· INTRODUCTIONThe Middle East and Gulf Region is a US $7.4-billion food market and is predicted to grow by 11 percent in 2006. The region 90 percent food and beverage is imported and has an average annual per captia income of US12500, which makes it a market for high- end products. The Middle East consumer is not only quality conscious but also taste conscious as a result hundreds of fast food and imported food shops has been mushroomed in past few years catering to the needs of its diverse population, who come from all parts of world. Western` expatriate community in Bahrain, Qatar and eastern Saudi Arabia are substantial, and generally enjoy an excellent standard of living.
Yet, they miss traditional food items of their home countries, which are not met from the local market. Often they have to plead with visiting friends or relatives to bring some supplies out for them, however that stock doesn’t last long. For Expats, money is not a problem, as they can afford to buy premium items, but problem is an-availability of such products. There is a dire need of lunching business in this niche market to provide Western Expats with the traditional food and give them “ A Taste of Home” over seas. This report will look at the feasibility of “A Taste of Home” project and will provide strategy to implement the plan.
SEGMENTATIONMarket segmentation is the process of identifying a specific set of characteristics that differentiate one group of consumers from the rest. The socio-cultural segmentation looks at various cultures and nationalities and their preferences. Certain cultural groups tend to have similar needs especially when it comes to food, it is natural to like traditional foods, but in overseas market it is hard to find it.
Being a Middle East based company; majority of the “A taste for home” needs be located in the high and premium locations, as Expats (Western), normally like to visit modern shopping centers and markets. The food product will consist of American, French, Italian and English traditional food items. A taste of home can initially market in three key locations (Saudi Arabia, Bahrain and Qatar), however there is possibility of further growth in the region, specifically UAE states which have huge amount of Western Expats and they make 5 % of UAE population.
The following are the three key locations, where the Western Expats will be targeted. SAUDI ARABIASaudi Arabia is the largest country on the Arabian Peninsula, with annual GDP of US$242 Billion (2002). It imported US$29.7 billion worth of goods, including processed food products as well. PopulationThe number of Western Expats is Saudi Arabia is about 100, 000 thousand majorities of which are serving top-level jobs with high-end salaries. BAHRAINThe Kingdom of Bahrain is an island nation , bordering Saudi Arabia to the west and connected to Bahrain by the King Fahd Causeway , while and Qatar lies in the south.In Bahrain, petroleum production and processing account for about 60% of export.
Expat PopulationWesterners 1 to 2 % of the total population. QATARThe State of is part of the larger Arabian Peninsula, bordering Saudi Arabia to the South.Qatar has the highest GDP in the world (US$39,607as per 2005). Qatari standard of living is same as Western Europeans. Expats Population3 % of the total population POTENTIAL MARKETUAEThe United Arab Emirates (UAE) is a Middle Eastern country, situated in the southeast of the Arabian Peninsula in Southwest Asia on the Persian Gulf, comprising seven emirates: Abu Dhabi, Ajm?n, Dubai, Fujairah, Ras al-Khaimah, Sharjah and Umm al-Qaiwain. UAE, total population is about 3.
7 million, which also includes the expatriates.The UAE native “Emirates” make about 20 % of population, which remaining 80 percent are residents from Middle East, Asia, Africa, Europe, and North America.The North American and European Expatriate communities are found through out Emirates. There are about 16000 Americans are found in UAE, of which 6000 live in Abu-Dhabi and 10000 in Dubai.
The Westerner Expats form about 5% of the total population as shown in the table below. UAE Population Ethnic SegmentationEmirate 20 %Iranian 22 %South Asian 50 %West Asian 3 %Westerners 5 % Total Western Expats in the regionWestern Expats PopulationNumberPercentage in PopulationSaudi Arabia100,000Qatar3 %Bahrain1 to 2 %UAE (potential market)5 % of the UAE population TARGETTINGThe Western Expats living in Middle East have high income,majority are earning 8 to 12000 Dh salary p/month and can afford to buy imported food at premium price. Normally they shop from Spinneys and Abel’s, Walmart and Carefour, “A Taste of Home” will develop its place in the market, and has no competitotrs at present. The shops location can be in prominent shopping centres, with intian intensive marketing efforts to create awarness, especially through English newspaper which are widely read in the region.Food prodcuts will be imported from multiple countries and offered to all age group, as food is the only thing which is universally liked and consumed. POSITIONINGA Taste of Home will be the first retailer of its kind to sell unique food products, which are normally available only in the Expats’s homelands.
