What is a brand in marketing?

Aspire Thought Leadership! Ever wondered about what is a brand?. Find out more on what has changed with brand management in the current age. Come righ

Almost everybody would be aware about what is a brand. There is little doubt that brands have become extremely powerful. But as their power is often seen in a negative light, this isn’t necessarily a good thing. If you ask me, however, in an ideal world such power presents a glorious opportunity to do something for the good, for the great a subject I’ll examine in more detail later in the post. But acknowledging how powerful brands have become also throws up a number of questions: is our obsession with brands the result of a cheap trick? Is a brand a set of cognitive associations linked to something or someone, or is it just a physical object? Is there anywhere in the world that has not been infiltrated by the brand?

So many questions, so little time.

What is a brand?

There are brands and there are products: this is the defining line. A brand is something that we have an emotional connection with. It may be completely fake and manufactured, but we nevertheless experience some kind of bond. This is human programming at its best. It takes a certain something to evoke in a prospective consumer a sudden feeling of connection when he or she is stood in the supermarket at 7.30 p.m. after a hard day’s work, hungry as a horse, looking for something half-decent to chow but faced with a shelf of identical brands. ‘Which ready meal do I buy?’ The brand that pulls at our heartstrings like a puppy at the pound is the brand that will get our money as a brand has a paramount influence on pricing strategies in marketing. Ker-ching!

The way I see it is that because everything in the cultural world is constantly changing, brands have to adapt to these changes in order to remain relevant. This dynamic relationship to culture, however, is something that the world of brands rarely celebrates. For brands to admit that what really makes them attractive is all the stuff that has rubbed off on to them from the world of culture is way too honest, way to close to the knuckle. But this is what makes a successful brand story stand out. A company whose marketing aligns with business strategy creates a product a sneaker, say but the real gravity and magnetism of that product is created by the culture that embraces it. In other words, it’s not the brand that made the sneaker cool, but culture. This fact is a game changer, but once the brand story becomes the focus of all communications, nothing can get in its way, regardless of the real story, regardless of the truth.

So let’s forget the mirages that advertising agencies and marketing departments focusing on outside in marketing build around brands. The global rise of many brands is indelibly linked to underground cultural phenomena, and this is the real juice, the real deal. It’s also the kind of thing that gets me out of bed each day. But it’s strange how global brands often behave as though they are made of kryptonite one moment and glass the next – saturating the media one day and then censoring it twenty-four hours later if anyone has anything to say that isn’t 100 per cent complimentary. One thing, however, is certain: the way in which brands acquire their market share is never by simply being the best, as all products out there are pretty much identical. To quote Malcolm X remixing Jean-Paul Sartre, they do it ‘by any means necessary’.

In one way or another we are all brands, and behave as such. From the current crop of hipsters running around the planet to the yummy mummies of Stoke Newington, Westchester and Prenzlauer Berg, we are all self-branded by the choices we make everyday by the cars we drive, the clothes we wear, the food we eat, and so on. And what we display in public we extend into the digital realm via our social-media channels. I think a lot of us are totally unaware of this fact, and so our ‘brand’ is pretty shite: photos of getting wasted, misbehaving, hating/trolling, duck-faces, trying to look ‘sexy’, wearing something hideous, driving an expensive yet ridiculous-looking car all of which damages ‘brand me’. Image, after all, is everything, and the power of the brand is controlled by its story, its choices and its image. The key ingredient in these three elements is authenticity. If it’s an authentic choice then it will work for the brand and it will work for us.

What is a brand equity?

So here is my definition: a brand is a thing or a person or a company that has got some kind of media traction and has managed (by hook or by crook) to get itself on the public radar and into our heads. The first rule for any brand is that we all have to know about it; we have to be aware that it exists, as only then can it begin to build its story deep within our subconscious. The second rule is that it has to offer something in return (apart from the actual product) for either our money or our loyalty. This is where it gets interesting. Thanks to the digital revolution, cultural currency has become almost as important as the regular, physical, common or garden dollar or pound, because it all helps to drive the story of the product the all important backstory into the mind of the consumer. [traditional marketing vs digital marketing]

As we all know, most mobile phones last a couple of years before they slow down or stop working altogether (that’s if you haven’t already broken it) a great example of planned obsolescence in full effect. In most cases it’s one small part of the phone that has actually broken, but because of the way in which they’re designed, you can’t just swap that part for a new one. Until now, that is. The Phoneblok is a mobile phone designed around a system of detachable components, or ‘bloks’, connected to a solid base that locks them all together. If a certain blok breaks, you simply replace it; and if the phone is slowing down, you can upgrade the processor for a faster one. All this revolves around the Blokstore, a digital hub where you can buy, sell, read reviews, get information or just purchase a ready assembled phone. The tagline is ‘A Phone Worth Keeping’.

