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Market Study and Action Plan for Saudi & Qatar for Furniture
Developing a Market Study & Action Plan for KSA and Qatar for Jordan
Furniture Exporter Manufacturing Association (JFEMA).
“The European Union is made up of 27 Member States who have decided to gradually link together their know-how, resources and
destinies. Together, during a period of enlargement of 50 years, they have built a zone of stability, democracy and sustainable
development whilst maintaining cultural diversity, tolerance and individual freedoms. The European Union is committed to sharing its
achievements and its values with countries and peoples beyond its borders”
August-2013
Table of Contents Introduction ..................................................................................................................................... 2
1. Current Market Position .............................................................................................................. 3
1.1 Jordan Furniture Market Analysis ......................................................................................... 3
1.2 Product mix ........................................................................................................................... 3
1.3.1 Saudi Arabia Market ....................................................................................................... 4
1.3.2 Qatari Market ................................................................................................................. 7
2. Market Trends ........................................................................................................................... 10
2.1 Saudi Arabia Market ............................................................................................................ 10
2.2 Qatari Market ...................................................................................................................... 12
3. Export Market Auditing ............................................................................................................. 13
3.1 SWOT Analysis ..................................................................................................................... 13
3.2 Target Market Auditing ....................................................................................................... 14
3.3 Competitors Analysis ........................................................................................................... 17
4 PESTEL Analysis ........................................................................................................................... 20
5. Market Entry Strategy ............................................................................................................... 22
5.1 Markets and Segments ........................................................................................................ 22
5.2 Positioning and Branding Strategy ...................................................................................... 25
5.3 Product Strategy .................................................................................................................. 26
5.4 Pricing Strategy .................................................................................................................... 27
5.5 Distribution Strategy ........................................................................................................... 27
Recommendations: ....................................................................................................................... 28
Annex List of Most Important Construction Companies in Saudi Arabia ...................................... 33
Introduction
The furniture industry in both Saudi Arabia and Qatar has come up as one of the vibrant
sectors over the past few years. Both countries and despite the 2008 economic crisis,
witnessed remarkable growth in this sector, either in retail or B2B. With the entry of a
number of real states developers and increasing demand for residential property, the
housing industry has witnessed huge growth. Young population base, government
funding for huge projects, booming economy, and world cup 2022 in Qatar, all have
provided strong base to furniture industry for developing new horizons.
The evolution of Furniture manufacturing in Jordan over the past few years along with
the existence large-scale factory with high capacity and up to date machinery has
enabled Jordan to penetrate Saudi and Qatari markets and positioned the Jordanian
Furniture Manufacturer with its high quality, short lead time and high level of
communication. This study aims to identify opportunities, setting marketing entry
strategies as well as export marketing action plans that will guide JFEMA in its future
business activities to target selected markets.
Jordan Furniture Exporters & Manufacturers Association (JFEMA) is a non-profit
association established in 2004 with the core purpose of being the sole representative
of the Jordanian furniture exporters and manufacturers on the local, regional and
international levels through delivering a wide spectrum of needed services including:
Sector promotion and marketing, export readiness consultation, networking, work force
training, and maintaining information systems.
Our study will consider the following product group representing the product groups
mostly manufactured and exported by Jordan
- HS-9403 : Other furniture and parts thereof.
1. Current Market Position
1.1 Jordan Furniture Market Analysis
Despite the global financial crisis, Saudi Arabia and Qatar are one of main targeted
markets for Furniture Producers in the globe. Jordan as rest of the Asian competitors in
this industry needs to maintain its export growth opportunities:
- Cost competitiveness
- Export diversification investments
- International competition
- Access to trade facilitation services.
Jordan is part of a large market network where the use of information technology in
business helps Jordanian exporters expand market share in the design furniture market
and build competitive positions in the global value chain.
According to the Jordan Furniture Exporters & Manufacturers Association (JFEMA),
there are around 3000-4000 furniture makers in Jordan. It is the experience of the
Jordan Exporters Association (JEA) that successful Jordanian furniture exporters are
known for supplying quality furniture and for maintaining professional supply chain
management systems. In addition, those who advanced in exporting furniture from
Jordan have implemented vigilant marketing strategies, have exhibited readiness to
conform with international labeling and certification standards, and have invested in the
technology to perform and demonstrate content analysis as much as needed by the
buyers. The most noticeable factor of export success in Jordan‘s furniture industry has
been the outgrowth of the interior design industry and increasing demand for custom
furniture products.
