Read the case below and answer the following questions:-
Al Jazirah: The Genius Inventor
The Hot Weather
Air conditioning is one of the most crucial appliances in almost all homes and businesses in the Arab world. The Saudi Arabian climate can be characterized as a desert climate, with wide fluctuations in day and night temperatures. The climate is typified by high temperatures in the summer, often rising to 45 degrees Celsius or more, while in spring and autumn, the average temperature is around 29 degrees Celsius. Apart from the coastal areas, the climate is rather dry and leaves people with an uncomfortable breathing experience. The climate in the Kingdom of Saudi Arabia has resulted in the installation of air conditioning in most domestic and commercial buildings. Sales of air conditioners reach 2.1 million units per year. Air conditioners are installed in every new building.
Have you ever noticed how cool it feels on the beach on a hot summer day? The cooling of the air is the result of water evaporation—and that's how an evaporative cooler works. An evaporative cooler is essentially an enclosed box with vented sides, containing three elements: a centrifugal fan (or 'blower'), an electric motor with pulleys, and a water pump to wet the evaporative cooling pads. To cool, the centrifugal fan draws ambient air in through the unit's vents and the cooling pads; heat in the air then evaporates water from the pads, which are kept constantly damp to maintain the cooling process. An evaporative cooling unit is mounted on the roof or on the exterior wall of a building, and the cool air is delivered to the building through a vent.
The culture in the Kingdom of Saudi Arabia is luxury-driven. The consumer generally has a large purchasing power and tends to buy expensive things. In recent years, the culture has grown to a more established structure, so that consumers look for the true value and advantage of the products they purchase.
Another new trend in the culture, which is still in development, is environmental and energy consciousness. With energy at a low cost, consumers tended to use it at high levels. Now, through government and corporate efforts, consumers are being made aware of the impact of high energy consumption on world prices and the environment.
Another characteristic of the culture is the eagerness to acquire new technologies and to become early adopters of the world’s latest trends, hence consumers like to buy high-end products such as the latest mobile phones, laptops, and cars.
The Right Product for the Macro Environment
Al Jazirah was established in 1973, when it became the first of factory of its kind in the Arab world to produce evaporative coolers under the Al Jazirah brand. Today, Al Jazirah evaporative coolers are number one in the world.
Al Jazirah manufactures the coolers at five factories (four in Saudi Arabia plus one in Sudan) and distributes them via 30 showrooms located across Saudi Arabia, wholesalers, and an agent network.
The company delivers a product that is perfect for the surrounding environment. The evaporative cooler represents a technological invention and overcomes all the aspects that made previous air conditioning solutions less desirable to the consumer. It is odor free—the first coolers to be invented had a moldy odor, so much so that they were called swamp coolers in the United States—and quieter than other models, thanks to a special engine. With the outer casing made of plastic or an anti-rust metal, the life of the product is extended. Durability is also ensured through the cooling pads, which are made of aspen or cellulose so that salt residuals generated from the evaporating water can be rinsed off. One of the biggest advantages of Al Jazirah evaporative coolers is their electricity-saving capabilities. Evaporative coolers, generally, are good at saving energy, but Al Jazirah has managed to escalate that energy saving to 80 percent. A further benefit is the purification of air from dust and other particles, which creates a cleaner environment for the user.
In 2010, Al Jazirah won the award for the best innovative Saudi firm for 'Products & Patents from Innovation to the Market,' presented by INNOVABIA. In 2011, Al Jazirah secured the 'Number one client and the best evaporative coolers portfolio' award by NIDEC Corporation—owner of the multinational brands Emerson & US Motors.
Al Jazirah's marketing focuses on matching the consumers' heritage and their culture. All marketing communication is centered on the customer's daily life, for example, highlighting their outdoor exercises, their atmosphere, and their overall life style. This puts the air conditioning product very close to the consumers' hearts.
Al Jazirah's evaporative coolers are widely available to the market in a wide portfolio of brands that meet different needs. The company has a 60 percent market share of all evaporative coolers sold in the Kingdom of Saudi Arabia. Its operations have grown beyond its home town to 18 countries worldwide. Al Jazirah's focus now is on the manufacture of coolers in Sudan for the local market there.
