Ajmal Perfume Strategic Management Analysis
Ajmal Perfume Strategic Management Analysis Report
Ajmal Perfume Company is a world beauty firm that operates in a number of Middle Eastern countries and specific components of Asia. The firm primarily has a robust market base in key Middle East locations, corresponding to, the United Arab Emirates, Kuwait, Saudi Arabia, Oman, Bahrain, and Qatar. Other markets embrace Malaysia and India. The company’s product strategy primarily centers on producing Arabian and French fragrances. It distributes its merchandise by way of several stores located in its key markets.
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This report, takes a eager have a look at Ajmal’s strategy by focusing on its goal of increasing its market presence and dominance in present and potential markets. Specifically, this paper evaluates Ajmal’s strategy within the United Arab Emirates (UAE) as a key market in the Middle East. A additional analysis that explains how industry dynamics and the external environment influence Ajmal’s technique also types an necessary a part of this report. Therefore, this paper evaluates the company’s external environment (macro setting) and trade dynamics (industry life cycle, industry driving forces, porter’s 5-drive analysis, and the industry profile and attractiveness). These analyses examine with the corporate scenario (monetary evaluation and SWOT evaluation) to show a bigger image of Ajmal’s operations. Comprehensively, these analyses provide a backdrop of the suggestions that this study offers to handle Ajmal’s strategic issues, situational profile, firm prospects, and strategic problems.
Ajmal’s company technique has always centered on the gross sales and distribution of status manufacturers. Through this technique, the corporate primarily meets the demand of affluent Middle East clientele. Ajmal’s goal market comprises mainly of younger individuals. In fact, about 65% of the corporate’s clientele are younger people, below the age of 25 years. Besides the technique of floating premium brands, Ajmal additionally embarked on a worldwide strategy of using on-line communication to spread its brand outreach. So far, the company is modernizing its brand to have a world appeal. The company only recently opened new retailers in Malaysia (as a worldwide technique to go beyond its GCC market and explore new market opportunities). In the future, the corporate goals to cement its dominance within the international market by strengthening its market base in new and emerging markets. Nonetheless, even as Ajmal goals to broaden its market outreach in these markets, unfavorable business dynamics, and the hostilities of the company’s exterior setting pose a number of alternatives and challenges to the company’s strategy.
Ajmal’s exterior environment has a significant impact on the corporate’s future strategy of cementing its market foothold in the UAE and other elements of Asia. The exterior surroundings contains a number of environmental dynamics which are beyond the corporate’s management.
One vital attribute about the UAE fragrance industry is the favorable financial circumstances of the market. While many developed countries are experiencing unfavorable financial circumstances, corresponding to, the 2008 world financial disaster, many developing markets, just like the UAE, project favorable financial conditions (supportive of progress). In this regard, many fragrance companies are diverting their focus to the UAE. Key among the many corporations which are diverting their focus to the UAE are world fragrance corporations that intend to compete with native and regional manufacturers within the perfume market. Many of such firms have posted growth in this market. For example, in 2011, Revlon posted a development rate of about 4.5%. Most of this progress stemmed from elevated web gross sales of perfumes. This growth fee helped to offset a few of the lowest gross sales witnessed in developed parts of the world.
Due to the financial potential of the UAE fragrance market, the market is shortly changing into a favourite destination for firms meaning to launch designer brands. For occasion, Hennessey’s Arabian Night is a traditional designer model that launched in the UAE. This model now attracts the high-end Middle East market. Some firms, which have emulated this technique, have tried to fuse product attributes from the East and the West. Based on the try by international perfume firms to merge East and West product dynamics, there is a clear acknowledgement among these corporations of the necessity to incorporate local product attributes in their product development process.
Social and Cultural Dynamics
The UAE is one such country that comes from a background of societal values that recognize perfumes and fragrances. Indeed, in most shopping malls inside the nation, there is a robust odor of perfume. The excessive consumption of fragrance (per capita) in the Gulf region also complements the sturdy societal appreciation for perfumes throughout the UAE. Therefore, perfumes are an integral part of everyday life within the UAE. However, most Arabian perfumes are totally different from different kinds of perfumes in the world. For occasion, Arabian perfumes are merchandise of oud (a rare and unique ingredient present in selected elements of the world). In fact, this uncooked material principally exists in particular elements of India and South East Asia only. In addition, some of the components for developing Arabian perfumes have a deep cultural appreciation. Non-Arabian perfumes are lighter and have a decrease endurance.
Another concern that impacts the dynamics of the UAE fragrance market (particularly with respect to Ajmal) is the demographics of the market. Considering Ajmal focuses on marketing premium brands, many people who characterize the perfume market for such merchandise are younger folks (primarily below 25 years). This youthful demographic usually spreads throughout all genders. Indeed, each women and men in the UAE apply a number of layers of perfume (a part of their custom and tradition). Most of the fragrance wearers just like the product because it offers them a touch of class, confidence, glamour, and mystery.
The technological surroundings can be an important issue in the UAE perfume market. More importantly, the speed of know-how penetration within the UAE is relatively higher than different Gulf States. For instance, the variety of Facebook and Twitter customers within the UAE is high. Generally, 70% of the UAE inhabitants uses the web, whereas 60% use Facebook. Consequently, most perfume corporations have launched into an ambitious effort of using on-line marketing strategies to increase their market presence on this area. Some corporations (like Carrefour) are additionally testing their merchandise online (by introducing online outlets in Dubai). Indeed, E-commerce is among the many quickest rising financial sectors within the UAE. The excessive internet utilization within the UAE complements Ajmal’s technique of reaching the youth (which form the vast majority of its goal market). Indeed, for the reason that market is especially reliant on a youthful demographic, the web acts as an necessary device for reaching this inhabitants group.
