Marketing of Azza Fahmy Jewelry Company - Case Study Example

Azza Fahmy Jwewlry Case Study Name Institution Date Table of Contents Azza Fahmy Jwewlry Case Study 1 Table of Contents 2 AZZA FAHMY JWEWLRY CASE STUDY 14 2 Executive Summary 3 Introduction 4 Question 1 4 Azza Fahmy Jewelry’s biggest competitors 4 Question 2 5 Significant steps taken by Azza Fahmy Jewelry towards the successful reposition of the company as a global luxury brand 5 Question 3 6 Efforts that the company can use to further establish itself as a global luxury brand 6 Question 4 7 Approach that Azza Fahmy Jewelry adopted to target the attractive Arab Gulf State segment 7 Question 5 8 Securing adequate capital for expansion as the company’s biggest challenge of moving forward 8 Question 6 10 Perceived challenges facing Azza Fahmy Jewelry as a Middle Eastern company 10 Question 7 11 How the company can overcome the expected resistance to change 11 Conclusion 12 References 13 Executive Summary Azza Fahmy began her journey in the passageways of the old Khan El Khalili of Cairo in studying the art. Today, she is globally identified as the principal jewelry designer of Arab World as well as the first label designer in Egypt. As brand and product became stronger, the possibility of global markets became highly apparent and opportunities for growth began showing themselves. Retail expansions began opening up materializing in numerous local outlets along with standlone and distribution outlets in Jordan, Qatar, Dubai, Bahrain and London. Upon recognizing market potential and pursuing opportunities presented for distinctive product, expansions began occurring and the company and interior change became crucial to accommodate the expansion in the company. Over the last four years, the jewelry business moved from a workshop operated by a single entrepreneur to a strategically structured and established organization comprising sales, marketing quality control departments supported by a sturdy human resource and financial team. The company took a complete reform to enable it to maintain its reputation while meeting the novel demanded volumes and also to be capable to expand constructively to deal with its anticipated challenge of competing in global markets. Introduction Azza Fahmy Jewelry is a family owned business founded by Azza Fahmy. The distinguished Azza Fahmy Jewelry brand has been in business for a long time, creating unique and special designs that are globally recognized in world of design. Today, forty years later, the company is globally identified as a principal leading jewelry designer of Arab world. Currently, Azza Fahmy is the chairwoman of the company and chief designer. Having at one time operated the business alone on each level, she has presently handed over every operation to the senior management and now directs majority of her attention to jewelry design (Fahmy, 2007). Starting 2006, Azza Fahmy’s daughter Fatma Ghaly has been the managing director, and with the new company vision and marketing strategy, along with a structured organization, Fatma has the elements required to transform the business from a small family business into an internationally competitive establishment. Question 1 Azza Fahmy Jewelry’s biggest competitors Small Jewelry designers and International Jewelry designers such as Bulgari and Cartier which are Italian luxury goods and Jeweler retailer are Azza Fahmy’s biggest competitors. These international jewelry designers are a huge competitor because they are significant jewelry houses in the Arab world and both brands possess prominent Arab pop stars as their spoke persons which have considerably added to their success and popularity in the area. Small jewelry are a major competitor because in the recent years, several young jewelry designers have been trying to establish their names in accessories markets. This newly surfacing industry of small scale diverse jewelry is very fragmented and majority of them depends on less expensive raw materials like semi-precious stones and silver to make their products. On the contrary, Azza Fahmy Jewelry uses expensive materials, mainly silver and gold. In addition , the smaller jewelry retailers relies on innovative designs and intense utilization of novel marketing channels like online social networks which are enabling them to reach a wider customer base compared to Azza Fahmy which do not use online marketing (Mohamed & Mehrez, 2010). Azza Fahmy can overcome competition through undertaking a competitive analysis in order to understand the market context. According to Fleisher and Bensoussan (2003), competitive analysis is the exploration of the organizations in a particular market niche or industry sector that are competing with Azza Fahmy Jewelry’s products for market share. A competitive analysis will help Azza Fahmy to better understand what its competitors are doing, the products they are providing to the customers and how the company can maintain its competitive advantage. The findings of competitive analysis can then be strongly factored into the organization’s strategic planning. Question 2 Significant steps taken by Azza Fahmy Jewelry towards the successful reposition of the company as a global luxury brand A key significant step taken by Azza Fahmy Jewelry towards successful repositioning of the company as an international brand luxury was rebranding. As a portion of the company’s transformation, the company undertook significant rebranding attempts to reposition the brand into a worldwide luxury brand. A part from advertising, the products of the company is frequently displayed in trade shows and top exhibitions of the jewelry industry. Mohamed and Mehrez (2010) note that Development of benevolence for the company’s brand is very important, a move that has made the company to receive several press releases on the organization and also its products in international and local media. In addition, the organization has resorted to placement of products in its marketing endeavors. The company uses distribution channels that sees the exclusive of its products in the upper scale locations, both outside and inside Egypt and the company’s outlets are found in superlative shopping malls, five star hotels and top global retailers. Successful repositioning of the company has enabled it to make immense sales globally, with exports making up approximately 