- What are the factors in the macroenvironment that triggered the need for evaporative coolers in the Kingdom of Saudi Arabia?
- What would be the best company policy: to integrate with regular air conditioners or to compete with them? Justify your answer.
- Based on analysis of the region's macroenvironment, which countries do you think Al Jazirah should target? Why?
Read the case below and answer the following questions:-
Activia in Egypt
Danone Around the World
Group Danone is a French company established in 1925. Initially, the company produced dairy products; it then gradually introduced several new brands in different product categories. It sells about six million cups of yogurt a day in almost 100 flavors, styles, and sizes. Activia is the company's top-selling brand of yogurt worldwide. Dannon® is the name of the US subsidiary company and is associated with one of its brands over there. It is sold under the names Dannon or Danone, depending on the country it is sold in. Its official name in Egypt is Danone. The company prides itself on consistently delivering high-quality, wholesome products and responding to consumers' needs with nutritious, innovative new products and flavors.
Danone was introduced in Egypt during 2005, after its acquisition of Olait along with its headquarters and factories. It first launched Danone core (the regular yogurt) in 110 g and 80g plain, Danone sugar yogurt, Danone lite, Danone fruits with various flavors (berry, strawberry, pineapple, and apricot), and Danone Mixy for children. In June 2008, the company introduced Activia.
Activia Enters the Market
Danone launched Activia for the first time in 1986 in Spain and it soon became available all over Europe. A group of researchers discovered the importance of bacteria in the digestion process and went on to develop a technique with which they could culture the 'good' bacteria and insert it into the yogurt. The bacterium Actiregularis was custom-made for Danone. Activia is now prevalent in 68 countries around the globe. It is one of the fastest-growing products innovated by Danone. Its sales are estimated at US$14 billion annually.
Activia was introduced to the Egyptian market in June 2008, then with just one product: plain 110g. The probiotics market in Egypt was still at the introduction stage, and Danone's aim was to grow the market. On July 16, 2009, Danone Egypt introduced two flavors of Activia yogurt, vanilla and honey.
The Probiotics Market in Egypt before Activia
Prior to Activia's launch, probiotics comprised just 0.2 percent of the total yogurt market in Egypt. There were two key players in the market: Nestle, which introduced Nesvita as a pro-digestion fat-free powdered milk with Actifibras; and Juhayna, which introduced Juhayna Digestive, the oldest player in the yogurt market. Lactel then introduced Lactel B Active after Activia's launch.
By June 2009, a year after the introduction of Activia, the probiotics market had witnessed fast growth, increasing from 0.2 percent to 5.7 percent, of which Activia captured more than 76 percent (4.3 percent of the total yogurt market). Activia maintained its leadership in the probiotics market, reaching 84 percent in early 2010 (5.7 percent out of 6.8 percent of the total yogurt market). Also, consumer research revealed the taste of Activia to be the best liked among all the yogurt brands in Egypt (including other Danone brands).
Challenges in the Market
It was not easy for Danone to grow and lead the probiotics market in Egypt because of the low awareness of probiotic yogurts in general. But Danone nevertheless considered probiotic yogurt a good business opportunity and began working to tackle those challenges.
Danone attempted to raise awareness of the vitality of probiotic yogurts, to show how they positively affect the digestive system, and help those who have digestion problems. To achieve these goals, Danone developed advertising campaigns and PR activities, including a '360° Campaign,' whereby the company used all available communication tools to reach its target market.
Accordingly, Danone designed television, radio, and print ads; held press conferences,: issued press releases; printed point of purchases materials, flyers, and brochures; and organized sampling in large supermarkets, universities, and hypermarkets. All these communication tools, carried a consistent message to the consumer stressing that the Product is 100 percent natural and guarantees to improve the digestion process. The campaign was successful and very quickly Danone increased awareness of the Activia brand in the Egyptian market and consumers began to view the product as credible and relevant to them.
