The Confidence of Saudi Consumers, Seasonal Sales - Literature review Example

? The confidence of Saudi Consumers in the credibility of seasonal sales of international brands Introduction The trends in consumer behavior arenot standardized worldwide – even for products/ services with similar characteristics. The reason is that, in each country, the preferences of consumers are likely to be influenced by the local ethics and culture. In this context, the successful promotion of products and services in the international market is depended on the ability of marketers to identify the marketing strategies that would be more easily aligned with the social beliefs and traditions of each region. Current paper focuses on the examination of the perceptions of Saudi consumers on international brands. Particular emphasis is given on the confidence of Saudi Consumers in the credibility of seasonal sales of international clothing brands. The literature published in regard to this subject is critically analyzed aiming to identify the views of Saudi consumers on the seasonal sales developed by the international brands. The performance of international brands in the Saudi market is examined; due to the lack of adequate material on the views of Saudi consumers on seasonal sales, an effort has been made to cover the relevant gap by analyzing the criteria on which the choice of consumers on international brands is based. The strategies used by marketers for increasing the trust of consumers to various products/ services are also analyzed. Furthermore, the international brands of firms operating in the clothing industry in Saudi Arabia are presented. It is proved that the marketing strategies used in Saudi Arabia for the promotion of these brands have certain characteristics; moreover, it is made clear that the marketing policies used in Saudi Arabia for the promotion of these brands are quite effective. Significant prospects exist for further growth of the firms operating in the particular sector of the Saudi market. 2. Marketing and consumer trust in sales In the context of marketing, securing the consumer trust can be a challenging task. In accordance with Kaplan (2001) a potential method for attracting the confidence of consumers in a particular product/ service is to develop a marketing plan that ‘can provide a high level of customer satisfaction’ (Kaplan 2001, p.55). On the other hand, Fink (2000) notes that in each market, the level of retail sales can be a credible indicator regarding the consumer confidence in the particular market (Fink 2000). It is not explained though whether there are specific marketing strategies that can increase the consumer confidence, which in turn will lead to the increase of retail sales. Referring specifically to the fashion sector, Hirschbichler (2011) notes that the sector’s managers are likely to use two strategies in order to improve the performance of their stores, i.e. increase the numbers of their customers: a) the Quick Response Strategy, a strategy focusing in the establishment of an effective supply chain; it is explained that the above method is particularly valuable in practice, as proved through the case of Zara; by adopting the above strategy the specific firm managed to reduce the time required for responding to the orders of its customers, and its performance has been significantly increased. The above strategy would be also used by retailers in Saudi Arabia, as a tool for increasing the confidence of their customers in the product/ services involved; b) ‘Collaborative planning, forecasting and replenishment’ (Hirschbichler 2011, p.6), meaning the cooperation with other members of the team for increasing the effectiveness of the strategies including in a particular marketing plan (Hirschbichler 2011, p.6). Between the two strategies proposed above, the study of Hirschbichler the second one is considered as more effective, covering an important area of the market. Another aspect of consumer confidence is presented in the study of Jacobson et al (2001); in the above study, it is made clear that the most effective way for increasing consumer confidence in a particular product/ service is to make extensive use of the media (television, radio) for its promotion (Jacobson et al. 2001). On the other hand, the high price of a product is not necessarily related to a high consumer confidence; in fact, consumers may feel confidence in products/ services which are of low price under the terms that they use these products/ services for a long time (U.S. International Trade Commission). Having understood the above phenomenon, retailers worldwide tend to highly emphasize on seasonal sales, aiming to attract customers who are familiar with the specific products/ services but which they cannot afford at the their normal price (Andersen 1996). In other words, seasonal sales can be important tool for supporting the confidence of consumers in the products/ services of a particular organization. From a similar point of view, Strange (2008) noted that before developing a particular marketing strategy it would be necessary to examine the conditions in the local market, focusing on the fact whether this market is ‘consumer driven or labor driven’ (Strange 2008, p.39). Different policies would be used in each one of the above cases for increasing consumer confidence in one or more products/ services. At the same time, Doyle (2008) notes that the effectiveness of the plan used in the event is depended on certain factors, the most important of which is the effective communication with customer. This communication would lead to the increase of customer confidence, thus to the increase of organizational performance (Doyle 2008). No relationship between the customer confidence and the recession can be justified (Doyle 2008); at least in accordance with the above researcher. The claim that the economic conditions are such that affect the organizational performance would not be made acceptable (Doyle 2008). This means that in markets that are wealthy, consumer confidence will be extremely high; also, in problematic markets, in terms of the status of the local economy, consumer confidence is expected