Ajmal Perfumes and the Global Fragrance Market - Case Study Example

University Name Department Student name & Admission number TASK Arab perfumes and the global fragrance market Lecturer Date of Submission Introduction In most cases Each firm has devised its own way of marketing to seize the competitive edge in the industry, for example, Ajmal perfumes has sometimes used celebrity looks to launch and market its brands. The perfume industry is condensed with firms that sell both alcoholic and non-alcoholic fragrances. Ajmal perfumes are counted as one of the flourishing fragrance firm in Gulf Cooperation Council (GCC) which is the Arab markets region. Its product branding has made it dominate in Arab market for quite a long time, with “Ajmal perfumes” perfumes being the exceptional and highly ranked in the region. The market competition has in the recent past intensified both nationally and internationally exerting pressure on companies to deliver valuable product to customers at relatively lower prices. Strategic Issue The strategic issue entails the means of winning the attention and support of important stakeholders in a particular industry. In the perfume industry, the supply chain management is an important factor that any stakeholder in this industry needs to look at (Armstrong, & Gary, 2005). This industry is doing well in Arab markets which are attributed to high purchasing power of residents on perfume products, something that has seen the Ajmal perfumes in this industry to perform well in terms of sales. In order for Ajmal perfumes to continue making profits, it needs to continue offering customers high quality products at cheaper price. The firms in the perfume industry need to do a market survey and know how much customers within the Arab markets are ready to spend and the trends they prefer. The growing Ajmal perfume brands are believed to be where its perfume products for consumers on the top-end of the wealth spectrum are directed (Ferrell, C., & Hartline 2008). Through the use of social media, Ajmal perfumes will be in a position to have its products reach many customers from different parts of the world. With a changing marketing environment, it is becoming necessary for Ajmal perfumes to make the use of articulate means to engage customers and to attract them towards themselves. It might be believed that some of the customers are tired of being marketed to and hence need a change; this change has to come from the producers themselves by analyzing the marketing environment (Inkpen, 2013). However, with such intense competition in perfume industry is going on in the GCC markets for premium brands, Ajmal perfumes should position itself strategically while entering the market so as to come at par with their competitors and matching their points of parity far create some type of point of differentiation. Online social media platforms have become vital in marketing. If this company can make use of these sites, then it will for sure reach many customers. However, it should also not forget using the conventional means of reaching customers, as they are also vital (Armstrong, & Gary, 2005). Ajmal perfumes can employ diversification strategy in the perfume markets. By coming up with diverse sizes of Ajmal perfumes in the market will help in boosting the sales level. Arab’s younger generation is more inclined to spend on perfume items than their elders do; likely, diverse group of younger and middle aged people are the new emergence of beauty consumption in GCC, as such Ajmal perfumes should target such group. External Analysis The contemporary Arab perfume industry has become very competitive. This has seen Ajmal perfumes adopt a new marketing strategy that is very unique. This is where the PESTEL and Five Forces Analysis come in. The external analysis includes concepts such as the macroeconomic environment of the area in which the company operates. This includes the government, legislation policies, technology, socio-cultural trends, and shareholders. In relation to Chinese super premium brand market, Ajmal perfumes can make the analysis; PESTEL framework covers the macro-environment. Political: looking at how GCC have opened up an open door for new entrants at the perfumes and the global fragrance brands in the market. For instance, the local firms have pushed for mergers and acquisitions in the perfume industry, a move that is likely to support the emergence of joint ventures between leading multinational companies and local firms. The government is also very committed to building infrastructure like roads, as a way to increase literacy levels to stimulate economic growth (Armstrong & Gary, 2005). In terms of business support the Government is controlling the lending rates of banks to help both local and foreign investor’s access funds for business growth and expansion. Economic: GCC has resolved to implement several tax adjustments and subsidies for example premium brand of perfumes to encourage competitive prices hence also to boost economic growth (Bowman & Narayandas, 2004). Interest rates have also been lowered as a matter of government policy to spur borrowing and lending, economic growth has been on the rise throughout, inflation has been contained and exchange rates against the USD have been steady. Social: Changes in the social structures are favorable for Ajmal perfumes businesses in the market, for example availability of cheaper labor and large urban market. Stress and unemployment make people desperate for jobs thus providing cheaper and efficient labor force. There has also been the rising domestic demand for beauty products that is attributed to rising incomes and a growing middle class. Technological: the domestic innovation and design capabilities in Arab perfumes and global fragrance market are key challenges to its international pricing competitiveness (Ferrell, C., & Hartline 2008). Environment: most industries have gradually launched environmental friendly policies for example safety standards for new perfumes. Plan to develop environmentally friendly strategy to Arab perfumes and global fragrance market (Bowman & Narayandas, 2004). Legal: The provision of friendly investment policies in terms of registering business and investing have been