Internationally Business - Marketing Strategies for Shisha Tobacco - Case Study Example

Marketing strategies for Shisha tobacco

• Introduction

Marketing strategies are important as they allow businesses to flourish in international segments (Chaney and Martin, 2010). In this paper, the researcher to discusses with the marketing strategies of shisha tobacco that contains fruits instead of nicotine. The researcher has focused on international marketing mix along with STP (Segmentation, Targeting, and Positioning) analysis. Since the aim of the product is to serve in the international market, especially UAE market, the researcher analyses the same and determines the strategies that best suit it.

• International Marketing Mix

Angwin, Cummings and Smith (2011) stated that shisha would adopt the marketing mix because the consumer requirements and marketplace is given sole importance. In UAE and other nations like the US, UK and China, strict laws have been imposed on smoking. For instance, in UAE ‘Anti-tobacco Federal Law’ imposes hefty fines on smokers (The National, 2016). Therefore, shisha needs to adopt marketing mix in its strategy for encouraging the smokers to experiment its non-nicotine cigarettes that have fruit extracts and are healthy. The proceeding segment discusses about the 4Ps (Pricing, Product, Promotion and Place) that needs to be adopted in UAE.

Pricing policy

Griffin and Pustay (2010) pointed out the pricing policy adopted by shisha tobacco i.e. market pricing. The reason is that setting the same price in all countries will be disadvantageous for shisha tobacco as there are certain countries where the demand for the same is quite low. Charles (2011) opined that Two-Tier pricing policy is also not suitable as the customers around the world will feel discriminated. Therefore, Marketing Price Policy will help shisha tobacco to survive in the highly competitive marketplace.

The prices charged by China National Tobacco Company for tobacco are quite high because in the year 2014, the Chinese Government increased the same by 5% for discouraging smoking (Campaign for tobacco free kids, 2015). Philip Morris International Inc. is predicted to increase the rates of cigarettes as a fine of $2.2 billion will be forced on the organization (The National, 2016). Therefore, from this perspective, the product of shisha tobacco needs to be priced at a lower rate as compared to its rivals.

Product

Johnson and Turner (2010) stated that since the product of shisha tobacco lacks tobacco and contain fruits; therefore it will be easy for the same to derive position in the marketplace of UAE. China National Tobacco, Philip Morris International, Japan Tobacco International and British American Tobacco fail to sell tobacco that contain fruits (Campaign for tobacco free kids, 2015). Hence, the marketing strategy of Shisha will point out the positive sides of its product.

Promotion

Morrison (2011) argued that since the youngsters in UAE are mostly interested in television, therefore the marketing strategy of Shisha needs to focus on promotions via television. Although UAE bans tobacco advertisements via electronic media and print mediums, shisha can easily promote its product as the Government will allow it to market tobacco. The reason behind the grant of permission to the product is that it contains fruits instead of nicotine. According to Rugman and Alan (2010), the product can also be promoted through newspapers as the UAE Government will allow it to use these mediums.

Grant (2010) stated that the business strategy of shisha needs to be one that incorporates differentiation, cost leadership and focus. From the perspective of differentiation, shisha needs to enlighten the customers in UAE and other nations about the inclusion of fruit extracts and absence of nicotine in it. This can be done by promoting it through social networking sites.

Place

Morrison (2009) opined that countries like UAE are the most suitable place for promotion; therefore, it is profitable to plan a marketing strategy that promotes its commodities in a location like it. Since tobacco users search for the same in supermarkets and hypermarkets, it will be useful if Shisha launches its non-nicotine product in such outlets. It is important to know about the culture of UAE before offering the product in that country.

Deresky (2011) and Guirdham (2011) stated that the culture in UAE is biased for Shisha as it is considered a close substitute of coffee. The Arabs mostly order shisha during social gatherings in coffee shops. The Emirati people believe that shisha is good for health as it relieves them of tension without causing any kind of health issue. In UAE, the males belonging to the age group 14-25 years are the main customers of Shisha. More than men, the women in this age group prefer Shisha to cigarettes. Moreover, in Lebanon, the culture is to serve shisha to the guests. However, in the UAE city of Sharjah, the Municipality has imposed fines of Dh500 on shisha users (The National, 2016). Therefore, from the discussion, it is evident that marketing strategy of shisha product needs to focus on UAE as a whole but exclude Sharjah as smokers are fined for using it.

• Marketing tactics based on competition level

For formulating the marketing tactics by analysing the competition level, STP will be conducted.

STP Analysis

The population of UAE can be segmented into three groups; one consisting of youngsters aged 18-25, the other comprising of employed group aged 26 and above. Since it is the second group that is indulged in smoking because nicotine consumption relieves tension, therefore, Shisha needs to be targeted in this segment. Moreover, Som (2009) stated that the working class can afford the low priced product easily and a price rise would hardly affect them.

Since the working section of the population is mostly involved in social media activities, therefore this platform is the best way to reach the target audience (Tulder, 2006). The reasons of using the product needs to be clearly stated in the posts made in the social media sites. Shisha needs to point out the benefits of using it which is the absence of nicotine and the presence of fruit extracts. Since, the product is of value to all those workers who are ready to quit smoking; shisha will be a success among that segment.

Figure 1: Positioning Map

(Source: Campaign for tobacco free kids, 2015)

Figure 1 clearly reflects that shisha product needs to be positioned in working section and low price category for marketing purposes in UAE and other nations. Shisha has the capability of charging low price for its product because of the cheapest labour cost of $40 per month in Uzbekistan where the product is manufactured (Nation Master, 2016). Shisha’s substitutes have a competitive disadvantage because Steam Stones and Beamer Ice Drops are highly priced. Thus, the strategy of shisha will be cost leadership and differentiation.

