A Diamond Is Forever - Until It's Disrupted: 
Navigating Change in the Luxury Market 
 How New Entrants Navigate in a Disrupted Luxury Market 
 
 
 
 
 
Authors:  
Daniella Milojkovic 
Yasmin Ghnayem 
Supervisor:  
Marouane Bousfiha 
Master’s Thesis in Innovation and Industrial Management 
Spring 2025 
Graduate School, School of Business, Economics, and Law, University of Gothenburg 
 
 
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. 
Keywords: Disruptive innovation, Disruptors Dilemma, Lab-grown Diamonds, Entrant 
firms, Market disruption, Entrant Strategy, Barriers to Entry, Veblen Goods, Diffusion of 
Innovation, the Diamond Industry and Luxury Market Strategy. 
 
 
Acknowledgements 
We would like to express our sincere gratitude to everyone who contributed to the completion 
of this thesis. First and foremost, we extend our heartfelt thanks to our supervisor, Marouane 
Bousfiha, for his continuous support. Your insights, enthusiasm and constructive feedback 
have been invaluable throughout this process.  
We are also deeply grateful to all the individuals who generously shared their time and 
expertise with us through interviews. Your willingness to share their time, experiences, and 
insights provided crucial context that helped shape our understanding of the topic and 
strengthened our overall analysis.  
Finally, we thank our friends and families for your encouragement and support throughout 
this journey. 
Thank you! 
 
Gothenburg - June 4th, 2025 
 
 
 
 
 
 
 
 
 
 
 
___________________________________________________________________________ 
 
Daniella Milojkovic            Yasmin Ghnayem 
 
 
Table of Contents 
1. Introduction 1 
1.1 Background 1 
1.2 Problem discussion 3 
1.3 Purpose and research question 3 
1.4 Delimitations 4 
1.5 Disposition 4 
 
2. Empirical context 4 
2.1 Diamonds as a Luxury Product 4 
2.2 The Diamond Industry 6 
2.3 Sustainability concerns 6 
2.3.1 Environmental impact 6 
2.3.2 Social concerns 8 
 
3. Literature Review 10 
3.1 Strategizing in the Luxury Industry 10 
3.1.1 Consumer perception and demand 10 
3.1.2 Customization 12 
3.2 Disruptive Innovation 13 
3.3 The Disruptor’s Dilemma 16 
3.4 Barriers to entry 18 
3.5 Diffusion of innovation 19 
3.6 Veblen Goods 21 
 
4. Methodology 23 
4.1 Research Strategy 23 
4.1.1 Qualitative Approach 23 
4.1.2 Abductive Reasoning 24 
4.2 Research Design 25 
4.3 Literature Review 27 
4.4 Data Collection 29 
4.4.1 Semi-structured interviews 29 
4.4.2 Sampling 30 
4.4.3 Interview Design 32 
4.5 Data analysis 33 
 
 
 
 
 
 
5. Findings 34 
5.1 Strategic Supply Chain Configuration as a Competitive Lever 35 
5.2 Building Credibility Through Channels and Community 40 
5.3 Customer Co-Creation and Strategic Adaptation 45 
5.4 Strategic Navigation of Institutional Barriers and Industry Disruption 50 
5.5 Market Positioning and Differentiation Strategies 56 
5.6 Value Creation and Customer Engagement 59 
 
6. Analysis 62 
6.1 Customization as a Luxury Driver 62 
6.2 Downstream Differentiation and Flexible Sourcing 66 
6.3 Building Trust and Legitimacy 69 
 
7. Conclusion 73 
7.1 Summary of Findings 73 
7.2 Practical Implications 74 
7.3 Limitations 75 
7.4 Future Research Directions 76 
 
Reference list 78 
 
Appendix 83 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
List of Figures 
Figure 1: Thesis Disposition 4 
Figure 2: The Five Adopter Categories of the Diffusion of Innovation Curve 20 
 
List of Tables 
Table 1: Inclusion and exclusion criteria 28 
Table 2: Overview of interviewees 31 
Table 3: Thematic analysis with first-order codes, second-order categories and an aggregated 
theme 39 
Table 4: Thematic analysis with first-order codes, second-order categories and an aggregated 
theme 44 
Table 5: Thematic analysis with first-order codes, second-order categories and an aggregated 
theme 49 
Table 6: Thematic analysis with first-order codes, second-order categories and an aggregated 
theme 54 
Table 7: Thematic analysis with first-order codes, second-order categories and an aggregated 
theme 58 
Table 8: Thematic analysis with first-order codes, second-order categories and an aggregated 
theme 61 
Table 9: Outlining the Analysis 62 
 
 
 
 
1. Introduction 
1.1 Background 
What happens when nature’s most enduring symbol of rarity and prestige can be replicated in 
a laboratory? Diamonds are the hardest naturally occurring material found on earth and have 
symbolized wealth and status since the 15th century (Horvath, 2015). Natural diamonds form 
deep within the Earth's mantle over the course of up to 3 billion years, rendering them both 
exceptionally rare and highly valued (Eterneva, 2024). For centuries, it was widely believed 
that such geological marvels could only be created by nature’s immense forces over time. 
However, this assumption has been fundamentally challenged by the emergence of lab-grown 
diamonds. Through technological innovation, lab-grown diamonds can now be produced in 
just hours (Kato, 2024) and these diamonds are optically, chemically, and physically identical 
to their mined counterparts (International Gemological Institute, n.d.). Their introduction 
marks a transformative disruption to an industry rooted in notions of authenticity, exclusivity, 
and luxury. 
In 2024, more than 50% of engaged couples reported that their ring featured a lab-grown 
diamond (The Knot, 2025). The invention of lab-grown diamonds in 1953 by the Swedish 
company ASEA, led by Erik Lundblad, marked a groundbreaking development in material 
science. Shortly thereafter, General Electric in the United States patented its method for 
producing what it termed “man-made diamonds” (Lundblad, 1988). These early innovations 
laid the foundation for a flourishing industry that has since revolutionized diamond 
production (Zimet, 2024). Today, two primary methods dominate lab-grown diamond 
manufacturing: High Pressure High Temperature (HPHT), the traditional technique, and 
Chemical Vapor Deposition (CVD), a more recent advancement (Butcher, 2023). Both 
methods now account for approximately half of the global supply, illustrating their 
widespread adoption and equal importance within the industry (Zimnisky, 2022). 
Over the decades, lab-grown diamonds have transitioned from niche industry applications to 
mainstream consumer products, experiencing a remarkable rise in demand. In 2016, 
lab-grown diamonds represented just 1% of the diamond jewelry market (Friesen, 2025); by 
2025, this figure is projected to reach 21% (Jaganmohan, 2024b). This surge in popularity is 
driven by four key factors identified by diamond industry analyst Ziminsky (2022). The first 
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factor is the virtually limitless supply of lab-grown diamonds. Unlike natural, also known as 
mined diamonds, whose availability is constrained by geological scarcity and market 
regulations, lab-grown diamonds can be produced in vast quantities. For instance, China 
produces 10 billion carats of lab-grown diamonds annually for industrial use, dwarfing the 
global production of 100 million carats of mined diamonds (Zimnisky, 2022). This abundance 
disrupts the traditional perception of diamonds as rare and exclusive, making them more 
accessible to a broader audience.  
Secondly, technological advancements and increased investment have significantly improved 
the quality of lab-grown diamonds, rendering them indistinguishable from their mined 
counterparts (International Gemological Institute, n.d.). These diamonds are graded using the 
same 4Cs (Carat, Cut, Color, and Clarity) and advancements have raised their quality while 
lowering grading and certification costs. As a result, lab-grown diamonds attract consumers 
seeking the aesthetic appeal of diamonds without the associated premium cost. The third 
driver is branding and proprietary design. Lab-grown diamonds offer unparalleled flexibility 
in terms of customization, enabling companies to cater to diverse consumer preferences. This 
includes producing high-quality diamonds at noticeably lower price points, where it is priced 
typically about 20% of the cost of mined diamonds. For price-conscious consumers or those 
indifferent to a diamond’s origin, lab-grown options are especially appealing. Finally, 
lab-grown diamonds stand out for their ability to create unique shapes and colors. Modern 
technology allows the production of diamonds in vibrant and rare shades, such as fully 
yellow diamonds, which are exceedingly rare in nature. This capability opens new design 
possibilities, appealing to niche markets and those with specific aesthetic preferences. 
(Zimnisky, 2022) 
The rise of lab-grown diamonds presents a compelling case of disruption within the 
traditionally rigid and image-sensitive luxury market. Luxury goods have long been 
associated with heritage, craftsmanship, scarcity, and symbolic value (Kapferer and Bastien, 
2012), which are characteristics that are being redefined by technological innovation and 
shifting consumer values. As lab-grown diamonds challenge the conventional markers of 
luxury, they also challenge incumbent firms and open the market to new entrants who must 
navigate a complex landscape of consumer perception, brand legitimacy, and industry norms. 
This disruption raises fundamental questions about what constitutes luxury in the 21st century 
and how emerging firms can craft strategies that resonate with evolving expectations. 
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1.2 Problem discussion 
While Christensen’s theory of disruptive innovation has become a foundational concept in 
strategic management, its explanatory power remains uneven across industries. In his 2018 
reconceptualization, Christensen acknowledged that the existing theory does not fully explain 
why disruptive entrants are sometimes able to move upmarket to challenge incumbents - nor 
why incumbents often retreat rather than resist. He also noted that in some sectors, such as 
luxury hospitality, disruption either unfolds very slowly or does not occur at all, with low-end 
entrants historically failing to displace high-end incumbents (Raynor, 2011). These 
observations highlight that disruption is not universal and does not follow a predictable path 
across industries. Despite extensive literature on when and why disruption occurs, there is 
still limited empirical research on how new entrants, especially in slower-moving or 
traditionally disruption-resistant markets like luxury, navigate these unique challenges. Our 
study addresses this gap by exploring the strategic behaviors and success factors of new 
entrants in a disrupted luxury market, thereby offering insights into how disruption unfolds in 
complex, high-status segments and what it takes to compete effectively. 
1.3 Purpose and research question 
The purpose of this thesis is to investigate how new entrants in a disrupted market navigate 
challenges and develop sustainable competitive advantages. Focusing on the case of 
lab-grown diamonds in the luxury jewelry market, this research examines the approaches 
these emerging players adopt to establish themselves, gain market share and compete 
successfully. By analyzing their strategic choices to industry dynamics, this study provides 
insights into how disruptors should strategize in the luxury sector. This leads to the following 
research question:  
 
How do new entrants navigate in a disrupted luxury market, what challenges do they 
encounter and what strategies do they employ to compete successfully? 
 
This question will be answered by studying the case of lab-grown diamonds. 
 
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1.4 Delimitations  
This study is delimited to the context of lab-grown diamonds as consumer goods within the 
luxury jewelry market, explicitly excluding their use for industrial or technological purposes. 
The focus is placed on new market entrants rather than incumbent luxury brands or legacy 
diamond producers. Furthermore, the study focuses on end-retailers, not resellers or 
companies that produce their own lab-grown diamonds. 
1.5 Disposition 
For clarity and structure, the thesis is divided into the following sections: 
 
Figure 1: Thesis Disposition 
2. Empirical context 
In this thesis, an empirical context is necessary to understand the specific dynamics of the 
diamond industry and luxury market, providing a concrete foundation for analyzing how new 
entrants navigate disruption. By examining factors such as sustainability concerns and 
geopolitical challenges in the supply chain, the study explores how theoretical concepts 
manifest in practice. This contextualization also supports a more comprehensive 
understanding of the complexity of the market and the various factors that shape how firms 
respond to disruption in a dynamic and competitive environment. 
2.1 Diamonds as a Luxury Product 
Diamonds stand out as a commodity due to their unique position in the luxury market. Unlike 
many other products, diamonds have historically been perceived as inherently luxurious due 
to their very nature. Most luxury goods are dependent on a high level of brand prestige rather 
and cannot simply rely on intrinsic qualities. However, given that diamonds historically only 
have existed on the luxury market, these types of products must be marketed and sold 
differently than products on the mass market. While there is no universally agreed-upon 
definition of "luxury," these products are traditionally characterized by high price and quality, 
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authenticity, exclusivity, and the ability to evoke positive emotions through hedonistic 
experiences (Wirtz et al., 2020). Kapferer and Bastien (2009; 2012) emphasize that 
exclusivity is essential to luxury. However, exclusivity can take different forms, particularly 
in luxury experiences. Holmqvist et al. (2019) introduce the concept of 
exclusivity-by-practice, which applies to activities requiring specific knowledge, such as 
playing chess. In contrast, exclusivity-by-price refers to items that not everyone can afford; 
while many can wear jewelry, only a select few can afford diamond jewelry. This concept 
suggests that luxury often requires a significant financial investment. For companies in the 
diamond jewelry sector, the challenge of exclusivity arises because lab-grown diamonds have 
disrupted exclusivity-by-price. With lower prices, diamond retailers can no longer control the 
exclusivity associated with their products. Luxury brands operate under 11 anti-laws, one of 
which states that luxury should not be too accessible (Kapferer and Bastien, 2012). This 
reinforces the importance of exclusivity, whereas if a product is widely available it risks 
losing its luxurious appeal. Historically, De Beers addressed this issue by creating an illusion 
of scarcity through vertical integration of the supply chain. However, with lab-grown 
diamonds, scarcity is no longer a defining factor. As more people wear diamonds due to 
higher availability and primarily affordability, they risk losing their exclusivity and 
desirability.  
Consequently, lab-grown diamonds not only disrupt the mined diamond industry but may 
also undermine their own luxury status, leading to cannibalization (Flesher & Reiter, 2024). 
Luxury brands often rely on emotional narratives and heritage to justify high price points 
(Bastien & Kapferer, 2012). However, the narrative around lab-grown diamonds often 
emphasizes affordability and sustainability, which traditionally are not attributes in the luxury 
segment. This positioning further accelerates the shift from exclusivity to accessibility. 
Moreover, the potential for cannibalization is heightened by the current market landscape, 
where transparency and ethical considerations play an increasingly important role in 
consumer decision-making (Flesher & Reiter, 2024). While sustainability is a growing 
priority, it may not be enough to maintain the wanted status of lab-grown diamonds if they 
are widely available and lack a sense of rarity. Brands must therefore strike a delicate balance 
between promoting lab-grown diamonds as ethical alternatives and preserving the sense of 
luxury. 
 
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2.2 The Diamond Industry 
The diamond industry has traditionally been dominated by a few major players, with the 
South African-British company De Beers at the forefront. Another key player is 
Russian-owned Alrosa, which, together with De Beers, controls approximately 60% of the 
global diamond market (Jaganmohan, 2024a). Both companies maintain extensive vertical 
integration, overseeing nearly every stage of diamond production, from mining and cutting to 
distribution and retail (ALROSA, 2025; DeBeersGroup, n.d.). This level of control has 
allowed them to significantly influence the global diamond supply chain, including pricing 
and availability. 
In contrast, the lab-grown diamond sector has developed under a different market structure. 
Unlike mined diamond producers, most lab-grown diamond manufacturers do not own their 
own retail outlets. As a result, companies selling lab-grown diamonds have access to multiple 
suppliers, creating a more competitive and decentralized market. However, only a few 
lab-grown diamond companies are involved in the entire supply chain, from production to 
retail (Flesher & Reiter, 2024). 
While there are many companies in the diamond industry that do not control their own supply 
chains (Flesher & Reiter, 2024), the mined diamond market remains less fragmented than the 
lab-grown diamond market. This is largely due to the high barriers to entry, including the 
substantial capital investment required for exploration, mining, and regulatory compliance 
(Flesher & Reiter, 2024). In contrast, lab-grown diamond production, while still requiring 
technological expertise, has fewer entry barriers, leading to a more diverse and competitive 
market landscape . 
2.3 Sustainability concerns  
2.3.1 Environmental impact  
The production of diamonds, whether mined or lab-grown, entails distinct processes with 
markedly different environmental footprints. Mined diamonds are extracted via one of four 
mining techniques: open-pit, marine, alluvial, and underground (Oluleye, 2021). The mining 
process is a sequential procedure consisting of eight key phases: exploration, ore processing, 
cleaning, sorting, and packaging, culminating in the sale of the rough diamonds (Worthy 
Staff, 2023). In contrast, lab-grown diamonds are produced through one of two methods: 
6 
 
High Pressure High Temperature (HPHT) or Chemical Vapor Deposition (CVD) (Butcher, 
2023) . Despite differences in production, both mined and lab-grown diamonds follow the 
same post-production steps: after being sold as rough diamonds, they are cut, polished, and 
sold as gemstones. The final stage, closure and rehabilitation, involves potential reparation or 
cleaning of the diamonds (Flesher & Reiter, 2024). The leading producers of mined diamonds 
include Russia, Botswana, Canada, Angola, and South Africa (The Global Economy, 2024). 
A study by Sun et al. (2024) introduces the Diamond Environmental Impacts Estimation 
(DEIE) model, designed to assess the real and long-term environmental effects of diamond 
mining. The authors evaluate the industry's impact based on three key indicators: greenhouse 
gas (GHG) emissions, mineral waste, and water usage. Their analysis applies the Shared 
Socioeconomic Pathways (SSPs) and Representative Concentration Pathways (RCPs) to 
forecast future trends. The SSP2-2.6 scenario is a "middle-of-the-road" trajectory assuming 
global warming to reach between 2-2,6 degree celsius until the year 2100. The annual GHG 
emissions from the global diamond industry are projected to reach 13.26 metric tons (Mt) by 
2100, with 582.84 Mt of mineral waste and 107.95 million cubic meters (m³) of water usage. 
Additionally, the study examines the environmental impact of lab-grown diamonds as an 
alternative to mined diamonds. The authors present two different projections for lab-grown 
diamonds market share in 2100: (1) A conservative estimate based on the 2022 annual growth 
rate (0.42%), resulting in a lab-grown diamonds market share of 36.98%. (2) An optimistic 
scenario incorporating external factors, such as shifting consumer preferences and 
government incentives, which projects an annual growth rate of 0.84%, leading to a 72.26% 
market share. By comparing these projections to the mined diamond industry under SSP2-2.6 
and RCP2.6 in the year 2100, the study estimates significant environmental benefits. The 
low-end scenario suggests a reduction of 341.33 Mt of mineral waste, while the high-end 
scenario projects a 421.06 Mt reduction. Water savings could exceed 10 million m³ in both 
cases. On the emissions front, the high-end scenario could cut GHG emissions by 9.58 Mt. 
(Sun et al., 2024) 
Other serious environmental risks with mining mined diamonds include biodiversity loss, 
deforestation, and groundwater contamination. Large-scale operations disrupt ecosystems, 
destroy habitats, and contribute to species displacement. Open-pit mining can pollute water 
sources with ammonia and heavy metals, while consuming up to 7,300 liters of water per 
carat. Soil erosion, acid mine drainage, and toxic tailings further degrade land and water 
quality. Deforestation in mining zones reduces carbon sequestration and contributes to 
7 
 
