Marketing Strategies for Middle Eastern Countries as Opposed to Western Countries - Term Paper Example

MARKETING STRATEGY FOR MIDDLE EAST AS OPPOSED TO EUROPE AND US Marketing is the tool by which companies create awareness of their products in the consumers. As such, a company’s selling ability and profitability depend greatly on the effectiveness of its marketing policies and plans(Lilien, 1992). “Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating, offering, and exchanging products of value with others.” (Kotler 6) Every company has some marketing objectives and to sustain these, it forms several marketing plans and strategies. The formulation of a marketing plan will depend on the specific economical, political, cultural and educational environment of the market in which the company decides to operate. Research and analysis of relevant data are required to evaluate the conditions and to formulate suitable policies. “Successful marketing requires a thorough knowledge of differing cultural attitudes and practices.” (Frederick, et al. 130). The companies formulate marketing plans which contain a list of specific actions required to be taken for the successful implementation of their marketing strategies. Such marketing strategies are the foundations of the marketing plan. Strategies differ from tactics, and a company’s marketing goals, policies, and action plan determine its marketing strategy. The objective of a strategy is to provide a foundation from which a company can develop tactical plan to market its products efficiently in a cost-effective manner. Corporate strategies, corporate missions, and corporate goals play an important role in determining market strategies. The company’s mission statement also has a direct bearing on the formulation of its strategies. In developing a global logistics strategy a number of issues arise which may require careful consideration. In particular what degree of centralization is appropriate in terms of management, manufacturing, and distribution and how can the need of local markets be met at the same time as the achievement of economies of scale through standardization (Christopher 132). This apart, several micro environmental factors also influence a marketing strategy of a company. Marketing strategies are primarily focused in increasing the number of customers or average transaction amount or the frequency of repurchase. 1. Increasing number of customers - This is the first step to grow business. 2. Losses can occur when inexperienced sales personnel are engaged in designing and implementing a marketing program. When the basic marketing strategies are executed correctly the companies can efficiently produce new prospects. Prior to deciding the marketing strategy for a particular region, the companies have to do some marketing research. “Marketing research is an indispensable marketing tool, in that companies can serve their customer market well only by researching their needs and wants, their locations, their buying practices, and so on. Marketing mix is the best marketing tools that the firm uses to pursue its marketing objectives in the target market. ” (Kotler 99) Thus marketing research is the first step in devising any marketing plan. While the educational profile of an average customer will be reasonably high in Western countries, in contrast, in the Middle East it tends to be low. Normally companies perform market research by surveying the local market, through interviews or questionnaires. In order for the survey or research to produce dependable results, the customers’ response requires to be realistic. An uneducated or inadequately educated customer may not understand a survey or questionnaire in its correct perspective and hence, will not be able to respond correctly or specifically to the questions. This will negatively affect the research conclusions, and may entail forming of misguided forecast. Advertising campaigns are an integral part of any marketing operation. In order to reach a wider segment of the prospective customer base, a company has to create awareness of the product in the consumers. Companies have to depend on advertisement to achieve this objective. Advertisements can be through print or electronic media apart from hoardings, literature etc. The effect of advertisement depends largely on how well the consumers of a given area understand and respond to it. In order for the advertisement to derive its intended benefits, its message should reach the audience and be understood. Majority of the population in countries like Egypt, Syria, Lebanon, Saudi Arabia etc., are not adequately educated and most of them do not understand English. Their power of grasping ideas and theories is much less than the educated population in western countries. Thus it becomes essential that a company devises very simple and easily understandable advertisements while targeting a population of this kind. It further necessitates the company to redesign advertisements in the local language which again involves extra expenditure. Modification may also require in the advertisement to conform to the cultural and political sensibilities of the local consumers. Thus while a company can promote its sales throughout the western countries and some developing countries with the same advertisement, when it comes to Middle Eastern countries the company will have to adequately modify or make changes in the advertisement. Another issue is that the existing regulations prevalent in these countries stipulate that labels and packages should be in Arabic or bilingual. This further delays the marketing of products and also entails in wastage of time from production to placement in the market. It is needless to mention that it also involves additional expenditure. Population statistics show that increasing diversity is a global trend that is reflected in countries like Australia, Canada, the UK and the USA. Because of high rates of economic development and liberalization, the career and business opportunities these countries offer are wide and varied. As a result, immigrants from all over the world come and settle in these countries both for employment and investment. The population thus becomes a vibrant mix of different ethnic groups and cultures. The buying habit of such a diverse group is extremely buoyant, which render the task of marketing simple and easy. The multicultural environment offers businesses a variety of choice to invest. There are always buyers for every product, and people from one culture or ethnic background demonstrate a fancy for experiencing the difference in other cultures and traditions. They are willing to buy the products from different countries and never display hostility for products