Direct Marketing Management - Research Paper Example

Direct marketing management Introduction Marketing a product is a vital function for growth and survival of an organization. It becomes all the more important when a company is entering into the market place for the first time. The company has to generate sales from scratch and this will be quite challenging for its marketing and sales departments. The market will have to be reviewed, the products mix will have to be developed, geographical and demographic data will have to be collected, a list of potential customers has to be developed, the legal and statutory requirements have to be complied with, and a strategy has to be created and implemented. In short it will entail the development of a detailed marketing plan taking into consideration the above factors. In the present instance, the whole process will be all the more difficult because the product that is to be marketed is primarily a Western food product, namely cupcakes. This paper is a report on the direct marketing of cup cakes in Dubai and will take into consideration all the above mentioned factors. It will then provide a workable direct marketing strategy which if implemented correctly can help the company find a market, and grow in this tiny region which is a part of the wealthy United Arab Emirates. Background of Dubai: The United Arab Emirates is comprised of seven independently ruled states and Dubai forms a part of this union. It is by far the most modern looking one with an enlightened ruler steering the region towards modernity and prosperity. This statement by Williamson sums up the present state of Dubai in one sentence – “Dubai is recognized as the commercial and tourism capital of the UAE and is globally regarded as one of the most sophisticated, futuristic and cosmopolitan cities in the world, in fact Dubai is something of a phenomenon” (Williamson). Oil only comprises a small portion of its huge revenue which is dominated by trade and tourism. It is placed strategically in the Middle East with good ports, free trade zones, and a friendly investment climate making it very attractive to international trade. As a result there is a huge presence of immigrants from many countries and in fact outnumber the local population of Dubai. A study of the gulf peninsula states that foreigners comprise eight percent of the residents in the UAE, and the locals make up for only the balance twenty percent (Walker et al 47). Americans and Westerners are also seen in large numbers and this will be studied in later sections of the paper. On the whole, the climate in the region is seen as a good market for a western food product like the cup cake. The product mix: As mentioned earlier, the product to be marketed is a western concept. At present only one product will be marketed in Dubai. Cupcakes are baked using flour, baking powder, a pinch of salt, sugar, milk, eggs or egg whites, and flavorings like vanilla and chocolate. They can be provided as items for birthdays, casual tea snacks, any gathering involving children and adults. It can also form part of other sweets and dishes for any gathering. Hence it is a versatile baked product which can be used for a variety of occasions. The advantage is that it can be flavored in a variety of ways. It is also adaptable and can even use flavorings popular in Arab culture like cardamom, dates, and nutmeg. This adaptability is well suited for a market like Dubai, where the local population is mixed with a diverse Western and Asian culture. There are many manufacturers of ovens for large scale manufacture of cupcakes and the there is no problem in getting the necessary equipment for manufacture and packing of the product in Dubai. For example, the company is engaged in talks with a company called Picard that makes ovens that run on gas or electricity (Manufacturer of Industrial and Commercial Ovens Since 1957). There is a belief that certain types of foods (like pork) is not allowed under religious laws among Muslims. Hence care should be taken that the ingredients used are halal (allowed) and not haram (forbidden) Market study and marketing plan: In the concept of John Westwood, “the marketing planning is the technique that enables a company to decide on the best use of its scarce resources to achieve its corporate objectives. The marketing plan is the passport to the future” (Westwood 1). This definition indicates the importance of marketing for the growth, survival and success of any company. The following techniques are used here to analyze the market and the company. SWOT analysis:  According to Evans, “All business plans should include a section analyzing the strengths, weaknesses, opportunities threats of the proposed venture, a SWOT analysis, and will endeavour to quantify the financial risk posed to the project by hypothetical events which may threaten its viability” (Evans 5). Essentially strengths and weaknesses are internal factors affecting a company and opportunities and threats are external ones. It should be noted that the company has yet to set up operations and hence review of strengths and weaknesses is not comprehensive. Strengths: A strong management Financially and technically strong Owners are a mix of Western and Arab influence Weaknesses: Not a traditional product Company yet to begin operations Relatively unknown company and brand Opportunities: Presence of a large number of Americans and Europeans Population exposed to Western culture, food, and tastes Dubai is highly Cosmopolitan Threats: Market is open to competitors Tastes may not be liked by locals Competition from other food items both Western, Asian, and traditional Anti-West sentiments PESTLE Analysis: PESTLE analysis (also referred to as just PEST or PESTEL analysis) is an ideal method to understand the market potential and its growth prospects (Williams & Curtis 113). The acronym is expanded as follows and is analyzed with respect to the Dubai market. Political factors: Dubai has a stable and forward looking monarchy. It also has a strong governing system that is relatively free from corruption. Transparency International ranks the UAE at 35 out of a total of 180 countries (CPI 2008 table). Economic factors: This state is the second richest among the seven that comprise the UAE. It has a strong trade and tourism industry and its employees earn good income. Moreover, the product is not a luxury item and hence is affordable to most sections of the population. Social factors: The region has extreme social diversity that includes Arabs, people from other Asian countries, Europeans and Americans. Exposure to Western tastes is also a favorable factor. Hence finding a market that likes cupcakes may not be a problem provided the quality is good. Unofficial figures put the number of Americans in Dubai at around 20,000. People from is the largest expatriate European population. The figure rose from 60,000 in 2006 to around 120,000 within one year according to the UK Office for National Statistics (Malik). Technical factors: This is not a high technology industry and equipment and machinery for manufacture and marketing is easily available in the country. Alternatively, it can be imported. Legal Factors: The country has a strong legal system with strict laws and statutes on manufacture and marketing of food items. The United States Department Agriculture publication of 2008 states that, “The Gulf Standards Organization (GSO) is comprised of senior standards officials from the six GCC member countries and is responsible for developing food and other standards in the GCC” (Taha). The UAE is a member of the aforesaid body and imports (raw materials) and marketing should be in accordance with their guidelines. Environmental factors: There are no apparent environmental threats with regarding of cupcakes in the region. The product is not a great pollutant and waste can be managed effectively. Porter’s five forces: Michael Porter’s five forces in the market place have been widely used in understanding markets worldwide. According to Porter, apart from competition, four other factors namely, threat of new entrants, threat of substitutes, bargaining power of suppliers and bargaining power of customers, form the five forces that decide the character of markets. According to him, ‘if the forces are intense’ profitability will be low for all players. In case they are less intense or benign, some of the better players can become profitable (Porter 3). An analysis of the Dubai market is done here using these factors. Competition in the cupcake segment appears to be low in the state. a consumer preference showed a few outlets where cupcakes are well appreciated. They include Sugar Daddy’s Bakery, Sugar Box, Kitsch Cupcakes, Scrumptious, and Sprinklez (Ann). This is apart from hotels, bakeries, catering companies, and restaurants where cupcakes are sold. This need not be taken as serious since none of them appears to be using direct marketing methods to woo customers. Since cupcake supply is not extensive, power of suppliers is comparatively higher when compared to power of buyers. But substitutes in large number exist in the form of other types of cakes, local sweets, and those from other regions. Overall, the forces are not very intense and there is a good chance of gaining a foothold if prudent and effective direct marketing methods are used. Strategy: Target customers and list making for direct marketing: It appears that exact figures of direct marketing activities pertaining to Dubai alone are difficult to obtain. But figures for the whole of UAE show a healthy trend: “the direct marketing service sector in the UAE should be generating around $13bn a year with annual growth of at least 6%, according to Charles Prescott, a Vice President at the Direct Marketing Association, reported Gulf News” (UAE direct marketing worth $13bn). This is still an infant industry in this area and the existence of a formal body like the one above will be a great assistance in marketing of products in the region. It is proposed that the initial target customers for this current project will be the American and European expatriates, and their families. The estimated figures for the above two types have already been mentioned in the paper. The middle class and the upper middle class population can also be