climate change, with some operations emitting up to 160 kg of CO₂ per carat. In addition, 
underground mining can cause sinkholes and irreversible land subsidence, endangering both 
communities and ecosystems. (Oluleye, 2021) 
Overall, the environmental impact of mined diamond mining is greatly affecting the earth's 
resources. In contrast, lab-grown diamonds present a substantially lower environmental 
burden, particularly under scenarios of growing market adoption. As demand for sustainable 
products increases, particularly for younger consumers (Majidi, 2024), these findings 
highlight the potential of lab-grown diamonds to reshape the diamond industry, both as an 
alternative product and as a response to ascending environmental pressures. 
2.3.2 Social concerns  
The diamond industry has faced intense scrutiny for decades, with stakeholders demanding 
greater transparency in gemstone sourcing. Growing consumer awareness of the industry's 
ethical implications and environmental impact has further amplified these concerns. 
The term “conflict diamonds”, or commonly known as “blood diamonds”, refers to “rough 
diamonds used by rebel movements or their allies to finance conflict aimed at undermining 
legitimate governments” (Kimberley Process, 2016). The definition was established by the 
United Nations in the 1990s, during the outbreak of rebel-led civil wars in Africa, that were 
funded by their diamond sales (The Editors of Encyclopedia Britannica, 2016). Three of the 
most significantly affected countries were Angola, the Democratic Republic of the Congo 
(DRC), and Sierra Leone - nations rich in diamond resources. Rough diamonds from these 
regions were smuggled and sold to Western markets, where, once polished and cut, their 
origins became untraceable (The Editors of Encyclopedia Britannica, 2016). This lack of 
traceability raised significant consumer concerns, particularly as reports of extreme human 
rights violations towards diamond mine workers emerged.  
In 2000, the UN Security Council released a report, also known as the Fowler report, 
highlighting the presence of blood diamonds in the global market (Angola, 2000). The report 
placed De Beers - who were then controlling 60% of the global diamond trade - under intense 
scrutiny for its mining activities in Africa. Additionally, it criticized the Antwerp market, the 
world's largest diamond trading market, for failing to verify the origins of diamonds sold 
within its network (Angola, 2000). As a response, the Kimberley Process was established in 
2003, bringing together trade associations, human rights organizations, and the UN to 
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develop a certification scheme aimed at ensuring that exported diamonds were conflict-free 
(The Editors of Encyclopedia Britannica, 2016). While the initiative achieved some success - 
leading to greater governmental control over diamond mining instead of rebel groups, and 
reducing the share of conflict diamonds in the global market to less than 1% by 2010 - 
criticism persisted (The Editors of Encyclopedia Britannica, 2016). 
Some human rights organizations argue that the UN’s definition of conflict diamonds, which 
focuses on rebel group involvement, overlooks cases where governments themselves engage 
in abuses of power and human exploitation. The 2008 violence in Zimbabwe, where the army 
killed 200 miners and committed widespread abuses such as rape and enslavement, 
highlighted a limitation of the Kimberley Process definition of conflict diamonds (Baker, 
2019). Because the violence was perpetrated by state forces, not rebel groups, it did not 
technically constitute a breach of the protocol. Furthermore, the Kimberley Process has faced 
widespread criticism for its weak enforcement and limited impact. In 2014, experts estimated 
that around 140,000 carats of conflict diamonds from the Central African Republic were 
smuggled into the legitimate diamond market (Baker, 2019). This is especially alarming 
considering these diamonds were believed to have funded approximately $24 million for the 
2013 genocidal conflict (Baker, 2019). The subsequent ban on the Central African Republic 
from the Kimberley Process was largely condemned as inadequate. This urges the concerns 
among consumers, about the lack of reliable fair trade certifications, to ensure that the 
diamonds bought have been sourced ethically. This has fueled ongoing debates about 
redefining what constitutes a conflict diamond and the need for greater control over the 
diamond trade, to ensure that diamonds are mined ethically (The Editors of Encyclopedia 
Britannica, 2016). 
With today’s technology, new possibilities emerge. One innovative way to ensure ethical 
sourcing is through Distributed Ledger Technology, a foundational component of blockchain 
technology. DLT enables a transparent, tamper-proof digital record that can track a diamond’s 
journey from its origin to the final buyer. Each diamond is assigned a unique digital identity 
stored on the blockchain, which records key details such as its source, ownership history, and 
certification. This creates an immutable chain of data, allowing stakeholders to verify the 
diamond’s ethical sourcing and track its movement both forward and backward in the supply 
chain. For the mined diamond industry, this means greater control and ensuring consumers 
about the product they are buying are ethically extracted. Furthermore, the technology could 
also be used to ensure authenticity for sellers and buyers, for example to identify if it is a 
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lab-grown diamond or mined diamond which has been a rising concern due to the similarity 
between the two today (O’Neal, 2019). 
3. Literature Review 
This chapter outlines the theoretical foundation for analyzing the emergence of lab-grown 
diamonds. The literature review is organized into five sections. First, lab-grown diamonds are 
introduced, covering their development, market presence, and relationship to luxury. 
Additionally, the review explores how established luxury firms are responding strategically, 
including through customization and redefinitions of exclusivity. Second, the theory of 
disruptive innovation is used to assess the impact of lab-grown diamonds in the mined 
diamond industry. Third, the so-called Disruptor’s Dilemma is examined, highlighting the 
challenges disruptors face when incumbents respond through coopetition, imitation, or brand 
equity. Fourth, Diffusion of Innovation Theory is used to analyze how innovations gain 
acceptance over time. Finally, Veblen goods and conspicuous consumption are examined to 
understand how perceptions of luxury and status shape consumer behavior. 
3.1 Strategizing in the Luxury Industry 
3.1.1 Consumer perception and demand 
The perception of diamonds as symbols of love and eternity is not a coincidence; it was 
carefully crafted. Historically, diamonds have been valued primarily for their rarity. However, 
in the late 19th century, massive diamond mines were discovered, threatening their perceived 
scarcity. To protect their value, major industry players united to form De Beers Consolidated 
Mines, Ltd., an entity that controlled the entire supply chain from mining to retail, ensuring 
diamonds remained scarce in the market (Bergenstock et al., 2006). 
Despite these efforts, diamond prices eventually declined, prompting De Beers to shift its 
focus from controlling supply to shaping demand. Partnering with an advertising agency, they 
launched the now iconic slogan “A Diamond is Forever.” This campaign was designed to 
reinforce the idea that diamonds should never be resold, preserving their exclusivity. At the 
same time, De Beers strategically linked diamonds to love and commitment, successfully 
making diamond engagement rings the cultural norm. In doing so, they transformed what is 
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in reality simply small crystals of carbon, into universally recognized symbols of wealth, 
power, and romance (Whitfield, 2024). 
The perception of diamonds has been constant for more than a century, but with the rise of 
lab-grown diamonds, this idea has shifted. Keech et al. conducted a compelling study in 2020 
in which participants, unknowingly evaluating two identical rings, rated the one labeled 
“lab-grown” as less valuable and prestigious than the “naturally mined” diamond, despite 
recognizing it as the more ethical choice. This finding aligns with research by Luchs et al. 
(2010), which suggests that labeling a product as “sustainable” can sometimes be a 
disadvantage rather than an advantage, where it enhances the perceptions of inferiority 
compared to non-sustainable alternatives. This effect is particularly pronounced for products 
that consumers expect to be “strong”. While it remains unclear whether customers associate 
lab-grown diamonds with being strong, their reputation with heavy focus on sustainability 
may inadvertently contribute to their lower perceived value and prestige. Today, younger 
consumers are often seen as highly influenced by, and aware of environmental and 
sustainability efforts in their purchasing decisions. Stakeholders in the luxury sphere believe 
their behavior in the luxury market will follow the same trends, adding pressure on the luxury 
houses to change their strategies (Winston, 2017). Unsurprisingly these consumers, or 
specifically millennials, born between 1981 and 2000, are the generation that find luxury and 
sustainability most contradicting yet, it does not refrain them from luxury purchases. 
Millennials are notably more conscious of sustainability in their everyday purchases, with a 
2023 U.S. study showing that 80% consider sustainability a key factor influencing their 
buying decisions (Majidi, 2024). Paradoxically, when it comes to luxury, millennials actually 
care equally as much, or little, about sustainability in luxury purchases as the previous, older 
generations (Kapferer & Michaut-Denizeau, 2020).  
This can be attributed towards two main reasons. Firstly, that the high price inherently means 
that the products are uncompromised vis-à-vis fast fashion or mass market products. 
Secondly, luxury purchases are bought on such rare instances that it is merely a parentheses 
in otherwise sustainable shopping habits. This is an interesting point, given that the 
millennials are now the biggest luxury consumer (Bain & Company, 2025) and are also 
currently in the prime age group for engagement-related purchases, such as diamond rings 
(Francis-Tan & Mialon, 2015). Despite their strong advocacy for sustainability in everyday 
consumption, their preferences in the luxury market suggest that factors like tradition, 
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exclusivity, and heritage may hold greater influence. This indicates that while lab-grown 
diamonds offer a compelling alternative, they still face challenges in reshaping consumer 
perceptions in this segment. 
3.1.2 Customization 
Over the past few decades, mass production has become increasingly dominant in consumer 
markets. In response to its inherent lack of differentiation, there has been a marked rise in 
demand for customization. This shift has been largely enabled by technological 
advancements, which now allow consumers to play an active role in the design of their 
purchases, resulting in products that feel personal and unique. In the luxury sector, 
customization is not a new concept, but its relevance has grown significantly in recent years. 
Yoo and Park (2016) found that a high degree of customization can strengthen brand loyalty 
and improve customer retention. Their study revealed that consumers who value hedonistic 
pleasure, social signaling, and creative expression are particularly responsive to the option of 
customization. Hedonic value stems from the enjoyment of the customization process itself, 
social value is tied to the desire to extend one's identity through association with a luxury 
brand, and creative achievement arises from the pride of having designed a personalized 
product. Interestingly, the study also revealed that even customers with initially low brand 
loyalty, particularly those driven by hedonic and social motivations, are especially receptive 
to customization, which increases the likelihood of them selecting the brand in future 
purchases. Expanding on this, Choi et al. (2022) found that luxury customization can 
significantly enhance consumers’ subjective well-being. Notably, this effect was not observed 
in the context of non-luxury products, underscoring the unique role that customization plays 
in the luxury segment. 
However, the growing emphasis on customization presents a critical challenge, namely the 
potential dilution of brand identity. As customization becomes more extensive, it becomes 
harder for brands to maintain a consistent visual and symbolic identity across bespoke pieces 
(Moreau et al., 2020). When consumers exercise their desire for self-expression, the brand’s 
distinct markers may become obscured, potentially diminishing the social value derived from 
brand equity. One way to address this dilemma is by limiting the extent to which consumers 
can personalize a product (Moreau et al., 2020). While this can help preserve brand identity, 
it risks reducing the emotional and creative benefits that customization offers, particularly for 
12 
 
consumers driven by hedonistic and creative values. An alternative approach is to ensure that 
branding elements remain visible and recognizable, whether through conspicuous or subtle 
cues. This strategy allows the brand to uphold its symbolic value, ensuring that status signals 
are still communicated to others, thereby preserving the product’s social appeal (Moreau et 
al., 2020). 
3.2 Disruptive Innovation 
The now prevalent terminology that is Disrupted Innovation was initially coined by 
Christensen and Bower in an Harvard Business Review Article from 1995, and two years 
later Christensen launched his book titled The Innovator's Dilemma (1997) further expanding 
the understanding of the phenomenon. Disruptive Innovation is a process that in essence 
explains how new products, services, or business models initially enter a market by targeting 
overlooked or underserved segments with simpler, more affordable, or more accessible 
offerings. Over time, these innovations improve in quality and performance, eventually 
moving up-market to challenge and potentially displace established incumbents. One key 
takeaway from this article is that Disruptive Innovation differs significantly from the original 
product it seeks to replicate. Specifically, disruptive innovation often underperforms in at 
least one attribute valued by mainstream customers. Consequently, disruptive innovations 
typically start by targeting overlooked or lower-end market segments where incumbent firms 
are less focused. Even though there is a resource asymmetry in favor of the incumbents, the 
disruptors offer more simple, affordable, or accessible alternatives, which leads to these 
innovations gaining a foothold and building a loyal customer base. Over time, as the 
disruptive technology or business model improves in quality and functionality, these entrants 
move up-market, attracting more demanding mainstream customers. This gradual upward 
migration challenges established players by redefining value and shifting customer 
expectations. The ability to scale from niche beginnings to broader market acceptance is a 
hallmark of successful disruption, illustrating how new entrants can transform industries by 
leveraging initially overlooked opportunities.  
In the case of lab-grown diamonds, their affordability has expanded access to diamond 
jewelry for a broader consumer base. This includes both former non-consumers, who 
previously found diamonds financially out of reach, and occasional buyers, who can now 
afford to purchase diamonds more frequently or in larger quantities. The commercialization 
of lab-grown diamonds has broadened consumer access and expanded the market beyond 
13 
 
traditional engagement rings, making diamonds more accessible for a wider variety of 
jewelry. 
A key consideration within the scope of disruptive innovation is defining what truly falls 
under this theory. Schmidt and Druehl (2008) clarified the terminology by distinguishing 
between two types of innovations that disrupt markets in different ways: pure disruptive 
innovation and sustaining innovation. The separation between these two types of innovation 
is crucial, as it profoundly influences the way incumbents perceive and respond to these 
innovations. Interestingly, sustaining innovations initially disrupt the market to a larger 
extent, which is why confusion between the two often arises. What differentiates the two 
essentially comes down to which consumer group the innovation aims to target. Sustaining 
innovations initially infringes on the high-end of an existing market, only to diffuse 
downward later. Because they pose an early and visible threat, incumbents tend to react more 
quickly. Hence, while these products do disrupt the market, they are not actually disruptive 
innovations. Sustaining innovations are improvements or advancements made to existing 
products, services, or processes that enhance their performance, features, or value for current 
customers. Unlike disruptive innovations, sustaining innovations do not create new markets 
or fundamentally change industry dynamics; instead, they focus on meeting the evolving 
needs of established customers within existing market structures. These innovations help 
incumbents maintain their competitive position by delivering better quality, greater 
efficiency, or additional functionalities. In contrast, truly disruptive innovations go about it 
the opposite way, starting in the low end to gradually diffuse upward to the high-end. 
Christensen et al. (2018) describes these as initially inferior to the products offered by the 
incumbents. This often leads established firms to underestimate their impact. This lack of 
early response and strategic adaptation is what ultimately makes these innovations disruptive, 
as they reshape entire market ecosystems over time. 
Incumbent reactions to disruptive innovations are a crucial factor to consider when evaluating 
how new entrants should formulate their strategies. Disruptive innovations often begin with 
inferior performance on some traditional metrics but offer a new value proposition, such as 
lower cost or greater accessibility, that appeals to underserved or overlooked customer 
segments. Because these innovations typically emerge in low-end or entirely new markets 
with lower margins and less clearly defined customers, incumbents tend to dismiss or 
deprioritize them (Christensen et al., 2018). However, as the disruptive innovation improves 
14 
 
and begins to target mainstream customers, incumbents typically respond in one of three 
ways: by fighting the entrants, by moving further upmarket, or by taking no action at all. 
According to Gilbert (2005), the nature of the incumbent's response depends in part on 
whether they perceive the innovation as a threat or an opportunity. When seen as a threat, 
firms are more likely to allocate significant resources to counter it; when viewed as an 
opportunity, the response tends to be weaker, often by not countering it at all. Another 
common response is moving further upmarket, as outlined by Adner and Zemsky (2006). In 
doing so, incumbents seek to maintain profitability by targeting even higher-margin 
segments. The strategy of moving further upmarket can be seen as a form of retreat. Instead 
of confronting the disruptive innovation directly, incumbents shift their focus to 
higher-margin segments, effectively abandoning the lower end of the market and conceding 
ground to the disruptors. 
Lab-grown diamonds exemplify disruptive innovation for several reasons, the most 
significant being their initial focus on the lower end of the market before gradually moving 
up to compete with mined diamonds. Additionally, as Christensen et al. (2018) explains, 
disruptive innovations often possess attributes that are, in some way, perceived as inferior to 
the original product. Although lab-grown diamonds and mined diamonds are chemically and 
physically identical, the rarity of mined diamonds shapes consumer perception, making 
lab-grown diamonds appear less valuable and thus aligning with Christensen’s definition of 
disruption. Moreover, lab-grown diamonds qualify as a green innovation due to their 
environmental and ethical advantages (Sun et al., 2024). Green products are often perceived 
as inferior to their conventional counterparts, a pattern that applies to lab-grown diamonds as 
well. While their ethical benefits appeal to consumers, lab-grown diamonds have yet to attain 
the same perceived value as mined diamonds, reinforcing their classification as a disruptive 
innovation (Keech et al., 2020). 
Another extremely important anecdote in christensen et al. (2018) is the clarification that 
disruption is not a constant, but rather a relative phenomenon. In other words, whether an 
innovation is considered disruptive depends on the specific firm and its business model. An 
innovation may be sustaining for one company while being disruptive to another. The 
disruptiveness of an innovation is closely tied to how well it fits within a firm’s current 
approach to generating revenue. Consequently, no innovation is inherently disruptive, but it is 
often the strategic choices made by firms that determine its trajectory. This perspective is 
15 
 
highly relevant in the case of lab-grown diamonds. For traditional jewelry retailers that rely 
on mined diamonds and position themselves around scarcity, heritage, and high-margin 
luxury, lab-grown diamonds pose a disruptive threat. These firms often struggle to integrate 
lab-grown alternatives without diluting their brand identity which plays an important role in 
their profit model. In contrast, for new entrants or digitally native brands with leaner 
operations and value propositions centered on affordability, sustainability, and transparency, 
lab-grown diamonds are a sustaining innovation perfectly aligned with their business models. 
As such, the disruptiveness of lab-grown diamonds is not inherent to the technology itself, 
but emerges from how different firms choose to position and incorporate it within their 
strategic and operational frameworks. 
3.3 The Disruptor’s Dilemma 
Innovation alone, no matter how groundbreaking, does not guarantee success. Execution, 
scaling, and overcoming market resistance are just as, if not more, important for an innovator. 
In the case of disruptive innovation, a new product challenges an existing one, but simply 
offering an alternative is not enough to create a lasting competitive advantage. The disrupted 
market operates within a complex ecosystem that cannot easily adapt to a new innovation. 
Meanwhile, incumbents, feeling threatened, often retaliate to protect their position. With 
advantages such as economies of scale, strong brand recognition, significant market share, 
and established customer trust, incumbents hold considerable power in shaping the 
disruptor’s path. This challenge is known as the Disruptor’s Dilemma; Where disruptors must 
strategically balance competition and cooperation, a concept known as coopetition, with 
incumbents. To succeed, they must simultaneously compete and collaborate with incumbents 
to create a sustainable position in the market which can be especially challenging for smaller 
companies who often have limited resources (Ansari et al., 2016). The Disruptor’s Dilemma 
is not a single problem that can be addressed in isolation, but rather a broader challenge 
involving how a disruptor should strategically position itself to compete effectively in the 
market. 
While there is no one definitive solution to the Disruptor’s Dilemma, several strategies can 
help disruptors build sustainable competitive advantages over time. A key insight, as 
highlighted by Ansari et al. (2016), is that long-term success in disruptive innovation often is 
dependent on a firm’s ability to continuously evolve its strategic direction, technological 
capabilities, and network positioning within the broader market ecosystem. TiVo, a successful 
16 
 
pioneer of the Digital Video Recorder, exemplified this through their dynamic approach in 
navigating tensions between collaboration and competition with incumbents. Their efforts 
involved reducing the perceived threat posed by their innovation, forming alliances with 
progressive industry stakeholders, and demonstrating resilience in the face of early 
challenges. When TiVo’s actions sparked resistance within certain actors, they altered their 
strategies to re-engage stakeholders and address concerns, showing a willingness to adapt and 
find common ground. 
In addition, emphasize the strategic value of forming alliances not just with established 
companies, but initially with stakeholders who remain relatively unaffected by the disruption. 
These early allies, who may benefit from the disruptor’s innovation, can offer vital resources, 
including funding, insights, and operational support, that enable the disruptor to improve their 
unique value proposition. Such partners might include venture capitalists, actors from other 
industries, or niche players within the existing ecosystem who are more open to innovation. 
Free from the current market traditions and bureaucratic ways-of-working that can often 
hinder dominant incumbents, using these partners can facilitate market entry and assist in 
challenging times. 
While forming alliances and relationships holds great value, to which extent this is necessary 
depends on the market dynamics. Ansari et al. (2016) points out how their findings are 
profoundly dependent on the rules of the market of the particular case they chose to study. 
The actors in this industry were highly connected, and the market ecosystem was generally 
open, involving numerous players. Moreover, the industry itself was heavily interconnected 
with other industries which naturally increases the number of actors where an alliance might 
be beneficial. Nonetheless, in markets characterized by the opposite conditions, with closed 
ecosystems and low interdependencies, the rules might look different and reciprocal 
coopetition might not be as important. This uncovers a gap in the current literature, which 
Ansari et al. (2016) also point out. The diamond industry is a textbook example of a market 
with a closed ecosystem and low levels of interdependence among actors. It has traditionally 
been dominated by a few powerful incumbents who exert significant control over supply 
chains, distribution channels, and even consumer perceptions. Still today, De Beers and 
Alrosa group account for 60% of market share in the mined diamond market (Jaganmohan, 
2024a). In such an environment, opportunities for collaboration are limited, and new entrants 
often face significant barriers when trying to form alliances or gain access to critical 
17 
 
resources. This makes the dynamics of disruption, and the strategies needed to succeed, 
markedly different from those observed in more open and interconnected markets. 
3.4 Barriers to entry  
To understand how new entrants navigate challenges in a disrupted luxury market, it is 
essential to examine the structural forces that shape competitive dynamics and market access. 
One influential framework for analyzing these forces is Porter’s (1980) theory of barriers to 
entry, which identifies seven key sources: economies of scale, product differentiation, capital 
requirements, switching costs, access to distribution channels, cost disadvantages 
independent of scale, and government policy. These barriers form a protective shield around 
established firms, making it more difficult for new entrants to gain a foothold - especially in 
industries where reputation, tradition, and customer loyalty play a significant role. 
In the context of luxury markets, these barriers are further intensified by the intangible and 
symbolic nature of luxury value. According to Bastien and Kapferer (2012), luxury goods are 
distinguished not just by their functional attributes, but by emotional consumption, symbolic 
value creation, and heritage branding. These elements add cultural and social dimensions to 
traditional economic barriers. The luxury industry often relies on narratives of rarity, legacy, 
and exclusivity, creating additional hurdles for new entrants seeking to establish legitimacy 
and recognition. 
The first barrier, economies of scale, refers to the cost advantages that established firms enjoy 
due to large-scale operations. New entrants face a strategic choice: enter at scale, which 
increases capital exposure and risks triggering incumbent retaliation, or enter at a smaller 
scale and accept higher unit costs. This barrier can span multiple dimensions, including 
production, distribution, and marketing, which are areas where incumbents benefit from 
accumulated efficiencies. 
The second barrier, product differentiation, relates to the strength of existing brands and the 
loyalty they command among consumers. Differentiated products create psychological and 
emotional switching costs that go beyond price and function. In luxury sectors, where brands 
often hold deep symbolic significance, this barrier is particularly formidable. New entrants 
must invest heavily in branding and storytelling to compete with the emotional and cultural 
capital of established players. 
18 
 