from other countries. This increases the selling potential of products irrespective of their country of origin, thereby providing a favorable environment for business. Although the trend to global brands and products continues it should be recognized that there are still significant local differences in customer and consumer requirement (Christopher 146). In order for sales personnel to convert prospective buyers into paying customers, there should be seamless flow of communication with the locals (Stoner & Freeman 779). The societies in Western countries are comparatively better educated and can respond well to the requirement of communication. Even the migrants have some parameters that are to be met to qualify them for migration. Communication flows quite smoothly in this society and interaction becomes easy and effective. Thus the companies can implement, in a cost effective manner, any marketing plan they devise to target a specific market. The selling team can freely mix and communicate with such a group and can achieve their objectives of spreading the awareness of the products. Thus, from the above, it becomes evident that the marketing team has to create product awareness in the market for attaining the objectives of market dominance and to sustain and enhance the existing customer base. When a company has to operate in the Middle East it becomes necessary for it to have a team specifically trained for operating in that area. A marketing team trained for western environment may not be as effective in the new terrain. The cultural, demographic, linguistic, and other conditions vary drastically. In countries like Lebanon, Egypt, Syria, or Saudi Arabia where English is not yet the lingua franca, the company has to either train its team in the local language or recruit one from amongst the local natives. In the former case, it involves additional overheads in terms of training costs and also considerable time will be wasted. In the latter case, though it is possible to recruit some experienced, talented individuals they need not necessarily be fluent in English, which in turn again precludes them from effectively interacting with the other employees in the organization. This can cause several administrative and managerial bottlenecks that may create impediments in the execution of the company’s marketing plans. The Middle East is an economically diverse region. Though the countries in the Middle East have a common heritage, when it comes to economic scenario they are at different stages of transformation and development. Also the availability of natural resources is different. The region’s economic performance in the past thirty years is reported to be much below its potential. Though the sharp increase in the oil prices in 1970s has benefited this region immensely the benefits are not uniformly distributed to each. The exponential increase in investment and growth in some of the countries helped the other countries in the region because of the sharp rise in employment opportunities, trade, capital flow, etc. Though this brought about vast improvement in living standards to a certain extent, it has not helped these countries to sustain any significant economic growth. The region’s economic performance during the next 20 years weakened as growth rates declined and it failed to generate the employment opportunities sought by a rapidly expanding labor force. While the Western countries cashed in on and reaped the benefits of globalization, the Middle East Region lagged behind because of the slow rate of liberalization. In the last 50 years, though some developing countries initiated growth they were not able to sustain it. This is especially so in the case of Middle East which recorded a decline of 1.5% in GDP whereas other developing countries recorded a 2% increase. Similarly, though some countries did benefit from the boom in oil trade, they too had only marginally shown any trend of sustaining it. The higher rate of population growth, and low productivity, lagging political and institutional reforms have taken its toll on the economy of the Middle Eastern countries. This, coupled with high trade restrictions and inappropriate exchange rate policies, has discouraged companies from investing in the Middle East. The lack of employment opportunities was also detrimental to the overall economic development. While some developing countries, which were more open and liberal to the tides of economic changes, have been able to reap globalization’s benefits, the Middle East, ensconced in more rigid trade practices, deprived itself from gaining any remarkable mileage. As a result it became a challenge for business to operate profitably in the area. Thus any business investment in the area was subject to severe market risks. Commenting on the Arab Human Development Report 2002, Mark Levine, an History teacher at the University of California states that: “The Report partly lives up to its media billing by, in its words, detailing the "deeply rooted shortcomings of Arab institutional structures" that hold back human development in the era of globalization. Pointing to the "freedom deficit," gender inequality, low levels of health care, education and information technology usage, and high unemployment, the AHDR authors call for urgent reforms lest the Arab world lag further behind the pace of global change. The authors warn that "while most of the rest of the world is coming together in larger groupings, Arab countries continue to face the outside world, and the challenges posed by the region itself, individually and alone." To overcome this isolation the Report calls for a "holistic development" strategy for reaching the new social contract.” < http://www.merip.org\mero\mero.072602.html> The Arab Human Development Report was authored by a team of Arab scholars and policy makers with an advisory committee of ‘well known’ Arabs in international public life, is the first UN Human Development Report devoted to a single region. From the above, it is evident that the scholars and eminent figures in the country were aware of the economic instability, lack of education, and room for improvement. Another major contrast between the Western market and the Middle East is the political climate of these countries. Whereas the political conditions in Europe and America remained favorable and encouraging to business, the situation in the Middle East remains totally different. A clear picture of the political situation in a country affecting the marketing process emerges when one examines the post-Afghan and Iraq war situations. Some of the Arab states in general and Saudi Arabia in particular, have boycotted American and British products in protest. In this context