There used to be a time where the notion of going global for a company seemed to be glamorous or outlandish especially, small companies. It is advantageous as well as critical for firms to expand further internationally. There are many factors to observe which indicate the importance of internationalization for companies. Due to advancements in technology and communication, companies generate a lot of global exposure if they become successful locally at times. In these situations, expanding globally becomes an easy task as potential markets can be searched and analyzed locally. Another factors is that foreign companies already have a profound presence in any area of the world. Competing on a global scale and competing with foreign companies helps establish a global presence and a market share in other countries. (Johnson, 2012) Once a global reach has been established, innovations can be proliferated globally. Small business fear to venture at a global scale due to the notion that a regional brand might not appeal to potential customers in other countries. But the point to consider is that if marketing is attempted, there is a very good chance that the brand will start getting recognized in other countries.
Internationalization can be experienced widely in UAE where almost every international fashion brand has an outlet and engineers from different parts of the world contribute to the development of a world class infrastructure. UAE has been known as a trading hub since decades and it is a part of the vision of UAE to be recognized as an export based economy at a global scale which is why UAE has been focusing on internationalization. Internationalization brings people from different cultures together in UAE providing UAE with culture from all over the world.
This paper focuses on Damas which is a leading jewelry brand in UAE. It has expanded to its neighboring countries like Qatar, Kuwait, Saudi Arabia and also India as a part of Internationalization. The product which is to be exported is Farfasha which is a line of 18K gold jewelry. The country which is being targeted for penetration is United States of America. (Damas, 2015)
The mission statement of Damas is to engage and retain professionals who will sustain the heritage and image of the brand carry forward the legacy of Damas by creating a suitable environment. The vision statement of Damas is:
“From a famous brand in Dubai to a famous international jewellery brand from Dubai”
INTERVIEW WITH COMPANY EXECUTIVE
An interview was conducted with the marketing manager of Damas from their office in Dubai. The interview was conducted to retrieve critical information about the marketing aspects of the company in order to gain crucial data to form an effective marketing strategy with vital information as a basis. He was asked questions related to the company’s organizational structure, key competitors of Damas, the awards or accolades achieved by Damas, challenges which Damas faced over the years in UAE, how the 4 Ps of marketing are utilized to compete and survive in the market. He was also enquired about the expansion plans for Damas if any.
Q. How is Damas structured as an Organization?
Damas is led by a board of directors consisting of nine members who take the majority of critical decisions in the organization. The responsibility of the board is held by the chairman who is an executive director of the board. The chairman of Damas UAE is Ibrahim Belselah. The office of the chairman and the chief executive office are separate, which is a unique dynamic in the organizational structure.
Q. What kind of awards has Damas achieved in the past?
Damas has been recognized as a “high flier of the UAE” by the ministry of foreign trade due to the company’s endeavors in enhancing the country’s image in the global economic scenario. Just recently, Damas won the CADCAM technology award and the ‘Objet D’Art Award’ at the Jewellery design awards which were organized in 2014. Damas also received the Mohammed Bin Rashid Award for leadership with innovation and success in new projects.
Q. What challenges does Damas face while doing business in UAE?
One of the challenges faced by Damas over the years is the increase of commodity prices which fluctuates making the growth and profit of the company unsteady. The other challenge of Damas in UAE is a tough competition in UAE market. Damas has managed to overcome these challenges successfully and sustain leadership in the jewelry sector of UAE.
Q. Who are the primary competitors of Damas in UAE?
The primary competitors of Damas in UAE are Richemont, Giorgio Armani, and Joyalukkas. Richemont has affiliation with major European Jewellery brand and distributes them in UAE. Giorgio Armani is an internationally leading fashion brand while Joyalukkas is another UAE based Jewelry brand.
Q. How does Damas utilize the 4 Ps of Marketing for surviving competition and achieving success?
Damas has been actively promoting its various brand extensively including Farfasha, which is among Damas’s most popular brands. The target customer segment is predefined and new products are being launched in Farfasha brand to ensure a fresh collection of jewellery for its customers. An effective marketing mix has been formulated for UAE and the Middle Eastern region, which has been successful over the years.
Q. Does Damas have any plans for international expansion currently?
Damas has spread to various middle-east countries and India but there are currently no new plans for expansion for Farfasha. But as it is widely successful, the brand can be selected for expansion.