to be low, being affected by the crisis. Moreover, in periods of extremely difficult economic problems, for instance, the depression, consumer confidence is, normally, low. Additionally, the development of an effective and well presented website could help towards the increase of consumer confidence, as reflected in the study of Hitt et al. (2009). At the next level, the sales person involved in the whole process, meaning the sales process, would be appropriately trained, being capable of understanding the needs of customers but also the potentials of the market to respond to particular customer demands. From this point of view, consumer confidence is made identical to consumer needs, meaning that in markets where all, or most, consumer needs can be addressed, consumer confidence is high (Hisrich et al. 1993). In such markets, marketers that try to increase consumer confidence need to give emphasis on the explanation to the consumers of the market’s potentials to meet their needs (Hisrich et al. 1993). In accordance with Matsatsinis et al (2003) the identification of the level of consumer confidence in specific products/ services requires the prior understanding of consumer behavior in regard to the market in general; then, his responses to the specific products/ services could be studied and evaluated. The consumer behavior analysis is proposed as a method for understanding the consumer’s views on a series of products/ services; such finding could help to predict the response of the consumer to other products/ services already existed in the market or which are expected to enter the market (Matsatsinis et al. 2003). Cecchini et al. (2003) note that it is quite difficult to increase the customer confidence when the products/ services are new in the market. This means that consumer confidence is likely to be high for products/ services, which exist in the local market for quite a long or for products/ services with a popular brand name. The above view is also promoted in the study of Rogoff (2007). From another point of view, Moschis (1992) highlighted the following issue: the increase of consumer confidence can be achieved through policies which are appropriately customized for meeting the needs of each consumer; reference is made not to each one consumer, a process which would be too long, but to group of consumers, as these groups would share common characteristics. Reference is made for example to the need of using different policies for increasing the confidence of older men than of older women (Moschis 1992). 3. Saudi consumers and international clothing brands 3.1 International clothing brands in the Saudi market International brands have a key position in the Saudi market. The response of Saudi consumers to these brands is significant, as it is revealed through the literature published in the particular issue. In accordance with Thomas (2010) the entrance of an international brand in a Muslim country requires that the particular brand meet the requirements of ‘halal status and Sharia compliance’ (Thomas 2010). Gucci is one of the major firms - of the clothing industry – that operates in the Saudi Arabia market. The firm has 4 brands across USA (Gucci, Saudi Arabia [1]). Louis Vitton also operates in the Saudi Market, even if its stores are just 2. It seems that the international brand which are most expanded in Japan is Marks and Spencer; the above brand has 8 stores across Japan, being the most popular international brand – of the clothing industry - in the specific country. The development of international clothing brands in Saudi Arabia had been made clear quite early; in a report published in 2000 from the Independent, emphasis is given on the rapid expansion of luxury brands, such as Gucci and Louis Vitton in Saudi Arabia (Sherwood 2000). It should be noted that the increase of the performance of international brands in Saudi Arabia seems to be related, among other factors, to the advances of technology regarding the promotion of products/ services in the market – reference is made to the expansion of e-commerce as a common tool for promoting products/ services of different characteristics, a practice which has been also used, successfully, in UAE (Diala 2011). The success of international brands in the Saudi market proves the high confidence on Saudi consumers on these products. This fact could further lead to the assumption that the confidence of Saudi consumers on the seasonal sales of these brands is high, an assumption which is analytically explained below. In any case, the performance of international brands worldwide is not standardized. Despite their power in the global market, still, these brands have to continuously fight for competing their rivals. This issue is highlighted in the report published by Fashion United (2011). In this report reference is made to a series of international brands and their performance in the global market. Reference is made to the case of Burberry and its difficulties within the British market; it is revealed that the chances for expansion in the Saudi market has significantly supported the particular brand, since the performance of the brand in other markets, especially the British market, is quite low, a fact that could threaten, in the long term, the brand’s survival (Fashion United 2011). Apart from the issues mentioned above, consumer confidence in the sales of international brands in Saudi Arabia is expected to be influenced by the following fact: the code of dressing in Saudi Arabia is strict – based on the country’s religious rules. For women, conservative dresses would be preferred; for men also, shorts and t-shirts would be rather avoided (Novel Guide 2011). The products of clothing firms in Saudi Arabia should be designed accordingly aiming to avoid insulting the local traditions and rules. 