Middle East cosmetics and personal care sector Marketing

TABLE OF CONTENTS

1) INTRODUCTION

2) LITERATURE REVIEW

3) CONCLUSION

REFERENCES

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1) INTRODUCTION

The Middle East cosmetics and personal care sector has grown 12% annually over the past three years, with an estimated sales value of $2.1 billion in 2007. The perception that Middle East society is conservative in its dress and appearance, skin care, beauty and grooming are increasingly important to both women and men. The consumption of cosmetics and perfumes in the region is said to rank among the highest per capita world wide, with an average purchase per head of around $334 annually. The changing retail environment is also spurring growth, with malls, pharmacies and supermarket chains springing up throughout the region, giving companies greater visibility and distribution opportunities. Some major brands in the Middle East are very active those are Christian Dior and Coty. The Middle East cosmetics business was dominated by US and European brands. The Middle East has unique climatic conditions - so that oil-based moisturisers and fragrances as presented by Asian brands would more likely appeal to Middle East and Asian customers. Additionally, the growth of non-oil based industries has seen women joining the expanding services workforce. This not only allows them to purchase quality cosmetics and care products, but also requires them to do so for jobs such as in the hospitality industry. It's not just women who are keen to spend their money on cosmetics. More men than ever before across the UAE are buying personal grooming products to suit a more "metrosexual" lifestyle. The Middle Eastern men are sports mad. In Saudi Arabia, the Kingdom's economy is showing a promising path to diversification, with the non-oil private sector growing 6.3% last year. The opportunities for the cosmetics sector in Saudi Arabia to look increasingly encouraging. In the last two years, the cosmetics and personal care market in the UAE alone was worth more than $414 million in retail sales, an increase from $382 million in 2005, according to one consumer survey. So there are number of companies and products already existed in the Middle East, so the company having a lot of competition in Middle East but Middle East is most attractive market for cosmetics in the world (www.4 and www.5).

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2) LITERATURE REVIEW

2.1) SCREENING CRITERIA FOR SELECTION PROCESS OF NEW MARKETS/COUNTRIES:

SEGMENTATION: According to KOTLER Segmentation means dividing a market into distinct groups of buyers on the basis of needs, characteristics or behaviour who might require separate products or marketing mixes. Initially preliminary screening criteria used for selecting the country. There are 22 countries which come under Middle East. Geographically Middle East can be considered as a large market with homogeneous characteristics like cultures, life styles, language, government type, developed and developing economies. But only the difference is GDP, population, area size and natural resources. Middle East countries will have similar characteristics, so Middle East countries can make into a group by clusters, by based on homogeneous characteristics.

Preliminary screening criteria’s are

• Population size and growth: population size and growth is one of the important criteria because if the country having more population there is a large massive market. If the population is more the usage is more and the usage is more then the requirement of products are more. If there is a requirement of the product then the company can utilize this opportunity and they will get succeed. Lactovit is such a product it required every day life, so if the population is more there is a chance to capture the business and the company can make sales and they can generate the profits.
• Climate and Weather variations: Climate another important criteria for sun and personal care products. The country temperature is very high then there is a requirement of skin care products are more. But its not correct to say that skin care products are used where the temperature is high because the culture is changing now a days every one showing interest about their skin care and they are using it every day.
• Physical Distribution and communication network: It is also an important factor for selecting a country because if the country does not have good

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physical distribution system, physical distribution system is nothing but transportation. If the country have very good transport facility then its easy to distribute goods. But in Middle East most of the area is covered with sand so mostly the mode of transport is train transport. Communication network play a important role any business. It is the main channel of telling about what are the products and services offering the company to the customer. Once the customer got information then only the customer starts thinking about the products and services offered by the company. After thinking about it he may think to purchase it. So everything will depend on the effective communication network.

