Facing the Competition from Global Giants

Facing the competition from global giants is now a very common scene for the local companies in the emerging markets. As with this case, SADAFCO is struggling to rival with those globally well-known competitors.

As a local company, however, SADFCO has its own strength against its foreign competitors. SADFCOЎЇs brands are well recognized by local consumers. It will take a certain period of time and money for the foreign competitors to gain the same level of reorganization. In addition, the companyЎЇs well established local distribution network system would also largely decrease the cost of distribution. Moreover, it has a better understanding of the culture of its market. This is a very important element in a market dominated by certain consuming pattern. As with this case, the understanding of Islamic culture and MuslimЎЇs shopping habit plays a crucial role in a companyЎЇs marketing strategy. For example, foreign competitors used to use larger packing volume of ice cream for the consumers who get used to smaller volume of ice cream consumption.

However, SADFCOЎЇs weaknesses, compared with those global giants, are also obvious. First, its portfolio of ice cream brands is too diverse to allow continuous marketing supports for all brands. Some brands have really low market share (such as Movenpick). Secondly, due to the limited access to capital and technology of the latest development of the industry, SADFCO find it difficult to handle the uncertain market changes, such as customerЎЇs tastes and shopping habits. Thirdly, foreign competitors can create competitive advantage through its flexible marketing strategy. This strategy tries to integrate the foreign competitorЎЇs financial ability to enhance its competitive power. This involves centralizing their activities in certain country by coordinating the resources among its entire network in the world. Also those foreign giants can gain a competitive edge over SASFSCO by increasing the number of their freezer in the supermarkets, pay higher rental fee to obtain prime position for their products at distribution. And also important is the fact that these international giants can afford the loss at the embryonic stage.

SaudiЎЇs ice cream industry is in its developing stage in which the local companies begin to encounter the competition of foreign rivalries. The market has a large potential to be more developed as the population of KSA was young, with over 60% under 25. More importantly, the new generation is the largest customer population for the ice cream products. The 5-15 year age group accounts for 30% of the total population but for 55% of ice cream consumption. Additionally, through as series of media campaigns, advertisers can further expand consumer market. At this stage, the entry of global giants will act