Saudi Consumers' Demand for Western Products Still Strong

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"We are keeping a watchful eye on the situation. But what we have noticed is that, yes, there is again a demand for products from the US and Denmark that had remained off the shelves for quite sometime," Tim Sutton, general manager, Geant SaudiGeant Saudi Ltd., told Arab News.

Locally produced items currently account for around 50 percent of the Saudi market. However, barring a few well-known brands, most of the "Made in Saudi Arabia" products have not reached international brand status, according to market sources, which cite lack of expertise in brand management and government initiatives requiring mandatory budget for R&D by the national industry.

Regional advertising manager for IPSOS KSA Bilal Kaissi said a market study conducted on 401 Saudi women in the age group of 18 to 45 from Jeddah, Riyadh and the Eastern Province disclosed that 44 percent of the respondents said they were interested in Western lifestyles and brands, 31 percent favored domestic products, 16 percent were influenced by religious considerations, while nine percent opted for luxury brands.

Asked about the market response to Saudi products, Sutton said there was a demand for some of them, as they maintained quality and the price line. However, they were nowhere near the Western products in terms of their promotional blitz. "The revenue stream of Saudi products is not that high."

The reason, he pointed out, was that Saudi consumer products have not yet pushed the western brands off the shelves, despite their promotional offers. "While the customers fall for the bait and buy the local products for the first time, the growth in demand remains only temporary. After they (local products) have been tested and tried, the well-known western brands are again back in circulation."

However, in some categories, he observes, Saudi brands like Afia and Mazola, have retained their market share. "This shows that what counts in the long run is the quality of the product backed up by a strong marketing strategy. Saudi products, to some extent, seem to be weak in both directions."

Another trend noticeable in some Saudi products is that the emphasis in the promotional campaign is more on the manufacturer of the product than on the brand itself. Thus, while Arabian Oud is widely publicized through street hoardings and neon signs, its brands would be known only to the users. This is in marked contrast to the marketing strategy of western companies which place greater emphasis on their brands than on themselves.

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PepsiPepsi

As Grant F. Smith, Director of Research at the Institute for Research: Middle Eastern Policy (IRmep) in Washington, D.C., notes: " Saudi Arabia's consumer market is clearly open to both innovation and honest brand positioning and consumer market exporters in Georgia and across America should consider how they can 'tune in' to core Islamic values and other local factors inherent to the market. They can demonstrate their role as "solutions" rather than contributors to regional problems to increasingly sophisticated consumers."

An executive of another hypermarket said that there is a good demand for FMCGs, especially Saudi dairy products and beverages. He mentioned Safi-Danone, AlmaraiAlmarai and Nadec, which have carved out their own market share in the dairy sector, while Indomie Noodles made in Saudi Arabia with Indonesian collaboration has forged ahead in the packaged foods market. However, by and large, a majority of the Saudi consumer products have not yet acquired the stature of internationally recognized brands.

The reason, he said, is that they do not have any R&D program, nor do they spend on aggressive marketing and advertising campaign. Geepas and Royal Ford of the UAE, which together have launched around 3,000 branded products on the Saudi market in the electric, electronic and crockery, demonstrate the effectiveness of a well-planned marketing strategy.

By Javid Hassan

© Arab News 2007