To tackle the issue of credibility, Danone continually relayed the message that Activia is 100 percent natural and really improves digestion. Danone repeated its message consistently through different advertising campaigns and PR activities. It published articles in leading women's magazines by well-known physicians discussing the effectiveness of Activia yogurt to improve digestion. It also contacted physicians and explained to them the benefits of Activia. Many well-known physicians were convinced and decided to advise their patients to eat Activia regularly. Such support for the product increased the credibility of Activia and probiotics yogurts in Egypt. In addition, Activia launched a campaign called the "Activia Challenge," which aimed to further raise Activia's credibility and encourage immediate purchase. The company's challenge to consumers was this: eat Activia regularly for 15 days and it will help improve digestion. If no improvement is felt, you will get your money back. This campaign was very effective in increasing the product's credibility as well as encouraging consumers to try the product. However, its impact on consumers' trust and belief is yet to be proven.
In November 2008, the company faced a different challenge—an increase in the prices of raw materials and packaging. The company decided to increase the price of Activia by about 17 percent. Several promotions were launched in order to reduce the effect of the price increase on sales. Moreover, the introduction of additional flavors assisted in increasing Activia's sales in the market.
Because Activia has raised awareness and increased the size of the probiotics market in less than two years, Activia's example is considered one of the success stories new-product introduction. Smart consumer-centered strategies allowed Activia to become a leader in the Egyptian market very quickly.
- In which stage of the product life cycle is Activia? Based on that stage, is Danone employing good marketing strategies?
- Propose a strategy for Activia's next product life-cycle phase.
- Discuss the potential threats to Activia's future success. What will help Danone avoid a premature decline for Activia?
- ABC is a well-established hair care products in Europe, and now the company is considering its expansion to Middle East markets. Develop a brief marketing plan for this company in the context of UAE market.
1. Factors triggered the need for evaporative coolers
Saudi Arabia is a rich country in terms of economy, living of standards and culture. It is desert country therefore there are fluctuations in terms of weather and climatic conditions (Armstrong et al., 2015). During summer, it is too hot and humid, and in winters, the climate is too cold and chilled. Environment and people over there suffer from health problems like breathing issues. Therefore, there was a huge demand for air-conditioning in most of the houses.
Additionally, cutting down of trees, creation of building, installations of air-conditioning gave rise to environmental pollution (Johnston & Marshall, 2015). Environmental pollution creates major health issues for the people of Saudi Arabia. Due to increase of pollution problem led the people of Saudi to invent such a technology that can solve the problem of pollution and it can help to fight during summer season. As a result, Al Jazirah manufactured the evaporative cooler for the Saudi Arabia in the year 1973.
2. Best company policy to compete with air- conditioning
In order to integrate with regular air conditioning, the Saudi Arab country came up with new product called evaporative coolers that can solve the problem of Saudi Arabia. Arab country was the first world producer of this cooler (Hutt & Speh, 2012). This invention not only created its productivity but also helped a long way to solve the climatic and environmental problems of Arab country. An evaporative cooler is a type of cooler that save electricity, energy, is a big positive attribute of the company as positive impact, and results create more production. Its evaporated water it gives cooling effect to the users of Saudi Arabia.
In terms of competition, then due to innovation and modern technology, manufacturer of evaporated coolers created a new business, more production customers and there by created profit. There are five factories in Saudi Arabian country, and thirty showrooms that have evaporative coolers. Being the most innovative country, it became the number one producer and manufacturer of evaporative cooler in the world.
3. Target country of Al Jazirah in terms of business expansion
Saudi Arabia after the successful production of evaporated coolers; it extended its line of production by creating four factories in Saudi Arabia and one in Sudan. The country in terms of business profit, earns a huge success for its innovation and market. There are nearly 30 showrooms in Saudi Arab (Hollensen, 2015). Company for their innovative approach got award in the year 2010 by INNOVABIA. The success behind their invention is their constant focus on day-to-day life activities of the people of Saudi Arab country, their life styles and their problems.
After achieving good production in home country, Al Jazirah gave a thought on expanding the line of production in Sudan country, where there is one factory of evaporated coolers business. There should be more number of showrooms and factories in the local markets of evaporated coolers in Sudan, so that there can be more demand and customers, leading to more number of sales and growth of profit.