• Natural resources: If the country has some natural resources it will help the country to develop the GDP and it will generate some revenue, so it leads to overall country development in all aspects of the country achievement.
• System of government, Political stability and continuity: system of government is a type of government following in the country. There is a Monarchy type government and elected government. If the government is monarchy government then the decision making is centralized and the only one person having the authority to take a decision. If any company want to do business in that country, if the company taken the permission from the head then automatically every member in the government will accept the decision taken by the king or head. Most of the countries in the Middle east are Monarchy type government so there is political stability and continuity of the government. Most of the countries in the Middle East are Monarchy type government, the countries can make into a group cluster.
• Government attitudes towards a foreign business: This factor mainly concentrated on how the government is reacting towards a foreign company. It is one of the important factor that should consider any company before start doing business in a particular country because the company start doing the business in the country but the country is not co-operating to do business it leads to wastage of time, efforts and loosing investment.
• Economic growth: In this factor any company should see the overall development of a country, GDP, per capita income, economic condition,

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purchasing power parity of each person. If all these elements are showing the tendency of growth then only any company get succeed in a particular country. If the economic condition of a particular country is bad then it reflects on GDP, per capita income, Purchasing power reduces and the customer can not afford to buy the things.

· Social/cultural: social and culture preliminary criteria used for segmenting the market. There are some important variables which should consider, those are language, educational level, existence of middle class, literacy rate.

SNO	CRITERIA	POINTS
1	Economic growth	40
2	Social/cultural	35
3	System of government and political stability	30
4	Government attitude towards a foreign company	25
5	Natural resources	20
6	Physical and communication network system	15
7	population	10
8	Climate	05

If the economic condition of a country is bad then there is no necessity to do business because no one can afford to purchase. So it is most important criteria compared to other. If the economic condition is good then there are some alternatives for the company to do business. Cultural criteria are also having the equal importance to economic conditions. Culture is nothing but beliefs, values, and attitudes of the people. Culture is mainly concerned with the people. People are consumers, business is depending on customers. In a international market system of the host country government is play important role because for doing business in the host country, host country government permission is required.

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2.2) COUNTRIES SHOULD MYRURGIA CHOOSE TO PENETRATE DURING THE NEXT FIVE YEARS:

The countries should Myrurgia choose to penetrate are Saudi Arabia and United Arab Emirates.

SAUDI ARBIA: Saudi Arabia is one of the largest countries in the Middle East and Saudi Arabia is largest country of the Arabian Peninsula. Saudi Arabia has the Middle East’s largest economy and the biggest market for cosmetics, and fragrance, estimated at $1.2bn 2007. Saudi Arabia people birth rate is 3% growth a year, one of the highest in the world, and the population doubling every 25 years (www.1). In Saudi Arabia the volume of sale of cosmetics increased because the significant increase in per capita and disposable income and the booming economy resulting from the massive increase in worldwide oil prices, Saudi Arabia dramatic development in the retailing and distribution landscapes with that hypermarkets and specialist shops achieved great sales, and by both local and multinational companies did a great effort in terms of new product launches, advertising and promotion. The demographic nature of the country where 58% of the population are under the age of 24 tends to dramatic changes in lifestyles and increasing numbers of Saudis joining the workforce led to increase the sale of cosmetics (www.2).

· Area: The area of Saudi Arabia is 2,149,690 sq km.

· The climate is hot, dry summers with mild, wet winters. The temperature is very hot, it favors to the company the requirement of Lactovit because lactovit is a product needed for each and every person. Lactovit is used every day in the whole life.

· Population: The population of Saudi Arabia is about 28,161,417. If the population is more, the more advantages of selling products. If the population is more, the consumption of products was more.

Age Structure:

0-14 years: 38.1% (male 5,469,641/female 5,258,508)
15-64 years: 59.5% (male 9,467,325/female 7,284,077)
65 years and over: 2.4% (male 355,173/female 326,693)

Most of the population is 15-64 age structure, if Myrurgia used this age segmentation they are going to succeed in their business.

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· Economic condition: Saudi Arabia has an oil-based economy with strong government controls over major economic activities. It possesses more than 20% of the world's proven petroleum reserves, ranks as the largest exporter of petroleum. The petroleum sector accounts for roughly 75% of budget revenues, 45% of GDP, and 90% of export earnings. About 40% of GDP comes from the private sector. High oil prices have boosted growth, government revenues, and Saudi ownership of foreign assets, while enabling Riyadh to pay down domestic debt.

· GDP: The purchasing power parity is $572.2 billions. By seeingthis figure Saudi Arabia people have the capability of purchasing goods at the same time they can spend on what they want to purchase.

· GDP growth rate: 4.7%

· GDP- per capita: Saudi Arabia is one of the few fastest growing growing countries with a high per capita income of $20,700. It shows the development of the country.