1.2 Product mix
Product
JFEMA members have a strong presence in the Jordanian market, the existing
companies are satisfying the need of the local market when it comes to furniture
demand in different aspects. They manufacture and sell:
Kitchens
Office Furniture
Bedroom Furniture
School Furniture
Lab Furniture
Doors (FR & NFR doors)
Chairs
Garden Furniture
Hotel Furniture
The local manufacturers focus on the local market as well as the gulf area. Many of
them have succeeded in penetrating Gulf markets and been awarded huge projects to
supply and install as well.
Place
Members in JFEMA have their own showrooms in Jordanian market where they exhibit
their product lines. Some of them has followed the same strategy and established
showrooms in export markets by alliancing with companies within the same industry
which enabled them to support their business services like installation, after sales
service and ongoing maintenance.
Price
Since 95% of raw materials imported for manufacturing is exempted from
custom duties, furniture manufacturer are able to compete when it comes to
total cost of raw materials. They have wide experience and exposure to sources
of raw materials around the world. The profit margin as well as overheads will
differ from one manufacturer to another, this creates competition between
Jordanian manufactures as well as manufacturers in targeted countries. 1.3
Furniture Market Potential
1.3.1 Saudi Arabia Market
The furniture industry in Saudi Arabia is a fast growing, highly untapped industry. With
the entry of a number of real estate developers and increasing demand for residential
property, the housing industry has witnessed tremendous growth in the past years. This
has infused growth in the household furniture market growth. Booming economy,
government support and young population base coupled with other secondary factors
have created a strong platform for the furniture industry to grow to new horizons.
Currently, the Saudi Arabian furniture industry is witnessing a huge demand-supply gap
due to increasing demand over local industry production and supply. Domestic
manufacturers are facing shortage of furniture raw material and parts and hence
imports become a need. However, the dependence on imports will reduce in near
future as many international furniture giants are establishing their roots in Saudi in
addition to many local companies are expanding their business and facilities to
accommodate the increasing need and demand.
Construction activities in Saudi Arabia have grown remarkably, the value of projects
planned / announced for 2010-2015 is roughly SR 1,575 Billion. This growth of
construction industry will further enhance the Saudi furniture market.
Based on Credit Suisse study for Emerging Consumer Survey 2012, the Saudi consumer
remains one of the most optimistic, expecting to see improvement in the state of their
personal finances. During 2011, there was significant increase in public sector incomes,
where minimum wage for government employees almost quadrupled. 25% of the study
respondents see excellent time to buy property or cars. The stabilizing effect from Saudi
government policy and robust oil revenues have provided government spending with
full power to support public sector income and boost spending more generally. In 2013,
a government pledge to spend USD 130 billion on housing and job creation.
Table 1 :List of Furniture imported by Saudi Arabia
Code Product label Imported
value in
2008
Imported
value in
2009
Imported
value in
2010
Imported
value in
2011
Imported
value in
2012
'940360 Furniture, wooden 6,150 11,122 142,003 199,031 359,958
'940350 Bedroom furniture,
wooden
1,060 73,252 168,266 220,413 267,338
'940320 Furniture, metal 694 490 48,495 58,981 261,366
'940390 Furniture parts 201 129 22,412 26,035 181,639
'940330 Office furniture,
wooden
- 84 103,823 141,477 98,627
'940389 Furniture of cane, osier
or similar materials
(excl. of bamboo, rattan
- - 1,809 2,272 80,602
'940310 Office furniture, metal - - 54,980 59,409 51,245
'940370 Furniture, plastic - - 14,924 17,734 30,313
'940340 Kitchen furniture,
wooden
2,259 1,188 41,974 51,078 24,904
'940381 Furniture of bamboo or
rattan (excl. seats and
medical, surgical, dent
- - 620 515 886
'940380 Furniture of materials
includgcane, osier,
bamboo similar
materials
- - - - 11
Unit : US Dollar thousand
Sources : ITC calculations based on UN COMTRADE statistics.