The inventor of the Phoneblok is a chap called Dave Hakkens, a designer from the Netherlands whose goal is to make the world a better place by making things that can be fixed and not just thrown away better and sustainable things. He started this quest when his beloved digital camera stopped working. After trying to fix it himself, he discovered that the one part he needed was not available anywhere. Dave was also acutely aware of waste streams (the total flow of waste from manufacture to disposal) generated by the mobile-phone industry, so he started working on a phone that could be easily fixed and would not contribute to these waste streams. Phonebloks was born, and has since gathered considerable digital momentum – a social-media reach of more than 380 million people. The first major company to get on board was Motorola. The Google owned telecommunications giant had been working on its own modular phone, and approached Phonebloks asking if it could get involved. As Dave wants Phonebloks to become a reality, he agreed, but with the strict condition that the consumer must always be kept in the loop, so that the project can be developed in the open. To me, Phonebloks represents an authentic link between producer and consumer. This is something that really needs to be focused on how brands can genuinely connect with the consumer for lean customer development. Motorola’s involvement with Phonebloks tells me that the once blinkered eyes of the tech giants are slowly beginning to open.

Why Phonebloks works:

• The product fills a technological need.
• It comes from an honest place no planned obsolescence.
• It is ecologically sound no excess waste.
• The creators and the brand are very accessible.
• It has a positive identity.

Evolution of branding

The idea of branding has changed over time as technology, population and society moved forward. The brand has changed its role in the economy and society, the way it creates value for stakeholders and shareholders, the metrics through which branded activities are measured and evaluated. Selling a pair of branded sneakers in the 80s was a completely different job compared with engaging a community of followers in a phygital environment such as that of today. In the same way, whereas some time ago the investments in the brand were considered as costs, now the brand value is considered among the most important corporate assets, as the recent wave of acquisitions in fast-moving consumer goods shows. Branding today is more important than ever, but building relevant brands has become particularly complex.

Evolution of branding

This guides us through the evolution of branding from the early years to this day. Consumer brands have gone through different phases, playing different roles, with different Key Performance Indicators (KPIs), within evolving environments.

From the brand as promise, when the brand role was just about differentiating an offer from competition, to the brand as purpose where the brand has a positive impact and builds measurable value for the entire value chain it belongs to. Along the way, brands have been moving from a product-centric to a customer-centric approach and, finally, to a people-centric approach.

In the following paragraphs, we discuss the different phases of brand evolution, the changing brand role as a consequence of the evolving consumer, retail and media environment and the effect on the brand performance metrics. We show how we have entered the phase of purpose-led brands, where a disruptive paradigm shift is changing the world as we know it.

From promise to experience

Originally, the brand role was all about identifying the seller of products or services and communicate the product’s functional benefits (such as quality, comfort, durability), mainly on a mass scale. In 1972, Ries and Trout argued that brand positioning is something that you do for the target group and not for the product itself. They introduced a new concept, positioning, which would change branding forever. Competitive brand positioning requires the identification of a distinct market space and a cognitive space as perceived by consumers. The brand role evolved from perception of tangible features to intangible associations, meaning anything creating a positive or negative relationship with or feelings toward the brand. Communication was about establishing a strong brand image3 through traditional communication, advertising activities that were largely nontargeted and had a wide reach. Advertisers began to present unique value propositions (UVPs) or brand promises, showing how their products were different from those of their competitors in addressing the customer need, and how the brand was a signal of that. Early perceptions of measuring brand performance revolved around financial output measures such as sales, gross margins and profitability. Market share attracted great attention as a measure of brand performance at this time, being considered a strong predictor of cash flow and profitability.

Brands won even more recognition and power over products during the 1990s. The branding specialty started developing its own language and conceptual models within business schools, consulting companies and corporations. The brand is not something you make; it is something you manage in the interaction with the consumer. Conceptually, many authors shed light on the consumer-based perspective of brand equity which could be summed up as a measure of how the consumers react to a brand (instead of a financial measure of a brand itself).

Communication contents became more focused. While above the line communication4 was ideal for generic brand awareness, below the line tactics became preferable for fostering direct relationships with potential customers including tools such as direct mail campaigns, trade shows, catalogues and targeted search engine marketing.