Even though “A Taste of Home” will not work as manufacturer, but a reseller, yet it has to create its brand image with its unique products, which will create its unique position in the niche market. This kind of strategy need close partnership with the suppliers to shorten the distribution channel allowing the company to take more responsibility in selling high-class products at a premium cost. Even though the quality of Western products are high, yet special care has to be given to emphasis quality, as premium items cannot flourish without quality and with the passage of time, this quality will become synonymous with “A Taste of Home”. A Taste of Home will need to make its name like other famous brands to be remembered for its high quality products and value for money. CONSUMER HABITS AND LIFESTYLEMany expatriates find their living cost in Middle East quite low, as their living cost is often subsidized. As a result they have more money to spend on shopping and eating and having high lifestyle. Majority of the Western Expats have an average salary of 12,000 dirham ($3,270 USD) base salary + Toyota Camry + 40,000 housing allowance + annual leave tickets.
Living is cheaper in the Middle East compared to Expats’s home countries; they have extra cash to spend on buying expensive and luxury items. There is little tax or no tax on the salaries in most of Middle East states, they can spend more on high end products, such as high-class cloths, cars, dinning in premium restaurants, buying expensive cars and trips etc.Most of Expats live in high-class accommodation.
For example in Dubai, Western Expats tend to live in either Jumeirah or Umm Suquiem which are closer to coasts and most of them tend to live in villas, either bungalows or two story buildings depending on location. In Saudi Arabia, they tend to live in walled compounds for safety reasons. As they have excess money, some of them even buy property and get PR status.The social scene is Saudi Arabia is bit strict but most of them have membership of clubs and join social activities like sports and parties.
While some go to Abha Mountains and diving in red sea. Some indulge in shopping and buy gold watches and electronic items, as these things are normally cheaper here . Eating is one of the favorite habits and a result there are many fast food chain flourishing including McDonalds, Burger King and KFC. In UAE and Bahrain and Qatar, the social scene is more relaxed.
Doha urban environment has been modernized in the last decade and there has been consistent construction of five star hotels and leisure fusion hotels, such as Intercontinental and Ritz-Carlton, who have beaches and spa as well. PRODUCT RANGEThe high- end food products will be imported from UK France, Italy and Switzerland , which will cater to the needs of all age group. A few of which are listed below (some products pictures are presented at the end of report)UK productsTraditional Sauces , such as Basil Sauce, Olive sauce etcNeapolitan Sauce, Basil SauceHoney (Blossom and Eucalyptus)Pudding, dumpling, cheese and traditional dairy products)French ProductsFrench gourmet collection, Sauces, chocolateCookies etcItalian FoodPasta and sauces,Nut cream and espresso cream,Honey products)Swiss (gravies and Soup) PRICINGThere is little problem in setting the price, as the offered products will not be available in the local market, there is no chance for consumer to perceive the price differentiation. And the basic idea behind the offered products are not selling sellable items but providing the memory of home at a price. As the products are high- end food items, which can only be found in Expats home countries. A Taste for Home will be offering value for money; it is natural to sell it on a premium price. The price will depend on the product imported. For example the British products are more expensive, it is natural converting it into Dh will increase the price compared to Italian or Swiss food item.
Before importing, it is essential that the selected food items should be available in the local super markets. One better idea will be, to conduct survey and check the needed food the customers needs, and the price they are willing to pay. This will give a clear idea, what the consumer want and re-align the strategy. However, it is essential to check the price of these products online, as the prices should not be higher than online offers. The emphasis should more on bulk sale of items and making customers loyal. LOGISTICS AND DISTRIBUTION The business center will be Qatar (Doha). The reason for selecting Qatar is its central location on both directions Saudi Arabia and Bahrain.
The imported food will be distributed via cargo companies who specialize in full spectrum of warehousing and distribution services, including logistic management and transit services.The arrived goods will be packed, labeled and bar-coded at Qatar and then sent via (trucks) road to Saudi Arabia and by sea to nearby Bahrain.The will hire the services of logistic and distribution company who can provide full spectrum of logistic services. The logistics and distribution model is drawn below. BUILDING AWARNES AND LOYALTY A taste for Home will build its reputation on offering different products, which are not available in the market. It would be this differentiation in product characteristics, which will be easily perceivable and will lead to brand loyalty among its customers. As brand loyalty is based on satisfaction, the company foremost policy will be, to provide value for money and satisfaction to the consumers and providing better performance than other retails.
The foundation of the business as the name depicts, A Taste of Home reminds the home and home made food. With the passage of time the product will not remain just a product, but it will become an icon for home and its memories. A Taste for Home will be dealing in high- end products for the Western Expats. The company will create its product awareness in number of ways as described below; Marketing through Expat clubs, resorts and favourite palcesOffering promotion and selling on discount prices, if items are purched in bulksSending prodcuts to other locations via DHLConsitenc survey and understanding of consumers needs and religning strtegies with the changing needs.A Taste Of Home will label all its prodcuts to create the brand awarnessIntensive use of newspaper, magazine, internet for marketting and advertisements to create awareness.Inviting Expat familes to free msuic and quiz shows to create brand awarnessOffering membership, discounts and other benefits, such as subscribtion to magazinesSpecial discounts and gifts on birthdays and Christmas to create customer loyatyLEGAL STRUCTURE FOR SETTING UP BUSINESS IN QATARThe foreigner may engage in business in the State of Qatar.