30% of the total sales of the company. However, 40 percent of product sales in the country are sold to outsider s visiting the country. Question 3 Efforts that the company can use to further establish itself as a global luxury brand According to Brassington and Pettitt, (2003), global marketing along with business growth on an international basis has become very common in each sector of business as a result of increased competition and the potential in novel markets that may be exploited for attaining ongoing business growth and development and achievement of competitive advantage in market. Azza Fahmy can use co-branding to further establish itself as an international luxury brand. According to Brassington and Pettitt, (2003) note that co-branding is a means through which a company institutes itself as a brand underneath the shadow of a stronger or more popular brand from another field of business. Apparently, Azza Fehmy has undoubted repute for innovation in the design of its numerous products. Through co-branding with reputable jewelry designers like Bulgaria, the company will be able to leverage a sturdier brand image for its products through generating an affirmative impression on the products amid the target markets therefore generating probable sales to attain market share and competitive advantage in the international market. This will be profitable because when marketing its products to entirely novel geographic regions such as the United States, co-branding with a well known brand that is relevant to the jewelry business will apparently attract customers and offer Azza Fahmy Jewelry with the opportunity to swiftly establish itself as a strong luxury global brand. Question 4 Approach that Azza Fahmy Jewelry adopted to target the attractive Arab Gulf State segment The company used the approach of targeting Western nations to target attractive Arab Gulf Sate segments. The Arab Gulf segment is regarded as a key market for jewelry in the globe as a result of its richness in petrodollars. The image conscious and affluent Arab Gulf nations thus symbolize an attractive market for the company. Nevertheless, these market segments, usually attracted to the western haute fashion design brands, are generally weary of goods manufactured in Middle East. Due to this fact, and as a portion of its expansion plans, the company steered the business westward, a move that assisted to promote appeal at home in the Eastern states. Currently, the strategy of the company is focused upon establishment of the Azza Fahmy brand in global market to competitors such as Bulgari and Cartier. Through creating a strong client base and name as a luxury brand in the European region, the company hopes that it will be received by Arab consumers (Mohamed, & Mehrez, 2010). I would not use the approach used by Azza Fahmy to target the attractive Arab Gulf state segments. This form of targeting the market is viewed as undifferentiated marketing strategy. According to Boone and Kurtz (2011), undifferentiated marketing basically implies that the company segment different segments and develosp a single marketing program that would attract the widest number of consumers. This strategy is effective in that it saves money and time and requires only a single promotional plan. Nevertheless, has its own downside since it concentrates on attracting the biggest segments and disregard smaller segments, which attracts more rivals and thus will require more fiscal resources so as to compete. Differentiated marketing is a useful approach that Azza Fahmy can adopt to target the Arab Gulf states segment. Boone and Kurtz (2011) note that differentiated market implies that the company needs to focus on its target market segments and create a marketing plan for every segment. Other that assuming that targeting the west will eventually enable the company to attract consumers from the East, the company will be required to target both the west and the East independently. Question 5 Securing adequate capital for expansion as the company’s biggest challenge of moving forward Securing sufficient finance for global expansion is the biggest challenge for Azza Fahmy Jewelry. As a family owned business, the organization faces considerable challenges in attaining the needed financing which will permit it to successfully market and offer its products in foreign nations. Finding sufficient sources of money for expansion is thus a continuing challenge for the organization. According to Becker and Tillman (2010), the inability to secure adequate capital has hindered several family owned businesses from expanding and capitalizing on the numerous opportunities available to them. Majority of family owned businesses have more disability in securing the needed funds for expansion due to institutional inadequacies and their incapability to offer essential collateral and access capital market. Azza Fahmy Jewelry can secure adequate capital for expansion through attaining a loan from a bank institutions or borrowing from family and friend. Becker and Tillman (2010 note that a family owned business can approach its bank to attempt and get a loan for expanding the business. Since the company has been operation for several years, it has ample assets and the essential financial records that will enable it to obtain a loan from a banking institution. Banks, nevertheless, can offer Azza Fahmy Jewelry lines of credit if the family, who are the business owners individually, guarantees them. This implies that Azza Fahmy and her two daughters will be individually liable for repayment of the loans obtained. The lines of credit can offer Azza Fahmy business with the required expansion capital. Nevertheless, they can be highly risky, particularly if the company doesn’t generate anticipated results and the business owners are not able to back the bank. Azza and her daughters should therefore utilize this scheme of financing cautiously. Azza Fahmy Jewelry can obtain expansion capital from friends and family. According to Becker and Tillman (2010), f family and friends are a conventional means of financing a family owned business. Several entrepreneurs have been capable of leveraging existing relations and attain capital, either as a capital investment or a loan. Even though this form of financing may be easier to attain, Azza Fahmy and her daughters should be careful not to