The product range that is being targeted for penetration in the foreign market is Farfasha. This range includes a collection of 18K gold jewellery. The types of ornaments available in the collection are pendants, bracelets and earrings. There is a hint of natural color palette in the Farfasha range. The design is appealing to the younger crowd of the age 20 to 30. The target market segment is the population of young females from upper-middle income earning families. So due to the factor of income range of the target market segment, the price range is average to low as compared to most other brands by Damas. It has a unique appeal due to its color palette and design (pattern) which is cut using lasers. (Damas, 2015)
The design and pattern of the jewellery range has been categorized as fashionable and contemporary appealing to the younger crowds. Most jewellery brands either cater to the ultra-fashionable individuals which prefer more gems and extravagant patterns or they are grand and made to wear for special occasions which makes them pricey. Farfasha draws a line between the two categories and carves a niche in the market through its exquisite design and comfortable price range. These factors are considerable for attracting more customers who want something unique at an affordable price. (Hutzler, 2011)
There are several different types of factors or forces which have a huge impact on the process of expanding a business to another country. Businesses are required to observe and analyze how the data associated with these factors would affect the growth in their business. This comprehensive analysis of the environment, which would largely constitute the external environment, would be carried out in the form of a PESLE analysis.
Five types of forces are being analyzed for measuring their impact on the penetration of the US fashion market.
The primary socio-cultural factors are aesthetics, age, ethnicity, and language of speech.
The people of USA are concerned with ‘value for money’ factors but also go for quality and aesthetic value of the object when it comes to jewellery. They do not prefer extremely bright or flamboyant colors but style and calm color palettes are appreciated. Jewellery does not have a functional aspect, which eliminates the factor of ‘function over design’ but there is concern of build quality and design. Farfasha jewellery has contemporary design which is preferred by American young adults. 65% of the young adults are employed who would prefer simple contemporary design which becomes a positive factor for Farfasha. (United States Census Bureau, 2009-2013)
The population of young adults in the age group 18-34 form 23% of the current American population, which has been decreasing over 5 decades. This can be considered as a negative factor as the population of the target segment customer age group is decreasing, which indicates that there are less number of potential customers than before. (U.S. Census Bureau, 2015)
Figure 1 Population, Age 18 to 34 in America (U.S. Census Bureau, 2006)
The population of females in United States is 50.8% which is slightly greater than half (U.S. Census Bureau, 2015). This is a positive factor for Damas as the product they are going to market is for the female population.
Out of the total population of America, 72.41% are from the white race, 12.61% are African American, and Asians form 4.75% of the total population while the 9% is constituted of all other races. The product which is to be marketed is going to be purchased by people from every race, which means that the ethnicity will not be a decisive factor. But for promotions, that factor is to be considered as the advertisements are supposed to be directed at a median of the total population. (U.S. Census Bureau, 2006)
LANGUAGE OF SPEECH
The number of people communicating in English in America are the highest, which is neither a positive or negative factor, but it is a considerable factor for the medium of promotion for Farfasha.
ECONOMIC AND SOCIO-ECONOMIC FORCES
The factor related to economy is a critical one among the types of forces that are to be considered.
INCOME (SPENDING CAPACITY)
The number of people employed in the age group 19 to 34 are roughly 65%. Median earning of this age group has decreased to $33,883 from $37,355 which can be considered as a negative sign. If people are earning lesser, they would like to spend more on essential items rather than on luxury items. But on the other hand, the price of Farfasha range of jewellery is lower than other brands in the market which brings a positive element to the range that is to be launched. (Bureau, 2015)
GDP AND GDP GROWTH RATE
The current GDP of United States is 16.77 trillion USD. The growth rate of America’s GDP is 2.4 which has decreased from 2.7%. (The World Bank, 2015) This figure might show a decline but the observed decline is due to the global financial crisis and United States has been recovering fast from the crisis as compared to other countries. The GDP of UAE is 402.3 Billion USD and the GDP growth rate is 4.3% as compared to 5.2% in 2014. (Trading Economics, 2015) This factor denotes that the economy of USA is strong and there are minimal threats considering the economy for business to function as the spending power could rise higher due to this factor.
PER CAPITA INCOME
The per capita income of America in 2014 was $53,042 which has increased compared to 2012 and the per capita income of UAE is $43,048 which has also increased compared to 2012.
CURRENT CONDITION OF US ECONOMY (FASHION INDUSTRY PERSPECTIVE)
As USA is rapidly recovering from the global financial crisis, the US luxury market is expected to grow 6% with a strong dollar that will increase the export to America. It is a country with 30% of individuals with the highest net worth in the world. From a fashion industry viewpoint, America is an under-penetrated economy. The luxury goods sector is a supply driven market in America which denotes that exposure to new brands will ensure growth from an economical viewpoint. (MELLERY-PRATT, 2015)
The legal system in USA is a civil law system as compared to Sharia Law in UAE. The set of laws which define trade policies is different, which becomes a considerable factor for establishing a business in another economy with a different legal system.
