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Argyle Diamonds: Company Analysis

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Argyle Diamonds: Company Analysis

The main problem faced by Argyle was the low sales of brown and yellow diamonds. These two kinds of diamonds are the most common once, accounting for almost 90% of all stones. White and pink stones are much rarer, which allows for selling them at a higher price. Besides, consumers have grown accustomed to white and pink diamonds and developed certain expectations regarding the color. By failing to sell yellow and brown diamonds, Argyle was missing a market opportunity and losing revenue.

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Upon further analysis, the company discovered that the two reasons behind the unpopularity of colored diamonds were the lack of exposure and targeting the wrong market segment. The majority of customers were not even aware of the existence of colored options and, therefore, could not reconsider their tastes and preferences. On top of that, Argyle could not figure out the segment that would be interested the most. Drawing on these facts, one may conclude that the company turned a problem into an opportunity by increasing consumers’ exposure and applying differentiated marketing to the underperforming goods.

When choosing the right market segment for yellow and brown diamonds, Argyle analyzed the following segmentation variables: geographic, demographic, psychographic, and behavioral. Geographically, Argyle decided to concentrate on North America and the United States specifically. As stated in the case description, the US is the key market for diamonds, meaning that many customers are already interested in buying stones. Therefore, introducing them to a slightly different version of a well-known and beloved product is less risky. As for demographic variables, Argyle chose to target women as they are the main consumers of jewelry and beauty products in general.

The company differentiated its marketing strategy further and focused on older, mature females. There might be several reasons behind this decision: firstly, diamonds are an investment that is typically more affordable by mature people who enjoy financial stability. Further, analyzing the psychographic characteristics of the chosen segment, the company might have concluded that at an older age, women are more confident and less dependent on other people’s opinions. Hence, they may feel more at ease, settling on a more unconventional piece of jewelry that is “champagne” or “cognac” stones.

Among other psychographic qualities defined by Argyle were upward mobility, agility, and active lifestyle. Upward mobility was a valuable insight because it meant that women who have just acquired a higher social standing might want to communicate it to society. Diamonds have a lot of associations such as wealth, prosperity, and lavish lifestyle. Therefore, the women of the chosen demographic cohort may be willing to buy them not only because of their aesthetic appeal but also as a status symbol.

Lastly, the company had to take into account the behavioral patterns of the chosen market segment. Mature, wealthy American women were likely to buy “champagne” and “cognac” diamonds for themselves instead of expecting them as a gift. Aside from that, consumers with significant resources at their disposal could act on their desire to spoil themselves. It is not stated explicitly in the case description, but Argyle might have even timed their campaign around holidays to stimulate people’s desire to make themselves feel good.

By choosing the right segment, a company takes into account consumers’ diverse needs and seeks to serve them in the best way possible. In this case, market differentiation helps a company to discover market opportunities that might elude its contenders. For instance, in the case of Argyle, the producer located the demographic cohort of wealthy, older women who were not offered enough options with regard to unconventional jewelry. By capturing their psychographic and behavioral attributes, Argyle was able to turn the previously undesired product (yellow and brown diamonds) into a luxury purchase.

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Market segmentation can and does yield positive results because it helps companies streamline their resources. A company gains an opportunity to learn exactly which objectives require the most resources. It does not squander either money or time on segments with customers that will not choose the product. Instead of one marketing programme that is supposed to draw in all potential consumers, a marketologist can offer separate marketing and promotion plans that would reach out to diverse audiences. After some time, a company can make a further evaluation of the success of their campaign. Depending on the collected metrics, it can decide to redistribute its funds depending on the buying response: if a campaign was not exactly successful, it might need further investment for readjustment or be cancelled for good.

The last but not the least advantage lies in capturing historical and market trends. Without doing proper marketing research and staying up to date, companies might operate on a set of outdated notions. For instance, with regard to the analyzed case, Argyle could make a mistake by thinking that women will not buy jewelry for themselves: they would rather that their partners do it. However, the times have changed, and women in the West have gained a lot of purchasing power as well as changed their lifestyle. Today, they do not need a partner nor an occasion to treat themselves.

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