jeopardize their relationships with their friends and family members if things don’t go as anticipated and business defaults occur. In addition, the transactions should be done with more formality and with written agreements to prevent any complications. Question 6 Perceived challenges facing Azza Fahmy Jewelry as a Middle Eastern company As a Middle Eastern company, Azza Fahmy is faced by several challenges. Raw materials for jewelry are a key challenge facing the company. The company exports majority of its raw materials because precious metals and materials used in Jewelry production are scarcely found in the region. Logic Management Consulting (2007) notes that the cost of valuable raw materials have been showing a sturdy increasing trend for the last five years together with considerable volatility as a result of instability of economic and political conditions in the region. The company is also faced with the challenge of marketing its products in the non Arab nations. Whilst Azza Fahmy designs which are focused on Arab culture enable the company to remain competitive and create creatively rich jewelry, this poses an image management challenge for the organization. Mohamed and Mehrez (2010) argue that several western countries have become wary of Islamic and Arab region and are unwilling to embrace the cultural heritage of these regions. The company is therefore required to prevail over this negative view and to build interest in the goods in the Western region. The emphasis of the company on Arab culture also presents challenges in the Middle East world itself. Arab customers are usually attracted to the westernized styles and getting these consumers to adopt the products that have more emphasis on Arab ethnicities will require the company to do considerable branding and marketing efforts. The company can overcome these challenges through market segmentation. According to Kotler and Keller, (2006), market segmentation is the recognition of key segments or groups in the universal market that share particular consumer habits and characteristics. Through breaking the jewelry market into segments, Azza Fahmy Jewelry can then develop advertising programs for its products for every segment, focus advertising efforts in one or more niches or segments or develop novel product with westernized style that will appeal to the segments. In order to recognize segments, the company should examine consumers’ preferences, tastes socioeconomic characteristics and interest so as to establish their consumption patterns and the way they will react to numerous marketing strategies. Question 7 How the company can overcome the expected resistance to change Azza Fahmy Jewelry is likely to undergo significant organization changes due to its commitment to flexibility in organizing the firm and as Fatma and Gahly take more duties in the organization. According to Bovey and Hede, (2004), resistance to organizational change is an inherent portion of the process of change and is to be anticipated. Resistance happens since changes entails moving from the known to unknown. Resistance is an unavoidable reaction to any key change and organizational change generates resistance and skepticism in workers, making it at times impossible of difficult to execute organizational improvements. Azza Fahmy Jewelry can prevent the expected resistance to change through proper communication and involvement of employees in the change process. Changes in a company begin with major decision makers who are required to explain why the changes are necessary to the entire organization. Therefore, employees should be informed why the changes are being implemented and they will affect the company. Siderite (2000) notes that, because Azza Fahmy Jewelry is enacting planned changes, it can prevent employee resistance through encouranging an atmosphere of mutual trust and adaptability. In order to create trust, workers must be involved to make them feel that they have an important role in the company. They should also be given the opportunity to offer their thoughts, and allowed to speak plainly. This will make employees change participants other than change resisters. Conclusion Azza Fahmy Jewelry is a renowned company distinguished for its brand that has enabled it to create unique and special designs that are internationally recognized in the world of Jewelry design. Although the company founded and operate by a one person for a long time, the increased consumer demand and emergence market potential and opportunities has made the company to undergo tremendous expansion and internal changes in order to accommodate the growth of the company to meet consumer demand. The company has shifted from a workshop ran by one entrepreneur to a well established and strategically structured company with many departments and managers. This transformation is fundamental and is aimed at enabling the company to sustain its repute, meet customer demand and expand constructively to effectively deal with the expected challenges of competing in worldwide markets. References Mohamed, A., & Mehrez, D., (2010). Azza Fahmy Jewelry-2010. www. Azzafahmy.com. Becker, B., & Tillman, F., (2010). The family owned business. Michigan: The University of Michigan. Boone, L., & Kurtz, D., (2011). Contemporary marketing. London: Cengage Learning. Bovey, W., & Hede, A., (2004). Resistance to organizational change: the role of defense mechanisms. Journal of Managerial Psychology, 16 (7): 534-548. Siderite, K., (2000). Rethinking resistance and recognizing ambivalence: a multidimensional view of attitudes toward an organizational change. Academy of Management -794. A, 783 Brassington F., & Pettitt,S., ( 2003). Principles of Marketing. Upper Saddle River, New Jersey: Prentice Hall Financial Times. Logic Management Consulting., (2007). A strategic study on the Egyptian jewellery industry . Retrieved on June 26, 2012 from http://www.imcegypt.org/studies/FullReport/Jewellery%20Sector%20Development%20S trategy_EN. Kotler, P., & Keller, K., (2006). Marketing Management. New York: Wiley Blackwell. Fleisher, C., & Bensoussan, B., (2003). Strategic and Competitive Analysis: Methods and Techniques for Analyzing Business Competition. United Kingdom: Prentice Hall. Fahmy, A., (2007). Enchanted jewelry of Egypt: The traditional art and craft. Cairo: American University in Cairo Press. Read More