it is also relevant that the entire Arab countries have banned products from Israel. Thus a company marketing its products has to confront several challenges in the Middle East in tandem with the changes in political situation, which is volatile and unpredictable. The resultant economical crises culminating from war situations seem like a permanent feature of this region. A recent instance is the incursion of Israel into Lebanon. “The Lebanese economy will be hard hit by the out break in violence. For the rest of the region (Middle East), with the conflict still contained, the implications for economic activity will be limited.” Similarly, because of religious and ethnical reasons the Arabs do not consume some specific products. Wine and pork are a couple of examples. Stores that sell pork products have to keep such stock in a specific place separate from other products, and out of public view. It may result in customers who look for a specific product not being able to notice it. Because of the hostility such products evokes in common public, it becomes impossible for the marketing team to advertise their products to generate more sales or even sustain the existing customer base. Thus it can be understood that when religious reasons couple with political situations they pose a great challenge for some products to be marketed in the Middle East. Whereas, in the case of Western countries there are no embargos of any sort and marketing a product is much easier. In the USA and European countries the focus of marketing strategy is on concepts like quality, Just In Time availability and flexibility, but in the Middle East it rather tends to root on religious and ethnical factors or political situations. One of the major weaknesses of many multinational companies within the region is their ongoing exposure to external, non-business related issues that are driven by political events. Due to anti-Western campaigns over the media and across the internet within the region, many consumers are opting for a local or regional brand substitute. Another major difference in Western and Middle Eastern marketing strategies stems from the societal framework. While the Western society recognizes women’s right and acknowledges the need for women’s empowerment, the conservative Middle East society is male dominated. Here the women are powerless and the males take every decision. “Few would argue that the status of women in the Middle East can be understood without reference to Islam. Although the legal-religious systems of no two Middle Eastern countries are identical, women are second class citizens in all of them.” The lack of education precludes women from perceiving the concepts of freedom of opinion or rights. Thus when targeting a Middle Eastern market the strategy needs to be formulated with an orientation on a male audience that ‘provides’ for its women as a opposed to the western culture where women take decision or at least participate in the decision making process. Most of the Middle East countries are in a monarchial set up as opposed to the democratic set up in western countries or other developing nations. In a monarchy, the buyer’s choice is limited by several regulations where a consumer cannot exercise his free will in deciding what types or makes of products he will buy. There exist embargos or trade restrictions and companies are restrained from selling what they want in spite of the availability of some buyers who may be willing to acquire their products. In the scenario, the companies will rather be compelled to turn to products that are sellable in the market rather than finding potential markets where they can sell the available products. In the post modern age, consumerism has become the most evident characteristic of the western world, especially in the American society. Visiting Malls and spending time there, is almost a ritual for the people. To quench their ever-increasing appetite, malls are mushrooming everywhere, bigger and grander than the previous one. With stabilized economy gaining exponential growth as an aftermath of globalization, the spending ability and buying power of the population have increased manifold. Impulsive buying has become the order of the day and companies are thriving in this backdrop. Malls offer an excellent convergence of consumers for sellers of different products. From the concept of dreary stores, malls have now transformed to a place of entertainment and indulgence, enticing and variety of patrons. A mall now includes movie theaters and facilities like food courts offering culinary delights from every corner of the world. It caters for all types of people from kids, parents and couples, disabled and old aged. Here, everybody can find something suitable for his or her taste. In such an environment it is easy for a vendor to sell any product because the buying in most cases is impulsive and not out of necessity. It looks more like a cakewalk for policy makers to plan their strategies under such conditions as compared to the situation in the Middle East, where the ‘mall culture’ is yet to take a strong foothold. While in more liberal countries like Bahrain, Dubai, Abu Dhabi etc malls are flourishing, in more rigid countries like Saudi Arabia it is still in the embryonic stage of conception. From the above analysis of the political, cultural, social, economical, educational, and linguistic differences in the Western countries and Middle East it clearly transpires that a company has to face a different situation in each region. While some regions offer a conducive environment that encourages business and investment, others are a bit hostile, offering challenges. The success of any marketing strategy lies in identifying the issues and formulating suitable tactics conforming to the situation in each region. Thus the effectiveness of the strategy will determine the growth of the company. Works Cited Fredrick. W. C., et al. Business and Society. Mc Graw Hill 1989 Kotler, Philip. Marketing Management: Analysis, Planning, Implementation, and Control. 8th Ed. New Jersey, Prentice-Hall. 1994. Levine, Mark. The UN Arab Human Development Report : A Critique July 26, 2002. MERIP 8 August 2006 Gary L.Lilien, et al. Marketing Models. Eagle Wood.NJ: Prentice Hall, 1992 Christopher, Martin. Logistics and Supply chain Management. Harlow, London : Prentice Hall (Pearson Education Ltd), 1998. Stoner & Freeman. Management. New Delhi : Prentice Hall of India, 1992. Home page AMEINFO. Middle East Overview: Standing up to challenges 11 August 2006 http://www.ameinfo.com/93005.html Kamguin, Azam. Islam and the Liberalization of Women in the Middle East. 25 May 2005. Institute of Secularization of Islamic Society: 12August 2006 Read More