reviewed and this process is now much simpler and faster compared to previous years. There have been various reforms from the government seeking to regulate various sectors to avoid monopoly synergies in the Arab perfumes and global fragrance market. Porters Five Forces of Almaj Perfumes Porter’s generic strategies – three success factors In contemporary business world, a strategy of any venture may be focused to one of the three that were fronted by Michael Porter, namely cost leadership strategy, differentiation strategy and focus strategy. In cost leadership strategy, Ajmal perfumes may resolve to become low-cost firm in the industry. This may be achieved through provision of flight services at a lower cost when compared to that of the competition (Mckeown, 2012). As such, the Ajmal perfumes may avail the same products of the competitors and make huge returns. The emphasis of this strategy is concentration on lowest cost and not sells at lowest price. Cost leadership calls for minimization of operational costs and pursuit of efficient scale of facilities. The second most strategy of a firm is differentiation, which entails being different from others. Ajmal perfumes may resolve to become a unique and different from other firms through rebranding, design and advertising, along with a focus on product development. By becoming unique in the industry means that clients will part with premium price (Mckeown, 2012). Focus strategy is the third generic strategy. It assumes a service market or product market and hence refocuses on a certain niche. The niche may be a certain clientele group, segment of service line or geographical location. For example, Ajmal perfumes may focus to serve a unique group of clients or avail special products. This strategy may be important since it entails the trade-off between profitability as well as sales volume (Mckeown, 2012). However, if Ajmal perfumes resolve to adopt this strategy, it should make sure that a perfume market segment which it intends to operate in is completely different from the main airline market. Company Situation The company situation is very important in contemporary business. It entails either the negative or positive operation or performance of the given organization. It also affects the choice of strategies to be applied by management to ensure the company is run in such a manner that will ensure its current and future goals are met (Armstrong & Gary, 2005). Ajmal perfumes concentrates on high quality, oriental and Agar wood fragrances which focus on Arab market segment and the global fragrance market. Ajmal perfumes head offices are based in UAE with more than 30 retail outlets around the Middle East. Presently, the firm is increasing its capacity in double to be the leading plant for perfumes in the GCC. The latest manufacturing plant for Ajmal perfumes is situated strategically in the Ajman Free Zone with capacity to manufacture more than 25,000 units of perfumes per day. Additionally, the firm claims to be a leader in technology shoulder to shoulder with worldwide trends and stick on to high quality standards. The competency in management has seen Ajmal perfumes succeed in the industry. The present management team has nurtured the firm and helped it to re-establish a reputable brand. SWOT Analysis Strength and weaknesses entails the internal surroundings elements of a firm and how impact on its operation, whereas opportunities and threats are normally external forces. Business environment for any company is a crucial aspect that affects its activities (Chintagunta., & Desiraju 2005). For Ajmal perfumes, business environment (external) has brought both opportunities and threats because of the uncertainties involved. To any business, external environment is indecisive, complex and dynamic which calls for more flexibility on the side of organization in managing them. The strengths, weaknesses, opportunities and threats of Ajmal perfumes are highlighted below: The product differentiation has been a key strategy and helped the firm to focus on quality. The differentiation of Ajmal perfumes products, which is Oriental and Floral fragrances, has helped in securing a competitive edge in the market. Oriental perfumes have been the common fragrances in the Middle East market (Acharya, 2007). Product designs have been successful as a result to the broad market research executed by the firm. According to Drucker (2006), for a comprehensive environmental analysis, an organisation has to take into consideration various factors in coming up with new products, renovating and re-inventing existing products and expanding into new potential markets. For this to happen in a systemic and more organised form Ajmal perfumes have to use various theory models and concepts (SWOT Analysis) to formulate and organise themselves well. Armstrong and Kotler (2002) assert that strength and weaknesses entails the internal surroundings elements of a firm and how impact on its operation, whereas opportunities and threats are normally external forces. Business environment for any company is a crucial aspect that affects its activities. For Ajmal perfumes, business environment (external) has brought both opportunities and threats because of the uncertainties involved. To any business, external environment is indecisive, complex and dynamic which calls for more flexibility on the side of organisation in managing them. It’s very difficult for a firm to control an environment because of its unpredictability. The keys aspects surrounding the Ajmal perfumes in terms of SWOT analysis include strengths, weaknesses, opportunities and threats. The Ajmal perfumes strength is encompassed in its investment in new manufacturing plants, diversification of perfume products, improved marketing techniques and availability of high skilled expatriates. The site of the plant is a key factor/strength to Ajmal perfumes development, which calls for the location to a place that is proximity to the centre of attraction like strategic shopping closeness to a recognized downtown market facility that offers world class services and is supposed to have operational sustainability. In relation to the market and Ajmal perfumes location of new development, weaknesses may comprise the