Capital requirements, the third barrier, involve the significant financial investments necessary 
for market entry. In many luxury-related industries, large initial investments are needed for 
product development, production capabilities, marketing, and distribution. This deters 
potential entrants lacking substantial funding or long-term backing, and protects incumbents 
with established capital reserves. 
The fourth barrier, switching costs, refers to the expenses or inconveniences consumers face 
when changing suppliers. These costs may be financial, but in luxury markets they are often 
emotional or reputational, tied to identity and social signaling. As a result, new entrants must 
offer compelling value propositions that not only meet but exceed customer expectations in 
order to justify the switch. 
The fifth barrier, access to distribution channels, reflects the difficulty new entrants may face 
in securing effective and prestigious pathways to market. In luxury industries, distribution is 
often selective and built on long-standing relationships with trusted retailers or high-status 
platforms. New brands may encounter resistance from distributors who prioritize legacy 
players or face pressure to exclude newer, disruptive offerings. 
Cost disadvantages independent of scale, the sixth barrier, stem from incumbent advantages 
such as proprietary know-how, preferential access to resources, favorable locations, or 
government support. These structural advantages are difficult for new firms to replicate, 
particularly in industries where experience and learning curves drive efficiency gains that can 
be protected or internalized by incumbents. 
Finally, government policy can either reinforce or reduce entry barriers. Regulations such as 
licensing requirements, trade restrictions, certification rules, or environmental standards can 
selectively favor existing firms, either intentionally or through inertia. In some cases, 
governments may also shape consumer perceptions through official endorsements or 
standard-setting that privilege traditional practices over new innovations. 
3.5 Diffusion of innovation  
The Diffusion of Innovation theory, developed by Everett Rogers in 1962, seeks to explain 
how new ideas and technologies spread through a population. It examines the processes by 
which innovations are adopted, the reasons behind their adoption, and the rate at which this 
occurs. While the theory outlines patterns of adoption, it does not provide strategies for 
19 
 
motivating individuals to take action, which remains the task of firms attempting to bring 
new innovations to market. 
Rogers (1962) categorized consumers into five groups based on their willingness to adopt 
innovations: innovators, early adopters, early majority, late majority, and laggards. Adoption 
within a social system is not simultaneous; instead, it follows a process in which certain 
individuals are more inclined to adopt an innovation earlier than others. These categories 
form a bell-shaped curve, representing a normal distribution, where roughly half of the 
population falls on either side. The earlier adopters (innovators, early adopters, and early 
majority) are segmented into three distinct groups, while the later adopters (late majority and 
laggards) are grouped into two. This asymmetry reflects the more heterogeneous and 
distinguishable nature of early adopters compared to the generally more homogeneous late 
adopters. 
 
Figure 2: The Five Adopter Categories of the Diffusion of Innovation Curve (Rogers, 1962): Innovators, Early 
Adopters, Early Majority, Late Majority, and Laggards. 
 
Rogers (1962) also observed that early adopters possess different characteristics than later 
adopters. Understanding these traits is essential when promoting an innovation, as certain 
characteristics can either support or hinder adoption. Tailoring communication and 
engagement strategies to each group enhances the likelihood of success. For example, 
innovators are typically eager to experiment with new ideas and are comfortable taking risks. 
Early adopters, often regarded as opinion leaders, tend to hold influential positions within 
their communities and are quick to embrace innovations. The early majority adopt new ideas 
slightly ahead of the average person, while the late majority are more skeptical and only 
adopt an innovation after it has been widely tested and accepted. Finally, laggards are the 
most resistant to change and are the last to adopt new innovations, if they adopt them at all. 
20 
 
Most people tend to fall within the early and late majority categories, while innovators and 
early adopters - often younger and better educated - are seen as trendsetters or leaders within 
their social circles (Rogers, 1962). This segmentation allows new entrants to differentiate 
themselves from traditional competitors by targeting less saturated consumer segments and 
shaping the narrative around innovation, ethics, and transparency. As early adopters begin to 
showcase their purchases and influence social opinion, lab-grown diamonds gain symbolic 
legitimacy, creating a feedback loop that gradually lowers psychological and social barriers 
for the late majority. 
Additionally, Rogers (1962) proposes five attributes of an innovation that influence adoption: 
relative advantage, compatibility, complexity, trialability, and observability. Relative 
advantage refers to the extent to which the innovation is perceived as better than the product 
it is intended to replace. The theory suggests that the clearer the relative advantage, the more 
likely adoption becomes. Compatibility refers to how well the innovation aligns with the 
adopters’ wants, needs, and existing values. Higher compatibility increases the likelihood of 
adoption. Complexity represents how easy the innovation is to understand and use; the 
simpler it is, the more likely it will be adopted. Trialability refers to the ability to test or 
experiment with the innovation before making a full commitment. Finally, observability 
refers to the degree to which the benefits of the innovation are visible to others. If the 
perceived advantages are clear, observability is high, which increases the chances of 
adoption. 
Still, it's important to recognize that while the theory explains structural adoption patterns, 
luxury markets are also shaped by status signaling, identity construction, and emotional 
narratives - dimensions that interact with but may not always follow rational innovation 
dynamics. In the context of lab-grown diamonds, both symbolic and functional factors must 
be considered when analyzing adoption behavior and strategic positioning. 
3.6 Veblen Goods 
While the definition of luxury can be debated, diamonds undeniably function as a Veblen 
good, one that defies the typical law of demand. Instead of demand decreasing as price rises, 
Veblen goods experience the opposite effect: higher prices fuel greater demand. This 
phenomenon occurs because consumers associate elevated prices with status and exclusivity, 
increasing their willingness to pay (Bagwell and Bernheim, 1996). Thorstein Veblen (1961) 
21 
 
also coined the term ‘Conspicuous Consumption’, which essentially refers to the behaviour of 
buying Veblen Goods. This type of consumption is based on the idea that deliberately 
purchasing luxury goods and services enhances an individual’s social status by visibly 
showcasing their wealth. Veblen suggested that the high prices associated with Veblen goods 
are not what consumers seek for their own sake; individuals are not simply looking to be 
overcharged. Rather, they value these goods for their ability to act as status symbols, 
signaling wealth and social distinction. In this view, consumers are less driven by the 
product’s functional qualities and more by the social recognition and prestige that come with 
owning something few others can afford. In other words, the utility of such a purchase is 
derived from the status it conveys, not from the practical use of the product or the price itself. 
However, since the very idea of conspicuous consumption involves choosing more expensive 
goods over functionally identical alternatives, price does play a crucial role in shaping 
perceived utility. It is precisely because the product is expensive, and therefore exclusive, that 
it holds value in the eyes of the status-conscious consumer. 
Historically, Veblen’s theory was particularly evident in the mined diamond market, where 
De Beers' monopoly allowed it to control supply, pricing, and, consequently, demand 
(Whitfield, 2024). A defining characteristic of diamonds has been their perceived scarcity; as 
prices rose, so did the impression of rarity, further driving demand. However, this dynamic is 
now being challenged by the rise of lab-grown diamonds, which disrupt traditional notions of 
scarcity and exclusivity. The rarity of diamonds is also one of the reasons for their high price 
tag which under the theory of conspicuous consumption, enhances their appeal as symbols of 
wealth and status. For the conspicuous consumer, the value of a diamond is not solely based 
on its physical properties, but on the social meaning attached to its cost and exclusivity. 
Lab-grown diamonds, however, challenge this value proposition by offering visually and 
chemically identical alternatives at significantly lower prices. As lab-grown diamonds have 
become more widespread and accessible, they disrupt the traditional link between price, 
status, and eventually perceived utility.  
22 
 
4. Methodology 
4.1 Research Strategy 
This study adopts a qualitative approach to explore how disruptive innovation, specifically 
lab-grown diamonds, impacts the luxury jewelry market. Qualitative research is ideal for 
understanding the underlying factors, perceptions, and behaviors that drive market changes, 
aligning with a constructionist perspective that views reality as socially constructed and 
shaped by interactions (Bell et al., 2022). This approach allows for an in-depth analysis of the 
complexities involved in market disruption. The choice of this method, along with the use of 
a case study and abductive reasoning, will be discussed below. 
4.1.1 Qualitative Approach 
For this specific research question, a qualitative approach is especially appropriate due to the 
nature of the question which purpose is to understand the underlying factors influencing 
disruptive innovation in the context of lab-grown diamonds. A qualitative approach generally 
puts greater emphasis on the human experience and perception, which can better answer the 
research question in mind. Bell et al. (2022) describes this type of research as highly 
influenced by the ontological position of constructionism, which aligns with the premises of 
this study. The constructionist view is based on the idea that reality is not objective or 
constant, rather it is a social construct that is continuously changing through interactions 
between individuals (Bell et al., 2022). This perspective acknowledges that disruption in a 
market caused by innovation is not solely the result of technological advancements or 
economic factors, but allows for the impact made through subjective interpretations, 
behaviors, and decisions of various stakeholders. By adopting a qualitative approach which is 
grounded in constructionism, this study seeks to uncover how these socially constructed 
realities shape and redefine the meaning of innovation and disruption in the diamond 
industry. This type of approach also allows the analysis to delve into the nuanced and 
dynamic processes that influence market transformation. 
The main problem with using a qualitative method is the risk of researcher bias (Bell et al., 
2022). This can conclude in subjective, or even inaccurate conclusions. This issue affects 
multiple aspects of the research process, but it is particularly significant during the analysis 
and conclusion stage. Interpreting data, especially from interviews, is inherently subjective, 
23 
 
as interpretations can vary based on factors like non-verbal cues, tone, or personal 
perceptions. Another challenge closely linked to qualitative methods is the issue of reliability. 
Qualitative research is often difficult to replicate for several reasons, particularly when 
interviews are involved (Bell et al., 2022). It may be impossible to interview the same 
participants again, their responses may vary over time, and in the case of semi-structured 
interviews, even the questions themselves might differ. Replication is crucial because it 
validates the results and ensures the reliability of the research. Without the ability to replicate 
findings, it becomes harder to verify their accuracy, which may reduce the overall credibility 
of the study. However, these issues can be mitigated through several strategies. To address 
researcher bias, it is essential to adopt a systematic approach to data analysis, such as using 
coding frameworks like the Gioia Method (Langley and Abdallah, 2011), which is discussed 
further below. This provides a structured and transparent way of organizing and interpreting 
data. To enhance the replicability of the study, detailed documentation is critical. This 
includes keeping complete records of the research process, such as the interview guide, data 
collection methods, and the explanations behind the methodological decisions. While 
qualitative studies inherently involve some level of variability, providing thorough 
descriptions of the context and procedures can aid future research to replicate key elements or 
adapt the study design to similar contexts (Bell et al., 2022). 
The alternative to a qualitative approach would be a quantitative approach. This type of 
research aims to measure social phenomena and specifically uses numeric data collection to 
do so. Quantitative research is in nature deductive, as it aims to test existing theories and 
relies on objectivism, which implies that reality is objective and independent of the observer 
(Bell et al., 2022). This method is well-suited for answering questions about ‘how much’ or 
‘to what extent’, however it may not capture the depth and complexity of human experiences, 
perceptions, and social interactions that is needed to answer the research question in this 
thesis. A quantitative approach would not fully address the nuances of disruptive innovation 
within the context of lab-grown diamonds, and therefore a qualitative method was chosen. 
4.1.2 Abductive Reasoning 
The research approach adopted for this paper is abductive reasoning, which Kovács & Spens 
(2005) explains as a combination of inductive and deductive reasoning. This approach is 
particularly well-suited for an exploratory study, which aims to develop a deeper 
understanding of the complex dynamics surrounding new entrants' strategic choices for 
24 
 
lab-grown diamonds in the luxury sector. The abductive process involves leveraging existing 
theories while simultaneously deriving new insights from the data collected (Bell et al., 
2022). This iterative process involves drawing on existing theories to develop initial 
explanations, then refining these explanations based on empirical data, and potentially 
contributing to theory development by identifying new concepts, relationships, or 
mechanisms that can enhance our understanding of strategic adaptation of disruptive 
innovation. 
The abductive process typically begins with a surprise or puzzling observation (Bell et al., 
2022). In the context of this study, the puzzle is the emergence and growing acceptance of 
lab-grown diamonds, which challenges the established norms of the luxury jewelry market. 
However, the response strategies of new entrants remain an area not adequately addressed by 
existing theoretical frameworks, further underscoring the relevance of abductive reasoning 
for this research. Specifically, the theory on Disruptive Innovation is well-suited for framing 
the problem - namely, identifying when and why disruption occurs (Christensen et al., 2018). 
However, it falls short in addressing solutions, such as what actions new entrants should or 
can take in response to the disruption. This gap aligns closely with the research question, 
which focuses on exploring how entrant companies should strategize in a disrupted market. 
Through this abductive process, the research aims to generate a more nuanced understanding 
of how entrants in a disrupted market have utilized the disruptive innovation to their benefit, 
potentially leading to the development of new theoretical insights or a refined framework for 
understanding strategic adaptation in the face of disruption. This abductive approach will be 
applied using qualitative data gathered through interviews and literature reviews to explore 
the complex dynamics at play. The data analysis will be conducted iteratively, involving a 
continuous dialogue between empirical findings and existing theoretical perspectives. The 
luxury market, with its emphasis on intangible values, brand heritage, and complex consumer 
perceptions, presents a unique context for studying disruptive innovation. An abductive 
approach is therefore well-suited to understanding the nuanced interplay of these factors and 
their influence on entrant firms' strategic choices. 
4.2 Research Design 
This study examines the luxury jewelry market as the industry context, focusing on the case 
of lab-grown diamonds as a disruptive innovation. Bell et al. (2022) discuss what constitutes 
25 
 
a case emphasizing that a case represents a specific, bounded system or phenomenon that can 
be studied in depth to generate insights. Thus, the definition of a case is dependent on the 
research context, purpose, and the boundaries set by the researcher. Whilst case studies can 
be either quantitative or qualitative, the latter enables for an intensive analysis due to the 
focused examination of a single case. By studying a broader question through a smaller case, 
situational aspects and distinct happenings can form an intensive analysis of the processes 
and interactions that contribute to the topic being studied. This approach allows for delving 
into the ‘how’ and ‘why’ of specific occurrences, which can offer detailed understandings 
that highlight the complexity and richness of real-world situations. Such insights can help 
build a more comprehensive understanding and contribute to theory development or practical 
applications (Flyvbjerg, 2006).  
In the case of lab-grown diamonds within the luxury jewelry industry, the emerging 
technology provides valuable insights into how new entrants are navigating a disrupted 
market. This case is particularly compelling as the industry is currently undergoing these 
changes, making the interviews timely and insightful. By speaking with companies and 
experts as they are experiencing the shift, we can gain a firsthand understanding of their 
perspectives, rather than relying on retrospective accounts, which may overlook or forget key 
thoughts, emotions and actions. Another reason why lab-grown diamonds are especially 
interesting to investigate is due to the technological advancements in the broader lab-growing 
industry, with an increasing number of products being developed in laboratories. As the 
technology becomes more refined and widespread, this research will provide valuable 
insights into how new companies in the luxury jewelry market are adjusting to and potentially 
benefiting from these innovations. Given the rapid growth and potential of this industry, the 
findings of this study could prove especially useful in shaping strategies and practices in the 
near future, as companies strive to stay competitive in an ever-evolving market. 
An inherent challenge of using case studies, similar to those faced in qualitative research 
methods, is their specificity, which makes replicability difficult. Goffin et al., (2019) 
highlights how case studies focus heavily on particular individuals, contexts, and events, and 
their outcomes are often shaped by the unique circumstances of time and place. In the context 
of lab-grown diamonds, where the technology and market are still relatively new and rapidly 
evolving, responses from interviewees might vary significantly if the same questions were 
asked just a few years later. The dynamic nature of this industry further complicates the 
26 
 
ability to replicate findings over time. Another limitation is that insights drawn from a single 
case may not always generalize to broader questions (Bell et al., 2022). While a case study 
can provide valuable, in-depth understanding, it represents only one instance within a larger 
phenomenon. Consequently, the findings from one case may differ significantly from another, 
which limits the amount a case can serve as a definitive answer to the overarching research 
question. To handle this issue as effectively as possible, several strategies can be employed. 
Firstly, transparent documentation of the research process, including the ideas behind the 
selection of the case, the methodology, and the interpretation of results, can improve the 
study's credibility and allow others to comprehend and potentially replicate key aspects of the 
approach (Goffin et al., 2019). Secondly, acknowledging the limitations of the case study in 
the conclusion section can ensure that the conclusions are appropriately framed within the 
context of the study (Bell et al., 2022).  
4.3 Literature Review 
This section outlines the methods employed to gather data for the study, ensuring a robust and 
comprehensive approach to addressing the research question. The secondary data collection 
process was focused on a systematic literature review and was amplified by an in-depth 
market analysis. The literature review provided a theoretical foundation by identifying and 
synthesizing existing knowledge on disruptive innovation, the lab-grown diamond industry 
and relevant theories that might aid in answering the research question. Meanwhile, the 
market analysis offered insights into current industry dynamics, key players, competitive 
strategies, and emerging trends within the lab-grown diamond and luxury sector. Together, 
these methods ensured a balanced approach, combining established theories with real-world 
developments to develop a deeper understanding of the research topic. 
According to Hiebl (2021), a systematic literature review requires three essential features: 
structure, comprehensiveness, and transparency. These features ensure that the review is 
methodical, thorough, and reproducible. The approach for this thesis has been designed to 
align with these principles. The first characteristic of a systematic literature review is that it 
must be structured, which involves conducting the process in a methodical and organized 
manner. A foundational step in achieving this is to define a clear and well-articulated research 
question. In this thesis, the research question integrates a theoretical framework, a specific 
industry, and a product. This clarity ensures that the review maintains focus and relevance. 
27 
 
To further refine the subject, a set of keywords was identified to guide the literature search. 
These keywords include Disruptive innovation, Lab-grown, Synthetic diamonds, Entrant 
firms, Market disruption, Entrant strategy, Veblen Goods, Diffusion of Innovation, and 
Luxury Jewelry market. These terms were carefully chosen to capture the core concepts and 
themes relevant to the research question. In some cases, keywords were combined with other 
relevant search terms, such as Luxury market + Demand shift, to refine the search and ensure 
precision. This structured approach enables a targeted exploration of the literature while 
reducing the risk of overlooking critical studies. 
The second attribute of a systematic review is comprehensiveness, meaning it should 
encompass all relevant literature on the subject. Achieving this requires the establishment of 
clear inclusion and exclusion criteria. According to Hiebl (2021), two primary criteria are 
used to determine relevance: the study’s contribution to answering the research question and 
its alignment with predefined inclusion criteria, which can be found below. 
Systematic Literature Review 
Inclusion Criteria - Peer reviewed academic articles 
- Written in Swedish or English 
 
Exclusion Criteria - Written in languages other than Swedish or 
English 
- Reports with an underlying political agenda 
 