USA has a legal division called Federal Trade Commission law which denotes legal guidelines regarding advertising and marketing laws for businesses which is to be followed by businesses that enter America. (U. S. Small Business Administration, 2015)
There are certain advantages also in America’s legal system. Lawyers are easily available in America and a fair access to legal system allows easy settling of disputes with suppliers and customers.
USA is a democratic country with effective laws and fair elections. The business policies which are to be followed by businesses in America are influenced by politics and because of that, a steady government is important for business growth. There has been a steady regulation of the Democratic Party for the past two terms in America under President Barack Obama. A steady democrat government has been good for business due to stability and no major change in laws.
In the global scenario, USA has been criticized for policies which lead them to intervene terrorism related matters which increases threat for terrorism.
The average minimum wage in USA is 9 dollars per hour. Taking a work of 12 hours into account, the company will have to pay 108$ a day and 3240$ a month. Also considering the fact that intricate jewelry workers get paid more than others, 4000 to 5000$ per month has to be paid to the skilled workers. Another factor which has to be taken into account is wage rates fluctuate according to states and workers will have to be paid more or less according to that situation. (Doyle, 2015)
The target market defined for Damas Jewellery is United States of America. Due to the increase in the demand of gold jewelry in America despite global shortage of demand. Also considering the factor the jewellery import comes at 5th position in the list of most imported commodities in America. This factor suggests two things: 1) there is a good demand of gold jewellery in America 2) There is a huge scope for setting up a new jewellery business in America. Revival of America from the global financial crisis has opened up new opportunities for businesses in other countries (Demarco, 2014).
Another factor for consideration is internationalization is the part of UAE’s way forward to economic growth. UAE GEM report suggests that UAE leads in global expansion in SMEs. There is scope for increment in global expansion for Damas considering these factors. But even if the economic condition is suitable, other factors related to target market have to be analyzed.
The target market segment in USA will be in the age group 18-30 as the design of the Farfasha collection appeals to the younger generation due to its contemporary design and color palette. The 23% of the total population is in the target age range out of which, 50.8% are females. The marital status does not have an impact on the preference of the product. The consumers of upper middle class to high class level will be able afford and will prefer to buy this product. 65% of the people in this age group are employed out of which at least half can be considered to be in the target customer segment. 30% of this age group lives with their parents so the part of the population which is unemployed/studying and living with their parents will be able to buy the product. Young families will also be able with an upper middle class or high class status will be able to buy this product. The e-commerce websites who sell Jewellery will also like to purchase the product range for re-selling.
The target audience for the product range will be young, affluent females of upper middle to high class status. From this group, the females preferring an ornament of contemporary design which can be worn casually as well as on an occasion will like to purchase this product. Although there are potential customers in the other areas of the market, but the target audience will be this particular group of people.
Geographically, the outlets will be opened at major cities in USA at first (i.e. New York, Los Angeles, Miami to name a few) and more outlets will be open after analyzing demand and response. The brand will also be sold in outlets of upscale malls. Regarding media, the target customer segment will get exposure to the brand from TV ads and Fashion Magazines so the promotional campaign will be formulated accordingly.
The price range of Farfasha will be dynamic but lower than the competitors due to its simplistic design and plan to cater a specific target audience. Jewellery prices are things that are not steady and vary according to weight of the ornament, pattern and the current rate of gold. But the range of price of Farfasha is kept at a dynamic range which can be more feasible than the heavier alternatives available in the jewellery market.
COMPETITOR PRODUCT STRATEGIES
The key competitors of Damas in USA will be world leading brands like Pandora and Kay jewelers who deal primary in jewelry. Both of these brands have products which heavily feature metals like silver and platinum and diamonds. Their products are of luxury (high) and mid-level range which is the same as Farfasha from Damas. Both of these brands cater to the females of ages 25 and above and they are crafted accordingly with contemporary design. They have carved a niche in the jewelry market with their style of jewelry. (Pandora, 2015)
The competitive advantage for Farfasha is that it features authentic gold jewelry from UAE and the world leading fashion brands import from UAE and other parts of middle-east. Making jewelry from authentic UAE gold and crafting the jewelry with the fusion of contemporary and traditional Arabic designs, it can become a pioneer in the USA jewelry sector. Another factor to consider is that people from over the world come to UAE gold market to buy jewelry and if authentic UAE gold jewelry is available in USA then people will prefer to buy that. By sourcing gold from UAE and crafting jewelry in the UAE, Damas has achieved vertical integration in jewelry making.
