Folks…let’s play a game. And let’s call the game “Commodity”.
Here’s how it works. I give you the rules and set up the
situation …then the problem…you ponder it all a bit…come up
with an answer to the problem…and see how your answer compares
to Commodity’s answer. Ready? Here we go.
We begin in the realm of fiction. I’m going to create a saleable
commodity…and I think I’ll call it: X342. I’m going to start
marketing X342 hundreds of years before today…and I will make
it an item all persons of the world want. They want it because
I, in my insane cleverness, have made X342 extraordinarily rare
and difficult to obtain. I am going also going to make X342 very
very expensive. However, there’s a kicker here. Try as I
might…throughout the eons…I have been unable to build
obsolescence into X342. The little devil won’t deteriorate. I
know that deterioration is the key to repeat business. What to do
what to do? Okay…I say. I’ll devise a clever marketing ploy.
I’ll advertize it as indestructible. Who amongst you wouldn’t
buy something indestructible? No matter what you spend…you buy
it once…and then never have to replace it.
My scheme works and sales grow. However, while being expensive,
I tend to cater only to the elite. I want the hoi polloi to buy
too. I call in my marketing team. Give it significance, they
say. Tie it to romance, they say. Attach historical precedence
to it, they say. I listen…and I act on their advice. I don’t
know it all and I know I don’t know it all. They make sense. I
put their marketing ideas into practice. My sales grow
enormously…as does an insidious problem. New stockpiles of X342
are being added to the existing supply in the public’s
possession. Suddenly…I find myself in a situation where I have
to watch out for Over-Hang–the excess stock held by the
populace. What if the public suddenly decides to sell their
stockpiles below market price. I make some quick calculations.
The amount of X342 in public hands now exceeds some five hundred
million units…which is more than fifty times the amount I can
produce in any given year. Should there suddenly be a mass flux
in public attitude, and should the public suddenly be consumed
with an insatiable urge to turn in their excess stores of X342
in order to cull some quick cash, the price of X342 will drop
dramatically and I will be in deep doo-doo.
Here is the problem: What do I do in order to maintain my price
structure and keep the populace from opportunistically turning
in their supplies of X342 for cold cash?
We pause here as you all ponder the problem. I await a
respectful passage of time here. For those of you who are
We now leave the world of fiction and enter into the world of
reality. We change the name of X342 to something more realistic.
Okay okay. I got it. Let’s call–for those of you have not yet
guessed it–let’s call X342 a “Diamond”. Clever name, dontcha
think? Now, if you re-read the above, and replace diamond
wherever you see X342, you will have a situation that exists and
existed. But there was a solution.
One has to give the DeBeers cartel the credit of being the primo
genius of the world when it comes to marketing. In order to
preserve the price of diamonds and create the illusions of
stability…they did two things. I will label these as minor
genius and major genius. In the minor genius, the cartel controls
the outflow of rough in direct relation to the number of
impending marriages in any given year in the United States and
Japan. This creates price control. Ah…but major genius is
truly genius of the first order. DeBeers had only to create in
the minds of the women of the world the idea that the
sentimental value of their diamonds was worth more than money
could buy. Proof? You want proof? No woman alive will sell her
engagement ring, or any other diamond ring for that matter,
unless dire circumstances dictate the need. After all, this
diamond engagement ring and this diamond wedding band were given
to me by my husband/boyfriend/lover. Money can’t replace this
kind of sentiment…can it?
And there ya have it.
That’s it for this week folks.
Catch you all next week.
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