Table 1: Inclusion and exclusion criteria 
The literature search was primarily conducted using Scopus, but was complemented by using 
Supersök, the University of Gothenburg’s database, Google Scholar and EBSCO. Articles 
that matched the keywords and met the inclusion criteria were systematically reviewed for 
relevance. To broaden the review’s scope, the snowball technique was employed. In this 
approach, references cited in relevant articles were examined to identify additional studies - a 
process known as backward searching (Bell et al., 2022). While this technique has the 
limitation of primarily uncovering older research, its effectiveness was balanced by 
employing forward searching to identify newer studies that cited the relevant works. This 
dual approach ensured a comprehensive and balanced review of both foundational and 
emerging literature. 
28 
 
While this approach is robust, some limitations should be acknowledged. First, the exclusion 
of non-peer-reviewed literature, while ensuring quality, may limit the range of perspectives 
considered. Second, solely using literature written in Swedish or English excludes literature 
published in other languages. To deepen the understanding of the research question further, a 
thorough market analysis has been conducted which can be found in the empirical context. 
Despite these limitations, the systematic approach provides a solid foundation for addressing 
the research question. The focus on peer-reviewed studies ensures that the insights drawn 
from the literature are reliable and relevant. The structured, comprehensive, and transparent 
methodology lays the groundwork for a thorough understanding of how entrants in a 
disrupted market should act, using the case of lab-grown diamonds in the luxury jewelry 
market.  
The findings of the literature review have been divided into three parts; empirical context, 
literature review and theoretical framework. The empirical context lays the ground for the 
entire thesis for the reader. It explains niche practices in the diamond industry and on the 
luxury market. Whilst this section does not aid in answering the research question per se, it is 
a cornerstone of the thesis, providing essential background for interpreting the subsequent 
analysis. Secondly, the literature review presents and synthesizes existing research on 
disruptive innovation and the lab-grown diamond industry, highlighting key findings, 
debates, and knowledge gaps. It provides a broad overview of what is already known and sets 
the stage for the study's contribution. In contrast, the theoretical framework narrows the focus 
by selecting specific concepts and theories to guide the analysis.  
4.4 Data Collection  
To complement the data collection, interviews were conducted with a diverse group of 
participants. These participants include representatives from a variety of companies from 
different countries specializing in lab-grown diamonds and also a researcher with expertise in 
the luxury industry. This varied selection ensures a multifaceted perspective on the research 
topic, capturing insights from both industry practitioners and experts within the subject.  
4.4.1 Semi-structured interviews 
A qualitative approach was chosen to prioritize the exploration of perceptions, experiences, 
and nuanced perspectives. Within this framework, semi-structured interviews were deemed 
the most appropriate method. This format combines structure with flexibility, allowing a 
29 
 
guided discussion through pre-developed questions while enabling the interviewer to adapt 
the sequence of questions or probe deeper into emergent topics (Bell et.al., 2022). The 
interview questions were carefully designed based on the research objectives and findings 
from the literature review. This alignment ensures that the discussions target the core aspects 
of the study while remaining open to capturing unexpected insights. Interviews were 
conducted via video- and phone-calls due to geographical distances that hindered face-to-face 
interviews. Each interview lasted between 30 and 60 minutes each, which provided time for 
in-depth exploration of participants' views and experiences. 
Ethical considerations were integral to the interview process. Participants were provided with 
detailed information about the study's purpose and scope and were required to give informed 
consent before participating. Confidentiality was provided as an option, ensuring that 
participants felt comfortable sharing candid insights.  
4.4.2 Sampling 
When choosing respondents, a combination of criterion sampling and convenience sampling 
was used. When using criterion sampling, participants are only selected if certain criteria are 
fulfilled, which are there to ensure that the research question is being answered (Patton, 
2015). To do this, the following criterion was selected where one needed to be fulfilled in 
order to be a suitable candidate: 
- Have previously or currently worked at, or with, a company with ties to the lab-grown 
diamond industry, in Europe. 
Undeniably, the pool of suitable candidates is limited. The diamond market is highly 
concentrated with a small number of key players. Therefore, convenience sampling was also 
employed. This method entails selecting participants who are easily accessible and willing to 
take part in the study (Marshall, 1996). Selecting participants partly based on convenience 
facilitates a larger volume of data collection. However, by combining criterion sampling with 
convenience sampling, the study ensures that the data remains both relevant to the research 
objectives and sufficiently substantial to yield meaningful results.  
While five interviews may initially seem limited, this number is more appropriate when 
considering the structure of the diamond industry. In a highly concentrated market dominated 
by a few key players, each major actor holds substantial influence. This high concentration 
30 
 
strengthens the relevance of each participant's perspectives and ideas, and means that insights 
from a small number of well-informed participants can still provide a deep and representative 
understanding of the industry given that in the diamond industry, a small number of 
companies control the majority of the market share. Each interview offers meaningful 
perspectives on the strategic priorities, challenges, and dynamics that shape the wider market. 
Additionally, the strategic roles held by the interviewees considerably strengthen the value of 
their insights. This thesis aims to explore how new entrants navigate and strategize within a 
disrupted luxury market, and how they position themselves in an industry long dominated by 
traditional players. And what better way to understand this than by speaking directly to those 
who helped shape these strategies from the very beginning, namely the founders of these 
emerging companies. Their perspectives provide first-hand information of the motivations, 
challenges, and strategic considerations involved in building a business in a transforming 
industry. Below is an overview of the respondents: 
Respondent Position Background Duration Date Language Interview 
guide (in 
appendix) 
Victor Founder and Founded VanBruun 12 44 minutes 2025-02-18 Swedish A1 
Halvarsson CEO of years ago, specializes in 
VanBruun diamond engagement 
rings. Offers both 
Lab-grown and mined 
diamonds. 
Anna Wallander Co-founder Co-founded Akind 6 49 minutes 2025-03-14 Swedish A1 
and CEO of years ago. Focus on 
Akind everyday gold and 
diamond jewelry. 
Exclusively sells 
lab-grown diamonds. 
Elvira Eriksson Co-Founder Co-founded Mockberg 10 29 minutes 2025-03-26  Swedish A1 
and CEO of years ago. Mainly sells 
Mockberg watches, but recently 
introduced a collection of 
gold and lab-grown 
diamond jewelry. 
Sidney Neuhaus Co-Founder Co-founded Kimaï 7 56 minutes 2025-04-15 English A1 
and CEO of years ago. Originally sold 
Kimaï everyday gold and 
diamond jewelry, but are 
today known for their 
engagement rings as well. 
Solely sells lab-grown 
diamonds. 
31 
 
Jonas Professor Professor and researcher 44 minutes 2025-03-13 Swedish A2 
Holmqvist and in luxury marketing for 
researcher in 11 years. Currently 
Luxury researching lab grown 
Marketing diamonds and 
sustainability in the 
luxury market. 
Table 2: Overview of interviewees 
4.4.3 Interview Design 
Two separate interview guides were developed, one for the respondents working in the 
diamond industry and another for the luxury professor. Before each interview, the guide was 
tweaked to ensure the questions matched each profile. These interview guides are included in 
the appendix, named A1 and A2, to enhance the study’s credibility and transferability (Bell 
et.al., 2022). While this guide provides a structured foundation, the use of follow-up 
questions (tailored to participants’ responses), introduces some limitations in replicability. 
The used follow-up questions are not listed, as they are dependent on the flow of each 
conversation. However, these interactions are documented in the transcriptions to maintain 
transparency and ensure the richness of the data is preserved. The interview guide for the 
respondents working in the diamond industry was structured in a way to truly capture all 
parts of the company strategy. The guide was therefore divided into 6 parts, to ensure that 
relevant data could be sourced: 
1. Background of interviewee and company 
2. Distribution, sales channels and marketing 
3. Customers and consumers 
4. Supply Chain 
5. Market and Industry 
6. Closing remarks 
A similar structure was used when interviewing the luxury marketing professor: 
1. Background of interviewee 
2. The Luxury Market 
3. Sustainability 
4. Strategy 
5. The Diamond Market 
6. Closing remarks 
32 
 
4.5 Data analysis  
In order to analyse the data, the initial step was transcribing the interviews. This step 
simplifies identifying themes and creates easier navigation of the interviews in text format 
and also enhances the transparency of the research, enabling readers to validate conclusions 
and address any uncertainties. It also simplifies replication, especially in semi-structured 
interviews where follow-up questions are often improvised. By providing a clear record of 
the interview paths taken, replication studies can simply trace and follow the original 
discussions. However, transcription can be a time-intensive process, particularly when 
dealing with numerous and lengthy interviews. To address this challenge, the artificial 
intelligence tool ‘Descript’ was employed to expedite the initial transcription process. While 
the artificial intelligence tool facilitated a smooth transcription, manual proofreading was still 
needed to ensure the accuracy of the transcripts. This combined approach ensures that the 
transcripts are both efficient to produce and fully aligned with the content of the interviews. 
The interviews were transcribed verbatim to ensure transparency. However, this approach 
may introduce certain limitations. Non-verbal cues and contextual nuances that cannot be 
captured in text were observed during the interviews, which means that interpretations may 
differ between someone who was physically present and someone relying solely on the 
transcripts. 
To address this issue, thematic analysis was used to organize the data by identifying patterns 
and themes in the transcriptions. What is defined as a theme is somewhat debated, however 
there is a consensus that themes represent patterns in a dataset, identified by the analyst (Bell 
et al., 2022). To find these themes, specifically the Gioia Method was applied for its 
systematic, structured approach. While Gioia himself has never explicitly explained the steps 
of this method, Langley and Abdallah (2011) explains the method as refining the data in 
stages, beginning with the raw interview responses, then categorizing them into first-order 
codes, second-order categories, and, ultimately, aggregated themes. The process began by 
carefully reviewing the transcriptions to identify quotes that highlighted key insights relevant 
to the research question. These quotes were then simplified into distinct categories reflecting 
participants' perceptions, forming the first-order codes. Next, these concepts were analyzed 
for patterns and relationships, leading to the development of second-order categories. Finally, 
the second-order categories were synthesized into third-order dimensions, capturing the 
essence of participants' experiences. This structured approach provided clarity and depth to 
33 
 
the data, ensuring that the findings were comprehensive and meaningful. Thematic analysis 
can be very-time consuming, so in order to reduce the time spent on this, the qualitative data 
analysis software NVivo has been utilized. The programme has assisted in systematically 
categorizing and analyzing the interview transcripts in line with the Gioia method. By using 
NVivo throughout this process, the analysis will benefit from increased accuracy, efficiency, 
and reproducibility (Lumivero, 2024). 
Thematic analysis can be a highly beneficial tool in qualitative research, particularly in 
providing a clear and organized framework to identify and analyze patterns within large sets 
of qualitative data. It simplifies the process, helping to extract meaningful insights and 
leading to more concise interpretations, which not only aids the analysis process but also 
makes the report more accessible to the reader. The Gioia method proves effective due to its 
reliance on participants actual words, ensuring that perspectives are authentically represented. 
Its structured and explicit nature also minimizes subjective interpretation, enhancing the 
research's reliability. However, thematic analysis is not without its challenges. It can be 
time-consuming, especially with large datasets, and while it reduces bias, it does not 
eliminate it entirely. The process of interpreting data multiple times and selecting themes 
involves some level of subjectivity. Additionally, broad categorization may result in the loss 
of certain nuances or insights. Despite these limitations, when applied carefully and with 
awareness of these potential drawbacks, thematic analysis using coding is a valuable tool for 
qualitative research. Additionally, as Gioia et al. (2013) mentions, while thematic analysis is 
essential for finding key topics and patterns, the subsequent phases hold greater power. 
Especially the discussion, when the themes from the interviews are incorporated with the 
findings from the literature review. In such a way, the discussion section takes a broader 
perspective and it is here the findings take on their full significance, revealing their 
implications for theory, practice, and future research.  
5. Findings 
This section presents the key findings derived from our qualitative interviews, which have 
been transcribed and, when necessary, translated into English. The insights have been 
thematically analyzed and structured into six aggregated themes, each capturing a distinct 
strategic or contextual dimension relevant to how new entrants navigate the disrupted luxury 
diamond market. These themes serve as the foundation for understanding how lab-grown 
34 
 
diamond companies respond to challenges and develop strategies for competitive success. 
Each theme is supported by second-order categories, based on first-order codes derived from 
direct quotes and interpretations that reflect recurring patterns and unique perspectives shared 
by the participants. 
5.1 Strategic Supply Chain Configuration as a Competitive Lever 
During the interviews, several patterns and differences emerged in how companies approach 
supply chain management, often reflecting varying strategic objectives. The first 
second-order category identified within this theme was relational sourcing. Interviewees 
emphasized that maintaining a close, communicative relationship with a small number of 
trusted suppliers is a key aspect of their quality assurance processes. However, establishing 
these relationships was described as particularly challenging - especially in the early stages of 
company development. This difficulty ties into broader challenges faced by new entrants in 
the market. The diamond industry is traditionally built on long-standing networks and 
established connections, making it hard for newcomers to identify and secure reliable 
suppliers with whom to develop long-term partnerships.  
“What was difficult was finding suppliers we could trust - where we would source all 
our diamonds.” - Anna Wallander, CEO and Founder of Akind 
Within the concept of relational sourcing, distinctions were noted across different stages of 
the supply chain, for example between mining or laboratory companies and cutters or 
jewelers. The most common and meaningful relational ties were found between the 
companies interviewed and the cutters. In contrast, laboratory or mining companies were 
generally viewed as more distant partners. Vertical integration was limited, and it appeared 
more important for firms to maintain strong relationships with downstream partners, such as 
cutters and jewelers, rather than upstream sources like laboratory or mining firms.  
“Obviously some big suppliers, these are the ones we have bought from, I know them 
personally. And all our rings, we have very, we manufacture the majority of all our 
rings in Sweden, which nevertheless is unique. And we have good relationships with 
them, but not with the diamond suppliers.” - Victor Halvarsson, CEO and Founder of 
VanBruun 
One company that stood out in the interviews was Kimaï, which was unique in sourcing 
directly from laboratories and managing its own production - including in-house 
35 
 
goldsmithing, setting, and design. Kimaï also emphasized a relational aspect to their sourcing 
strategy, working closely with a select number of labs through established collaborations. 
This approach leads to another second-order category: streamlined sourcing. Kimaï’s method 
provides a high level of control over both the supply chain and the final product outcomes. 
By internalizing significant parts of the production process, the company ensures consistency 
in quality and efficiency. Other interviewees echoed this sentiment, pointing to the 
advantages of minimizing outsourcing as a means of enhancing both quality assurance and 
operational efficiency. 
Another sourcing approach identified was flexible sourcing, which in some cases stands in 
contrast to relational sourcing. While the two are not mutually exclusive, they serve different 
strategic purposes. The key driver behind flexible sourcing is the company’s 
consumer-centric orientation. This approach enables firms to consistently deliver the right 
products to customers by adapting their supplier choices based on specific needs, rather than 
maintaining exclusive relationships with a select few. One interviewee noted that certain 
suppliers were rigid in the scope of their offerings. As a result, the company opted to source 
from alternative suppliers when necessary, prioritizing product availability and customer 
satisfaction over supplier exclusivity. 
“We don't choose the suppliers, we choose the diamonds. So it has to be what the 
suppliers offer.” - Victor Halvarsson, CEO and Founder of VanBruun 
Flexible sourcing can also be linked to the concept of a lean, made-to-order production 
model. This sourcing strategy enabled the companies to maximize product customization, 
thereby enhancing customer satisfaction. By adopting a made-to-order approach, the 
companies could maintain minimum inventory levels, only procuring products when an order 
is placed.  
“We have no inventory, so you build for a business model, everything is kind of made 
to order. So we put together the diamonds with the customer and then we manufacture 
it to order and then we add a brand name.” - Victor Halvarsson, CEO and Founder of 
VanBruun 
This not only reduced the excess stock but is also viewed as a strategy for maintaining 
competitive pricing while upholding high product quality. Interviewees emphasized that low 
36 
 
inventory was both a cost-saving measure and a means of ensuring greater flexibility in 
responding to customer preferences. 
Differentiation within the supply chain was also considered crucial for achieving sustained 
competitive advantage. Two distinct second-order categories emerged in this context. The 
first involves differentiation through a deliberate focus on downstream processes. Several 
interviewees emphasized that their core strengths lie in design and branding. As a result, 
vertical integration, particularly into upstream activities, was viewed as misaligned with their 
business models, potentially fragmenting their operations and diverting resources toward 
areas that are both time-consuming and costly to compete in. By concentrating on their 
downstream capabilities, these companies were able to strengthen market positioning and 
support strategic growth.  
“Yes, I've actually looked into it [producing own lab-grown diamonds], but I'm a firm 
believer in focusing on what you're good at and what you add value to, and we're not 
diamond manufacturers” - Victor Halvarsson, CEO and Founder of VanBruun 
The second form of differentiation centers on quality control. One company, in particular, 
underscored the importance of craftsmanship in the jewelry industry, which has a 
long-standing heritage. When offering lab-grown diamonds, which are often compared 
directly with mined diamonds, maintaining an equally high standard of quality and 
craftsmanship is essential for establishing credibility. Furthermore, greater control over the 
production of lab-grown diamonds, owing to their creation in a laboratory rather than 
extraction from the earth, enables companies to guarantee cleaner, more flawless diamonds. 
For example, one firm highlighted that their diamonds were free from the natural impurities 
sometimes found in mined stones. This enhanced quality was seen as a key point of 
differentiation in the jewelry market. 
“It's just because of course there's a craftsmanship at the sustainable side of the lab grown 
because you can find so many different qualities in terms of quality of stones but also quality 
of how it was grown. But we're very picky with that and that's also why our price are the 
price that we charge our clients.” - Sidney Neuhaus, founder and CEO of Kimaï 
The final second-order category under the supply chain theme emerged from the interview 
with Professor Holmqvist and focuses on the incumbent diamond supply chain. This structure 
differs significantly from that of new entrants. The most notable distinction is the high degree 
37 
 
of vertical integration among incumbents, which not only enhances efficiency but also serves 
as a mechanism for ensuring consistent quality. Incumbent companies, exclusively mined 
diamond producers in this context, often exercise tight control over their supply chains, 
managing every step from extraction to retail. This level of control is largely attributed to 
their scale, resources, and long-standing presence in the market. Some incumbents even own 
their own mines, granting them a significant competitive advantage, including the ability to 
restrict access to the market for other players.  
“And since the diamond industry is quite small, the essential actors still have very 
strong control over the supply chains.” - Jonas Holmqvist, Professor of Luxury 
Marketing at Kedge Business School 
Professor Holmqvist also emphasized the potential risk for premium brands when 
outsourcing their supply chains. He noted that losing control over production processes can 
increase the risk of quality disruptions, which is something luxury brands cannot afford. 
Since quality is a foundational value and key differentiator in the luxury segment, any 
compromise in this area could undermine brand strength and consumer trust. 
In summary, supply chain management is deeply integrated into every company and serves as 
a crucial pillar for strategic decision-making. Since all interviewed companies prioritize 
unique designs and rarely purchase finished products directly, a robust supply chain remains a 
significant factor. However, the specific supply chain strategies companies adopt vary 
considerably based on aspects such as inventory management, customization options, quality 
control, and the significance of trust within their networks. 
 