In terms of metrics, measuring brand equity typically took two forms:

1. the behavioral approach attempted to measure the differential effect of brand knowledge on customer response to marketing activities. Behavioral measures include sales and share, customer acquisition, retention, loyalty and penetration;
2. the financial approach attempted to define the financial value of the brand to its owner. A widely cited approach5 defines brand equity as the incremental cash flows that accrue to branded products over and above the cash flows that would result from the sale of unbranded products.

The concept of brand equity was particularly used by American PR businesses to show the CEOs and CFOs of top companies how investing in branding can increase the financial value of the company, the shareholder value. Brand equity in this approach is the set of assets and liabilities associated with a brand.

The decade that started after the 2008 crisis was characterized by the effect of digitalization on all brand processes.

Disruptive brands redesigned the go-to-market strategies and the model of interaction with consumers. Amazon made e-commerce ubiquitous, Apple made user experience a key driver for success, Starbucks and Sephora made their brands built on experience rather than on advertising, leveraging WOM and communities. Accordingly, the most recent wave of studies focuses on brands as experiences. Brand experience is defined as sensations, feelings, cognitions and behavioral responses evoked by brand-related stimuli such as packaging, communications and environments. Within an omnichannel or better no-channel environment, individuals are building their knowledge about brands through multiple touchpoints, navigating across several customer journeys. Delivering the branded experience is challenging as touchpoints are diverse (physical, digital and human), owned by different entities (the brand, partners and consumers) and proliferating over time (from press to Instagram to Tik Tok). In terms of communication and media, within a consumer-to-consumer (CTC) economy brand conversations are happening online, and contents are no longer generated by brands alone, but also by other actors. Social media have made the consumers, the narrators of the brand stories. Consumers may listen to their peers or online influencers with a progressive loss of control on brand meaning and experience by the companies, well-documented by marketing research8.

Within a fragmented media scenario, companies seem to chase every new platform and feel urged to generate new contents daily, if not multiple times a day. Many brands, particularly those targeting Millennials and Gen Z, seem to suffer from the fear of missing out (FOMO) syndrome. Gone are the times of a mass audience with long-lasting loyalty to brands. The experience gets increasingly personal and one-off. Creating contents that are meaningful within the specific environment individuals are living in becomes the new direction. Amazon relies on personalized advertising, including customized onsite content and tailored emails and offers. Nike offers an innovative SNKRS personalized shopping experience and targets consumers in different regions with geo-specific content.

What has been defined as “hyperconnected environment” has changed the role and management of brands forever. Brands now play several new roles becoming containers of symbol-intensive meaning, tools for self-expression, architects of value creation and distribution within branded ecosystems, catalysts of communities and stewards of data privacy among others. But it is not an easy world. Brands should become increasingly channel-agnostic, change their service model, change the organization in the direction of making more resources available in relevant activities, and the way they measure and evaluate results.

Brand metrics should consider the different customer journeys and assign different KPIs accordingly: customer centricity is becoming the mantra. In the awareness phase, brands can measure the brand sentiment or the share of voice, while in the consideration phase, purchase intent and the bounce rate will be considered. In the purchase phase, the conversion rate or the acquisition costs are leading to conclude in the post-sale with metrics such as the net promoter score, customer lifetime value and customer retention. Design and strategic marketing teams could use data for a predictive approach to design a much more consumer-centric product offer. The individual leaves traces of his journey more frequently than in the past, and these traces can be collected and interpreted in order to move from generic targeting to dynamic profiling personas.

Brand as purpose

While the phase of brands as experiences was still under construction, the 2020 pandemic has accelerated the future to come. What we are facing now is unprecedented: not only the acceleration of the contactless interactions, but also the quest for radical visibility. Business as usual has changed for the world in two ways:

1. technology and media have given individuals the opportunity to be informed and the power to stand up for their opinions and beliefs on a grand scale. This power, reflected in everything from the #MeToo movement to #blacklives matter, and the growing intolerance for fake news, is infiltrating every aspect of people’s lives, including their purchasing decisions;

2. the shift in terms of values, attitudes and behaviors affects every brand, business, and individual. In times of crisis, people are worried and fragile and they look to leaders and institutions for guidance, reassurance and information. Increasingly, they also look to brands. No longer do brands belong only to shareholders, who invested in them, but they become “community property”, belonging also to their employees, who allow them to exist; suppliers, who sustain them with their components; and clients, who support them with their purchases and loyalty. And the power of consumer feedback can make and break a brand.

As we head into a new decade, the business is shifting away from shareholder primacy toward a more inclusive role in society or the so called stakeholder capitalism. This vision started before the pandemic. “The Universal Purpose of a Company in the Fourth Industrial Revolution”, issued by World Economic Forum in December 2019 did consider businesses as part of a broader social system and thus, they should aim at fulfilling human and societal aspirations. Performance should be measured not only in terms of return to shareholders, but also on how the company achieves its environmental, social and good governance objectives, the ESG metrics.