Kay is one of the largest selling brand in USA and relies on selling its products through mall outlets. (Donahue, 2005) Pandora has both exclusive shops in posh areas as well as mall outlets. Kay and Pandora cater to the crowd through places like malls which makes them accessible but the unique touch of place is lost and it becomes the part of the crowd (Kay Jewelers, 2015). The way to challenge these brands would be to open exclusive outlets in middle class areas with an Arabian theme. The place would have its own aura of being a place from a different culture through the design and ambience of the place. This will make Damas look like a unique brand and not just another jewelry store in a mall.
COMPETITOR PRICING STRATEGY
The target market of competitors is the high class population of USA who can afford platinum jewelry with diamonds. Another factor here is that the target market prefers big brand names. Through vertical integration, Damas can sell at better prices than their competitors. Kay provides a very dynamic price range in its outlets which had led to high amount of sales but the price factor is due to mass production of the items which causes a compromise on quality at times. The target market that is being approached by Damas through Farfasha is the middle and high class population both. It is more affordable than the brands which target the same crowd.
COMPETITOR PROMOTIONAL STRATEGIES
Kay has a broad promotional strategy through TV, magazines and through online advertising. Pandora follows the traditional approach and advertises on TV and lifestyle magazines. The online advertising targets the lower middle and upper middle level crowd and magazines and TV are for the general crowd. The products of Kay are promoted through online advertising by displaying ads in Facebook and other social network in profiles of people who have liked pages for jewelry and has a jewelry shopping history. (Stern Advertizing, 2015)
DAMAS MARKETING STRATEGY
The target market of Damas for Farfasha will be major cities as well as cities in other states where there is good demand for Jewelry. The target market segment will be females of age 18-35 from lower middle to upper middle class as well as the high class population. The target audience will be the people in the target market segment with preference to gold jewelry and liking towards contemporary and traditional-fusion jewelry.
The product range of Farfasha are ornaments of contemporary as well as Arabic style jewellery made with 18K gold. Some of the ornaments also contain gems studded with Arabic craftsmanship. Farfasha range of ornaments can be worn casually as well as on occasions. New product collections will feature at the start of spring and autumn. Also, a new collection will feature before Christmas every year as people like to shop for gifts before Christmas. 4
The aim behind the pricing strategy is that we provide value for money and more quality for a lower price according to the target customer segment who prefer affordable jewelry of high quality. Some products in the collection will be priced higher most other items in the collection, which are specially designed but middle-class segment will pay more for those items.
Damas will open outlets for Farfasha in areas with middle class crowd in major cities as well as cities in states where the purchase of jewelry is in high amount. The outlets will feature an Arabian theme with a unique ambience giving a uber-traditional experience to jewelry shoppers. This will make a positive impact on the image of Damas as these outlets will provide an exquisite feel compared to the mall outlets to the competitors. This will make the image of Farfasha distinct from other brands in the country.
The brand Farfasha will be promoted as a unique collection of ornaments with Arabic craftsmanship and high quality gold from UAE. The features of the design which include contemporary and traditional patterns will also be included in the promotion strategy. The brand will be promoted through TV, fashion and lifestyle magazines and there will be an online advertising campaign wherein the ads of Farfasha will be displayed in the social network accounts of people who have jewelry preferences. Google AdWords will be utilized in advertising in which, if any individual searches for Arabic jewelry or traditional jewelry in USA, then Farfasha links will be featured. There will be ads through hoardings before Farfasha stores open displaying ads regarding a unique jewelry experience coming soon.
MARKET ENTRY STRATEGY
The mode of market entry for Damas international will be that of a standalone entity through market development strategy. This would be due to the factor that the brand is trying to launch the existing product range in a new market. The Farfasha brand will be marketed as a part of Damas Jewellery.
Farfasha is a part of Damas jewelers in which the Farfasha range of jewelry will be one of the many brands that Damas will launch in future if Farfasha is successful. Aligning with another brand will not allow the unique image that Damas wants with its unique line of jewelry with Farfasha and its other brands.
The market entry of USA by Damas Jewelers though the expansion of Farfasha their most successful line of jewelry will be a brave but meticulously thought out endeavor. The environmental factors line politics, the legal system, the economy and socio cultural factors are favorable for the market entry of Damas into the USA. Interview with the company executive has provided critical information about the marketing of Damas which has been helpful in creating a marketing strategy for Damas.
Analyzing the target market has brought many factors into light which were essential to handle in the marketing strategy of Damas. The competition is tough in the USA despite the growing demand. It has been observed that at times, supply will create a demand for unique type of jewelry in the jewelry industry of USA. Damas cannot succeed alone because of that factor but ideas have been generated in the four aspects of marketing for Damas after observing and analyzing the same aspects for the competition in USA. The aim has been to have a unique image through a standalone market entry and exclusive theme oriented outlet designs yet to be affordable and provide good quality of gold adding the attribute of “value for money” to the product.
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