Figure 1 : List of supplying markets for Furniture imported by Saudi Arabia
1.3.2 Qatari Market
As a result of the government's investment and the feel-good factor leading up to
hosting the 2022 FIFA World Cup, Qatar's economy is expected to gain further
momentum. Handing of power from Sheik Hamad to Tamim, will have its own effect on
country's economy, Tamim is new mood that is making a shift in his father abroad
policy. Rebalancing, discipline and the need to centralize are the main focuses of the
new Emir.
The international Monetary Fund (IMF) forecasts an expansion in Qatar's GDP up to
18%, and the state is committed to a huge investment program that will see tens of
billions of dollars flow into the economy through new projects, most of which are aimed
at improving the nation's infrastructure, diversifying the economic base and boosting
employment.
Qatar has the highest in the world per capita GDP with more than $86,000 a year, a
figure that is foreseen to grow as the economy continues to expand. A survey conducted
by MasterCard Worldwide for Index of Consumer Confidence issued in December 2012,
found out that Qatari consumers were among the most positive in the region. Qatar was
ranked second on the index for the first half of 2011, behind only Saudi Arabia, while its
overall rating on the index of 83.6 was well above the regional average of 71.6.
The huge jump in demand is feeding growth in shopping supply, with a steep rise in
retail space coming onto the market over 2010. According to a report released by
property consultancy Colliers International at the end of 2011, the total gross leasable
(GLA) available to the retail sector in Doha topped 630,000 SQM, up by some 30% since
2009.
Qatar's retail, hospitality and tourism sectors have given a small foretaste of what to
expect in 2022 during the Asian Cup held lately in Qatar. Though there will be doubts for
some deflation for the sector following the World Cup, but it would not be that
extreme, as the expected expansion of the domestic economy and population growth
should soak up the increased retail capacity long after the final whistle in 2022.
Table 2: List of Furniture imported by Qatar
Code Product label Imported
value in
2009
Imported
value in
2010
Imported
value in
2011
Imported
value in
2012
'940360 Furniture, wooden, 47,770 68,257 133,760 103,075
'940320 Furniture, metal, 23,723 25,946 30,134 33,972
'940350 Bedroom furniture,
wooden,
27,575 33,804 30,719 33,776
'940330 Office furniture,
wooden,
24,710 27,470 28,784 24,803
'940390 Furniture parts 6,449 12,121 28,769 22,029
'940310 Office furniture,
metal,
73,933 58,871 9,275 20,495
'940389 Furniture of cane,
osier or similar
materials (excl. of
bamboo, rattan
- - 11,403 13,686
'940340 Kitchen furniture,
wooden,
27,153 26,516 9,131 9,963
'940370 Furniture, plastic, 17,139 12,701 2,354 2,992
'940381 Furniture of bamboo
or rattan (excl. seats
and medical, surgical,
dent
- - 526 335
'940380 Furniture of
othmaterials,
includgcane, osier,
bamboo/similar
materials
9,111 3,260 107
Unit: US Dollar thousand
Sources: ITC calculations based on UN COMTRADE statistics.
2. Market Trends
2.1 Saudi Arabia Market
Saudi Arabia is one of the largest markets in the Middle East and welcomes suppliers of
high standards. Wealth is driving the kingdom towards more changes. Families are
investing their existing homes and demand new or replacement furniture for home
extension and redecorations. Due to culture issues, home is considered the place where
many spend most of their time, socialize and even work from.
Taste and needs in furniture have changed to mutli-functional and space-efficient items,
including furniture for home entertainment, relaxation, socialization and work. Demand
for upholstered seating and other furniture has increased. Eco-design furniture is
becoming a trend now, where it is becoming a main requirement in B2B project
submittals and requirements.
Demand for furniture is influenced by the media with a large number of TV programs
and magazines dedicated to home makeovers and design. Technology is playing a major
role here. Where internet is becoming a more relevant marketing and selling tool for
furniture. An important development is the introduction of websites that allow
consumers to build up their own interior designs, swap ideas and see how a particular
item will look like their own home.