This is eroding the traditional distinction between a shareholder-primacy model (which focuses on financial and operational costs and benefits) and a stakeholder-driven model (focused on environmental and social risks and opportunities). The basic premise of stakeholder theory is that the stronger the relationships with external parties, the easier it will be to meet corporate business objectives. Strong relationships with stakeholders are those based on trust, respect, and cooperation. Big businesses should become key contributors to the economy and to society not just for the goods and services they provide, the jobs they create and the dividends they generate, but also in terms of conduct and effect. While Corporate Social Responsibility is largely a philosophical concept, stakeholder theory is primarily a strategic management concept based on the concept of value creation. So, welcome to the Age of Purpose, defined by the World Economic Forum as the way to engage all the company stakeholders in shared and sustained value creation.

In the age of purpose, it is more important for brands to be culturally relevant than just solve a customer need. Each brand should go back to the reasons why the organization exists and then map all the stakeholders it has effect on. This new awareness makes the brand the visible sign of a system rooted in the organizational purpose, where there should be an internal consistency with the mission (guiding internal stakeholders) and the brand promise (made to clients).

Brand as purpose

It is important to understand what the purpose is not. It is not the corporate strategy, nor the revenue model; it’s neither a marketing plan nor the mission statement. Above image reinterprets the Golden circle framework, Why, How, What, proposed in a famous TED talk by Simo Sineck. It shows how the purpose relates with the mission and the promise.

Purpose is the reason why the promise and the mission exist. Purpose is the foundation and the North Star. It is a declaration of intent, an approach and a framework that moves the organization forward, according to an inside-out approach, becoming a core driver of growth and differentiation.

Purpose versus mission and promise

Above offers a more detailed definition of the organizational purpose versus the brand mission and the brand promise. To better explain how the purpose stays at the origin of the brand promise, an old but excellent story about Wal-Mart is an instance14. The brand was built on the promise of everyday low prices, but over the years with more competition rising and some consumers seeing “low prices” a liability, Wal-Mart management understood the need to go back to the wider purpose that was supporting the brand promise. The purpose was found in the original intent of Wal-Mart founder Sam Walton: the lower prices policy was to help people provide better lives for their families. Thinking about one of the most successful brands ever, Apple, its success is closely related to its purpose-driven strategy. Apple believes in “thinking differently”, while the way they think differently is by making products that are beautifully designed and user-friendly compared with those of their competitors.

All kinds of brands in all industries have inspiring purposes.

Procter & Gamble pushes to become a force for good and a force for growth, BP is reimagining energy for people and the planet. Tesco aims at serving shoppers a little better every day. The purpose of Disneyland is to create happiness for others. Starbucks wants to inspire and nurture the human spirit one person, one cup, and one neighborhood at a time. Nike wants to unite the world through sports to create a healthy planet, active communities, and a level playing field for all. Ralph Lauren wants to inspire the dream of a better life through authenticity and timeless style, while L’Oréal wants to create the beauty that moves the world.

The new paradigm: People-led branding

When is a company on the right path to develop a purpose-driven brand? As research shows, the purpose is excavated, not created, understanding the organization’s distinct strengths; to be authentic, it must flow from the brand leaders themselves, usually from the founder or founding group. It must be fully embraced by the top leadership team and understood by every employee. It should be infused across the organization via all touch points. Research findings were confirmed by the best cases we have studied in our research; from De Beers to Salvatore Ferragamo and Mutti, from Davines to Loropiana, they have all demonstrated that purpose-led branding turns around a people-centric paradigm where employees, consumers and suppliers are the main pillars.

People = employees

First and foremost, purpose should mean something to all people working for the brand. Many times, purpose statements are well written on the walls, but employees do not buy them as the purpose is not aspirational nor integrated into the day-to-day decision making. It is sad to say, but most executives are not true leaders; leadership today means clarity of purpose and clear communication, pleading by influence. This is the challenge of leaders today: first cultivating purpose-led leadership, and then creating a purpose-led workforce. People want to work in organizations that are purpose-driven – especially the younger generations that are now entering the workforce and bringing fresh talent, ideas, skills and insights into what makes today’s customers tick. How to develop a people centric approach? Events and conversations are not the only ways to inspire and socialize employees; well-designed promotion and compensation systems are also important. New success metrics should span beyond stock prices and profit maximization and account for worker rights and protection, inclusivity and diversity. The growing prominence among compensation committees’ priorities of ESGs metrics show that there is a recognition that addressing broader human capital management issues is important for sound reasons: legal (treat risk management more holistically), reputational (damage in terms of brand image may result in lawsuits and negative press attention), organizational (diverse, empowered workforces that are treated and paid fairly may perform better, a key determinant in the creation of sustainable, long-term value)18.. Emphasizing the importance of ESG factors also has significant benefits with regard to attracting and retaining talent. According to Mercer’s Talent Trends survey, one in two employees want to work for an organization that offers “responsible rewards” to its staff.