· Modernized communication systems: Saudi Arabia have well developed tele communication networks, even most of the people have land line connection, mobile phones and most of them used the internet. If they have well developed communication network system then it is easy to advertise. It tends everyone get idea about the product and services offering by any company (www7).

UNITED URAB EMIRATES: The retail sale of cosmetics and personal care market in the UAE was worth more than $414m a research conducted by one company. Demand of cosmetics may be increased in the UAE by an estimated 6.2 million tourists a year, a 23.5% rise in GDP in nominal terms in 2006, and by population increased from 2.4 million in 1995 to 4.3 million. The future outlook for the sector is equally bright, with some estimates predicting that the population could reach 10 million by 2010(www.1).

Sales are particularly high in Dubai, which has positioned itself as a tourist and shopping destination, as well as a regional media hub, with new products typically

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Launched in Dubai. All brand cosmetics available in all malls, airport duty frees and supermarkets, there has been a notable upswing in sales of oriental perfumes in the last couple of years. The UAE sales of male grooming and personal care products were increasing rapidly. The men were spended $16 billion on cosmetics and associated goods. The high standard of living and one of the highest GDP per capita in the United Arab Emirates is a reason for rapid change in the demand for cosmetics (www.8). Tourism has also had a big impact on the market, as tourists often shop not only in duty free shops, but they also purchase colour cosmetics and fragrances at the local shopping malls which are cheaper than elsewhere. The amount of incoming tourists to the United Arab Emirates now exceeds a few million each year, and Dubai and Abu Dhabi alone account for more than a million throughout the year (www.3).

· Area: The area of UAE is 83,600 sq km. Most of the area is high central plateau and several mountainous. So it will helpful to do business easily in Turkey by easy to transport, easy to advertise and easy to distribute.

Climate

· The UAE is a desert, cooler in Easter mountains. The temperature is very hot, if the temperature is high it favors to the company the requirement of Lactovit because lactovit is a skin and body care products. Lactovit is need for every day life.

Population: The population of UAE is about 4,621,399. If the population is more, more advantages of selling products. If the population is more, the consumption of products was more.

Age Structure:

0-14 years: 20.5%(male 484,102/female 462,405)
15-64 years: 78.6% (male 2,663,702/female 970,672)
65 years and over: 0.9% (male 26,244/female14,274)

Age is one of the important factor used for segmenting the market because in UAE most of the people were in the above age of 15 years. Female percentage is also high it leads to requirement of more cosmetics.

· Economic condition: The UAE has an open economy with a high per capita income and a sizable annual trade surplus. Overall economy out of 40% is coming from oil and gas output.

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· GDP: The purchasing power parity is $145.8 billions. The

· GDP growth rate: 8.5%

· GDP- per capita: $55,200

· Modernized communication systems: UAE also have the modernized tele communication system and computerized technology. So advertising can be done easily by modernized communication system (www6, www9).

If Mrurgia get succeed in these two countries then it can do business in other countries of Middle East also because of homogeneous characteristics.

2.3) TIMING OF THESE NEW COUNTRY PENENTRATION & METHOD OF MARKET ENTRYY:

Before entering into a new market the foreign company should consider some factors

• When should the firm enter into a foreign market it means timing of new country penetration
• Level of international experience company having
• The size of the firm
• The value of product and services company offering
• How much market knowledge the company having about product and competition
• Economic condition of the country

At present Saudi Arabia and UAE in strong position in terms of economy, politically stable and booming fashion life style in Saudi Arabia and developed market of fashion in UAE.

GHAURI The method of market entry the company using should reflect an analysis of market potential, company capabilities and the degree of marketing involvement and commitment management is prepared to make.

JOINT VENTURE: Joint venture is the process of acquisition of an existing company. It is a way to enter markets that pose legal and cultural barriers and will reduce political and economical risks. Local partners can lead the legal mazes and provide

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the outsider with helping understanding cultural nuances. There are some following advantages of Joint venture

· It enables a Myrurgia to utilize the specialized skills of a local partner

· It allows the marketer to gain access to partners local distribution system

· When Myrurgia seeks to enter a market for wholly owned activities, the Myrurgia will face some problems

· It provides access to markets protected by tariffs or quotas

· When the firm lacks the capital or personnel capabilities to expand its international activities.

· If the company operating a joint venture initially and once the product was existed, then Myrurgia can establish own company. When the company operating joint venture there is a less chances of disadvantages like the government also helped the company, even if any disputes between the company and government there will some alternatives.

