guys like wearing fancy watches instead of big heavy gold chains around their necks) but there has to be a nonzero difference.