People = customers

The second pillar of a people-centric approach is customers. For some of them, social purpose is becoming the new status. Being effective about climate change or social issues is what affluent customers in particular are looking for when spending money: being seen to be doing good. Influencers and key opinion leaders are now also increasingly promoting ethics and a positive effect as part of their stories and lifestyles. This new awareness is changing the relation between people and brands. From purpose-driven brands clients get more than a product; they get a culture, a statement of values as these brands are growing not just a customer base, but increasingly a movement powered by brand communities. Best cases are Patagonia, Lululemon, Netflix and Oatly in food.

Oatly is a Swedish oat milk brand created 25 years ago by a food-science professor looking for a source for milk other than cows. In Sweden, Oatly developed a small but loyal following without much marketing, but its success is driven by the booming revenues in the USA. People want to drink oat milk because they like the health and environmental benefits that come with consuming less dairy. Plant-based milk requires less water and land, and produces less carbon dioxide than the production of traditional milk. In the USA, the coffee community and baristas were the powerful drivers behind the brand growth.

The effect on the customer experience design of this new approach is huge: it means redefining the key narratives and translating the brand purpose into practical, values-centric language that individual customers can relate to.

Think about the recent evolution of youth culture: this is embracing music, art and fashion moving fluidly between genres and refusing categorization. Gen Z in particular is rejecting society’s restrictive labels, creating new labels that better reflect their pride in contemporary values and affiliations. This cultural shift presents a challenge to marketers. Younger generations want to be defined by their interest points, allegiances and beliefs, not their age, race or gender. People expect their favorite brands to connect with them as individuals. That said, it is important to consider that the golden rule of delivering the right message to the right audience always works. Consumer segments in the general population exhibit different attitudes and opinions based on their generation, nationality and levels of environmental and sustainable engagement. Brand communications about accountability and transparency, at least in the initial stage, are relevant just for certain segments in the market that are more informed and educated on these topics. The acronym LOHAS has been used to identify the lifestyle of health and sustainability consumers driven in their consumption by post-materialistic values and attitudes. This group can become the first ambassador and advocate of a brand narrative about accountability and transparency in all industries from fashion to beauty, from wellness to travel.

People = suppliers

Last but not the least, developing a people-centric approach means aligning suppliers with the brand purpose. The majority of environmental and social effects nowadays are in the supply chain. The closer a company’s purpose aligns to consumers’ beliefs, the better. But we would add that the closer a company’s purpose aligns to its own supply chain design, so much the better. If suppliers and vendors are not engaged in the pursuit of unified purpose along the whole value chain, real system-wide effects will be hard to realize and the purpose journey can easily stall or lose its authenticity. Also, considering that social media movements, such as the #payup campaign launched in March 202021, increasingly give voice to the weakest links in the fashion supply chain: the workers. For many global companies, the most challenging labor and other human rights issues are likely to occur in their supply chain. Issues left “behind the scenes” are now moving up to the forefront. Building resilient supply chains is not just about delivering products, commodities or services in a more responsible way. It’s also about protecting and enhancing the lives of the community members that are such an important part of bringing those goods to market.

Fashion is the second most important manufacturing sector of Italian industry with an annual turnover of 95 billion euro and an economic system involving over 60,000 enterprises including SMEs, artisan and commercial enterprises, and approximately 600,000 workers. The excellence of this system is confirmed by the very high export rate, equal to over 66% of the turnover, and is guaranteed by the uniqueness of the supply chains that include small and large companies deeply rooted in the territory. As corporate supply chain leaders of excellence - that are able to unite entire production chains and are particularly sensitive to their suppliers’ needs - the Italian Intesa Sanpaolo Bank and Gucci Group have entered a collaboration that allows Intesa Sanpaolo to analyze and add value to the membership of suppliers in the supply chain, while giving full value to the industrial context in which they operate and ensuring important price advantages. Thanks to digitized procedures and an effective exchange of information between the two partners, the loan process will be faster and more streamlined, in order to meet the need of small- and medium-sized enterprises to cut down on times in obtaining resources from the financial system.