The youth taste is towards finer lifestyle and comfort, due to their travels around the
world and exposure to other cultures. The upper and upper middle class families buy
American furniture from major local trading establishment including Habitat, American
Furniture and Elegant Home. Middle class usually buys Far Eastern furniture and
occasionally locally made purchase from souks and informal markets.
There are number of other retailers who carry a large variety of furniture from global
suppliers. Key retailers include Al-Mutlaq, Qutub & Sagaff, Al Mira and Abdellatif
Furniture.
Most of the large Western Brands already exist in SA, like Rowe, Blackstone, Henerdon,
Lane and Bernhardt. Significant opportunity exists for smaller firms, especially those
with quality product targeting the upper middle and high end designed sectors.
To succeed as exporter to Saudi Market products and marketing efforts should focus on
helping wholesale buyers reach targets and achieve policies. Demand is always for great
quality products at low prices for customers, while maintaining the ethical standards
they require. Product testing, certification, and labelling are important aspects, and
more important is the exporter's invoicing and order management system.
2.2 Qatari Market
Qatar has many specialist furniture stores, but only a few which cater to Western tastes,
so Qatar's Western expat community often imports goods from abroad or sticks to very
specific ranges in the country's biggest furniture retailers, Homes R Us and Home
Centre.
Qataris in general love elaborate, extravagantly designed furniture and there are many
stores which cater to their tastes. There are no online shopping options for consumers
looking to buy furniture.
3. Export Market Auditing
3.1 SWOT Analysis
Jordanian Manufacturer auditing
Strengths
High Quality, durable, reliable product
Qualified designers & architects
Flexible manufacturing capabilities
State of art technologies & modern machinery
Most companies have ISO9000 and other quality certificates
Clustering and unified activities between stakeholders to have collaborative
activities
Short Lead time
High and easiness level of communication
Joint ventures and partnerships with international companies
Good reputation and good projects lists
Weaknesses
Absence of specialized institutes in professional training
Deficiency in local market protection
Lack of knowledge in required submittals for awarded projects
Well-structured marketing plan for furniture sector
Packaging and labelling to meet high standards.
High quality raw materials available in local market to enable quicker delivery.
Inefficient product distribution
Presence of JFEMA members in targeted markets is project driven
Disability to develop highly qualified future managers specialized in this field.
High distribution cost
Lack of market research and competitors watch
High dependency on foreign suppliers
High raw materials cost
3.2 Target Market Auditing
Jordanian Market
Opportunities Threats
Proximity to both targeted markets Depletion of wood supplies in the
world
Stable Environment compared to
other countries in the region
Financial crisis reduced the cash
flow
Increased consumers' awareness
regarding furniture and its brands.
The effect of fuel fluctuation price
on shipping and production cost
Tendency and ability to imitate the
consumption behaviour of the
upper class
High competition in terms of
individual sales
Lack proper technical training
programs and facilities
Saudi Market
Opportunities Threats
Application of GCC common
external tariff of 5% for imported
goods, while Jordanian imports are
exempted Pan Arab agreement
SA gives priority in government
purchasing program to GCC
products. They receive up to 10%
price preference over non GCC
products
Alliances and distributors are of
Jordanian nationality familiar with
Jordanian manufacturing brands.
Law of commercial disputes
settlement
Large population and growing rate Trade barriers – ziad report #31
Overall string economic
development
Competitive business environment
is expected to make Saudi Arabia
appealing to investors once risk
appetite returns to global markets
Qatari Market
Opportunities Threats
Population is young, the proportion
of the population under 15 years in
GCC will account for 24% in 2020.
(The Economist Intelligence Unit)
Fluctuating Jordan-Qatar relations
Increase in infrastructure and real
estate development.
Change in Qatar Leaders and new
country strategy.
Infrastructure development,
construction activity and real estate
development and tourism are all in
rise.
Manufacturers coming from UAE
and mainly moving from Dubai
after 2008 financial crisis.
FIFA World Cup in 2022 is
prompting heavy government
spending in infrastructure.