 
 
 
 
 
 
38 
 
 
First-order codes Second-order Aggregated 
categories themes 
➔ The company builds close relationships with local jewelers to  
emphasize craftsmanship, while maintaining more distant,  
transactional ties with diamond suppliers. Relational 
➔ Important to maintain a good relationship with legitimate Sourcing   
suppliers. 
➔ Difficulties in identifying credible and reliable suppliers in the 
early stages of market entry  
➔ Demonstrates flexibility and breadth in supplier sourcing,  
reflecting an opportunistic and adaptive procurement strategy.  
➔ The company operates with a flexible sourcing model, Flexible  
focusing on product quality rather than loyalty to specific Sourcing  
suppliers. 
➔ Operates on a lean, made-to-order business model that Lean &  
minimizes stock and maximizes customization. Made-to-Order 
➔ A lean, made-to-order business model. Model 
 
Strategic 
➔ The company pursues a streamlined supply chain by sourcing  
directly from cutters, aiming for efficiency and greater control  Supply Chain 
over product quality Streamlined Configuration 
➔ Operating within a controlled supply chain with limited sourcing 
outsourcing.. as a 
➔ Partial in-house production for quality and control. Competitive 
➔ Limited amount of supplier countries Lever 
➔ The brand concentrates on its core strengths in design and  
customer experience, deliberately avoiding upstream diamond Deliberate 
production. Focus on 
➔ Clear strategic choice to remain downstream, avoiding Downstream 
vertical integration. Differentiation 
 
➔ Quality control as a differentiator within sustainable luxury.  
➔ Higher ROI on lab-grown diamonds due to control over the Quality control 
product development which ensures a sellable product as a strategic 
➔ Trust in craftsmanship as a persistent norm in jewelry making. differentiator 
➔ Incumbents maintaining tight supply chain control  
➔ Vertical integration for quality assurance Mined diamond 
➔ Premium brands risking negative perceptions through Supply Chain  
outsourcing 
Table 3: Thematic analysis with first-order codes, second-order categories and an aggregated theme  
 
 
 
 
 
39 
 
5.2 Building Credibility Through Channels and Community 
An essential component of any market entry strategy is the selection of appropriate marketing 
and distribution channels. These choices are not only critical for initial positioning but also 
serve as long-term strategic levers for growth. As highlighted in the interviews, channel 
strategies are not static, rather they are reassessed and adjusted continuously in response to 
resource availability, market performance, and brand recognition. 
A recurring pattern among the interviewed companies is the prioritization of establishing a 
strong foundation in a specific product segment or geographic market before pursuing 
broader expansion. For example, Mockberg, the Nordic market leader of watches, is now 
leveraging its well-established reputation for quality and craftsmanship to expand into 
adjacent categories, particularly lab-grown diamond jewelry.  
“We are the Nordic market leader in women's watches, but we are also growing in the 
jewelry industry or in the industry there and taking market share.” - Elvira Eriksson, 
CEO and founder of Mockberg 
This strategic progression is not limited to product segment expansion, but also applies to 
expanding geographically. VanBruun, one of the leading brands for engagement rings in the 
Nordics, is now entering new markets abroad. Such a move would not have been possible 
without first achieving a solid and reputable brand presence domestically. 
“We would never have been able to compete in the Netherlands and in France, 
which we are now seriously embarking on.” - Victor Halvarsson, CEO and 
Founder of VanBruun 
Another interviewee, adopts a comparable approach, although with a distinct consumer focus. 
Targeting self-purchasing consumers of diamond jewelry, the company is planning to enter 
the UK market, where lab-grown diamonds are more established and normalized compared to 
the Nordic region. As explained by the CEO and founder, the expansion is a strategic 
response to both consumer demand and the maturity of the British lab-grown diamond 
market. But in order to build a strong brand reputation that enables growth into adjacent 
segments and markets, a critical component lies in the strategic selection of sales and 
visibility channels. A dominant pattern among the studied firms is the initial reliance on 
digital channels. All the companies in this study launched as digital-native brands, foregoing 
40 
 
physical retail spaces in their early stages. While this approach reflects a deliberate strategic 
orientation toward contemporary consumer behaviors, it also aligns with financial restraints 
often associated with small and up-and-coming companies. For instance, Kimaï adopted a 
highly cost-efficient go-to-market model by producing only one physical prototype of each 
jewelry design for their website. This lean approach minimized both inventory costs and 
upfront capital investment, while enabling an agile, make-to-order production model. 
“That's also why we could launch a website with like basically no money because we 
kind of like made one piece of each style that we wanted. And then we said like okay if 
we sell, great, we just make-to-order and clients will wait.” - Sidney Neuhaus, 
founder and CEO of Kimaï 
While digital retail has proven successful across the brands, additional efforts have been 
made to enhance brand visibility and facilitate consumer conversion. Notably, companies 
such as Mockberg, Akind, and Kimaï have engaged with selected resellers. These 
partnerships are not primarily aimed at boosting sales, but rather at increasing brand exposure 
and allowing potential customers to physically experience the products. 
“So when we do work with a reseller, it means that it's mostly for brand awareness 
and just for people to see the product.” - Sidney Neuhaus, founder and CEO of Kimaï 
Furthermore, a number of interviewees emphasized that their marketing strategies are 
evolving in recognition of untapped opportunities to engage younger, digital-native 
audiences. While these consumers are mainly reached through online platforms, some of the 
interviewees also identified exclusive distribution and physical retail experiences as future 
opportunities. As these brands have matured and acquired more resources, they have marked 
a strategic transition toward omnichannel engagement. VanBruun, for example, complements 
its digital store with physical showrooms. 
“So it's clear that online is a much more streamlined business, but would we have 
been able to sell so much online without showrooms, no.” - Victor Halvarsson, CEO 
and Founder of VanBruun 
Kimaï has observed similar consumer behavior. Their single physical store in London truly 
boosted engagement ring sales, prompting the launch of a pop-up store in the U.S. Following 
its immediate success, the space was converted into a permanent location. The brand 
41 
 
attributes this growth in sales directly to the in-person try-on experience, which appears to 
enhance customer confidence and conversion rates. 
“We had just people coming like more and more to try on the engagement rings and 
that's really basically when the engagement rings sales started to to grow.” - Sidney 
Neuhaus, founder and CEO of Kimaï 
Together, these findings suggest that while a digital-first approach facilitates accessible, 
scalable, and resource-light market entry, the gradual incorporation of physical touchpoints, 
whether through resellers, showrooms, or brand-owned stores, plays a vital role in building 
consumer trust, increasing brand legitimacy, and accelerating sales in the luxury jewelry 
market. 
Another key strategy that emerged during the interviews concerned the strategic selection of 
media channels and partnerships through which a brand chooses to appear with. This decision 
is particularly consequential in the luxury sector, where brand perception is deeply 
intertwined with exclusivity, credibility, and long-term value. An issue of focus, mentioned 
by all interviewees, was the use of influencer marketing; A practice that, while widespread 
and often effective in mainstream marketing, poses unique risks and challenges for luxury 
brands.  
“I would say it's mostly negative. You see that, but the same thing stops there, that the 
more prestigious a luxury brand is, the more negative it is to collaborations with 
influencers.” - Jonas Holmqvist, Professor of Luxury Marketing at Kedge Business 
School 
This cautionary perspective appears to be reflected in the practices of the interviewed 
companies. Many expressed hesitation in using influencers purely for transactional customer 
conversion. Instead, their strategies emphasize the importance of value alignment and 
narrative coherence. Rather than prioritizing short-term visibility, firms now seek long-term 
associations that strengthen brand prestige and emotional resonance. The ideal partner is one 
who not only garners attention but also embodies the brand’s ethos and enhances its 
credibility in the eyes of discerning consumers. This adjustment is particularly visible in 
Akind’s approach. The company has deliberately become more selective, reassessing its 
influencer collaborations with the aim of enhancing authenticity and prestige. 
42 
 
“Stricter and stricter, I’d say. I’m probably stricter now when it comes to 
collaborations. We're doing a bit of a switch. For me, it’s really important that people 
are genuine, feel natural, and that it comes across as credible.” - Anna Wallander, 
CEO and Founder of Akind 
Rather than moving away from influencer marketing entirely, these companies are refining 
how they engage with it. The focus has shifted toward identifying long-term partners who 
contribute not only to return on investment but also to the cultivation of a desirable brand 
image. In parallel, many firms are increasingly investing in organic marketing, efforts that 
aim to build recognition and legitimacy without direct promotional payment. For example, 
brands benefit noticeably when influential public figures wear their products voluntarily. Two 
of the interviewed companies noted that their jewelry had been worn by members of the royal 
families in Sweden and the United Kingdom, events that conferred both symbolic prestige 
and increased consumer interest, without the need for direct sponsorship or endorsement. 
Another strategy involves engaging with PR agencies to organize brand-aligned events for 
influencers and also coming in contact with journalists and press. These experiences intend to 
foster genuine interest and affection for the brand, enhancing credibility and authenticity. 
“We try to do a lot of organic marketing things, so partnerships, events with 
influencers, journalists etc.” - Sidney Neuhaus, founder and CEO of Kimaï 
Additionally, word-of-mouth was highlighted as a particularly powerful tool in the diamond 
jewelry sector. Given the high-involvement, infrequent nature of purchases in this category, 
consumer satisfaction and trust become essential levers for reputation management and 
organic growth. Brands like Mockberg and VanBruun rely heavily on customer experience as 
a means to generate new leads through recommendations.  
“Our most common customer acquisition is through recommendations, obviously. So 
every customer should generate at least one, two new customers is my ambition.” - 
Victor Halvarsson, CEO and Founder of VanBruun 
Collectively, these strategies illustrate a broader shift in luxury marketing from mass 
influence to intentional brand alignment. In a sector where brand integrity is paramount, 
influencer collaborations and media exposure must be carefully managed to support, rather 
than dilute, perceived exclusivity and value. 
43 
 
 
First-order codes Second-order Aggregated 
categories themes 
➔ Emphasizes the importance of physical retail spaces  
for building trust and supporting high-value online Blending Digital Reach 
transactions. with Physical Trust  
➔ Positions itself as an omni-channel brand, evenly  
splitting sales between digital and physical platforms 
to meet customer needs. 
➔ Physical retail experience increases customer 
conversion.  
➔ Relies heavily on word-of-mouth referrals, viewing  
each customer as a potential growth agent within a Leveraging Social  
networked marketing approach. Capital and Peer 
➔ Social proof and peer recommendations are central to Networks 
growth.  
➔ Growing Importance of PR to expand brand awareness Building 
➔ The brand acknowledges that prior limitations in Strategic Channel Credibility 
competitiveness have now evolved into readiness for Expansion Based on Through 
international expansion. Core Strengths 
➔ The company leverages its strong position in watches  Channels and 
as a launchpad for expanding in the jewelry segment.  Community 
➔ Expanding to the UK where lab-grown diamonds are 
an established product among consumers 
➔ Choosing brand partners based on aesthetic and values,  
rather than just performance metrics.  
➔ Using celebrity endorsements to establish credibility Carefully value aligned 
and visibility. partnerships and media 
➔ Grassroots and experiential marketing to build brand presence 
presence. 
➔ Strategic partnerships to scale brand exposure 
➔ Focus on genuineness in collaborations and association 
to attract the target consumer group 
➔ Initial media coverage and positive feedback boosted 
the company's early momentum 
➔ Prestige brands avoiding influencer collaborations 
➔ Marketing strategies are evolving, with recognition of  
untapped opportunities to engage younger, Adapting to the new 
digital-native audiences.  Luxury Consumer 
➔ Exclusive distribution and physical store as an  
opportunity for the future 
➔ The main consumers are modern and digital 
Table 4: Thematic analysis with first-order codes, second-order categories and an aggregated theme 
 
 
44 
 
5.3 Customer Co-Creation and Strategic Adaptation  
Firms are inherently dependent on their customers, and this interdependency was strongly 
reflected across the interviews. A central insight that emerged is the extent to which customer 
preferences, values, and behaviors shape the strategic direction of companies in the 
lab-grown diamond industry. From branding and communication to product development and 
service delivery, the consumer plays a critical role in determining both long-term positioning 
and short-term operational decisions. In total, eight second-order categories were identified in 
relation to customer strategy, which together create the broader third-order theme of 
Customer Co-Creation and Strategic Adaptation. 
One unique aspect of the lab-grown diamonds industry is the high-involvement nature of the 
product category. Due to the high price point and the emotional significance of the purchase, 
many consumers engage with the category infrequently, often only once in a lifetime. This 
reality increases the importance of customer satisfaction and word-of-mouth, as a single 
positive experience can generate follow-on business through referrals, as repeat purchases are 
relatively rare. Despite this, a second-order category identified across several companies was 
a lifecycle-oriented customer strategy. Three of the interviewed companies demonstrated 
strategic efforts to increase customer retention, however through different approaches aligned 
with their core customer segments. 
VanBruun, for instance, primarily serves well-educated men aged 25–40 living in urban 
areas. Their strategy centers on positioning the brand as a partner across key life milestones, 
using the engagement as a strategic entry point into a longer-term customer relationship. 
“The most important customer is the one who is going to propose, I would say. 
Because then you get in, then you get in like the engagement ring and then you 
probably get in the wedding ring, and then maybe get in a morning gift, then maybe a 
push gift, like if you see a traditional family cycle.” - Victor Halvarsson, CEO and 
Founder of VanBruun 
In contrast, Akind and Kimaï primarily target women aged 25–45 who are highly educated, 
urban, and sustainability-conscious. While both brands have the ambition to build customer 
loyalty, they do so through different strategies. Akind emphasizes self-purchase as a form of 
self-care and empowerment, promoting products designed for stacking and everyday use. 
This approach has resulted in high levels of recurring customers. 
45 
 
“We definitely have returning customers. We have an average of between 25 and 30 
percent returning per month right now.” - Anna Wallander, CEO and Founder of 
Akind 
Kimaï, while sharing a similar demographic focus, employs a slightly different strategy by 
expanding their product lines to ensure engagement ring buyers can return for complementary 
items. This reflects a conscious effort to extend the customer relationship beyond a single 
major purchase. 
“I think it's important that when somebody buys an engagement ring that you have 
something else to sell them.” - Sidney Neuhaus, founder and CEO of Kimaï 
Notably, while both VanBruun and Kimaï offer engagement rings, their appeal to different 
genders is shaped by design and brand ethos. Kimaï’s more contemporary and 
unconventional aesthetics tend to resonate more with women, while VanBruun’s classic 
designs appeal to traditional male buyers. 
“But it's mostly the woman who is involved since especially we're doing different 
designs. We do have men coming by themselves but it's more rare I would say and if 
they come they might go for the more traditional design.” - Sidney Neuhaus, founder 
and CEO of Kimaï 
A further layer influencing customer strategy is the intrinsic association between lab-grown 
diamonds and sustainability. However, there was no consensus among interviewees regarding 
how prominently this should feature in branding and communication. Several respondents 
acknowledged the so-called sustainability-luxury paradox, where sustainability, while 
increasingly important to consumers, can sometimes undermine perceptions of luxury and 
exclusivity. 
“There’s unfortunately a tendency among some customers to associate sustainable or 
ecological goods with lower quality.” - Jonas Holmqvist, Professor of Luxury 
Marketing at Kedge Business School 
Despite this challenge, brands such as Akind and Kimaï have built their identities around 
being sustainable alternatives in a historically foul industry. Both noted that this positioning 
has successfully attracted ethically conscious consumers. Nevertheless, there is a growing 
internal debate about how explicitly to promote sustainability in marketing efforts. This 
ambivalence is further compounded by differing perceptions of what motivates consumers to 
46 
 
choose lab-grown diamonds. While many brands believe sustainability is a key driver, 
VanBruun CEO Victor Halvorsson takes a more skeptical stance. 
“If you were to ask people in town, they would say it's for like ethical reasons and 
stuff, but the truth is that it's for the cost.” - Victor Halvarsson, CEO and Founder of 
VanBruun 
Indeed, the affordability of lab-grown diamonds emerged as a steady pattern across the 
interviews. Several companies noted the need to remain flexible and demand-driven in their 
strategic decisions. For example, VanBruun originally focused exclusively on mined 
diamonds but introduced lab-grown diamonds in response to growing consumer demand. 
Today, lab-grown diamonds constitute over 50% of their unit sales. Even brands that 
specialize in lab-grown diamonds have shown a willingness to adapt. Kimaï, for instance, 
began accepting requests for custom pieces made from vintage mined diamonds; Aligning 
this choice with their broader sustainability ethos and commitment to circularity. 
This responsiveness to customer needs also materialized in a broader category of 
Customization and Customer-led flexibility. All companies emphasized the importance of 
adapting to individual preferences, even if doing so meant deviating from the core product 
offering. Customization was widely embraced, with few constraints. Kimaï was the only 
brand to indicate a desire to retain certain boundaries to preserve brand identity. 
“There's nothing we can't do, but we will always add the Kimaï DNA to our designs.” 
- Sidney Neuhaus, founder and CEO of Kimaï 
Such agility is supported by the lean organizational structures of the companies studied. All 
had fewer than 15 employees, with highly centralized leadership models often involving the 
founders themselves. This flat hierarchy allowed for rapid decision-making and 
responsiveness to emerging trends or customer feedback. 
“Because we're such a young team and small, we do everything ourselves and then we 
can pivot very quickly.” - Sidney Neuhaus, founder and CEO of Kimaï 
A further critical dimension of customer strategy in the lab-grown diamonds industry 
concerns building brand trust and emotional credibility, which has been historically important 
for some of the brands who started earlier. At this time, there was a relatively low baseline of 
consumer awareness and understanding as public familiarity with lab-grown diamonds was 
extremely limited. 
47 
 
“When we started, no one knew about lab grown.” - Sidney Neuhaus, founder and 
CEO of Kimaï 
There is still a continued need to educate and guide consumers through change. While 
increased market awareness has since reduced the need for scientific explanations, consumer 
education remains a key part of the customer journey, especially for first-time buyers. 
Nonetheless, the interviewees highlighted the difference between a low knowledge of the 
product and a low interest in the product. 
“I never really encountered any major criticism of lab-grown. There were definitely 
some customer comments and such. But we sold well from the start.” - Anna 
Wallander, CEO and Founder of Akind 
Across the interviews, it became clear that brand trust is actively constructed, not assumed. 
Exceptional customer service, premium packaging, and trusted affiliations or visibility in 
high-profile contexts like the royal family, serve to strengthen both emotional and social 
credibility. In a category where the emotional significance of the purchase is exceptionally 
high, this trust-building effort is amplified by the creation of emotionally resonant brand 
narratives. 
“You need to sell the story. You need to sell, really, like what Kimaï is, what the 
product they’re buying is, and then just create that bond with your client to make sure 
that they come not only for the anniversary gift, etc., but for the wedding band.” - 
Sidney Neuhaus, founder and CEO of Kimaï 
Taken together, these findings demonstrate that customer strategy in the lab-grown diamond 
space is not only multi-dimensional but also in constant evolution. Firms in this space are not 
simply reacting to customer demands, but rather actively co-creating meaning and value with 
their customers. 
 