During the pandemic, the fashion and lifestyle e-commerce company, Zalando, decided to offer all kinds of fashion brands, designers and retailers immediate solutions to increase liquidity, clear overstock, and launch or expand direct-to-consumer business.

Ensuring that voices and claims from the supply chains are heard is of course the first step in the direction of accountability and transparency. Then, brands can do a number of things to incentivize and equip upstream players, including purpose-centric evaluations that encourage a race to the top; testing and adopting new solutions that improve transparency and mutual accountability. Suppliers should be increasingly selected and kept in the business not only for their speed and cost, but because they help the organization to reach its purpose and vision. Suppliers can be a continuous source of innovation.

LVMH’s environmental policy has been a pillar of its growth strategy for the past 27 years with the first environmental department created in 1992. In 2020, the leading luxury group has announced its willingness to promote a new vision of luxury (defined as luxe nouveau), aiming at allying the creativity and skills of their 75 brands with the world of nature. Nature has always had a deep relation with luxury, both in terms of raw materials and its role in serving as inspiration for creativity. This vision and this alliance with employees and suppliers are embodied in the new Life 360 holistic program replacing the former Life 2020 program, drawn up in 2016, which has reached nearly all its objectives. Deadlines are set at three, six and ten years (in 2023, 2026 and 2030) with the commitment to communicate more often on progress and shortcomings to stakeholders.

The program’s four pillars are ambitious and holistic:

• creative circularity: improving the environmental performance of products from creation to packaging, implementing circular initiatives inter-maison;
• biodiversity: regenerative agriculture for the Wines & Spirits sector and responsible sourcing also partnering with institutions such as UNESCO for the preservation of local territories;
• transparency: facilitating traceability from fields to products;
• climate: 100% renewable energies by 2030, intervening also on suppliers’ CO2 emissions, in addition to 100% LED lights in the Group boutiques by 2023 and eliminating plastic from Louis Vuitton packaging by 2026.

LVMH aims to build a “web of trust” with all suppliers in the supply chain, based on collaboration and solidarity.

The spread of COVID-19 has led to debates about what the new normal should look like, possibly not getting back to problems and issues we had in the old normal, as most analysts observe. The best brands are showing that the coronavirus pandemic is a reason to accelerate social and environmental effect goals, not abandon them in the name of his company’s bottom line as examples in this book show. Working for people with people means involving employees, clients and the larger ecosystem of stakeholders to identify shared values and areas where the company can make a real difference. The best cases in our book demonstrate that trust and transparency are the new equity for brands.

A first best case in the direction of building a brand narrative that is credible, responsible and shared within the brand ecosystem is De Beers’ Building Forever sustainability framework to incorporate ESGs in the entire supply chain.

Insight: De Beers. Building Forever

Diamonds are nature’s hardest substance; they are formed from billions of years of geological pressure, the oldest being three billion years old, and are rare, finite, unique and expensive to mine. Rare, because it is very difficult to find a diamond deposit, with no new significant deposit found over many years; finite – because the earth makes new diamonds and their supply will run out any time; and unique – because no two diamonds are the same. De Beers Group is the world’s leading diamond company today with expertise in exploration, mining and marketing of diamonds with 3.4 billion revenues (2020) and approximately 20,000 employees, but its influence and control on the evolution of industry in the past has been even greater.

De Beers. A story of resilience in the diamond industry

The long history of De Beers started in 1888 following the discovery of vast diamond deposits in Kimberley, South Africa, in 187024. The company created a horizontal monopoly, thanks to its involvement in exploration, mining, and distribution of most of the rough diamonds traded around the globe. De Beers was also able to control prices through its strategic stockpile, ultimately controlling more than 80% of the world’s diamond supply by 1980.

The company’s leadership position has not been achieved easily in an industry characterized by several shocks and an ever-changing market.

During the 1930s, due to the Great Depression, the entire diamond industry experienced a moment of profound crisis: people stopped buying diamonds and also started reselling their gems. This in turn increased the supply, and drastically reduced the price of diamonds. As the industry leader, De Beers needed to improve the image of diamonds and make them accessible to a broader segment of the American population. In 1947, with the famous marketing slogan, “a diamond is forever,” a unique connection between the concept of eternal love and diamonds was established. As a result, in 1990, 80% of American women and 70% of Japanese women got a diamond engagement ring.

At the end of the 20th century, the diamond industry was threatened again by several factors, including European and American antitrust actions against De Beers, the “conflict diamonds” issue, and a global rise in the diamond supply. De Beers reacted by changing its business model. Abandoning both the horizontal cartel based on supply and price control, and the role of protector of the diamond industry, De Beers decided to focus on a demand-oriented strategy promoting its own brands. In 2001, the “De Beers Diamond Jewellers” brand was created, and in 2008, the brand “Forevermark” debuted to start marketing and selling diamonds to final customers.

