Jewelry Branding as an Independent Business

by Rimma Perova

Branding has recently drawn a lot of attention in the Russian jewelry industry. Jewelry manufacturing companies have realized, however, that not every trademark can inspire confidence in the buyer’s mind, thus forming a long-term preference.

As Oleg Kornilov, director of marketing at the Smolensk Kristall Jewelry Center, says, “The creation and promotion of a jewelry brand in Russia is an absolutely independent sphere of business, laborious and expensive. Its monetary value can be measured by the reputation, original design and traditional quality of the product.”

By the time the jewelry manufacturing company Smolensk Kristall Jewelry Center was founded,  the overwhelming majority of the polished diamonds branded as “Russian cut” had already been exported. The Russian people had a vague notion that classical polished diamonds named after their country enjoyed popularity around the world. It was high time to carve out a market niche. Fortunately, the stable facilities of the oldest company in the Russian diamond industry combined with the market potential of well-off buyers to make this an achievable goal. With its worst crisis three years in the past, the domestic Russian jewelry market still remained underserved and imperfectly competitive.

There were several further developments to consider. It was generally agreed that the best and most transparent plan to promote Russian-made jewelry in the domestic market was to manufacture for ourselves what we know we want, to choose the designs ourselves, to determine pricing policy ourselves, and, finally, to sell the products ourselves as we think most profitable.

Smolensk Kristall Jewelry Center was set up to bring this idea to life. Our independence helped us actively develop our product line and introduce Smolensk Diamonds into the domestic market. At present, we own seven boutiques under the name “Smolensk Diamonds,” and our products are also sold by our partners: the Moscow-based Arcade jewelry chain stores and St. Petersburg’s Jewelry Trade of the Northwest. 

In the five years we have been in business, many things have changed for the better, including the quality of our production, assortments and design, though it is still very difficult to compete with the world-famous jewelry brands. Enterprises manufacturing moderately priced items have made notable strides.

Unfortunately, many manufacturers are hesitant to invest in developing designs or making jewelry with large and expensive stones, though this unique segment of the market is considered the most prospective. Of course, entering this market niche requires large-scale advertising.

Dealers who sell foreign jewelry brands in Russia take out ads in glossy journals and put on creative PR events using celebrities. Russian jewelry manufacturers, on the other hand, are accustomed to placing their goods in sales outlets to be sold on commission, apparently thinking it is not their concern how and for what price their goods will be sold. This method of doing business is no longer effective today. It is not for nothing that those jewelry manufacturing companies that have achieved a certain level of stability, such as Russian Gems, Kast and Sakhajeweler, have begun investing in large stones. 

In my opinion, these companies, which are gradually strengthening their position, will come to be the leaders of the luxury market, which is very important to Russia, as the country is on the verge of entering the WTO. After all, the necessity to comply with strict regulations on customs, taxes and other payments can negatively affect the work of all Russian companies, including ours.

The hope for protection of domestic jewelry manufacturers’ interests rests on the Russian Jewelers Guild, for there is nobody else to lobby the government on our behalf. As far as I know, the Guild has submitted to the State Duma a package of measures intended to help our jewelry manufacturers compete effectively with the Western brands now flooding the Russian market. While such issues as VAT on rough diamonds and colored stones and gold bullion are being debated at the national level, jewelers must draw up their own marketing policy, taking into consideration international experiences and their own experience and intuition.

Our marketing policy is oriented toward expensive jewelry set with large stones—1, 2 or 4 carats and up. We are increasing what we spend on advertising the Smolensk Diamonds jewelry brand. This year, our budget for advertising has grown 70-80 percent. We use such well-known advertising venues as Vogue and Glamour JQ. We also stage many PR events to launch new boutiques and jewelry collections, and have sponsored a number of special events. For instance, we have created a prize in the shape of a horseshoe made of black gold set with diamonds, to be awarded to the owner of the winning horse at the annual races at Grand Prix Monte Carlo. There, everything is on a large scale: over 250 celebrities attend, serious money is at stake, and jewelry, high fashion and glittering advertisements are on display everywhere, in video clips, banners, and print ads, on banners hung from the stands and on TV. 

In addition, we have created a prize called the “Diamond Gramophone” to be awarded as part of the “Gold Gramophone” ceremonies. Proving once again that “diamonds are a girl’s best friend,” as the famous song has it, this year the prize has gone to the pop singer Valeria and the pop group VIAGRA. As part of the program “Moscow-Turin 2006,” we, along with the Olympic Committee of Russia, have created special prizes for the Russian medal winners: a unique collection of rings, each set with a 1 carat diamond.

We approach jewelry exhibitions very selectively as a means of marketing. With our items priced in the 0-plus range, and going up every year, we are occupying the high end of the market, in which demand can outstrip supply. Thus, it would not make sense to remove our jewelry assortments from the boutiques every time there is a trade show. Experience has proven that it is rather more effective to sell through our own boutiques and those of our partners, where 2 to 6 carat diamond jewelry is offered and buyers can see a good assortment, enjoy a friendly atmosphere and choose a piece of jewelry without pressure.

Over the past five years, we have invested tens of thousands of dollars in the development of our model lines of jewelry and the creation of new and unique collections, which are constantly being upgraded. Now we are sure that the best approach is to present anything new in the form of collections. In a jewelry shop where about 200 to 250 jewelry items are on display in the showcases, a collection of 10 to 25 items will most certainly attract attention. Each collection gets a unique name to stimulate consumer confidence. That will boost sales and ultimately advance our brand.