 
 
 
 
48 
 
 
First-order codes Second-order Aggregated 
categories themes 
➔ The customer journey involves few but highly intensive and personalized  
interactions, reflecting a high-involvement purchase process.  
➔ Showcases a customer-first mentality and willingness to adapt to individual Personalization and 
needs, even for highly customized or unconventional requests. Customer-Led  
➔ Adapts to individual preferences, even if it diverges from core offering. Flexibility 
➔ Moving from transactional to communicative/customer-centric models. 
➔ Agility and responsiveness due to lean team structure.  
➔ Brand trust is built through exceptional service, aesthetics, and affiliation with Emotional Credibility 
reputable partners and causes and Values Alignment 
➔ Building emotional resonance through brand narrative for long-term loyalty.   
➔ High market validation from consumers facilitating Early Adoption 
➔ Unfamiliarity to many consumers requires clear communication. Educating and 
➔ Increasing consumer awareness and education on lab-grown diamond Guiding Consumers  
equivalence. Through Change 
➔ Initial lack of consumer awareness of lab-grown alternatives.  
➔ Highlights a strategic balance between sales volume of lab-grown diamonds   
and higher revenue from mined diamonds.  
➔ The company embraces a customer-led approach, prioritizing demand over Demand-Driven and 
rigid brand ideology when choosing to introduce lab-grown diamonds. Hybrid Product 
➔ Price-sensitive demand driving preference for larger lab-grown diamonds Strategy  
➔ Importance of product line extension for continued customer engagement. 
➔ Consumer-driven change boosts the legitimacy and relevance of lab-grown 
diamonds. 
Customer 
➔ Importance of product line extension for continued customer engagement. Lifecycle-Oriented 
➔ Sustained Customer Loyalty, Driving a Strong 25-30% Monthly Return Rate Customer Strategy Co-Creation and 
➔ Utilizes key life events as strategic entry points into long-term customer  Strategic 
relationships. Adaptation 
➔ Sustainability is a core value, despite concerns it may weaken the luxury  
image. Sustainability-luxury 
➔ Consumer resistance to sustainable luxury branding paradox 
➔ Sustainability stigma linked to perceived quality drop 
➔ Noticing a market gap in ethical consumption within the diamond industry. 
➔ Disruptive innovation from fresh perspectives and generational insight.  
➔ Generational shift towards personalized and meaningful jewelry design. Generational & 
➔ Generational Divide on lab-grown diamonds, where it appeals to a younger Demographic Shifts 
audience more 
➔ Core customer profile: urban, sustainability-focused women aged 25–45. 
➔ Evolving design aesthetics in line with founder maturity and market shift. 
➔ The brand focuses on customers who are more cautious and need social proof Consumer Behavior  
before adopting new products. & Identity 
➔ The company has consumers that self purchases as a form of self 
empowerment, which is unusual in the industry. 
➔ Gendered preferences: women seek innovation, men prefer classic styles. 
➔ The typical customers are conscious women keen on trends and well-educated. 
Table 5: Thematic analysis with first-order codes, second-order categories and an aggregated theme 
 
49 
 
5.4 Strategic Navigation of Institutional Barriers and Industry 
Disruption 
The diamond industry is both ancient and uniquely characterized by its distinct structure. This 
legacy brings with it a range of barriers and opportunities that companies must navigate in 
order to compete effectively. Closely tied to the broader luxury industry, the diamond sector, 
like luxury more generally, is dominated by well-established incumbents with strong 
reputations and high consumer recognition. Through our thematic analysis, we identified nine 
second-order categories. 
The first second-order category highlights how respondents perceive the mined diamond 
industry as one with extremely high entry barriers. These barriers have contributed to a 
market with relatively few dominant players. Uniquely, the industry is known for a strong 
level of cooperation among these major actors, who often prefer to work with familiar, 
established partners. One respondent whose company sells both mined and lab-grown 
diamonds shared that, upon entering the market, they were required to secure three referees 
before being allowed to purchase diamonds, which is an especially challenging requirement 
for newcomers without prior experience in the luxury or diamond sectors. 
“You usually always need three industry references to be able to buy, so it becomes a 
Catch-22. You can’t get references without buying, and you can’t buy without 
references. So yeah, I basically had to bullshit a lot, and then I started buying. Now 
it's super easy because we’re big, but it's a very closed industry.” - Victor Halvarsson, 
CEO and Founder of VanBruun 
This difficulty was compounded for those based in countries like Sweden, which lacks a 
significant domestic diamond industry compared to major diamond hubs such as Antwerp. In 
addition to limited network access, age was identified as a barrier to market recognition for 
young entrepreneurs, both male and female. However, female entrepreneurs of any age 
reported facing a further layer of difficulty in gaining trust and being perceived as serious. 
“Even though we were coming from the industry, I do think it was still hard to 
penetrate the diamond industry and to give, to have like, two women who were very 
young as well. So for people to trust us in the industry, I think it was hard.” - Sidney 
Neuhaus, founder and CEO of Kimaï 
50 
 
There was also considerable discussion around the initial resistance faced by lab-grown 
diamonds, both from industry incumbents and consumers. Established diamond companies 
were described as consistently undermining lab-grown diamonds, portraying mined diamonds 
as inherently superior. This narrative caused frustration among some interviewees, who 
emphasized that the two products are fundamentally the same, the only difference lies in how 
they are produced. Incumbents benefit from a significantly larger platform and a century-long 
tradition of storytelling that has cemented the idea of mined diamonds as more prestigious. 
As a result of this dominant narrative, consumers were often confused, with some explicitly 
stating that lab-grown diamonds were not equivalent to mined diamonds. 
"Basically you have an association called the mined diamond Council, I think, and 
they're basically doing so much advertising and against lab grown diamonds and 
they're doing so many things and, it's basically a combination of many brands, many 
different diamond companies together. Cause they wanna fight the rise of lab grown 
diamonds. So that's what we had. And then we had in the past when we were trying to 
get the word out there about Kimaï and the brand, we were sometimes reaching out to 
journalists and then the journalist said like, unfortunately we can't cover Lab Grown 
Diamonds because they sponsored.” - Sidney Neuhaus, founder and CEO of Kimaï 
Interviewees noted that this skepticism was most common among traditional luxury 
consumers, those who had purchased diamonds or other luxury products in the past and were 
more influenced by heritage and brand perception, while the respondents overall witnessed 
gradual social acceptance of lab-grown diamonds.  
“The people most opposed to it [Lab-grown diamonds] are usually from an older 
generation.” - Anna Wallander, CEO and Founder of Akind 
Moreover, a major challenge for new entrants is the emotional connection and legitimacy that 
established brands possess. Their long-standing reputations and strong brand recognition give 
them a substantial competitive edge, particularly when selling emotionally significant items 
like engagement rings. These products are not only symbolic but also confer status, especially 
when associated with a well-known luxury brand. However, even though some incumbents, 
as noted by Professor Holmqvist, recognize the similarities between lab-grown and mined 
diamonds, the industry is undergoing a significant transformation. After decades of 
continuous expansion, the luxury market has entered a period of stagnation, prompting shifts 
51 
 
in both consumer behavior and market dynamics. Respondents highlighted how lab-grown 
diamonds are reshaping the industry. The increased efficiency in production, along with a 
growing number of suppliers, has intensified market competition and driven down prices for 
lab-grown diamonds. This downward pressure on price has also affected mined diamonds, 
which are losing value as the market becomes increasingly saturated. As lab-grown diamonds 
become more accessible, the perception of mined diamonds as rare and exclusive is being 
challenged - altering their luxury appeal. 
“The value of mined diamonds has declined as lab-grown alternatives have gained a 
competitive edge.” - Anna Wallander, CEO and Founder of Akind 
This shift has also contributed to a lowering of traditional entry barriers. Many new entrants 
now choose to focus on lab-grown diamonds or include them alongside mined diamonds in 
their product offerings, responding to rising consumer demand.  
“The way I see it, it's been a pretty closed market. So if someone is going to start a 
jewelry brand, it's easier to get hold of. It's also about accessibility.” - Elvira 
Eriksson, CEO and founder of Mockberg 
The decreasing barriers to entry have led to a more competitive landscape, as more players 
are able to participate in the market. Still, as Professor Holmqvist points out, achieving true 
luxury brand status remains a long-term endeavor, often requiring 10 to 15 years of consistent 
quality and brand building to earn consumer recognition and trust. With shifting market 
dynamics, the impact extends beyond incumbents and also shapes how new entrants position 
and operate. A common strategy among new players is to remain flexible and adaptive, 
closely monitoring market trends and responding to new disruptions.  
“You're constantly evolving. You develop your brand so much. You investigate, 
explore. You see what works and what doesn’t.” - Anna Wallander, CEO and Founder 
of Akind 
One company mentioned that they adjust their pricing dynamically - maintaining consistent 
margins even as the prices of both lab-grown and mined diamonds fluctuate. However, some 
respondents expressed concern about the future of lab-grown diamonds, questioning whether 
they will continue to gain market share or eventually stagnate and require reinvention 
themselves. 
52 
 
Another key finding that emerged in the interviews was the role of ethics in the diamond 
industry. Many respondents observed growing consumer concern regarding the origins of 
mined diamonds, particularly issues related to conflict diamonds and the environmental 
impact of mining. This consumer pressure has also been felt by incumbents, leading to the 
adoption of measures like the Kimberley Process in an attempt to address these concerns. 
Professor Holmqvist noted that while the effectiveness of such initiatives is uncertain, 
especially in light of ongoing geopolitical events, they reflect the industry's intent to ethically 
align with evolving consumer values.  
“So the whole idea behind the Kimberley Process was to bring a more ethical 
perspective into the diamond market. And that’s become harder and harder to uphold 
- especially after Russia invaded Ukraine. It’s gotten increasingly difficult to track 
where the diamonds are coming from.” - Jonas Holmqvist, Professor of Luxury 
Marketing at Kedge Business School. 
Interestingly, one respondent pointed out inconsistencies in regulatory scrutiny across sectors, 
noting that the gold industry, often perceived as even more problematic, receives noticeably 
less consumer and governmental attention compared to the diamond sector. Additionally, 
marketing lab-grown diamonds as a sustainable alternative is not without its challenges. In 
Sweden, for example, strict advertising regulations make it difficult to make direct 
sustainability claims. Despite these constraints, many of the respondents focus on positioning 
lab-grown diamonds as a modern, sustainable, and innovative alternative to mined diamonds. 
In doing so, they challenge the traditional norms of the industry and express a desire to 
modernize and redefine what luxury means in a changing world. 
 
 
 
 
 
 
53 
 
 
First-order codes Second-order Aggregated 
categories themes 
➔ Gradual social acceptance of lab-grown diamonds.  
➔ The brand seeks to offer luxury without the exclusion or  
intimidation traditionally associated with it. Transformation of the 
➔ Falling lab-grown diamond production costs threaten luxury Luxury Market and  
perception. consumer 
➔ Mined diamonds are losing value due to competition from 
lab-grown diamonds. 
➔ Increasing mass-marketization of traditional luxury brands.  
➔ The luxury industry is facing a difficult future after decades 
of growth. 
➔ Market saturation diminishing diamond exclusivity  
➔ Consumers prefer branded jewelry for perceived legitimacy  
and emotional connection.   
➔ Early-stage market skepticism towards lab-grown diamonds.  Consumer Dynamics  
➔ Resistance from incumbents due to lab-grown diamonds’ and Incumbent 
indistinguishability.  Resistance 
➔ Active lobbying by the traditional diamond industry to 
undermine lab-grown legitimacy.   
➔ Storytelling reinforcing mined diamond premium 
positioning. 
➔ The brand observes that affluent customers tend to reject 
lab-grown diamonds, associating them with lower prestige.  
➔ Mined diamond brands recognizing but publicly denying 
equivalence 
➔ Barriers to entering the diamond industry are lowering, Erosion of Entry  
enabling new brands to emerge  Barriers and Rise of 
➔ Low entry barriers to lab-grown diamond market New Market Entrants 
➔ Lab-grown diamonds lowering traditional market entry  
barriers  
➔ Entry into luxury market requiring 10–15 years of quality 
consistency 
➔ New entrants embracing lab-grown diamond opportunities 
➔ Frames lab-grown diamonds as expanding consumer choice  
and lowering entry barriers, contributing to a more accessible 
luxury market. 
➔ Gender and age as barriers to gaining industry trust   
➔ Highlights the diamond industry's exclusivity, where  
gatekeeping demands resilience and improvisation. Structural Barriers and 
➔ Exclusive nature of traditional diamond hubs as barriers to Gatekeeping in the 
entry Diamond Industry Strategic 
➔ The diamond market being closed and characterized by a Navigation of 
limited number of participants 
➔ Diamond industry serving few, ultra-high value customers Institutional 
➔ High entry barriers maintain incumbents' dominance Barriers and 
Industry 
➔ Positions itself as a market pioneer in Europe, drawing Positioning Innovation 
inspiration from platform-based business models that and Sustainability as Disruption 
streamline customization and logistics. Competitive Advantage 
➔ Innovation-driven mission to modernize a legacy industry.  
➔ The traditional structures of the diamond industry are being 
challenged by innovation. 
54 
 
➔ Ethical and environmental concerns regarding the destructive  
nature of traditional diamond mining and its associated Change driven by 
conflicts sustainability concerns 
➔ Blood diamond controversies driving ethical reforms 
➔ An increasing demand for ethical and sustainable practices 
within the diamond industry 
➔ Criticizes inconsistencies in regulatory enforcement and  
stresses the brand’s commitment to transparency in sourcing Navigating Regulation, 
amid geopolitical challenges. Transparency, and 
➔ Transparency about limits in data collection and verification Trust 
processes for lab-grown diamonds, leading to minimizing use 
of sustainability terms.  
➔ The Kimberley Process showing industry’s potential for 
ethical alignment 
➔ Declining effectiveness of Kimberley Process 
post-geopolitical crises 
➔ Overexpansion undermining brand prestige and exclusivity 
➔ Anticipating price drops, the brand positions itself as flexible Strategic Flexibility in  
and responsive to shifting market dynamics rather than trying Volatile Market 
to control them. Conditions 
➔ Maintains confidence in its current competitive position but 
remains cautious about disruptive threats emerging in the 
future. 
➔ Lab-grown diamonds have seen strong growth but may now 
be approaching market saturation, suggesting the need for 
innovation or repositioning. 
➔ Acknowledgement of shifting price structures in the diamond 
market. 
➔ Emerging market uncertainty around value retention of 
lab-grown diamonds.  
➔ Focus on an evolving and adaptable strategy, conscious about 
the market responses 
➔ Shift in global customer base as China’s role in driving 
luxury consumption declines despite remaining a major 
market 
Table 6: Thematic analysis with first-order codes, second-order categories and an aggregated theme 
 
 
 
 
 
 
 
 
55 
 
5.5 Market Positioning and Differentiation Strategies 
One important consideration when building a brand is the value proposition. This proposition 
can evolve over time as markets shift, and brands must remain aware of how their original 
value offering may no longer align with current market dynamics. This idea emerged in the 
theme Managing Brand Identity in a Shifting Value Landscape, where respondents discussed 
how the perceived status of lab-grown diamonds can potentially dilute a brand's prestige, 
particularly when a brand offers both lab-grown diamonds and mined diamonds. In such 
cases, a brand’s stance may appear ambiguous, which could alienate consumers, especially 
those in the luxury segment. The brand’s positioning may become unclear, as consumers 
often expect a company to choose one side, either mined or lab-grown diamonds. 
“Then, of course, I think that some people are like this, in a way I think it can tarnish 
the brand among some customers a little bit, like that. Since we still sell probably 
more lab-grown diamonds in terms of quantity, it's like some customers probably 
think, but they have lab-grown diamonds, it's either Cartier or Tiffany's type.” - Victor 
Halvarsson, CEO and Founder of VanBruun 
This discussion transitions into another theme, Creating Exclusivity through Selective 
Targeting. Respondents shared how they actively target and collaborate with high-status 
individuals to reinforce their trustworthiness and exclusivity. For instance, Kimaï leverages 
its generational ties to the diamond industry to underscore its credibility and seriousness. 
However, Professor Holmqvist emphasized that while exclusivity is a core component of 
luxury branding, it cannot stand alone. Additional elements are necessary for a brand to be 
perceived as truly luxurious by a broader audience. He also warned that claiming luxury 
status too early can backfire, potentially damaging the brand rather than elevating it. 
“In that case, it would be better not to start by claiming you’re a luxury brand. A 
surefire way to fail is to enter as a new player and say ‘we are luxury.’” - Jonas 
Holmqvist, Professor of Luxury Marketing at Kedge Business School. 
A third theme that emerged from the interviews was Balancing Accessibility with Perceived 
Luxury. Respondents emphasized that one of the primary drivers for choosing lab-grown 
diamonds over a mined diamond is the distinctly lower price. This affordability not only 
makes diamonds more accessible to a broader audience but also reshapes the traditional 
boundaries of luxury by decoupling it from scarcity and high cost. Several interviewees 
56 
 
viewed this affordability as a deliberate strategic positioning. For example, the founder of 
Akind described how their company consciously leveraged competitive pricing as a key 
differentiator from established industry incumbents. By offering high-quality products at a 
more accessible price point, they aim to attract a new segment of consumers who value 
aesthetics, ethics, and innovation - but may not be driven by traditional markers of luxury like 
heritage or exclusivity. However, this strategy also presents a delicate balancing act. While 
affordability broadens market reach, it can risk undermining the perception of luxury if not 
carefully managed. Respondents acknowledged the importance of maintaining high design 
standards, brand storytelling, and emotional connection to preserve the premium feel of their 
offerings. In this way, new entrants are actively redefining luxury not as something reserved 
for the elite, but as an experience that is inclusive, value-driven, and ethically aligned with 
modern consumer values. 
The final theme is First-Mover Strategy and Scalable Differentiation, in which respondents 
described identifying a gap in the European market for platform-based luxury jewelry 
featuring lab-grown diamonds. They viewed this as an opportunity to position themselves as 
pioneers and to capture early market share and brand recognition. While many acknowledged 
that their companies remain relatively small in certain areas, they emphasized how success in 
other segments has been strategically leveraged to fuel expansion in this emerging space. 
“I also realized that this lab-grown diamond thing is so fascinating. And that it was so 
big in the US, but in Europe it is still so unknown and so small.” - Elvira Eriksson, 
CEO and founder of Mockberg 
 
 
 
 
 
 
 
57 
 
 
First-order codes Second-order Aggregated 
categories themes 
➔ While consumers claim ethical motivations, the brand  
perceives price as the primary driver behind lab-grown  
diamond purchases.  
➔ Communicates high perceived value through efficient   
business models, offering premium products at reduced  
prices without diminishing brand prestige. Balancing Accessibility 
➔ Lab-grown diamonds framed as offering a better with Perceived Luxury 
size-to-price ratio.  
➔ Competitive pricing driven by a cost-effective approach, 
differentiating from high-markup luxury brands. 
➔ Brand positioning itself as fine jewelry exclusively  
using real gold and diamonds. 
➔ Strategic avoidance of the 'luxury' label by new brands. 
➔ The brand is aware of the risk that lab-grown diamonds   
could dilute its prestige among traditional luxury  
consumers.  
➔ Offering both types of diamonds may blur the brand's  
positioning. Managing Brand Identity Market Positioning 
➔ Scientific indistinguishability between lab-grown and in a Shifting Value 
mined diamonds. Landscape and Differentiation 
➔ Emphasis on superior quality and design that combines Strategies 
timeless elegance and contemporary elements. 
➔ Consumer skepticism about lab-grown diamond quality. 
➔ Luxury emerging from quality, not from self-proclaimed 
status. 
➔ The brand targets urban, affluent demographics,  
distancing itself from lower-income and rural markets.  
➔ Leverages elite clientele and social credibility as  
implicit marketing, signaling exclusivity and trust. Creating Exclusivity 
➔ Leveraging multigenerational industry knowledge as through Selective 
founders. Targeting 
➔ Exclusivity necessary but insufficient in isolation for  
luxury status 
➔ Risk of early-stage luxury brand positioning for new 
entrants 
➔ Positions itself as a market pioneer in Europe, drawing  
inspiration from platform-based business models that  
streamline customization and logistics.  
➔ Recognizes increased competition but credits growth  
and brand strength to scalability and persistence. First-Mover Strategy and 
➔ Identified a gap in in the market and an opportunity to Scalable Differentiation 
be a first mover in the European market. 
➔ Aims to expand the definition of luxury to be more 
inclusive. 
➔ Despite current small-scale impact, the brand signals a 
clear intention to invest and grow this segment over 
time. 
Table 7: Thematic analysis with first-order codes, second-order categories and an aggregated theme 
 