2.4) FACTORS CONSIDER FOR THE NEW COMMUNICATION STRATEGY TO LAUNCH IN THE CHOOSEN COUNTRIES:

According to CHRIS Marketing communication is “the process of presenting an integrated set of stimuli to a market with the intent of evoking a desired set of responses within that market set and setting up channels to receive, interpret and act upon messages from the market for the purposes of modifying present company messages and identifying new communication opportunities”.

Marketing communications breaks down the strategies involved with marketing messages into categories based on the goals of each message. There are distinct stages in converting strangers to customers that govern the communication medium that should be used.

There are several factors should MYRURGIA consider, those factors are

· Culture

· Language used for Advertising

CULTURE: According to KEEGAN culture can be defined as “ways of living, built up by a group of human beings that are transmitted from one generation to another.” According to DIBB, Culture is passed on from one generation to another and is a kind of blue print for acceptable behaviour in a particular society. The connotations

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associated with body motions, greetings, colours, numbers, and shapes, sizes and symbols vary considerably across cultures. In the Middle East raised eyebrow facial expression indicates “yes”, and the word “no” must be mentioned three times before it is accepted. The positive colours for Middle east people are brown, black, dark blues and reds. And also the company should know their not favored colours, those colours are pink, violets and yellows. The positive numbers for pricing a product are 3,5,7,9 and the negative numbers are 13, 15. So any company should kept in their mind when they are doing the pricing of a product. There are some shapes and sizes, symbols accepted by the Middle East people, round or square shapes are acceptable and symbols of six pointed star, raised thumb or koranic sayings are avoided.

MYRURGIA should also keep in mind Middle East customs regarding male and female interaction. Saudi Arabia comes under High-context culture. High-context culture means if some one given a message to people they will take it heavily what they said, it will depend on who is giving the message (the person who is having a personal reputation). One important factor Myrurgia should consider, it is not acceptable to show the soles of feet or shoes to the people and they are not accepted when something was giving with their left hand.

LANGUAGE: According to WALSH Language is described as the mirror of culture. Language plays an important role doing business in some other country where the language is different to home country to host country. Advertising must be translated into host country language and make sure that there should not be any mistakes while transforming the language, may be one word having different meanings in different language or different country. Brand names must be vetted for international acceptability. Business negotiations must often be conducted through expensive interpreters or through more expensive acquisition of a foreign tongue. Foreign language may imply different patterns of thought and different customer motivations.

3) CONCLUSION

Myrurgia is a company having very good brand image and strengths, the company will get suceed if it used the resources of the country properly and using good strategies. Mostly Myrurgia should concentrate on culture, language used for the advertising, segmentation and competition.

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REFERENCES

1) Fill C (2002), Marketing Communications, Contexts, strategies and applications, 3^rd edition,Prentice Hall,UK.

2) Ghauri and cateora (2005), International Marketing, 2^nd edition, McGraw-Hill Education, Berkshire.

3) Philip K and Gary A (2008), Principals of Marketing, 8^th edition, Pearson Prentice Hall, New Jersey.

4) Sally D, Lyndon S, William M.P, O.C.Ferrell (2006), Marketing; Concepts and strategies, Pg no: 124-135,Houghton Mifflin company, U.S.A.

5) Walsh L.S (1993), International Marketing , 3^rd edition,Bell and Bain ltd, Great Britian.

6) Warren J.K and Mark C.G (2005), Global Marketing , 4^th edition, Pg no: 119-121, Pearson Prentice Hall, U.S.A.

7) www.1----http://www.cosmeticsbusiness.com/story.asp?storycode=1591

8) www.2-http://www.euromonitor.com/Cosmetics_And_Toiletries_in_Saudi_Arabia

9) www.3----http://www.the-infoshop.com/study/eo47853-arab-cosme.html

10) www.4---http://info.hktdc.com/imn/07072404/cosmetics043.htm

11) www.5-----http://archive.gulfnews.com/articles/07/01/04/10094073.html

12) www.6--https://www.cia.gov/library/publications/the-world-factbook/geos/ae.html

13) www.7----http://en.wikipedia.org/wiki/Communications_in_Saudi_Arabia

14) www.8- http://www.messefrankfurtme.com/beauty/site/scripts/documents.php?categoryID=4

15) www.9----http://en.wikipedia.org/wiki/Middle_East

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