The Law No. (13) for the year 2000, and it’s later amendments identifies the activities available to the foreign capital to invest therein.1. Foreign investors may invest in all sectors of national economy provided they have one or more Qatari as partners, whose share shall not be less than 51% of the capital.2. By a decision from the Minister of Economy and Commerce, the foreign investor percentage may exceed from 49% to 100% of the project capital in the sectors of agriculture, industry, education, tourism and the development and exploitation of natural resources or energy or mining.
3. It is prohibited for the foreign investments to invest in the fields of banking, insurance companies, commercial agencies and the purchase of real estate.4. The project in which the foreign investor participates should be founded according to the Qatari companies law No. 5/2002.;;;;Article No.
(4) states that any company incorporated in Qatar, shall take the form of the following categories:1. Simple Partnership Company.2. Joint Partnership Company.3. Joint Venture Company.4. Public Shareholding Company.
5. Limited share Partnership Company.6.
Limited Liability Company.;(Partnership Company)With the exception of joint venture company, the memorandum and article of association of the above-mentioned companies, are required to be in Arabic, otherwise the contract of association will be null and void.1. A simple partnership company is formed by two or more persons who are jointly and severally liable for the partnership’s debts. (Article No.19).2.
All partners in Partnership Company must be natural persons of Qatar nationality. (Article No.21).3.
The contract of incorporation must be in writing and should contain the certain particulars, as prescribed, in this article. (Article No.22). (Joint Partnership Company)The law regulates joint partnership company as follows:1.
A joint partnership is similar to Partnership Company, but the joint partnership company consist of two categories of partners:a. Joint Partners.These partners are responsible for the running of the company, and who are jointly and severally liable for the partnership’s debts.b. Trustee Partners.These partners are liable for the partnership’s debts only to the extent of money they have invested, or are committed to invest in the partnership. Trustee partners should not interfere in any ways with the management of the business.2.
All joint partners should be natural persons of Qatar nationality. (Article No.45). (Joint Venture Company)Article No. (52) provides that a joint venture company is formed by two or more natural or legal persons.
Without legal personality, the joint venture company is not required to follow the same commercial registration as other categories of business. (Public Shareholding Company)The law regulates this company by lengthy provisions the important of which:1. Public Shareholding Company is formed by a number of persons, (not less than 5 persons) and it’s capital is divided into equal negotiable shares, each person shall not be liable except to the extent of the value of it’s share in the company.c. Without prejudice to the provisions of the above two clauses, founders must prepare both the Memorandum and Articles of Association; Memorandum of Association shall comprise the following statements:1. Name of Company.2.
Head Office.3. Object for which the company was incorporated.
4. Amount of capital, number of shares divided into, its nature and amount.5. Term (duration) of the Company.
6. State of each non-pecuniary share and all conditions of producing thereof: name of producer and rights in kind subsequent upon such share, and roughly statement of expenses of incorporation. (Private Shareholding Company)Article No.(203) states that persons more than five, may incorporate a private shareholding company which should not offer shares for public subscription.
The capital of the company should be more than two million Qatari Riyals to be paid totally by the founders.(Limited Share Partnership Company)1. Article No. (225) states that the limited liability company shall be composed of number of persons not less than two persons and not exceeding fifty persons.
2. The company with limited liability shall not undertake insurance business, banking businesses, or to invest monies on behalf of third parties in general. (Article No. 227). 3. Article No. (229) states that a company with limited liability comes into existence by after registration of the company’s Memorandum and Articles of Association in the Commercial Register.
The Memorandum and Articles of Association should be signed by all shareholders and must include:- The company’s type, name, object and principal place of business.- The name, nationalities, place of residence and addresses of the partners.- The amount of capital, the share of each partner, a statement of shares in kind, their value and the names of those presenting the same (if any).- The names and nationalities of those responsible for managing the company, be they partners or not, regardless of whether their names appear in the company’s memorandum.
– The names of the supervisory council members (if any).- The company’s duration.- The methods of distribution of profit and losses.- Conditions of assignment of shares.
– The approved method in which notices to partners are required to be communicated.Further detail can seen at http://www.qcci.org/2index.asp CONCLUSIONThe marketing plan has looked at all the factors of “ A Taste of Home”.
From the research it is clear that there is a great potential of such business in the region, which with the passage of time can grow around the region and become a premium brand, offering value for money to the Western Expats. Some Sample (traditional) Food(BRTIISH FOOD) Referencewww.wikepedia.com (2006)www.mapzone.com (2006) US Department of States (2006),Bahrain, Saudi Arabia, UAE, Qatar facts and figure. Gulf Food (2006) MIDDLE EAST FOOD MARKET OFFERS “MAJOR OPPORTUNITIES” FOR PRODUCERS AND DISTRIBUTORS IN (2006)