• Marketing strategies based on key decision making factors

There are certain key decision-making factors like standardization, customization, legal forces and economic factors based on which international marketing strategies are made. Out of the different marketing strategies, shisha will adopt customization, as legal differences are present all over the world. For instance, in UAE, fines are imposed on individuals consuming Shisha in the city of Sharjah. In UK smoking has been banned in workplaces and since 2007, the Government has been strict regarding the rules (The National, 2016). Therefore, the product shisha has to be customized as per the difference in laws prevailing in different countries and thereby follow customization in its strategies.

As per the legal standards prevailing in UAE against tobacco, shisha will be able to advertise in newspapers, hoardings and television advertisements regarding the effectiveness of the product. Since the number of smokers below 18 years of age is huge and they are imposed fines of Dh 500-10,000 on smoking, therefore, shisha product can be easily targeted to that section of the population in UAE (The National, 2016).

Economic factors like taxation rates have a negative impact on tobacco companies like British American Tobacco operating in UAE. The government of the same country has decided on introducing federal taxes on consumption of tobacco. Based on this decision, the marketing strategy of shisha will be to introduce the product in the UAE market, as it will attract customers who avoid the consumption fines on tobacco.

• Public Relation Strategies

In an attempt to attain successful outcomes, it is important to define the public relation strategies. One of the strategies of shisha will be to communicate the advantages of using it and this needs to be adopted via the social media sites. The online platforms like Facebook, Twitter and Instagram should be used by shisha for communicating to the customers the nonexistence of nicotine in it and the presence of fruits in it. This will encourage the UAE customers and give them reasons to purchase it.

Moreover, for promotional purposes, shisha needs to take the assistance of tools such as sponsored posts as well as native advertisements instead of sales pitch (Robertson, 2007). Additionally, the promotion of the product in traditional press like traveller papers, broadcasts and newspaper dailies will help it to build a better relation with the public.

• Transnational Strategy of shisha

Figure 2: Transnational strategy of shisha

(Source: Daniels, 2012)

Daniels (2012) argued that the transnational strategy is the best one that shisha should implement because it will allow shisha to customise as per the requirements of different countries like UAE and UK. Although the pressures for integration and local responsiveness are stronger in such a strategy, the same can attract international customers. Competitive advantage is also easier to attain through such an application of strategy. By using this strategy, shisha can easily market its product in UAE, as it will be able to customise the product.

• Conclusion

In order to flourish in the international market, shisha tobacco will adopt marketing price policy and adopt differentiation strategy by using fruits for making the product. Since the product is healthy, UAE Government will allow it to promote it via online platforms and television advertising. Moreover, it will adopt cost differentiation strategy by manufacturing shisha in Uzbekistan as the labour cost is cheapest. It will also implement marketing orientation and extensively use public relation strategies to attract customers in the transnational market. However, further research is necessary to determine the correct strategies for shisha.

• Reference list

Angwin, D., Cummings, S. and Smith, C., 2011. The Strategy Pathfinder core concepts and live cases. 2nd Ed. West Sussex: Wiley.

Campaign for tobacco free kids, 2015. The Global Cigarette Industry. [Online] Available at: <http://global.tobaccofreekids.org/files/pdfs/en/Global_Cigarette_Industry_pdf.pdf> [Accessed 21 April 2016].

Chaney, L. and Martin, J., 2010. Intercultural Business Communication. 5th ed. New Jersey: Pearson Education Limited.

Charles W. L., 2011. International business: competing in the global marketplace. New York: McGraw-Hill Higher Education.

Daniels, J. D., 2012. International business: environments and operations. Harlow: Pearson Education.

Deresky, H., 2011. International management Managing across Borders and Cultures. 7th Ed. New Jersey: Pearson.

Grant, R.M., 2010. Contemporary Strategy Analysis. 7th Ed. West Sussex: Wiley.

Griffin, R.W. and Pustay, M.W., 2010. International Business. 8th ed. New Jersey: Pearson Education Limited.

Guirdham, M. (2011) Communicating across cultures at work. 3rd ed. Basingstoke: Palgrave Macmillan.

Johnson, D. and Turner, C., 2010. International Business Themes and Issues in the modern Global Economy. 2nd Ed. Oxon: Routledge.

Morrison, J., 2009. International business: challenges in a changing world. Basingstoke: Palgrave Macmillan.

Morrison, J., 2011. The Global Business Environment - Meeting the Challenges, 3rd Ed. Basingstoke: Palgrave Macmillan

Nation Master, 2016. Uzbekistan Labor Stats. [Online] Available at: <http://www.nationmaster.com/country-info/profiles/Uzbekistan/Labor> [Accessed 21 April 2016].

Robertson, C. J., 2007. International business. New York: McGraw-Hill Higher Education.

Rugman, Alan M., 2010. The Oxford handbook of international business. Oxford: Oxford University Press. 

Som, A., 2009. International Management Managing the Global Corporation. Maidenhead: McGraw-Hill Higher Education 

The National, 2016. Tough anti-tobacco laws come into force across the UAE. [Online] Available at: <http://www.thenational.ae/uae/health/tough-anti-tobacco-laws-come-into-force-across-the-uae> [Accessed 21 April 2016].

Tulder, R., 2006. International business-society management: linking corporate responsibility and globalization. Oxon: Routledge