Most of the decision makers in
construction sector are of
Jordanian Origins- Local Jordanian
manufacturers are well known to
them
3.3 Competitors Analysis
Both the Saudi and Qatari Markets are import oriented and local production is only able
to meet a fraction of the domestic demand. Some of the main countries competing in
these two markets include China, Italy, Egypt, USA and the South-East Asian like
Malaysia.
Available Data for Saudi Market shows that the inefficient wood product industry has
been the major growth inhibitor for furniture industry in the Kingdom. The supply of
materials including plywood, processes timber items, hardwood lumber, laminated
veneer, etc. has been very limited and the country is highly dependent on semi-finished
and finished furniture products imports from other countries and that too on higher
prices.
Figure 2: Number of Operating Industrial Units and employees in Wood Product
Industry
200720082009
53 52 53
4298 3932 4052
Number of Operating Industrial Units and Emlpoyees in Wood Product Industry (2007 - 2009)
Industrial Units
Employees
Figure 3: Total Finance of Wood Product Industry
Despite a dull performance of wood product industry, the furniture sector has shown
phenomenal positive developments in recent years. The sector also showed notable
growth in terms of employment generation. Total finance in furniture product industry
has grown substantially in the last decade. It was around SAR 4.8 Billion (US$ 1.25
Billion) in 2000, which reached to SAR 6.4 Billion (US$ 1.66 Billion) in 2009.
Figure 4: Number of Operating Industrial Units and employees in Furniture Product
Industry
200720082009
784 784
843
Total Finance of Wood Product Industry (Million SAR), 2007 - 2009
200720082009
290 293 312
26,264 27,394 29,567
Number of Operating Industrial Units and Emlpoyees in Furniture Product Industry (2007 - 2009)
Industrial Units
Employees
Figure 5: Total Finance of Furniture Product Industry
In Saudi Arabia, high demand of office furniture is raising the competition among
producers, especially after polarization of the local factories to high –tech, high
performance-oriented, and provision of operational efficiency that inevitably facilitated
the transfer of advanced technology and high performance. It is anticipated that in the
coming years, improved operational efficiency will function as catalyst for the reduction
of office furniture pries in the kingdom and bulk purchases will benefit the most from
these proceedings.
200720082009
5.2 5.2
6.4
Total Finance of Furniture Product Industry (Billion SAR), 2007 - 2009
4 PESTEL Analysis
In this analysis the main political, economic, social, and technological factors that affect
the furniture industry in general and Jordan particularly are identified. The main
objective of this analysis is to assess the main impact of the external factors on the
business and to come up with actions to exploit the points with positive effect and avoid
the points with negative effect on Jordan.
Political Environment
- Stable environment in Jordan compared to other countries in the region
- Benefit from the migration from other countries due to regional conflicts
- International political support to Jordan in the form of funding, projects and
agreements
- Good governmental relationship with targeted countries
Economic Environment
- Inflation rate reflects on expenses.
- Fluctuating currency exchange rate for Euro vs Dollar
- Depletion of wood supplies
- Financial crisis and region instability reduce the cash flow.
- The effect of oil price fluctuation and expected increase in electricity pricing
on shipping and production cost
- The industry sector presented about 10%of the Jordanian GDP in 2008
Social Environment
- Increased consumers' awareness regarding furniture and brands of furniture
- Tendency to imitate the consumption behaviour of the upper class.
Technological, Environmental & Legal Environment
- Availability of automated and semi-automated machinery than can affect
production positively.
- Availability of advanced designing and drafting production software.
- Rapid development of finishing materials & accessories.
- Rapid improvement cycles of information technology (means of
communication)
- Limited number of local experts in this type of industry
- Absence of regulations or code of ethics to organize the furniture sector.
- Increase in computer literacy among Jordanian companies, as it became a
necessity for all operating companies in the Jordanian market to have
comprehensive and user friendly websites
- Signing multi-trade agreements including accession to WTO, Arab free trade,
Euro med partnership, as well as, having economic industrial zones and Arab
special economic zone.
5. Market Entry Strategy
5.1 Markets and Segments
Market segments for both markets currently can be segregated to:
- Household Furniture
- Office Furniture
- Hotels
- Retail
- Residential
Household Furniture
In Saudi Arabia, the construction boom infused furniture demand and the industry
achieved one of the highest growth among all the economically active industries. The
future furniture demand will largely depend on domestic manufacturer's capacity to
fulfil the premium segment household furniture requirements. The fast growing
population, rising wealth, western furniture look and feel impacts, rising spending on
furniture products, and decreasing costs will continue to force furniture demand in the
coming years.