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5.6 Value Creation and Customer Engagement 
A strong theme across the interviews was that value in the lab-grown diamond industry is not 
limited to the physical product but is deeply embedded in emotional, ethical, and experiential 
dimensions. Companies differentiate their value proposition through value-driven strategies 
based on exceptional service and an in-depth understanding of the customer and their needs. 
A second-order category that emerged was Emotional and Ethical Initiatives at the Core of 
the Business Model. It became clear that for many of the interviewed firms, emotional 
significance and moral clarity were key concepts that not only aided in founding the 
companies, but are also part of their value creation beyond the product that keeps driving the 
company forward.  
“We have continued on it [Lab-grown diamonds] because it felt better in the 
stomach...and it felt like the right way forward.” - Elvira Eriksson, CEO and founder 
of Mockberg 
Many founders described their companies as born out of personal conviction, shaped by 
personal values in combination with changing customer needs that favored ethical innovation 
and sustainability. This was most clearly seen in explicit rejections of mined diamonds not 
only for ethical reasons but also because lab-grown alternatives were viewed as 
technologically and morally superior. These principles translated into tangible practices such 
as adopting a no-mining strategy and embedding circular design principles into operations. In 
addition, multiple interviewees focused heavily on reinforcing customer trust and building 
long-lasting relationships with customers. One way of doing this, is by staying true to the 
brand's value proposition over time. 
“I think we’re very… we stand firm. I think people feel loyal to or trust the brand. And 
that’s so important. We work a lot on that.” - Anna Wallander, CEO and Founder of 
Akind 
Another major theme that emerged, also focusing on the value proposition was Brand Equity 
Enhancement Through Value-Added Offerings Beyond the Product. Customer engagement 
was elevated through intentional branding and storytelling. Many of the companies offer 
what are essentially identical products, hence the brands need to be superior through other 
metrics. Intentional branding, emotional storytelling, and the cultivation of symbolic value 
were repeatedly emphasized as essential components in shaping customer perception and 
59 
 
driving engagement. As Professor Jonas Holmqvist explained in the context of mined 
diamonds, storytelling plays a critical role in establishing luxury brand identity and 
legitimizing premium pricing. 
“So there you can see exactly how a luxury brand - in this case a diamond company - 
emphasizes storytelling and tradition, in order to justify a higher price for mined 
diamonds instead of lab-grown ones.” - Jonas Holmqvist, Professor of Luxury 
Marketing at Kedge Business School. 
In the lab-grown diamonds segment, storytelling fulfills multiple strategic functions. For 
some brands, it is primarily about creating the perception of exclusivity and emotional 
significance - even when the price point remains relatively accessible. In these cases, 
branding is not used to justify higher costs, but to elevate the customer’s experience and 
make the product feel premium, regardless of actual market positioning. For others, such as 
Kimaï, branding and storytelling are deliberately used to support higher price points, 
positioning the company as a true premium offering within the lab-grown diamond 
landscape. 
“We see it more like we want to provide like a brand we're selling a brand rather than 
just a product and I think you have a lot of brands where it's just selling the product 
and no brands. That's also why we're more expensive than others.” - Sidney Neuhaus, 
founder and CEO of Kimaï 
The idea of building brand equity is to create a feeling within the customer of trust, emotional 
connection, and perceived value that goes beyond the functional attributes of the product. 
Several of the interviewees noted that this is an ever-changing and dynamic strategy, however 
one of the more important. As the lab-grown diamonds market matures, with increasing 
consumer acceptance and lower barriers to entry, competition has intensified. In this context, 
emotional resonance has become a vital differentiator, allowing brands to stand out in a 
landscape where many products are materially similar.  
“I think that we have a different offer, perhaps a different feeling when it comes to 
Mockberg. That it's just Mockberg's jewelry, that it kind of adds to it.” - Elvira 
Eriksson, CEO and founder of Mockberg 
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First-order codes Second-order Aggregated 
categories themes 
➔ Positions the company as value-driven and  
customer-centric, willing to pass cost benefits on rather Emotional and Ethical 
than capitalize on market shifts for profit. Initiatives at the Core of 
➔ Emotional and moral alignment as a guiding principle the Business Model  
for business direction 
➔ Embedding circular design principles into business 
practices. 
➔ Founders’ values and urban environment shaping  
ethical strategy. 
➔ Strong focus on stable customer relationships 
➔ No-mining strategy as sustainability initiative Value Creation and 
➔ Rejection of Mined Diamonds due to lab-grown 
diamonds being superior in many aspects Customer 
Engagement 
➔ Critiques rigid brand segmentation, advocating instead  
for a fluid approach that reflects the reality of diverse Customization as a 
customer preferences. Competitive Advantage 
➔ Customization as a foundational business model 
component. 
➔ Balancing deep customization with a consistent brand 
identity. 
➔ Frames its mission around emotional milestones, Brand Equity 
reinforcing the cultural and symbolic value of its Enhancement Through 
products.  Value-Added Offerings 
➔ Branding is used to elevate customer experience and Beyond the Product 
emotional appeal, even when the underlying product is  
similar to competitors. 
➔ High quality positioned as a differentiator in a 
competitive luxury market 
➔ Competing not just on product, but on feeling and 
perception.  
➔ Prioritizing exceptional customer experience to drive 
loyalty. 
➔ Brand storytelling as a premium pricing strategy. 
➔ Balancing deep customization with a consistent brand 
identity. 
Table 8: Thematic analysis with first-order codes, second-order categories and an aggregated theme 
 
 
 
 
 
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6. Analysis 
In this chapter, we address the central research question: How do new entrants navigate in a 
disrupted luxury market, what challenges do they encounter and what strategies do they 
employ to compete successfully? This is explored through the case of lab-grown diamonds. 
The chapter is organized around three core findings, which are analyzed in relation to insights 
drawn from the interviews, supported by the literature review, theoretical framework, and 
broader empirical context. 
 Themes Main Strategy Theories applied 
Challenge 
Finding 5.6 Value Creation Being perceived ➔ Customization ● Disruptive 
one and Customer as luxury ➔ Symbolic Innovation 
Engagement + Storytelling ● Disruptor’s 
5.5 Market ➔ Strategic dilemma 
Positioning and Alliances ● Diffusion of 
Differentiation Innovation 
Strategies ● Veblen Goods 
Finding 5.1Strategic Supply Incumbent ➔ Building ● Disruptive 
two Chain Configuration resistance and legitimacy Innovation 
as a Competitive control  through ethical ● Disruptor’s 
Lever +  sourcing dilemma 
5.4 Strategic ➔ Flexible ● Diffusion of 
Navigation of sourcing Innovation 
Institutional Barriers ➔ Lean ● Barriers to 
and Industry made-to-order Entry 
Disruption  production 
Finding 5.2 Building Building brand ➔ Omni-channel ● Diffusion of 
three Credibility Through  credibility and presence Innovation 
Channels and loyalty ➔ Leverage brand ● Barriers to 
Community + 5.3 equity from Entry 
Customer other segments 
Co-Creation and ➔ Organic 
Strategic Adaptation marketing  
Table 9: Outlining the Analysis  
6.1 Customization as a Luxury Driver 
A clear theme emerging from this study is the difficulty lab-grown diamond companies face 
in being perceived as authentically luxurious. While lab-grown diamonds represent a 
disruptive innovation within a traditional and symbolically charged industry, their success 
depends not only on technical quality or sustainability but, crucially, on their ability to 
reshape consumer perceptions of value and exclusivity. 
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The developments in the diamond industry largely follow the classic path described by 
Christensen’s (1997) theory of disruptive innovation. Lab-grown diamonds began as a 
low-price, initially limited-quality and low-status alternative aimed at less demanding 
consumers. Over more than a decade, their technological and aesthetic quality gradually 
improved. As is typical in disruptive scenarios, the incumbents who are established players in 
the traditional mined diamond sector initially dismissed lab-grown diamonds. One 
interviewee mentioned greater incumbent pushback in recent years, which is in line with the 
pattern where disruptive innovations are initially dismissed, but later met with resistance 
when they start to threaten the established market logic. In this case, resistance materialized 
through strategic efforts to delegitimize lab-grown diamonds, particularly by emphasizing the 
authenticity, rarity, and historical symbolism of mined diamonds. Such responses reflect the 
incumbents’ reliance on luxury attributes traditionally linked to scarcity and heritage, two 
dimensions where lab-grown diamonds underperform. The challenge for disruptive entrants 
is to resolve a core paradox: offering a democratized, affordable, and sustainable alternative 
within a market segment where exclusivity-by-price and symbolic rarity are central to 
perceived value (Holmqvist et al., 2019). 
This dynamic ties directly to Veblen’s (1961) theory of conspicuous consumption, wherein 
the value of luxury goods derives not merely from their functional attributes but from their 
role in signaling wealth and social status. By offering a more affordable alternative to mined 
diamonds, lab-grown diamonds potentially undermine this traditional signaling function and, 
as a result, must develop new forms of symbolic value to compensate. 
A recurring theme in the interviews was the strategic emphasis on lab-grown diamonds as a 
more sustainable alternative to mined diamonds. In line with Rogers’ (1962) concept of 
relative advantage, highlighting sustainability leverages the growing awareness of the 
environmental and ethical issues associated with traditional diamond mining. This is 
particularly important given that younger consumers, who now represent the dominant 
demographic for both luxury goods and engagement rings (Bain & Company, 2025; 
Francis-Tan & Mialon, 2015), are generally more prone to take part in ethical consumption 
(Majidi, 2024). Consequently, luxury brands face increasing pressure to align with these 
shifting consumer values (Winston, 2017). 
However, while logical, this strategy appears to have limited persuasive power within the 
luxury segment. Research by Kapferer and Michaut-Denizeau (2020) suggests that 
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millennials do not value sustainability in luxury purchases more than older generations. Thus, 
although sustainability may enhance lab-grown diamonds ' appeal in ethical or lifestyle 
markets, it may not significantly elevate their status as luxury goods. This insight was echoed 
by one interviewee, who observed that while customers often cite sustainability as a 
motivation, in practice, price remains the primary driver. Therefore, while the sustainability 
narrative aligns with the innovation diffusion literature’s emphasis on value alignment and 
relative advantage (Rogers, 1962), it is unlikely to be sufficient to resolve, or even to partly 
bridge the perception gap in the luxury context. 
To overcome the limitations of the luxury narrative, lab-grown diamond companies are 
increasingly turning to high levels of customization and bespoke design as a means of adding 
symbolic and emotional value. Customization allows brands to position lab-grown diamonds 
not as inferior substitutes, but as modern expressions of luxury, anchored in individuality, 
creativity, and personal meaning. This approach addresses the central paradox of lab-grown 
diamonds by offering a form of exclusivity rooted in co-creation rather than material scarcity, 
thereby reconciling the tension between affordability and luxury (Holmqvist et al., 2019; 
Veblen, 1961). Customization also responds to the emotional and symbolic dimensions of 
luxury consumption. As shown by Yoo and Park (2016), customization enhances customer 
loyalty, particularly among consumers who value hedonic pleasure, social identity, and 
creativity. Thus, lab-grown diamonds gain emotional resonance by enabling consumers to see 
themselves not merely as purchasers, but as co-creators of their jewelry. 
However, the strategic opportunity of customization is not without tension. Moreau et al. 
(2020) warn that extensive customization may dilute brand identity, particularly in a category 
where symbolic value is critical. This concern is relevant to lab-grown diamond brands, 
which must balance the consumer’s desire for self-expression with the need to maintain 
coherent and recognizable brand markers that communicate quality and trustworthiness, 
especially important in a market where consumer understanding of the product remains in 
development. 
Within this context, brands such as Akind and Kimaï offer significant degrees of customer 
input into the design process, while maintaining consistent brand cues. One interviewee 
underscored that although designs are co-created, the brand's DNA remains embedded in the 
final product. This approach reflects the findings of Moreau et al.’s (2020), where brand 
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identity should be preserved through visual and symbolic elements, even when there is a high 
level of customization. 
Ultimately, customization helps restore a sense of exclusivity, a core pillar of luxury, not 
through material rarity, but through the uniqueness of the product and the intimacy of the 
creation process. It becomes a powerful mechanism for differentiation, allowing lab-grown 
diamond brands to appeal to consumers seeking individuality and meaning, rather than 
simply lower prices. This may also mitigate the risk of cannibalization, whereby lab-grown 
diamonds would erode the perceived value of the overall diamond market. Instead, lab-grown 
diamonds positioned as personalized luxury items can contribute to market expansion rather 
than substitution. 
In addition to narrative and design-based strategies, lab-grown diamond companies also 
pursue relational strategies to enhance legitimacy. Previous research has suggested that one 
effective way to navigate the disruptor’s dilemma is by addressing its core challenge, namely, 
the dominant position of incumbents in the market. Forming strategic alliances and 
collaborative partnerships with well-established players has been shown to enhance 
legitimacy, enable access to resources, and facilitate smoother market entry for disruptors 
(Ansari et al., 2016). This strategy has proven especially successful in industries 
characterized by openness and interconnectivity, where collaboration is both structurally 
possible and culturally accepted. However, as Ansari et al. (2016) also emphasize, the 
viability of such partnerships is highly dependent on the nature of the industry. The diamond 
market remains tightly controlled and highly concentrated, with a few incumbent firms 
holding substantial market power and exerting influence over both supply chains and brand 
narratives. In such an environment, opportunities for direct collaboration between disruptors 
and incumbents are limited, if not entirely absent. This distinction was reflected in the 
empirical findings, where no evidence of formal relationships between incumbents and 
disruptors emerged from the interviews. 
Instead, some lab-grown diamond companies have adopted alternative legitimacy-building 
strategies by aligning with respected third-party platforms in the broader luxury ecosystem. 
For instance, partnerships with premium retailers such as Net-A-Porter provide market 
exposure and symbolic validation through association with well-regarded actors. While these 
collaborators may not be incumbents within the diamond sector, their strong reputations 
within luxury more broadly offer lab-grown diamond brands enhanced visibility, credibility, 
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and access to high-end consumers. This reflects the insight of Petzold et al. (2023), who 
argue that building alliances with adjacent credible actors can achieve similar outcomes as 
incumbent partnerships. In highly institutionalized industries with closed networks, these 
alliances serve as viable alternatives to direct collaboration, helping disruptors overcome 
entry barriers and build consumer trust. 
From the perspective of disruptive innovation theory, these strategies underscore a key 
insight: lab-grown diamonds do not merely compete with mined diamonds on traditional 
dimensions; they introduce a new value proposition. Lab-grown diamonds underperform on 
conventional markers of luxury such as scarcity and heritage, but outperform in areas like 
ethics, affordability, and design flexibility, which are increasingly valued by emerging 
consumer segments. In this sense, lab-grown diamond brands are not simply responding to 
shifting consumer preferences, rather they are co-creating a new interpretation of luxury, one 
defined less by price and scarcity and more by emotional resonance, ethical alignment, and 
personalized experience. 
In sum, this finding highlights the central challenge for lab-grown diamond companies: the 
need to establish legitimacy as luxury despite lacking traditional luxury attributes. 
Sustainability, while a strategic starting point, may not be enough. Instead, customization, 
symbolic storytelling, and strategic alliances emerge as key pathways for reframing 
lab-grown diamonds as credible luxury goods. These strategies align with disruptive 
innovation theory, diffusion theory, and Veblen’s concept of symbolic value, and collectively 
point to an evolving luxury landscape - one in which value is increasingly derived not from 
material scarcity, but from co-creation, meaning, and emotional engagement. 
6.2 Downstream Differentiation and Flexible Sourcing 
Lab-grown diamond companies face a tough challenge in attempting to disrupt one of the 
most tightly controlled and symbolically entrenched luxury markets: mined diamonds. The 
dominant barriers to entry are not merely technological or financial, but institutional, 
relational, and historical. These barriers manifest themselves particularly through incumbent 
resistance and control. This analysis draws on practical examples from the findings in how 
lab-grown diamond firms employ distinct strategies to overcome this challenge, using the 
theories of disruptive innovation (Christensen, 1997), Porter’s (1980) entry barriers, and the 
disruptor’s dilemma (Ansari et al., 2016). 
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The mined diamond market is characterized by significant barriers to entry, as conceptualized 
by Porter’s (1980) theory, which identifies structural factors that protect incumbents and 
restrict new competition. Dominant players, often vertically integrated, such as De Beers and 
Alrosa, not only own and operate their own mines but also control the downstream flow of 
high-quality rough diamonds. New entrants reported the difficulty of penetrating this tightly 
held system. A key challenge was earning trust in an industry steeped in tradition and 
governed by legacy networks, many of which have been passed down through generations. 
These networks are grounded in interpersonal loyalty and long-standing relationships, 
creating a closed ecosystem where access is largely informal and reliant on social capital. In 
such a context, trust functions not merely as a relational asset but as a form of institutional 
currency, essential for gaining legitimacy and securing resources. This aligns with Porter’s 
(1980) concept of customer switching costs and demand-side benefits of scale, where 
incumbent firms benefit from established social networks and consumer loyalty that are 
difficult for entrants to overcome. 
This environment closely mirrors the dynamics described in the disruptor’s dilemma (Ansari 
et al., 2016), where emerging firms must decide whether to collaborate with powerful 
incumbents or pursue alternative market paths. Notably, none of the respondents in this study 
indicated a desire to cooperate with legacy actors. Even VanBruun, a player operating in both 
the mined and lab-grown segments, has not established formal partnerships with incumbents. 
This strategic distancing reflects an industry that is not only vertically confined but also 
institutionally limited, leaving little room for newcomers to integrate into existing value 
chains. 
Beyond structural constraints, new entrants have faced narrative resistance from incumbents. 
As one interviewee described, there have been attempts by established players to delegitimize 
lab-grown diamonds through lobbying and communication campaigns. These efforts aim to 
preserve the symbolic value of mined diamonds by framing lab-grown diamonds as inferior, 
fake, and less valuable. This form of resistance aligns with Porter’s (1980) conceptualization 
of product differentiation as a barrier to entry, wherein incumbent firms maintain competitive 
advantage not merely through superior products, but by shaping consumer perceptions and 
brand loyalty. Such framing strategies reinforce the complexity of the innovation, a factor 
67 
 
identified by Rogers (1962) as a determinant of adoption rates. In the lab-grown diamond 
case, complexity does not arise from the product’s functionality, but from its disruption of 
entrenched beliefs about what constitutes a “real” or “luxury” diamond. These challenges 
reflect a common dynamic in the diffusion of disruptive innovations: the burden of education 
lies with the entrant, while incumbents seek to confuse consumers in their favor. 
Despite these considerable challenges, lab-grown diamond firms have developed adaptive 
strategies to bypass structural and symbolic entry barriers. These strategies reflect core 
principles from disruptive innovation theory and draw on new market dynamics, including 
shifting consumer values, open supply ecosystems, and downstream differentiation. 
One key strategy employed by lab-grown diamond firms is the strategic framing of 
sustainability as a source of competitive legitimacy. In contrast to mined diamonds, which 
face growing scrutiny over their carbon footprint, ecological damage, and historical links to 
conflict zones, lab-grown diamonds are positioned as an ethical and environmentally 
conscious alternative. The production process significantly reduces greenhouse gas 
emissions, water consumption, and mineral waste, aligning with the preferences of a younger, 
more value-driven consumer base (The Editors of Encyclopedia Britannica, 2016). This 
sustainability focus allows lab-grown diamond firms to build symbolic value independent of 
traditional scarcity narratives. Rather than attempting to compete on heritage or exclusivity, 
they stake legitimacy on transparency, accountability, and long-term impact. In doing so, they 
align with a redefinition of luxury that increasingly incorporates social and environmental 
responsibility. That said, the empirical findings suggest sustainability may not be the primary 
decision factor for most luxury consumers. As several respondents observed, while 
sustainability is often cited as important, price remains the decisive factor. However, in a 
market where the negative legacy of mined diamonds is widely recognized, lab-grown 
diamond firms may benefit from an assumed ethical baseline, where sustainability is not 
necessarily a purchase driver but a minimum expectation. 
Unlike the mined diamond industry, which is characterized by almost oligopolistic control 
over upstream resources, the lab-grown segment has developed a more open and 
decentralized supply structure. New entrants can source rough lab-grown diamonds from 
multiple global producers, reducing reliance on gatekept distribution channels. The findings 
68 
 
suggest that the new entrants may benefit in using flexible sourcing, which stands in contrast 
to the traditional model of relational sourcing that dominates the mined diamond industry. 
Instead of forming exclusive, long-term partnerships with select suppliers, some companies, 
such as VanBruun, opt for a consumer-centric sourcing model, prioritizing availability and 
product fit over loyalty to specific suppliers. This flexibility in sourcing is strategically 
significant as it allows companies to adapt rapidly to customer preferences, reduce 
dependency on any single upstream partner, and thereby mitigate the leverage incumbents 
traditionally wield over access to materials. It also supports a lean, made-to-order production 
model, which not only minimizes inventory costs but also enhances product customization, a 
key differentiator in the luxury market. By reducing fixed commitments and inventory risk, 
this approach allows entrants to remain agile and responsive to evolving consumer demand, 
rather than conforming to rigid supply chains shaped by incumbent norms. 
Additionally, quality control emerged as a second-order category. While lab-grown diamonds 
are often criticized by incumbents as inferior, some firms, such as Kimaï, have positioned 
themselves at the premium end of the lab-grown diamond market, emphasizing high 
standards of craftsmanship and the ability to ensure cleaner, more flawless stones through 
technological precision. According to Kimaï’s founder, quality is not merely a matter of 
aesthetics, but a critical marker of credibility and trust, particularly in a market where 
lab-grown diamonds must constantly defend their legitimacy. These sourcing and 
differentiation strategies are not only operational choices, but they also serve as deliberate 
countermeasures to overcome incumbent control and resistance. They reflect a strategic 
navigation of resource asymmetries by disruptive innovators, who overcome traditional 
bottlenecks by leveraging new value propositions and operational models. They also reduce 
dependency on the traditional institutions and increase the degrees of strategic freedom 
available to entrants. These responses reflect the adaptive logic of disruptive innovation 
theory, showing how new entrants can survive and even thrive in institutional environments 
designed to exclude them. 
6.3 Building Trust and Legitimacy  
A central challenge faced by lab-grown diamond brands is the need to establish brand 
credibility and customer loyalty in a market historically dominated by the symbolism and 
69 
 