1. Stage of Activia in product life cycle and its Marketing strategy
DANONE is a French company that came into existence in the year 1925. It is a company, which manufactures dairy items. There are various brands and products of DANONE, which has a good production scale in the market all over the world. Activia is dairy product of yogurt acts as a leading producer in the production stage, came into existence in the year 1986 in Spain. With the huge production in Europe, Activia collaborated with 68 countries, with robust growth in the manufacturing and sales.
Compared to other products, it is the fast growing product across the world. In the year 2009, Probiotics came into existence as a fast growing product soon after a year of arrival of Activia (Lee & Carter, 2012). Still, the production rate of probiotics did not affect production of Activia. The company captured Activia hold for more than 76 percent of the market. In the year 2010, it rose to 84 percent. DANONE employed a very strong and innovative marketing strategy for Activia.
2. Strategy for Activia Next product
Due to robust growth in the sales and production unit, Activia became the largest producer of dairy across the world. After the existence of Probiotics business, Activia raise the various awareness measures in relation to the quality and usage of the product. It created a success and inspirational story for the rest of the business units in less than two years. Smart business and marketing strategies led the company to become a leader globally. Innovation and creativity adds to success in the business and industry.
Organized planning process in product marketing with standard quality is what marked the success of Activia. Additionally, creation of different new flavors in this product will encourage more and more customers and sales. Rapid growth of sales creates a positive impact on the growth of production and market rate also. Constant increase in the sales leads to increase in production automatically more supply with respect to consumer demand, therefore company earns more profit.
3. Threats to Activia’s future success and role of DANONE
Activia is presently leading at top position; therefore, there are strength and weakness of every company and products. There is tough competition with the growing market. In terms of innovation, with the rapid and constant encouragement in the technology sector, company can maintain a positive and strong stability (Martín, 2015). If the Activia company unable to afford finance for updated technology and if unable to provide enough resources then company may lose its market position.
In case, DANONE faces premature failure in the Activia market then DANONE may avoid this threat by using few methods of business recovery. By raising positive, benefits of using the product and it good quality that is good for health, advertisements and campaigns, publishing the success story in the articles, magazines, source of media, can help to avoid premature failure of the market. The higher the advertisement will give more information to the public in general. Decrease in the price rates will also help to create more customers. Therefore, implementing these effective measures DANONE can avoid premature market failure.
1. Marketing strategy using hair care product
Marketing means purchase and sale of products in the unique way to earn maximum sales. To maintain a good relation between customer and seller, there must be good communication that leads to encouraging of the customers in the best way (Wilson & Gilligan, 2012). Selling of a product depends on the percentage of influencing capacity of seller (Weinstein & Pohlman, 2015). A seller can get customers only when an individual has a full fledge knowledge and information about the product. More advertisement and research of a product leads to creation of demand; therefore, the product should be in relation to customer wants and needs as the market depends on Customer satisfaction.
An example of a hair care product established in Europe, for instance dove shampoo. The company produced good output in Europe, now with growing demand and sales, it want to expand in Middle East countries. With a set goals and plans, creating teamwork, collection of complete information regarding the company and the product, business can create customers. Therefore, good and accurate market plans help the business to grow more rapidly.
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Johnston, M. W., & Marshall, G. W. (2015). Marketing management. McGraw-Hill Education.
Hutt, M. D., & Speh, T. W. (2012). Business marketing management: B2B. Cengage Learning.
Hollensen, S. (2015). Marketing management: A relationship approach. Pearson Education.
Lee, K., & Carter, S. (2012). Global marketing management. Oxford University Press.
Martín-de Castro, G. (2015). Knowledge management and innovation in knowledge-based and high-tech industrial markets: The role of openness and absorptive capacity. Industrial Marketing Management, 47, 143-146.
Weinstein, A., & Pohlman, R. A. (2015). Customer value: a new paradigm for marketing management. In Proceedings of the 1997 Academy of Marketing Science (AMS) Annual Conference (pp. 132-133). Springer, Cham.
Wilson, R. M., & Gilligan, C. (2012). Strategic marketing management. Routledge.