The global economic crisis in 2008, together with the early debate on social media about the real value of diamonds, affected consumer choices slashing demand for diamond jewelry down by 10%. In particular, the critical age group of Millennials was waiting to marry, yet seeking authentic relationships, committing to buying a house and having children before the “formal” engagement. This time, this insight was captured by diamond producers. The Diamond Producers Association, which took over the industry-wide role of De Beers, launched the “Real is Rare” campaign to reach the Millennials and promote the purchase of natural diamonds as a sign of commitment. The concept of “real” itself was proposed with a double meaning: the value of real connections in the contactless world of social media and also real diamonds authentic, organic and precious.

The need to reinforce the value of natural diamonds as real diamonds emerged again later on due to the rise in popularity of synthetic diamonds which are usually priced far lower than natural diamonds and claim to be more environmentally friendly and 100% conflict-free.

At the end of 2019, De Beers’ top management faced the latest paradigm shift in the diamond market. Industry-wide challenges were clear: high inventory levels throughout the pipeline, uncertainty surrounding the proliferation of man-made diamond jewelry and weak downstream sentiment related to macroeconomic and geopolitical factors. De Beers’ Consumer and Brand teams reported that consumer sensibilities were also evolving. The diamond industry is unique among mining industries, in that companies sell luxury products that till today were all about scarcity, heritage, and quality materials. But now, consumer sentiment was increasingly encompassing fair treatment of workers and responsible environmental practices. Advocacy groups were warning that major Jewelry companies weren’t doing enough to combat human rights and environmental abuses in their gold and diamond supply chains. New consumer values were not specific to the diamond industry; instead, they permeated all luxury categories. For De Beers, this meant that the traditional emotions associated with diamonds (eternity, love, commitment and important moments in life) had to be leveraged together with more rational aspects. These included human rights, environmental influence, and preservation of local communities involved in rough diamonds extraction and polishing, activities that were mainly carried out in underdeveloped countries.

De Beers’ sustainability journey

In 2019, sustainability was not something new for the company. Sustainability initiatives had been many, most of them in partnership with stakeholders, as this was the cornerstone of the De Beers business model.

Because diamonds are about trust (about their sourcing, authenticity, and value), De Beers embarked on its journey toward sustainability early on. The aim was to comply with the major issue of diamond supply chain transparency and the need for industry standards to protect the company’s reputation and prevent the erosion of value. As early as 2003, De Beers with the help of many NGOs, established the famous Kimberley Process Certification Scheme (KPSC) to better monitor and stop the flow of the so-called “blood diamonds” Then, in 2005, the “Best Practice Principles Assurance Program” was introduced, which guarantees that every sightholder, accredited buyer and all De Beers’ operations comply with very strict ethical, financial and environmental standards. The same year, De Beers was among the founding members of the Responsible Jewellery Council (RJC), a not-for-profit standard-setting and certification organization. In 2007, the company launched the Diamond Dialogue Series, roundtable sessions within and beyond the industry to discuss sensitive, emerging topics. In 2018, De Beers introduced GemFair™, a program aiming to create a secure and transparent route-to-market for ethically sourced artisanal and small-scale mining and trading diamonds. To give consumers the confidence in what they were buying, De Beers pushed to develop a blockchain technology, TRACR, to build end-to-end connectivity from miners to retailers to ensure that diamonds do not come from conflict zones and to provide asset-traceability assurance. The De Beers Blockchain is the first to span the entire value chain and be open to everyone in the industry, making the process more transparent and efficient. In this direction, some years ago, the company developed the FOREVERMARK logo, a guarantee of high-quality and responsible sourcing, representing the world’s largest Track & Trace system for diamonds.

How to improve people’s lives was a second area of concern and investment. A critical issue for the communities where mining operations are located in Southern Africa was HIV/AIDS, as South Africa is home to the largest HIV seropositive population in the world. Starting in 2001 in Botswana, De Beers has been providing its antiretroviral HIV/AIDS treatment to all the infected individuals in its entire workforce. In addition to health, women’s empowerment and education were key issues for the local communities. Mining has historically been a male-dominated industry, while investing in a stable community means investing above all in women. In 2017, De Beers announced a three-year partnership with UN Women with initiatives such as the Accelerating Women-Owned Micro-Enterprises Programme. De Beers also pledged to accelerate the advancement of women across its organization. The same year, a three-year education partnership was established with Stanford Graduate School of Business to better sustain and develop Southern African economies.