targeted since there is every chance that they may be exposed to Western customs and tastes. The more adventurous among them will surely try out the product. Since children are more likely to like the product, those studying in American and British schools in Dubai can be targeted first. One way to make a presence felt is to sponsor a parent teacher meeting. By doing so, the name of the product and the company can be clearly communicated to those who attend the meetings. Al Mizhar American Academy for Girls, Cambridge International School, Deira International School, Dubai British School, Dubai American Academy, and the Dubai English Speaking School are some of the schools that can be targeted (Schools in Dubai). If possible, informal efforts to obtain the addresses of parents can be tried at these places. There are some associations that promote fellowship and contact within an expatriate community Dubai. An example would be the American Women’s Association of Dubai. Foreign companies employing Americans and other Europeans can also be targeted. The main reason for this activity is to create a list of potential customers. According to Levinson, “Most likely, your most precious business asset, ranking right up there with your quality and reputation, is your customer mailing list. It’s worth more than its weight in platinum” (Levinson 87). If age and details of children are available, it is easy to calculate the lifetime value of customers. For example, if the age of a child is five, the family is a potential customer for the next ten years at least, assuming that the child will study up to his or her final year in school. One thing that should be repeated here is to cater to local tastes also using popular flavors like cardamom, dates, and nutmeg. Both telemarketing and internet marketing are effective ways of direct marketing. According to Stone and Jacobs, both these techniques are effective in direct marketing (Stone & Jacobs (b) 522). Creating a full fledged online purchase site may be unfeasible at this moment. What could be done is to have a simple website, coupled with emailing people from the lists available. The authors add that telemarketing is seen as a nuisance by many people, but the concept of tele-services can remove this negative feeling. The purpose of tele services in manifold and they include sales, obtaining orders, lead generation, loyalty programs, retaining customers, customer relationship management, and customer win back (Stone & Jacobs (a) 312). Proper training for employees for effective tele services should take place before it is attempted. Conclusion: It appears that the Dubai market has a lot of potential for marketing cupcakes. But it will be a slow and patient growth for the company. The presence of Western immigrants is a good thing and they can be targeted through direct marketing methods initially. The upper middle class that are exposed to Western tastes can also be targeted. In order to attract the local population, flavor that is popular among Arabs can be used for making cupcakes. One advantage here is that the product is affordable by most people. The important thing is to obtain a list and maintain it by adding, preserving, and removing names. Internet mailing and telemarketing (and tele services) are techniques that can be used for gaining market share and informing of the presence of the company. The company can surely become successful it follows a prudent and effect direct marketing policy coupled with quality products, consistency, and hard work. Works Cited Ann, Beverley. Where to Buy Cupcakes in Dubai: Places to Get Your Fairy Cake Fix. suite101.de, Mar 15, 2009. 14 June 2009 < http://cookingresources.suite101.com/article.cfm/cupcakes_in_dubai> CPI 2008 table. 2008 Corruption Perceptions Index, Transparency International. 14 June 2009 < http://www.transparency.org/news_room/in_focus/2008/cpi2008/cpi_2008_table> Evans, B.G. Satellite communication systems. Illustarted 3rd edn: IET, 1999. Levinson, J.C. Guerrilla marketing for free: 100 no-cost tactics to promote your business and energize your profits. Houghton Mifflin Harcourt, 2003. Malik, Talal. Dubai leads British exodus overseas. Arabian Business.com: ITP Digital, 21 May 2008. 14 June 2009 Manufacturer of Industrial and Commercial Ovens Since 1957: Evolution Oven - 8 or 16 pans. Fours Picard Inc, 2009. 14 June 2009 < http://www.picardovens.com/commercial-ovens/products/BakeryampPastry/revolution--oven---8-or-16-pans.aspx> Porter, Michael E. On Competition. Illustrated 2nd edn: Harvard Business Press, 2008. Schools in Dubai. Dubai Online-A comprehensive Guide to World’s fast growing city. Dubai Online. 14 June 2009 < http://www.dubai-online.com/jobs/schools.htm> Stone, Bob and Jacobs, Ron (a). Successful Direct Marketing Methods: Interactive, Database, and Customer-Based Marketing for Digital Age. Illustrated 8th edn: McGraw-Hill Professional, 2007. Stone, Bob and Jacobs, Ron (b). Successful Direct Marketing Methods. Revised Illustrated 7th edn: McGraw-Hill Professional, 2001. Taha, Mohamed. United Arab Emirates FAIRS Country Report Annual 2008. 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