Office Furniture
Office Furniture segment has accelerated its growth pace in recent years with both
countries' focus to diversify its GDP in non-oil sectors. An increasing focus on developing
education infrastructure has started paying rewards and the countries are receiving
large number of skilled professionals domestically. In addition, relaxed investment
regulations attracted large number of multinationals to enter the market in various
sectors like IT, Energy, Education, Manufacturing, etc.
Hotels
The Saudi hotel industry has emerged as one of the flexible pillars of economic
development. Despite challenges of oversupply in the short to medium term, investors
in the hotel industry are optimistic about future prospects with a paradigm shift from
development to investment-led market. The kingdom attracts millions of visitors
through religious tourism in Makkah and Madinah, which is one of the prime
contributes to the country's economic growth. There were around 7.7 Million visitors in
2010, which increased demand for construction of hotels and allied sectors.
Majority of international hotel chains including Hyatt, Raffles, Accor, Rotana, etc have
started to expand its existing number of hotel chains to leading market players to attract
tourists as much as possible.
Figure : Hotel Spending on Interior Design Contracting and Fit-out Industry
Retail
Known to remain the most preferred sector for diversification and sustainable economic
development by most nations in GCC, the retail sector is driven by a healthy population
growth, increased per capita income, growing standard of living, improving service
sector, and an encouraging travel and tourism sector. Home to numerous state of the
art modern plush hypermarkets and malls, the GCC countries encourages retail trade by
providing highly developed free trade zones, various shopping festivals and events
relaxed tax provisions.
This rapid growth in the retail sector is due to the fact that the retailers are increasingly
adopting advanced and attractive IDC and fit-out solutions for both malls and local
shops.
20102011e
40.7
220.5
Hotel spending on IDC & Fit-outs (Million US$), 2010 & 2011e
Figure : Retail sector Spending on Interior Design Contracting and Fit-out Industry
20102011e
34
343.4
Retail sector spending on IDC & Fit-outs (Million US$), 2010 & 2011e
5.2 Positioning and Branding Strategy
JFEMA members should position themselves in both retail and B2B at the medium to
medium high end of the market. Jordanian products are perceived of high quality with
fair price, which means that staying away from Chinese red ocean low quality products.
Most of the decision makers in related sectors like construction, design consultancy
firms and same trade partners in both Saudi Arabia and Qatar are of Jordanian origins,
accordingly company name and origin will ring a bell and tackle the positioning in target
customer. Jordanian Furniture Manufacturer should be branded as reliable and
innovative partner for consistent high quality products.
Marketing Jordanian Furniture in these 2 markets should be through finding a suitable
trade partner. Potential trade partners can be:
- Companies with same industry where the Jordanian product can complement its
product range.
- Direct relationship with main contractors – especially in Saudi Arabia.
- Marketing offices in Qatar and Saudi Arabia well experienced and knowledgeable
with Jordanian Manufacturer capabilities.
Each member should hold an identification plan to define who matches its own profile
and product range as well as communication level.
Also Sales promotion can be made by trade missions, trade fairs, websites and free
publicity and some advertising in trade magazines.
Participation in national and international furniture trade fairs can be useful sales
promotion tool. It needs comprehensive and detailed examination with regards to:
- Selection of a suitable trade fair.
- Participation
- Follow-up
5.3 Product Strategy
Each JFEMA member and based on its own competence should be able to develop its
product range in accordance with the end customer needs. They should be aware if
their standard range product can appeal to these 2 targeted markets or does it need
adaptation. By all means, its own competence and strength should be the driving
factors.
Features / benefits analysis
JFEMA members should acquire needed tests and certifications according to latest
trends and requirements of the global market. Such as Fire Rated Doors Certification
according to BS standards and American Standards, as well as ISO 9001, LEED.
Unique selling proposition
Each member should be able to define one unique property for each P in the market mix
(Product, Price, Promotion, Place) for its product that is considered an incentive for the
customer to buy.
