A Diamond Is Forever - Until It's Disrupted: Navigating Change in the Luxury Market - How New Entrants Navigate in a Disrupted Luxury Market

Abstract

This thesis explores how new entrants navigate disruption in the luxury market through the case of lab-grown diamonds. It examines the challenges they face and the strategies they adopt in an industry shaped by preconceptions, heritage, and incumbent resistance. Using a qualitative approach, including a systematic literature review and semi-structured interviews with founders of entrant firms and a luxury marketing expert, the study connects theory and practice to show how disruptors build competitive advantages. It addresses a gap in the literature by focusing on strategic responses to disruption in high-status, tightly controlled markets where change is often resisted. The findings reveal that lab-grown diamond firms in the diamond market face a core paradox: offering an affordable, accessible, and sustainable product in a segment historically defined by the opposite. They must overcome incumbent resistance and consumer skepticism about symbolic value. In response, they do not merely compete on price or sustainability but actively redefine the meaning of luxury. Their strategies include downstream differentiation through customization, co-creation, and emotional storytelling, as well as agile operations that reduce dependency on incumbent-controlled supply chains. Legitimacy and consumer trust are cultivated through strategic partnerships, brand-building, and a phased omnichannel presence that enhances both emotional and experiential value. Ultimately, the study finds that successful new entrants avoid direct imitation of traditional luxury models. Instead, they construct a new paradigm of luxury centered on ethical values, personalization, and emotional resonance. This thesis contributes to the theory on disruptive innovation by offering a nuanced understanding of how new players can reshape value creation in resistant luxury markets, thereby offering strategic insights for navigating disruption in other luxury or high-end industries.