Marketing communication strategies in Middle Eastern dairy industries

Marketing Communication of Dairy Sector in Saudi Arabia

Marketing communication refers to the methods used by a company to create awareness about a product and its uses. The communication includes promotion, price, place, product and packages. It means company must correctly price the product, place it at the right outlets for easy access and also design the package that would successful communicate the usefulness of the product.

Saudi Arabia's Dairy industry and its marketing communication:

Saudi Arabia is no longer the wealthy nation that had no capitalistic goals. With money comes education and with education, Saudi Arabia has turned into a nation that is desperately trying to become food-independent. SA is investing more in food industry to meet the burgeoning domestic demand. The Dairy sector in Saudi Arabia is thus growing at a good rate and the country is over producing with good capacity for export as well.

The dairy market is growing at 4% every year and over the past one year; prices of milk have gone down due to increasing competition. In the Saudi kingdom, there are currently 26 major names in dairy sector bit almost 60% of the market is dominated by just two names i.e. Almarai and Alsafi. Almarai is the biggest player and is totally dominated by Saudi shareholders since the company went public. Alsafi is owned by Danone of France and also plays a major role in the dairy market. Nadec and Nada are the other two well-known names in the dairy industry.

Dairy production in Saudi Arabia is currently experience overcapacity, thanks to huge investments totaling around $1 billion and for this reason; Saudi Arabia is looking to increasing dairy exports in the Middle Eastern region. Al Safi has the biggest dairy farm in the world. This farm has the capacity to produce 125 million liters of milk every year. With two very modern plants in operation, the country is able to export a significant portion of its production to GCC countries.

While Dairy industry is growing rapidly and the two major players are facing the challenge of meeting ever-increasing demand, there are several challenges that they still need to overcome in their effort to become at least milk-independent. To meet these challenges, they are investing heavily into their marketing communication mix so enough profits can be generated to keep the production going. The ever-changing highly unpredictable and often very hot climate translates into excessive need for water for the cattle. With an efficient production system, Almarai and Alsafi plants have been able to not only meet the demand for fresh milk but have also introduced many new fresh perishable products which were hitherto being imported from other countries. The dairy sector is playing a critical role in leading the country to independence and self-reliance.

Nothing is more important in success than a good marketing and distribution system. Marketing communication mix such as price, product, place and packaging play a huge role in competing with the rivals and Saudi firms have to be exceptionally good in this regard since they had stiff competition from very well established foreign firms.

From 1950 to 1970, fresh cow milk in packages was unheard of in Saudi Arabia. People would resort to fresh milk in unpasteurized form available from local milkmen but there was no concept of buying them in the supermarkets. The supermarkets did not have to deal with refrigeration issues as whole milk came in powder form from foreign firms. However with the appearance of Almarai in 1970s, things changed drastically and fresh cow milk along with laban became very popular products in Saudi Arabia.

For deeper market penetration, effective marketing initiative was required and that came in the form of wide media advertising campaigns along with good packaging designs that changed the perception and moved people to purchase fresh products. The campaigns were so successful that they can be compared to any high profile brand campaign internationally. First of all the word Almarai meant green pastures and this was presented in visually aesthetic form on both advertisements as well as on the package designs. It was very appealing and conveyed the idea of fresh milk effectively and the sales of fresh packaged milk rose substantially in Saudi Arabia with Almarai seeing exponential growth as "annual sales rose to 28 million liters in that year, growing to 65 million liters in 1986, to 140 million liters in 1991/1992, to 160 million in 1993 and 190 million in 1996."