Product Development
JFEMA Members need to know very well that their products will be directly acceptable
to the market only for exceptional cases and for certain period of time. Therefore,
product development as well as process management development should be on-going
process.
Product Packaging
Packaging is one the features that should be highly considered, it should be practical,
convenient and well defined-especially when furniture for projects is been delivered.
5.4 Pricing Strategy
Price needs continuous extended market research that will provide insight for retail and
wholesale prices, appropriate margins to choose and competitor prices. Main items to
consider upon building price; demand, competition, cost, image, delivery, installation
(included or not included), segment. Also counter act from competitors should be
considered.
Four main types of pricing strategy can be considered upon building the price:
Cost –plus pricing
In cost-plus pricing, cost of product is added up to required profit, used in opportunity
market where selling is more focused on than long term sustainability.
Competitive Pricing
Market price is built up by benchmarking with competitors' prices and differentiated by
its marketing mix.
Penetration Pricing
Low margins are added here for the sake of to sell at the lowest price of all competitors.
Focus is on entry and high volume. It is workable in case of high volume projects. High
quality should be maintained since low price is always related to low –quality image
which may affect market position later.
Value Pricing
Where no competition exists or when the product is perceived as unique or high end
product. Volume is small, but margin is high. This is workable in case of retail business
for high end furniture such as Executive Office Furniture or Kitchens supplied to palaces
and large villas.
5.5 Distribution Strategy
"Just across the border" is a fact that is reflected on the geographic location of Jordan
along with Saudi Arabia and Qatar. Recommendations go here toward indirect
distribution to these two markets, finding the right business partner in this case will
elude JFEMA members the large investment of cash and efforts for in-market stocks, in-
market promotion and in-market sales.
Recommendations:
Recommendations to enter the two Targeted Markets
Matching products and the product range (Adding Unique Selling Proposition)
In order to differentiate from others competitors, it will be very important that the
furniture item will be differentiated and be unique by meeting the taste and needs- that
are more familiar to Jordanian than other world competitors, its special materials,
design and skills in craftsmanship or in finish .
Packaging
Transportation to Saudi Arabia and Qatar is usually done through land freight by Trucks.
Special transport packaging and well defined labeling is necessary to ensure the safe
arrival of goods to its destination.
Goods are usually cleared on the Saudi Borders regardless of the GCC imported country,
so double handling is expected for exported goods.
Building up a relationship with suitable trade partner
Each company in Jordan with Furniture sector should be able to identify who matches
its own profile and product range and accordingly who are the best for building up a
business relationship.
JFEMA – Marketing Office for its members
Establish within JFEMA or through some external parties marketing department for
JFEMA members. Its responsibilities should be to well define the Strength and
Weaknesses of each company and guide external customers to best fit manufacturer in
Jordanian market. Through this, projects will not be lost to others and each will have its
own share of the cake.
Saudi Arabia Market
- The Saudi market should be constantly reviewed for product adaptation in
addition to process management.
- Manufacturer should ensure that their supplies are as per specifications, at the
specified time and place.
- Contacts with Saudi Importer should be direct and regular. Complete product
line rather than single products is much better to introduce to benefit from great
demand and achieve economies of scale.
- Exporters are highly recommended to check with Saudi Arabian Standards
Organization on precise implementation of Saudi Arabian Standards related to
their exported products to Kingdom.
For future planning:
1. Give the opportunity for the members to share their opinions and suggestions
about the association.
2. Work with the cooperation of the executive manager to raise the efficiency of
the association to meet the needs of the sector, by determining the services that
the association should provide the members with.
3. To assure the importance of commitment and participation of the members in
the association.
Methodology:
Prepare a methodology to facilitate in addition to supporting exercises:
1. The services that the association should provide concerning the following:
a. Human Resources
b. Customs
c. Supply and transportation
d. Increasing the capacity
e. Dealing with competitors
2. What are the challenges that face the furniture sector?
3. What are the measures that should be done by local companies to overcome
these challenges?
The aim is to assist the executive manager in developing a work plan suitable for the
needs of JFEMA members.