As diamonds come from deep within the earth, the environmental effect of operations was the third area of concern. Is it possible to treasure nature while mining nature’s treasures? For De Beers, the answer was yes. The company implemented, on one hand, a strategy on water, energy, and carbon emissions for the period from 2013 to 2018, succeeding in slashing energy consumption per carat by 16% in 2018 compared with that in 2015. On the other hand, for every hectare of land affected by mining, the De Beers Group set aside an additional six hectares dedicated to conservation. In this respect, to secure an ecosystem for Africa’s most vulnerable species, the Diamond Route was launched at the World Summit on Sustainable Development in 2002, a 200,000-acre reserve that amounts to six times the total land used for mining.

Even if much had been done, De Beers still had to push itself to go even further. All these initiatives had to become part of a unified approach, a formal sustainability strategy that engaged not only partners, employees, and communities, but also the final customer.

Building Forever. Purpose-led branding is people-led branding

In 2014, De Beers developed a conceptual platform aspiring to become the common ground and source of inspiration for all initiatives about sustainability. It was named Building Forever, based on the idea that diamonds have the power to build forever in the communities and countries where they are found. Since then, the company journey and results were reported in a yearly publication addressed to key stakeholders, including shareholders, producer governments, employees, local communities, civil society, intergovernmental organizations, unions, customers, and consumers (as indicated by De Beers in the Group’s sustainability reports).

In 2019, the management team wondered if Building Forever could evolve from an internal operating philosophy into the more integrated, holistic approach to sustainability they were looking for to face the challenges of the new decade. Could Building Forever bring De Beers people together to work toward shared goals, and inspire consumers at the same time, giving them the confidence that their diamonds have had a beneficial effect on people and places? To achieve all this, societal issues had to be embedded in the business strategy and become everyone’s task, a constant conversation with the teams on the ground to make sure the things that were important to the company were also important to local countries and communities.

To get the process started, the top management held a wide range of internal and external discussions to better understand what was important to stakeholders. A list of relevant issues was drawn up using desk research and referencing internal risk logs, peer reports, industry standards, GRI standards, and the Sustainable Development Goals. A diverse team was engaged, made up of internal and external professionals coming from the operational side, local communities, government experts, and marketing managers, and tasked to discuss this list. As the main employee base for the company was in the mines, the mine managers were invited to voice their views and needs. Time-wise, it took the company one year to research and double check the assumptions and materiality of the different factors for the company and for stakeholders; all this was also discussed among the various teams. At the end of the process, the most important factors were prioritized and grouped into four clear pillars, consistent with the company legacy and approved by the executive committee: leading ethical practices, partnering for thriving communities, protecting the natural world and accelerating equal opportunity.

Building forever pillars

Building forever pillars

These pillars were vitally important not only to the commercial business, but also to employees, partners, and communities across all facets of De Beers’ operations. In order to connect the new approach to the company culture underpinning the pillars, De Beers established what were called the “Critical Foundations” priorities and initiatives that have formed part of the Group strategy, ethos, and DNA. The four pillars, supported by the Critical Foundations and enabled by De Beers’ collaborative approaches, became the structure of the new Building Forever sustainability framework, a blueprint for the company’s sustainable growth strategy. To make the framework operational, within the four pillars, the management team set twelve concrete and ambitious internal goals to achieve by 2030 to guide and engage every De Beers’ employee, business division end-to-end, and final consumer. Very soon, Building Forever grew beyond the control of De Beers C-Suit; mine managers understood the ultimate purpose and how the four pillars supported their own business.

As happened in the past, “resetting” the public perception of natural or mined diamonds was among the top priorities of De Beers’ marketing strategy. The first initiative to start engaging the final consumer in the Building Forever project was the ReSet Project, launched in Autumn 2020. ReSet carries out a series of collaborations with the community of Jewelry designers to engage in conversations on sustainability and to offer a fresh perspective on the positive effects of natural diamonds.

In 2020, De Beers defined the group’s new purpose, “Make Life Brilliant,” a transformative concept that sets out to extend the brilliance of diamonds to lives of employees, communities, shareholders, customers, and consumers. A purpose is an endless journey and dialogue in the constant pursuit of ESGs objectives. The purpose looks forward at protecting mining licenses, be a partner that host countries want to work with, and ultimately sell a product that consumers are happy to wear. Building Forever translates the purpose into the tangible, everyday commitment at the heart of everything the Company does. Since 1947, a line created by a young copywriter, “a diamond is forever” has simply and perfectly summed up the epic of diamonds. But this line carries additional meanings for De Beers: diamonds have the power to build forever in the communities and countries in which they are found.