The Confidence In Of International Brands - Dissertation Example

?Chapter Four – Results The confidence of Saudi Consumers in the credibility of seasonal sales of international brands Location and Population The population of Saudi Arabia is currently around 25,700,000 according to the 2010 census. There has not been steady population growth over the years, but instead has fluctuated year to year (Figure 1). There was a trend of general population increase up till 2009, following which there was a period between 2009 and 2010 that showed a substantial decrease in population making it difficult to predict what the trend will be in the coming years. Figure 1: Population trend in Saudi Arabia from 2000 to 2010. Note that the interval between years is not even. Data for population from Internet World Statistics . The country has a very devout nature, with the official language of Arabic, and Islam as the major religion . Most citizens are Islamic, and those who are not tend to follow many of the religious practices of Islam out of respect. The same is true for foreign visitors to the country. The system of government for the country is a monarchy, and there is strict control on the media and information available . There is strong segregation between the genders, with women not being allowed to drive, and the different gender Saudi’s only able to work together in hospitals. Some businesses get around this by hiring female Saudi’s and male foreigners Islamic religion is strict on the clothing that people wear. Generally males where white robe-like garments, while females were black ones that cover their entire body, many also have their faces covered. This has a strong effect on the fashion industry, creating challenges as to what can be produced. Even for Saudi’s that wear western style clothing, clothing that reveals too much skin, such as t-shirts and shorts for both genders tend to be avoided, and most women wear conservative dresses . Compared to many other areas, the country has a very young population on average. The majority of the population is between 15 and 64 years of age, with only three percent being above 64 and the remainder being below 15 (Figure 2). The median age is 23.9 years old , and 60% of the population is under 25 years of age . The younger generation tends to be less conservative and more swayed by western trends, leading to an opening for which businesses to operate. Figure 2: Age distribution in Saudi Arabia (male and female combined). Data sourced from Central Intelligence Agency The Saudi Fashion Market Western brands are very common in Saudi Arabia. Growth in franchising has been estimated at 27% in the Middle East in general, and in Saudi Arabia more than 70% of all franchised operations are American owned. Fashion from UK, Europe and the USA are all experiencing strong growth in the Saudi market, especially in the area of female fashion. While UK fashion initially had a strong hold over the market, there is now increasing trends towards US brands such as Gap, Gucci and Louis Vitton . The fashion market in Saudi is very seasonally based, with sales following religious holidays as well as the seasons. With the relatively young population, there is large potential for the fashion market. The habits of the nation are changing to become more in line with Western culture, a trend that is especially strong in the younger generation. Women are leaving their traditional roles and many going into work. These trends are driving the boom in the fashion industry . Despite the fact that women wear the Abaya over their clothes, a traditional black dress that covers them, they often wear western clothing underneath . In addition there is a trend of fashion designers producing colored Abayas that are popular, especially for the younger generation. Teenage girls and young adult females have developed ways of wearing their Abayas that reveal their western clothing underneath, such as leaving the front wide open, or tying the edge around their waists, so their tight western jeans can be seen . There are also many different styles and cuts of Abayas and these change seasonally much the same way as Western fashions do, with old fashioned styles considered out of place. This provides much for fashion stores and designers to work with. The fashion market primarily centered in the large cities within Saudi Arabia (Figure 3), and many of the well known US brands have stores in those cities. Marks and Spencer has two branches in Dammam, four in Jeddah and two in Riyadh . Louis Vitton has a branch in Jeddah and in Riyadh , while Gucci is present in two multibrand stores in Riydia and one in Jeddah, as well as operating a Gucci store in the smaller city of Al Khobar . Figure 3: Percentage of fashion sales across Saudi Arabia. Numbers from Sanghvi . Another way that the Saudi fashion market has bloomed is through e-commerce and online shopping. There are a wide range of shops that sell Saudi fashions online, and with the close to 40% of the population now using the internet this is becoming an important area of growth . A large number of the products sold in Saudi Arabia are imported, not just from the US, but also from other countries such as the UK. T-shirts and trousers were the most commonly exported items from the UK, followed by bras (Figure 4). Figure 4: Exports from the UK to Saudi Arabia in 2006. Data from UK Fashion and Textile Association The growth in the fashion market within Saudi Arabia is high, and is dependent on the stream of imports from other countries It has been found that the overall import growth into the country has increased in the past ten years with electrical machines being the largest amount of growth at 21.3% and fashion being responsible for 7.8% of the imports . There is an increasing trend towards the globalization of the fashion industry with imports from the US, UK and a wide range of other countries . The overall market in Saudi Arabia is growing at a rate of 3% of Gross Domestic Product (GDP) per year . Consumer Opinion and Behavior One of the most reliable methods of determining customer opinion, where directly asking is unavailable, is to look at levels of sales . Consumer decisions are affected by a large range of factors including brands, brand loyalty, retailers, culture, family, friends and product types. A study on the Saudi consumer through surveys found that the more highly educated a consumer was the more importance they placed on newspaper advertisements. The same study found that more highly educated individuals relied on the opinions of friends and family less. This appears to indicate that more educated individuals trust information that they can determine for themselves rather than what is passed on through word of mouth. From the advertisers point of view, this means that their advertisements will have a different effect depending on the class of the individual that is reading them . Buying behavior was also connected to age group, with older consumers trusting other individuals more as sources of information while younger consumers tended to trust advertisements more . This is a general trend in Saudi Arabia, with the younger generation tending to take on more western based traditions such as wearing western clothing under their Abayas and often wearing their Abayas in non-traditional ways that reveal their western clothing underneath . One way of looking at consumer opinion is consumer complaint behavior (CCB). This