3.2 The confidence of Saudi Consumers in the credibility of seasonal sales of international brands Retail sales, or else seasonal sales, are a phenomenon developed after the crisis of 2008. In accordance with a report published in Knowledge Wharton, shop malls in Saudi Arabia arrange “mega-sales in recent weeks to tempt increasingly cost-conscious shoppers to their stores” (Knowledge Wharton 2010). Up today, the confidence of Saudi consumers in products/ services of international brands promoted in the local market seems to be significant. It is possible for this reason that the performance of the country’s retail sector is continuously increased. in accordance with a report published by the Global Arab Network, the growth of the specific sector for 2011 is estimated to 3%-4% (Global Arab Network 2011), which is a significant growth taking into consideration the turbulences in the global market. The growth of the retail sector in Saudi Arabia is also revealed through the figures published in the particular field. in accordance with a report published by Smart Oman (2011) this year the retailers in Saudi Arabia managed to ‘sell out much of their Spring/Summer 2011 inventory’ (Smart Oman 2011); moreover, a significant volume of orders made ‘for the season Fall/ Winter 2012’ (Smart Oman 2011). International brands of this sector would be also benefited by this growth. In a similar report, it is noted that the development of consumer confidence in Saudi Arabia is, currently, continuous; the establishment of e-commerce schemes has helped the consumer confidence to be increased (The Nielsen Company); the development across the country of international brands has been another factor positively influencing the consumer confidence in the Saudi market (The Saudi 2011). The characteristics of consumer behaviour as exist in the Western market – for instance customer loyalty (Khraim 2011) or the use of credit card for buying goods/ services also appear in the Saudi market (Abdul-Muhmin 2007). The above characteristics have been aligned with the local culture and ethics (Jamal et al. 2005); this trend is clear to the marketing practices used for promoting products/ services in the Saudi market (Bhuian 1997). Consumers in Saudi Arabia, in their major percentage, can afford to buy the products they want without having to wait for reduced prices/ i.e. for out of season sales. In fact, in a relevant report it is noted that ‘the Middle East, with its wealthy residents and consumers with a penchant for logo-speckled gear, has been a booming market for luxury retailers in recent years’ (Ligaya 2010). In a survey conducted among UAE residents, it was revealed that residents in the UAE consider luxury products” not just an indulgence but a lifestyle’ (Ligaya 2010). From this point of view it could be assumed that Saudi consumers, who are expected to have similar buying behaviour with consumers in UAE, also prefer to buy the product/ service they want no matter its cost; this fact, would lead to the assumption that seasonal sales of international brands in Saudi Arabia are likely to be quite successful. In terms of marketing, consumer confidence reveals the trust of consumers to the products/ services of the customer involved. Consumer confidence is usually given the following explanation: it is a behavioural framework showing the trust of consumers to the qualities of the products/ services promoted to the specific market. In the clothing industry, the above phenomenon is developed as follows: consumers of various ages are likely to prefer the products/ services of international brands; the consumer confidence, as described above, revels the alignment of the services/ product involved with the consumers’ needs and preferences. It also reveals the quality of the products/ services promoted in the local market – under the terms that these qualities, as promoted through the relevant marketing policies, are identical with the actual qualities of the products/ services involved. 4. Conclusion In order to evaluate the responses of Saudi consumers to the seasonal sales of international brands it would be necessary to refer to the criteria on which such decisions are developed. Usually, the level of acceptance of a product/ service in a particular market is depended on the structure of the market – meaning the competition (Kumar 2002); the local culture and ethics are also likely to have a crucial role in the success of a product/ service within a particular market (Rehman 2007). Other factors influencing the consumers’ decision to prefer a specific brand would be: the success of a brand in the global market (Shoult 2006), the quality of the product/ service involved – meaning especially the balance between the quality of the product/ service and the price (O’Guinn et al. 2008). Apart from the above issues, the following fact should be taken into consideration: the population of Saudi Arabia is young – ‘about 14% of the population is under 14 years old’ (Tawill 2010); moreover, the lifestyle of the population tends to change continuously. This means that the successful performance of products/ services within the particular market is difficult to last for a long period time – unless innovation is highly promoted for aligning the products/ services offered with the needs of the population. On the other hand, the review of the relevant literature has proved that the increase of consumer confidence in the sales of international brands can be achieved only through specific marketing strategies. The level at which these strategies have been already developed by marketers in Saudi Arabia is difficult to be precisely estimated; however, taking into consideration the common marketing policies of the brands reviewed in this paper it could be stated that the current perceptions of consumers on international clothing brands across Saudi Arabia are positive. However, the high percentage of the population is less than 14 years; the future behavior of this part of the population in regard to the particular product would be better evaluated in a few years – when current consumer confidence methods will start to be alternated, for responding to the different organizational needs. References A. Books Ahlstrom, D. 2009. International Management: Strategy and Culture in the Emerging World. Belmont: Cengage Learning Anderson, E. 2010. Social Media Marketing: Game Theory and the Emergence of Collaboration. New York: Springer Andersen, A. 1996. 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