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The latest incarnation of the Faberge brand strives hard to reawaken the sense of mystery and drama created by the original, the jeweler to the Russian Czars whose eggs became a symbol of conspicuous consumption and beauty in the face of the Russian Revolution.

Since its purchase in 2007 by a South African mining firm, Faberge has undergone the divestment of some of its lower end properties, in preparation for the introduction of its new collection of jewelry. And this line is the high end, ranging in price from $40,000 to $7 million. But the introduction is occurring in a market in which the prices of polished diamonds have fallen 16 percent in the past year and observers anticipate a further 10 percent contraction of the luxury market.

To set itself apart, and perhaps to avoid the investments required to open multiple brick-and-mortar salons, Faberge will use its online store as its flagship—and virtually the only way for consumers to purchase its offerings. The sales associates staffing the Web site will be constantly available and speak several languages to appeal to the international market segment of the super-wealthy.

Another jewelry retailer, Blue Nile, has enjoyed great success selling diamonds online, but the sales model is quite different. Blue Nile’s average sales price is $1700—way below the least expensive item on Faberge’s site. It also offers specific criteria that consumers can use to assess its product, such as the cut and clarity of its diamonds. For Faberge, the site has to find a way to communicate the unique value of a hibiscus bracelet made up of almost 2500 stones.

To address this concern, Faberge hired IBM to design its Web site and create an in-store experience online. But first the company has to get people to visit the site, and to do so, it is relying mainly on the buzz of its name. The return of the Russian jeweler: Is such a promise enough to convince people to spend millions online?

Discussion Questions:

Do you think this strategy is viable? Why or why not?

William Lee Adams, “Would You Buy this $320,000 Brooch Online?” Time, October 12, 2009.

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