heritage of mined diamonds. This challenge is particularly pronounced due to the relatively 
recent emergence of lab-grown diamonds and the persistent skepticism surrounding their 
authenticity and emotional value. As highlighted by several interviewees, early market 
entrants encountered low consumer awareness and doubts regarding the legitimacy of 
lab-grown diamonds. Although consumer knowledge has improved over time, emotional trust 
and perceived authenticity remain under continuous construction. 
In this context, trust-building becomes a critical imperative. Lab-grown diamond brands must 
actively construct emotional and symbolic narratives to offset the rooted advantages of 
traditional luxury incumbents. Unlike mined diamonds, which naturally derive symbolic 
capital from its long-standing heritage and tradition (Bastien & Kapferer, 2012), lab-grown 
diamonds must establish legitimacy from the ground up. This reflects what Porter (1980) 
terms incumbency advantages independent of size, a key entry barrier that favors established 
players with reputational and symbolic authority. 
The perceived lack of authenticity surrounding lab-grown diamonds highlights a further 
obstacle: the relative advantage dimension from Rogers’ (1962) diffusion of innovation 
theory. While lab-grown diamonds offer clear functional benefits, such as affordability and 
environmental sustainability, these are often overshadowed by the symbolic associations of 
mined diamonds. In luxury markets, superiority is not purely functional, but also deeply 
symbolic and emotional. Unless lab-grown diamonds are perceived as equally meaningful, 
their functional advantages may not be sufficient to drive widespread adoption. To address 
this, brands have implemented a range of strategic responses, each aiming to enhance 
credibility, reduce perceptions of inauthenticity, and foster loyalty. Emotional storytelling is a 
foundational tactic. As Kimaï emphasized, selling the story is of extreme importance. By 
embedding narratives of transparency, modern craftsmanship, and emotional significance, 
brands work to construct symbolic value around their products. This narrative is often 
complemented by customization, enabling consumers to co-create unique pieces, thereby 
strengthening personal attachment and perceived exclusivity. 
Another strategic avenue involves partnering with recognized gemological institutions, such 
as the International Gemological Institute or the Gemological Institute of America (Kimaï, 
n.d.; Vanbruun, n.d.). These affiliations function as credibility signals, lending institutional 
70 
 
legitimacy and helping position lab-grown diamonds as equivalent in quality and value to 
their mined counterparts who use the same certifications. 
Brand presence and distribution strategies also play a critical role. Initially, all interviewed 
companies adopted digital-first business models, enabling them to cost-effectively reach early 
adopters, consumers more open to innovation and experimentation. This aligns with Rogers’ 
(1962) notion that early adopters are critical in the initial diffusion phase. However, as 
companies scaled, they transitioned to omnichannel strategies, incorporating physical 
touchpoints such as showrooms, pop-up shops, and retail stores, thus transitioning into an 
omnichannel strategy. As several interviewees emphasized, the physical component has 
become a crucial and indispensable part of their business model, with many now attributing a 
significant share of their sales to in-person experiences. This can also be seen as a means to 
increase the level of trialability and observability of their products (Rogers, 1962). The ability 
to test and experience the product in-person helps reduce perceived risk and supports 
trialability. Moreover, physical spaces and in-person experiences enhance observability, as it 
allows potential customers to directly perceive the quality and value of lab-grown diamonds, 
further emphasizing the identical nature of lab-grown and mined diamonds. In-person 
experiences allow consumers to assess product quality directly, reducing uncertainty and 
increasing confidence in the product category. These physical spaces not only meet consumer 
expectations for high involvement purchases like engagement rings but also convey tangible 
legitimacy that is difficult to replicate through digital platforms alone. 
Additionally, lab-grown diamond brands exhibit a selective approach to marketing strategies. 
While acknowledging the visibility that influencers offer, interviewees, including Professor 
Holmqvist, expressed caution. Rather than focusing solely on reach, firms emphasized 
authenticity, alignment with brand values, and credibility. In contrast, greater emphasis was 
placed on organic growth through word-of-mouth, public relations, and exceptional customer 
experiences. These strategies are particularly effective in fostering emotional loyalty and 
generating peer-driven credibility, further reinforcing Rogers’ (1962) concept of 
compatibility. When prospective customers observe peers or aspirational figures wearing 
lab-grown diamonds, the product feels more compatible with their own identities and values. 
71 
 
A recurring strategic pattern among the interviewed companies is the deliberate focus on 
establishing a strong and credible brand presence within a specific product segment or 
geographic market before pursuing broader expansion. This approach not only enables 
resource concentration and brand consolidation but also serves as a foundation for building 
consumer trust and symbolic capital, both of which are essential in the diamond sector. For 
example, Mockberg, the Nordic market leader in women's watches, is now leveraging its 
firmly established reputation for quality and craftsmanship to expand into the adjacent 
category of lab-grown diamond jewelry. As CEO and founder Elvira Eriksson noted, their 
established market leadership in watches provides a strong base of consumer trust, which 
they are now translating into the jewelry segment. This kind of category adjacency strategy 
can help mitigate the credibility gap often associated with lab-grown diamonds by 
transferring brand equity from one product category to another, thereby reinforcing 
perceptions of quality, reliability, and emotional relevance. 
This strategic logic is equally evident in geographic expansion. Vanbruun, a well-known 
Nordic brand specializing in engagement rings, is now actively entering markets such as the 
Netherlands and France. As CEO Victor Halvarsson emphasized, such internationalization 
efforts would not have been feasible without first developing a solid and reputable domestic 
foundation. This progression supports the notion that credibility must be accumulated and 
signaled before scaling, particularly in emotionally charged and symbolically laden 
categories like diamond jewelry. By entering adjacent segments where existing brand capital 
can be transferred, these firms strategically reduce perceived risk for consumers and enhance 
compatibility (Rogers, 1962). 
Building trust and emotional resonance with consumers in the lab-grown diamond market is 
best understood as a phased strategy. The first step involves adopting a digital-first approach 
to efficiently reach early adopters. This initial digital presence allows brands to test the 
market, refine messaging, and begin cultivating brand identity with relatively low overhead. 
However, as the brand gains traction, the second step becomes critical: establishing a physical 
presence. Integrating showrooms, pop-up stores, or permanent retail spaces not only enhances 
trialability and observability but also provide tangible legitimacy and help solidify emotional 
trust, which is often difficult to achieve through digital channels alone. Once a baseline of 
72 
 
credibility and customer loyalty has been established, the third step involves leveraging that 
brand equity to expand into adjacent product categories or geographic markets. By 
transferring accumulated symbolic capital from an initial product line or market, brands can 
mitigate the perceived risk typically associated with lab-grown diamonds and reinforce 
perceptions of quality and authenticity. This stepwise approach enables brands not only to 
overcome the credibility gap of being a new entrant, but also to reposition lab-grown 
diamonds as a compelling and legitimate alternative within the broader luxury landscape. 
7. Conclusion 
7.1 Summary of Findings 
This thesis explores the research question “How do new entrants navigate in a disrupted 
luxury market, what challenges do they encounter and what strategies do they employ to 
compete successfully?” through studying the case of lab-grown diamonds.  
One significant challenge for lab-grown diamonds lies in achieving perceived luxury status. 
Traditional luxury is intrinsically linked to concepts of scarcity, heritage, and history, 
attributes not inherently possessed by lab-grown diamonds. This highlights a core paradox: 
offering an economically accessible alternative within a market segment where value is 
primarily derived from price-based exclusivity. To address this challenge, new entrants 
strategically leverage customization and bespoke design. This approach facilitates a 
redefinition of exclusivity, shifting its basis from material rarity to co-creation, individuality, 
and personal meaning. While sustainability is frequently emphasized, its primary function 
appears to be establishing an ethical baseline rather than serving as a bridge for the luxury 
perception gap. 
Furthermore, new market entrants confront substantial incumbent resistance and structural 
control. Established players drive delegitimization campaigns against lab-grown diamonds 
and hold considerable influence over supply chains and industry networks. This creates tough 
barriers to market entry and constrains opportunities for direct collaboration. To mitigate 
these structural impediments, lab-grown diamond firms prioritize downstream differentiation 
and flexible sourcing. This agile operational model minimizes reliance on traditional, closed 
supply chains and supports lean, made-to-order production. Such flexibility enhances 
73 
 
customization capabilities and responsiveness to evolving consumer demand, thereby 
effectively reducing the traditional control incumbents exert over the market. 
Finally, in the absence of inherent heritage and established symbolic capital characteristic of 
mined diamonds, and long-standing luxury brands in general, lab-grown diamond brands are 
compelled to construct emotional and symbolic narratives from the ground up. This requires 
overcoming initial consumer skepticism and continuously working on increasing the 
perceived authenticity and emotional trust from consumers. The establishment of trust and 
legitimacy is achieved through a versatile and integrated strategic framework. This includes 
the formation of strategic alliances with reputable third-party luxury platforms, thereby 
acquiring credibility through association. Brands also use emotional storytelling to heighten 
the symbolic value of their products. Furthermore, a phased omnichannel distribution strategy 
is adopted, transitioning from an initial digital-first approach to incorporating essential 
physical presences such as showrooms or pop-up stores. This enhances product trialability 
and observability, providing tangible legitimacy and increasing emotional trust. Ultimately, 
strategic expansion into adjacent product categories or geographic markets enables the 
transfer of existing brand equity, further reinforcing perceptions of quality and authenticity. 
Subsequently, new entrants in the lab-grown diamond sector navigate disruption not by 
imitating the traditional luxury model, but by redefining it. Their strategies focus on 
redefining value, moving away from material scarcity and heritage toward ethical values, 
personalized experiences, and emotional connection. By avoiding direct confrontation with 
incumbents and instead creating independent ecosystems, they reshape the rules of the 
market. This innovative approach allows them to build a credible and growing presence 
within an industry long dominated by established players, meaning they are not merely 
offering a substitute for traditional luxury - they are constructing a new paradigm for what 
luxury can mean. 
7.2 Practical Implications 
For emerging companies in the lab-grown diamond segment of the luxury jewelry market, 
several practical and strategic recommendations can be drawn from this study. 
First, firms should prioritize customer-driven strategic adaptation and co-creation. Success in 
this market goes beyond simply responding to demand; it involves actively engaging 
74 
 
customers in creating meaning and value. Offering customizable products can serve as a 
powerful differentiator, especially for consumers who value hedonistic pleasure, social 
signaling, and creativity. However, customization efforts should be carefully aligned with the 
brand’s identity to maintain coherence. 
Second, building trust through an omnichannel presence is vital. While many new entrants 
begin as digital-only businesses, physical touchpoints, such as showrooms or retail 
partnerships, play a crucial role in validating product quality and enhancing customer 
confidence, particularly for high-involvement purchases like engagement rings. A gradual 
transition to an omnichannel model is recommended as the business scales. 
Third, the brand value proposition should emphasize emotional, ethical, and experiential 
elements. Lab-grown diamonds cannot compete with mined diamonds on rarity or heritage. 
Instead, companies should focus on storytelling that highlights their products' modern appeal, 
and personal significance. Positioning the brand as a sustainable option should be used with 
caution, however using sustainable efforts in production and sourcing is vital. 
Finally, companies must navigate industry barriers strategically. The traditional diamond 
sector is marked by high entry barriers and tightly controlled supply chains. Rather than 
attempting to integrate into this closed ecosystem, new players should leverage the more open 
supply structure of lab-grown diamonds. Strategic alliances with credible third-party 
platforms in the broader luxury space can help build legitimacy without relying on 
established diamond giants. 
7.3 Limitations 
While this study provides valuable insights into how entrant firms should strategize 
successfully in a luxury market, several limitations must be acknowledged to appropriately 
contextualize the findings. 
First, the use of a qualitative methodology introduces certain challenges. The interpretation of 
interview data is inherently subjective, and despite using structured methods such as the 
Gioia Method, some researcher’s bias may have influenced the analysis. Additionally, the 
semi-structured nature of the interviews limits replicability, as both participants’ responses 
and the follow-up questions varied. Additionally, non-verbal cues and contextual signals, also 
may have been lost during transcription and thematic categorization. 
75 
 
Second, the study is based on a single-case design, focusing exclusively on the niche of 
lab-grown diamonds within the luxury market. While this allows for in-depth exploration, it 
limits the generalizability of the findings beyond this specific context or to other sectors. The 
time-specific nature of the interviews (conducted in spring 2025) also means the insights 
reflect a particular moment in a rapidly evolving industry. Perspectives may shift greatly over 
time. 
Finally, the data collection process involved a sample of five participants, four company 
representatives and one academic expert, all from firms located in Europe. The limited 
number of interviews reflects the concentrated nature of the market but still constrains the 
breadth of perspectives. Additionally, the sample is geographically concentrated, as all four 
companies studied are based in Europe. While this reflects current market activity in Europe, 
this market context may differ substantially from other regions.  
These limitations do not undermine the relevance of the findings but should be considered 
when interpreting the results and assessing their applicability in other contexts or future 
research. 
7.4 Future Research Directions 
Future research in the field of market disruption and luxury goods, particularly within the 
context of lab-grown diamonds, can be directed along several paths. First, this study 
highlights a notable gap in the literature concerning strategies for disruptors operating within 
closed market systems. Existing frameworks, such as the Disruptor’s Dilemma, 
predominantly focus on markets characterized by openness and interconnectivity. However, 
industries like the diamond sector represent closed markets with low mutual dependence, 
where formal alliances or collaborations with incumbent actors appear limited or absent. 
Further empirical investigation is required to understand how disruptors should strategically 
position themselves in such closed systems and whether partnerships or alliances could 
emerge as feasible or advantageous mechanisms for competitive advantage. 
Secondly, the long-term trajectory of lab-grown diamonds remains an open question. While 
current trends indicate growth in market share, it is uncertain whether this momentum will be 
sustained or if the category will face stagnation and require strategic redefinition in the 
future. Future research could adopt longitudinal approaches to trace the evolution of 
76 
 
lab-grown diamonds’ market penetration and their sustained positioning within the luxury 
segment. 
Additionally, the complex nature of consumer perceptions and valuations of lab-grown 
diamonds warrants deeper exploration. Despite increasing consumer awareness, stigma 
persists around synthetic diamonds, and their perceived value relative to mied stones is 
multifaceted and dynamic. Subsequent studies could examine how different consumer 
segments, divided by demographics such as age, gender, or motivational drivers, perceive and 
appraise lab-grown diamonds over time. Particular attention should be paid to the interplay of 
factors such as storytelling, customization, and brand heritage, as well as the tension 
consumers experience between price sensitivity, sustainability concerns, and luxury 
aspirations. 
Moreover, the role and impact of omnichannel strategies in luxury markets merit further 
quantitative assessment. This study underscores the importance of physical touchpoints for 
lab-grown diamond brands; however, the relative effectiveness of various channel 
configurations, such as owned boutiques, showrooms, and retail partnerships, on sales 
performance, customer trust, and brand perception remains underexplored. Future research 
could systematically evaluate these dimensions to inform best practices for luxury 
omnichannel management. 
Finally, given the case study nature of this research and its inherent limitations regarding 
generalizability, comparative studies across different industries and geographic regions would 
be valuable. For instance, exploring the disruption of lab-grown diamonds in markets with 
varying maturity levels, such as the United States versus Europe, could yield insights into 
contextual differences. Likewise, cross-sector comparisons with disruption phenomena in 
other luxury categories may further enrich understanding of industry-specific and universal 
disruption dynamics. 
 
 
77 
 
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Appendix 
A1 - Interview Guide 
Introduction 
Introducing ourselves and the thesis in order to provide a brief introduction to the subject, 
and to ensure confidentiality as well as consent. 
Section 1: Background 
1. Could you briefly introduce [company] and your role at the company? 
2. What inspired you to start a business within the diamond industry? 
3. What was it like to enter this industry as a new player? 
4. Did you have any prior connections within the market, or did you have to build a new 
network from scratch? 
a. Are any of those early contacts now part of the [company] team? 
5. How many employees does the company currently have? 
6. What does your market share look like in lab-grown diamond products like 
engagement rings and other jewelry? 
7. What was your turnover in 2024? 
8. What is [company] valued at today? 
9. What do you believe have been the most important success factors for [company]? 
Section 2: Broader strategy 
10. Through which channels do you sell your products? 
11. Which sales channel has proven to be the most profitable? 
12. What does the distribution of your product categories look like - for example, 
engagement rings, necklaces, men’s jewelry, etc.? Are there certain categories that 
dominate your sales? 
13. How do you market your products - and where? 
14. How do you differentiate yourselves in the market? Why do customers choose 
[company]? 
15. How does your pricing compare to others in the market? 
16. Have you been working exclusively with lab-grown diamonds since the start? 
17. Why did you choose to focus solely on lab-grown diamonds - was it an obvious 
decision from the beginning? 
83 
 
18. What are the most significant costs in your operations? 
Section 3: Customers 
19. Who are your different customer groups? 
20. Has your “typical customer” changed over the years? If so, how and why? 
21. Who would you consider your most important customer segment? 
22. To what extent can the customer customize your products? 
23. How would you describe your relationship with your customers? 
24. How would you describe your relationship with other actors in the industry? 
25. How have your customers responded to the fact that you [only sell lab-grown 
diamonds / sell both lab-grown and mined diamonds]? 
a. Have you ever considered offering [mined diamonds / solely lab-grown 
diamonds]? 
26. Have you noticed any shifts in consumer behavior or preferences? If so, how has that 
affected your business model? 
27. What kind of brand associations would you like your customers to have when they 
think of [company]? 
Section 4: Supply Chain 
28. What does your supply chain look like today? 
29. Has it changed over the years? If so, why? 
30. Which part of the supply chain carries the greatest risk? 
31. Do you work with one or several suppliers? 
32. What is your relationship like with your suppliers? 
33. Could you walk us through the process - from the lab to the final product reaching the 
customer? 
34. What is done in-house, and what do you outsource? 
a. Have you ever considered producing your own lab-grown diamonds? 
Section 5: Market and industry dynamics 
35. What was it like to enter this industry as a new player? 
36. What would you say are the benefits and disadvantages of being in a relatively new 
market? 
37. What does the competitive landscape look like for [company]? 
84 
 
38. Who would you identify as your key competitors, if you're comfortable naming them? 
39. Do you apply different strategies in different countries? 
40. Have you ever considered producing your own lab-grown diamonds? Why or why 
not? 
41. How do you think the market has changed since lab-grown diamonds became a viable 
option? 
42. How do you envision the future of the diamond industry? 
43. Do you think different customer segments will emerge? 
Section 6: Conclusion 
44. Is there anything else you would like to add? 
45. Would it be okay if we reach out again in case we have any follow-up questions? 
46. Do you know anyone else in the industry you think we should talk to? 
 
 
 
 
 
 
 
 
 
 
 
 
 
85 
 
A2 - Interview Guide 
Introduction 
Introducing ourselves and the thesis in order to provide a brief introduction to the subject, 
and to ensure confidentiality as well as consent. 
Section 1: Background 
1. Would you like to tell us a little bit about yourself, and about your experience in the 
luxury industry? 
2. How would you define the main characteristics that differentiate luxury products from 
other segments? 
3. What does the luxury goods market look like for diamonds today? 
4. How have you seen the luxury market evolve in recent years? 
Section 2: The Luxury Market 
5. How do established companies in the luxury goods industry deal with disruptive 
innovation? 
6. What are the challenges and opportunities for new entrants to the market today? 
7. Has this changed over time?  
8. What is the future of the luxury industry? What challenges and opportunities does it 
face? 
Section 3: Sustainable Luxury 
9. How important is sustainability, both social and environmental, for luxury consumers 
in general? 
10. How has sustainability influenced the strategy of established diamond companies in 
recent years? Transparency, certifications, etc 
11. Many companies selling lab-grown diamonds choose to market lab-grown diamonds 
as sustainable - how do you think this affects customer perception of the product as a 
luxury good? 
Section 4: Luxury Strategy 
12. What strategies have proven most successful for new entrants in the luxury segment? 
13. How important is storytelling and brand positioning to establish yourself in the luxury 
market?  
86 
 
14. Do you see digital platforms and e-commerce influencing how luxury goods are 
marketed and sold?  
15. How can new entrants differentiate themselves to compete with established luxury 
brands?  
16. How important are partnerships with traditional luxury houses or influencers for 
young companies?  
17. Is it common for luxury brands to own the entire production chain? 
Section 5: The Diamond Industry 
18. Can diamonds themselves be classified as a luxury good? 
19. What challenges does the diamond industry face? 
20. Is the diamond industry different from other luxury goods markets? 
Section 6: Lab-grown Diamonds 
21. How do you think established companies will deal with the increasing popularity of 
lab-grown diamonds? 
22. What are the main challenges that new entrants in lab-grown diamonds face in the 
luxury market?  
23. How do you think the luxury consumer perceives the increased popularity of 
lab-grown diamonds? 
24. Do you see specific geographic markets (or customer segments) where lab-grown 
diamonds have a greater opportunity to establish themselves as luxury products? 
25. How do you think the luxury industry will evolve in terms of the acceptance of 
lab-grown diamonds? 
Section 7: Conclusion 
47. Is there anything else you would like to add? 
48. Would it be okay if we reach out again in case we have any follow-up questions? 
49. Do you know anyone else in the industry you think we should talk to? 
87