operation of the firm is good, although not amazing in terms of its subsidiaries numbers as well as its entrance to development and trigger for new projects. Despite the fact that physical surrounding will be provided in the firm’s development plan, the present features for certain locations of the downtowns space and lack of infrastructure facilities for its clients is a problem There are a number of acknowledged opportunities linked with Ajmal perfumes, they comprise of, though not narrowed to the diversified brands, rising technology, rising urban population and high growth rate at the market. All this is likely to set the company above the rest in controlling the perfumes industry. Availability of facilities that offer an opportunity that is functionally incorporated to offer and be offered services. Threats are relatively limited threats for the Ajmal perfumes, and there is a possibility for the existence of threats in certain rooms or products may enter the marketplace elsewhere in Ajmal perfumes, and a result raise the competitive supply to a point where extra perfume project appear not to be feasible. Prevailing conditions such as public policies, implementation actions in conjunction with the new projects linked to Ajmal perfumes, causing its new products with no synergistic support it may lean on for any success Recommendations Al Haramain Perfumes is well-placed to capitalise on its strengths and opportunities it has to enter into the market and build a competitive edge in the automotive industry. For example, the extensively differentiated products are helping the Ajmal perfumes to have more global presence. This can also be achieved through entering new markets like China which is one of the leading emerging markets. The company had in the past concentrated on the Middle East markets and it needs to setup sound strategies to go through the other markets as well. Ajmal perfumes have now to embrace product diversification as a major strategy in Arab market penetration. The pricing issue is going to be a vital weapon of fighting competitors in the new market. The cost of production of Ajmal perfumes units is likely to be low owing to possible mass production plants, thus making the general cost of production much lower. This means the business will be in position to sell their products much cheaply and still stay cost-effective. It is apparent that most of the clients to the Ajmal perfumes are attracted primarily by the unique natural aroma of the perfumes, and the activities in which they participate are driven by this natural environment. Any future decision making on development must be mindful of the current market for the area and be sensitive to the potential to undermine the experience of existing clients, either through the scale or nature of development proposal. Furthermore, in light of the sensitive and fragile market environment, it is recommended that any future decisions on development in the majority of the brands should focus on small scale developments, which reflects the current appeal of the region. The persistent monitoring and evaluation of the effects of clients of Ajmal perfumes should be supported by strategic decision making practice and greater resources to inform various stakeholders on their impacts on the susceptible market environment, which is a fundamental constituent of any future development in the region. SWOT can help organizations to have a thorough understanding of the external and internal forces that strongly affect an organization. The potential for a successful company development in any industry will be a function of many variables, comprising opportunity available at the market, location of the industry and possibility of any partnership, be it public or private. However, the variables will not be limited to interpretation of historical progress of the market of any existing cluster. Sustainability in businesses is meant to implement practices that support and enhance economic safety, social wellbeing and environmental protection as they work hard improved performance. To achieve this, Ajmal perfumes should formulate sustainable business strategy which is enclosed in sustainability reports. Sustainability reports have assisted the company to highlight keys achievements it has made for the public read and get educated on new initiatives put forth by the organization. It is impressive how social reporting can expand the scope of issues covered when analyzing a company’s performance. Businesses and management that employ a stakeholder approach commit to serving broader goals, in addition to economic and financial interests, of those whom they serve, including public. There is also a rising trend of spending in the social sector and improving the company’s reputation as firms that are socially responsible. References Acharya, J. (2007). Profit maximising: pricing strategies North Brunswick : Information Sciences and Systems, CISS '07. 41st Annual Conference. Armstrong, & Gary, A. (2005). Marketing: An Introduction, 7/e (New Edition). South Asia: Pearson Inc. Bowman, D. & Narayandas, D. (2004). Linking Customer Management Effort to Customer Profit­ability in Business Markets. Journal of Marketing Research, 41 (4), 433–447. Chen, J & Kim, S (2013), ‘A comparison of Chinese consumers’ intentions to purchase luxury fashion brands for self-use and for gifts’, Journal of International Consumer Market, vol. 25, no. 1, pp. 29-44. Chintagunta, K., & Desiraju, R. (2005). Strategic Pricing and Detailing Behavior in International Markets. Marketing Science , 24 (1), 67-80. Ferrel, C. & Hartline, M. (2008). Marketing Strategy. Mason: South Western Cengage Learning Langlolis, A &Barberio, EJ (2013), ‘Luxury goods & China: A case study’, Journal of Applied Business and Economics, vol. 14, no. 5, pp. 83-95 Inkpen, A. (2013). Arabic Perfumes and the Global Fragrance Market. Thunderbird School of Global Management Tsai, WS, Yang, Q & Liu, Y (2013), ‘Young Chinese consumers’ snob and bandwagon luxury consumption preferences’, Journal of International Consumer Market, vol. 25, no. 1, pp. 290-304. Yeoman, I & McMahon-Beattie, U (2006), ‘Luxury market and premium pricing’, Journal of Revenue and Pricing Management, vol. 4, no. 4, pp. 319-328 Read More