encompasses any action by an individual that communicates a negative opinion concerning a product or service. The manner of CCB in Saudi Arabia is likely do differ from the Western world due to the comparative lack of consumer protection laws in Saudi Arabia. One example of this is that while Western economies have legal requirements for companies to offer return and exchanged for damaged goods, in Saudi Arabia this behavior is voluntary. While theory suggests that CCB may differ between Saudi Arabia and Western civilization there have been no studies looking at CCB in Saudi Arabia . With strict controls on media within Saudi Arabia, many citizens turn to blogging as a method of expression their opinion. One individual reported on the rush of consumerism that begins a few days before the religious time of Ramadan. During this time many retailers actually increase the prices, with officials blaming consumer brand loyalty for this . Another blogger noted that customer service is often very bad. While Saudi companies talk about customer service and many even claim to have it, this is not the case. The situation arises because customers are unaware of their rights and businesses have little to fear for their behavior as there are little to no regulations in place. The blogger gives an example where a hairdressing assistant dropped a pair of hot curling tongs on a woman’s arm and then continued with her work as if it was not a big deal. In Western society, if the same event had happened, the assistant would likely have been extremely apologetic, the hairdressing service would also probably have been free as a form of compensation . Consumer Confidence Consumer confidence in Saudi Arabia is currently high according to a quarterly online survey. This survey is frequently undertaken and considered a good source of information, surveying more than 8,000 respondents from 14 countries. Of the Saudi respondents 32% said their position had not changed since year, 34% said their financial situation had got better, and the remaining 27% reported that they were in a worse financial situation. Since the previous quarter the Consumer Confidence Index (CCI) had increased by 10.7 points, and the Consumer Expectations Index (CEI) had also increased, by 12.6 points. Both measures indicate that Saudi consumers are finding increasing confidence in the financial status of their kingdom and its future . Similarity to Western Culture One of the strong indications of the Westernisation of the Saudi Arabia culture, especially in regards to fashion is the opening of a DNA store in the city of Riyadh. This is the first DNA store in the Middle East, and the store operates as a ‘museum-like boutique’ offering inspiration and visual stimulation to its customers as well as educational material about many of the brands that it offers . Malls in Saudi Arabia are popular and similar in many ways to Western malls. They have many different brands, and offer a wide range of clothing as well as other items such as shoes, jewellery and electronics . The country had its first fashion show towards the end of April 2009, although it was very different to fashion shows that Western cultures are used to. As the country has a large concern with the privacy and modesty of women, no cameras or photos were allowed, and the event was female only. Despite this there was a mixed reaction from the Saudi audience. It provided a breakthrough for the female fashion industry and designers in Saudi Arabia, and a chance for them to exhibit their products to a receptive audience. The show was considered a huge success, managing to combine the breaking edge concepts of female fashion while still keeping within the guidelines of Saudi community . In many ways the consumer market in Saudi Arabia resembles that of developed countries. International brands are widely present, and many operate in shopping malls that collectively arrange sales in order to best entice the consumer. Many Saudi consumers have buying practices like those present in the western market, there is customer loyalty towards particular brands and stores, and many consumers use credit cards to pay for purchases. The majority of consumers are able to afford to buy the products they want whatever the time or the season, without waiting for sales. Research has found that the fashion market is lucrative in Saudi Arabia as consumers spend large amounts of money on clothing, passing six billion a year, with many residents considering the spending ‘not just an indulgence but a lifestyle’ . The market focuses on seasonal sales, with businesses announcing the reduction in the prices of goods during seasons where customer turnout is low. These sales entice customers to endure large waiting times to obtain items at reduced prices. Large stores are able to sell goods at lower prices than smaller stores, taking advantages of discounts for buying in bulk, and attract consumers not only through lower prices, but through decor and lighting. Many of these stores display permanent signs that announce reductions, but these are often incorrect or irrelevant. The use of the internet by Saudi consumers is increasing each year, and on average the Saudi consumer is becoming more aware and understanding the market better. Like the Western market, Saudis still moderate their spending habits as a result of threats of recession. Inflation is a high concern, with more than 50% of surveyed individuals reporting that inflation was having a direct impact on their lives . Saudi Malls While malls in Saudi Arabia resemble the western style of malls in many ways, but there is also strong evidence of the strict religious and cultural guidelines that are in place. Images on the front of music CDs are often censored, such as the sleeveless dress that Celine Dion wears on the front of one of her albums was replaced with a black shawl. Other differences are also noticeable, male and female Saudis are only able to work together in hospitals, so all sales people on the mall’s mixed floors are male foreign workers. At McDonalds the women must eat in a separate walled off section, while men eat in the open. The country has large segregation between men and women, so much so that paranoia about men hiding in dressing rooms has resulted in the absence of any dressing rooms in malls. The Kingdom Centre in Riyadh is attempting to turn this into a business advantage rather than a logistical hassle. They offer a female only floor , where all staff and security are female and females are free to walk around in western style clothing, checking in their Abayas if they wish . Advertising of Products and Sales Both products and sales are advertised in a wide number of ways, similar to in the western market. Internet advertisements are common, especially with the increasing use of the internet. Blogging has become a popular means of expressing opinion, especially as media is tightly controlled, and women are allowed to express few, if any, opinions. Because of this, flash and static advertising is common through blogging sites, although these are mainly for fashion stores in general and not for sales. Facebook is also used for advertising, for companies in general and as a way of informing the population of sales. Beyond the internet, newspaper advertisements are common, as are storefront advertisements . Middle Eastern regions in general are now the top areas for online and internet based shopping . References Read More