The Implementation
1. Holding primary discussions with concerned persons in the furniture sector to
underline the challenges that face this sector and more importantly is:
a. Competitive pressures from China, Malaysia, Indonesia and turkey.
b. The members do not know each other; additionally they are unaware of their
abilities.
c. The possibility of the cooperation between members stems out from the
knowledge of every member’s capabilities.
2. Secondary discussions about the questions that are raised in the meeting
(Facilitation)
It was clear that the members are from four sub-sectors related to the furniture
sector:
a. Kitchens
b. Office furniture
c. Doors and furniture
d. Wood and Carpets
3. It’s clear also that the requirements of these sub-sectors may differ and JFEMA
should take that in to consideration.
4. And the request from JFEMA to these sub-sectors to be separated in to different
groups.
5. Then these groups are asked to ask questions and share them with the other
groups for discussion and clarification.
Proposed Approach:
The following actions are to be taken into consideration:
Wood Doors Kitchens Office Furniture JFEMA Objectives
Improving the
workers skills by
holding training
courses
specialized in
Selling &
Marketing
To assist in
providing skilled
work force.
Looking forward
to putting an
agreement with
the Gov. to
provide this
work force until
local skilled work
force is available
Representing the
sector locally and
internationally
Providing the
sector’s need from
workers: rapid
provision of skilled
labour- develop
the local skills
through training
courses to meet
the needs of the
members and
sector.
The assistance in
providing skilled
Organizing
lectures on wood
Increasing
exports of the
Exempt the inputs
& raw materials
work force to the
sector by
simplifying the
procedures of
importing these
workers.
exports &
furniture trade
plus training
courses by
experts on new
machinery to
raise the level of
local industries
sector from customs fees
Publishing on
regular basis all
the activities of
each company
and general
Exhibitions.
Marketing the
sector&
promoting
exports
Give the priority to
local products in
Gov. bids
Assisting the
Gov. in
discussions
concerning
Bilateral trade
agreements
Decrease the
income tax on
exports
JFEMA Services
Improve the
capabilities of
the sector
through lectures
& seminars
Facilitate the
import of skilled
work force
Solve the problems
that face this
sector
Define new
markets through
participation in
regional
Exhibitions.
Cancelling all
customs fees on
raw material.
To Be the official
representative of
this sector.
Wood Doors Kitchens Office furniture JFEMA Objectives
Providing
information
about new
construction
projects.
Providing
information on
exports.
Improving exports
through complete
knowledge of the
exporting
opportunities&
export markets
Facilitate the
import of skilled
work force.
To Determine &
Participate in
Exhibitions
suitable for
Jordanian
products.
Offering support
& grants to
participate in
exhibitions
(carpets).
Provide data base
for the investors in
the construction
projects about the
local capabilities
Facilitate building
relationships
among the
members
Define the
challenges that
face the sector,
and put forward
strategies to solve
and face them.
Annex
List of Most Important Construction Companies in Saudi Arabia
During the last few years, Saudi Arabia construction market has shown tremendous growth. National companies are constructing the new kingdom, from roads and railways to the hundreds of thousands of new homes and complete industrial and medical cities.
The list is dominated by family-run firms like the Saudi Binladin Group and Saudi Oger, both of which have held their place for decades and still secure the largest projects. However, the last few years have also seen a creation of fast-growing local firms along with joint ventures between KSA contractors and international companies.
Business culture in Saudi Arabia in construction sector is preferable towards direct contact between the supplier and contractor. Contractors have the last word to say. The list includes top 10 companies in construction in Saudi Arabia:
1- Saudi Bin Ladin Group
2- Al Rashid Trading & Contracting Co. (RTCC)
3- Al Ayuni Investment & Contracting Co.
4- Al Harbi Trading & Contracting Co. Ltd.
5- Arabian Bemco Contracting Co.
6- Al Shoula Group
7- Almabani General Contractors
8- Al Fouzan Trading & General Construction Company
9- ABV Rock Group
10- El Seif Engineering & Contacting
“This publication has been with the assistance of the European Union & Jordan
Enterprise Development Corporation. The contents of this publication are the sole
responsibility of JFEMA and can in no way be taken to reflect the views of the
European Union & Jordan Enterprise Development Corporation.”