This week I was the guest of King Fahad University in AlKhobar, Saudi Arabia where I addressed a hundred enthusiastic business and marketing students and faculty. I like to keep things pretty general at first meetings like this, so I set myself the objective of introducing a new perspective on a few key marketing topics that would stimulate debate later in their classes. My framework was the role of brand building (which seems to always be considered a bit creative) in the hard-nosed, rational world of business efficiency. This provides loads of opportunity to detour into side topics such as how we make purchase decisions and the way brands exploit our tribal instincts and enables me to introduce a few light-hearted anecdotes.
Actually, the subject of brand-building is very topical across Middle East. There’s a real invasion of Western brands and culture taking place that locals have seemed powerless to resist. Nowhere is this moreso than in Saudi Arabia. I’m not sure if I envy the emerging generation of Saudi marketers. I enjoy a challenge, but the one they are facing might be a challenge too far. They’ll need all the focus and determination they can muster to navigate prejudices, tradition, even the countries laws in some cases.
Every sector of these MENA markets is dominated by international brands. Businesses in Saudi Arabia may all be owned by Saudis, but, if you haven’t been here you should know that its almost impossible to find a business that ultimately isn’t either a Western franchise or is managed by Westerners. It’s understandable of course. In the past, few locals have had the skills or experience to set up and run successful businesses and we are only now witnessing the emergence of a very few Saudis with the combination of skills and experience to take on the top jobs.
The impact this has had on the business landscape is considerable. In shopping malls local brands are so rare that you can easily overlook them and frankly, they mostly serve to illustrate why Western franchises dominate. In the BtoB sector too, plant and machinery, consumables and services are nearly all foreign brands.
Because brands are communities and therefore culture-rich, the proliferation of Western brands represents the introduction of Western culture. The liberal attitude, glitz and glamour of the West has proven too much for the new generation of local consumers to resist and the more Western brands there are, the more popular they become. The impact this has on a closed society with a culture that has remained comparatively undiluted for centuries, is a book in itself, but there is a narrower issue here worthy of study. With a population of under thirty million many of whom are poor migrant workers with no disposable income, Saudi Arabia is a small market and right now it’s looking over-subscribed with consumer brands. In the retail sector for example, most of the potential foreign players have arrived, their franchisees are learning to better exploit their brand equity and its “game on” in the malls … big time!
Its easier for an investor to take on a franchise than build a business around an Arabic brand they have to create from scratch. With the clamour for Western brands, the few remaining local brands are being forced off the field. Even Western franchises, now fighting among themselves for market share, are finding it challenging. Yet, if only for the sake of national pride, Saudi Arabia needs some successful domestic brands. However, its not enough to be successful in their home market, to achieve the volume they need to fund product and brand development any new brands will have to appeal to consumers in other markets and that means markets with more Western tastes. Therein lies the challenge.
There’s no escaping the impact a nation’s culture has on its brands. Think of the associations with British, German, Scandinavian and Americal ptroducts, while China and India are struggling to shake off the stigma their national identity has on the products they make. Put a set of adjectives together to describe Saudi culture and you end up with a lot of words like “conservative, traditional, bland, unexciting, primitive”. Hardly the associations a new bramnd needs. Even Saudi consumers have fallen out of love with “Made in Saudi Arabia”. Their neighbours are even less impressed, so what chance would you have of selling a Saudi brand to people to Western consumers? However, if Saudi brands are to succeed even in their home market, they have to be able to play the international brands at their own game and win back some overseas territory. That’s the challenge the students I was talking to will face when they graduate in the coming weeks and months.
I was impressed by the students I met at King Fahad University. I talked to them about assessing their resources and being realistic about the limitations placed upon them as they plan brand strategies, but their list of constraints was probably longer and more daunting than those facing their counterparts in other markets, so they’ll need all the smarts they can muster. There is reason for optimism. Attitudes are slowly changing and I’m sure someone will find a way to build a Saudi brand that will compete with the West. I may already have met him at King Fahad University!
December 6, 2013