Legislatively, fragrance producers are subject to each native and world legislations. Most of these legislations are supposed to guard the customers and the environment. Legislative adjustments have essentially the most important implications for perfume manufacturers as a result of a legislative change might require a company to re-manufacture its products, thereby inflicting further costs in manufacturing. For instance, in 2012, there was a legislative change that altered the technical regulations for manufacturing fragrances sold within the UAE. All perfume manufacturers had solely six months to adjust to the brand new regulations. This legislative change tremendously inconvenienced many fragrance companies that needed to adjust to it.
The external setting of the fragrance market in the UAE depicts the enabling and the disenfranchising nature of the industry which will pose a problem (or alternative) for fragrance producers to succeed (or fail) out there. For instance, the legislative environment and the limited market demographics are limiting components in the environment. However, the constructive financial prospects and the vibrant technological setting pose vital opportunities for perfume producers like Ajmal to succeed in the market.
According to the growth reported by most business players within the UAE perfume market, it is secure to say the business is in its progress stage. Between 2009 and 2010, the entire share change in premium fragrance manufacturers was 3.6%. This proportion change contains other modifications in premium women’s fragrances, premium men’s fragrances, and premium unisex fragrances. The grand complete change in premium perfume brands (plus mass) was 7.7%. This change contains percentage adjustments in men, girls, and unisex fragrance brands. An common gross sales growth of less than 8% exhibits that the trade is in its progress stage. Other evidences showing that the business is in its development stage includes the increased entrance of recent players in the market. Therefore, unlike the introduction stage, the place there are just a few players within the business, and few clients, increased competitors characterize the expansion stage
Considering the UAE perfume industry is in its growth stage, competitors is the most defining characteristic of the trade. Indeed, the depth of market activities of new perfume manufacturing firms in the UAE outweighs the actions of different firms in the region. This reality is very profound because global companies are quickly defining the aggressive landscape of the industry, based mostly on their introduction of new world brands available in the market (predominantly characterised by native and regional brands). Indeed, observers perceive the UAE fragrance market as a melt-level for western glamour and Middle Eastern tradition. Therefore, many fragrance manufacturers have launched new manufacturers in the area.
Based on these new characteristics, the UAE fragrance market is now very competitive. In addition, primarily based on the increasingly aggressive nature of the market, fragrance-manufacturing companies are adopting extra aggressive and innovative advertising campaigns. Such strategies include using online advertising techniques to succeed in a wider audience and the restructuring of their provide chain strategies to extend operational efficiencies. Ajmal is one such company, which must re-engineer its provide chain strategy to exploit alternatives for supply chain efficiencies and effectiveness. Through such a strategy, Ajmal might create a brand new and distinctive competency that’s difficult to copy by other perfume-manufacturing companies in the industry.
Porter’s Five-Force Analysis
The supplier power refers to the capability of owners of market inputs to affect a company’s strategy. Since several perfume-manufacturing corporations have their inner manufacturing methods, they have a firm grip on the product growth process. They are therefore not excessively reliant on suppliers to supply them with finished merchandise. However, the use of some crucial uncooked supplies (oud) improve the supplier power as a result of oud is a vital uncooked materials for making Arabian perfumes, and it is in low provide. The demand for oud therefore outstrips its supply. However, apart from oud, there isn’t any vital market problem to current corporations. Comprehensively, after considering the restricted provide of some uncooked supplies and the in depth control that many of the perfume manufacturing corporations have on their provide chain processes, it’s truthful to say, the provider power within the trade is average.
Threat of Substitutes
The risk of substitute products in the UAE fragrance market could be very strong. The elevated energy of substitute merchandise in the UAE fragrance market is particularly profound as a result of global corporations have launched new fragrance manufacturers out there, which compete favorably with native brands. Therefore, whereas the presence of well-liked perfumes, corresponding to, ouds, ambers, and musks characterize the Middle Eastern fragrance market, the threat of international fragrance manufacturers (like Sara Jessica parker’s Lovely, and Justin Beiber’s Someday) stay vivid. Consequently, international companies introduce new perfumes out there (yearly) and it is extremely tough for one Perfume Company to be snug with their market share (as a result of the specter of substitutes is powerful).
Threat of New Entrants
The UAE fragrance market has attracted many new gamers. Since the industry is deregulated, global players have given local corporations stiff competitors in the market. Broadly, no market limitation stops new gamers from entering this market. Consequently, current corporations are investing in innovation and marketing to cut an edge above their opponents. In addition, the deregulated nature of the industry has led to elevated competition among business gamers. Comprehensively, the specter of new entrants to the trade is strong.
The UAE perfume market has a robust purchaser power. This robust purchaser power stems from the youthful demographic of the market. Notably, this paper exhibits that a youthful inhabitants, which has a changing style and desire for perfume products characterize the market. Therefore, firms at all times have to keep abreast with these changing tastes and preferences. In this regard, consumers affect company methods by forcing them to regulate to their new preferences. For example, since the market is essentially youthful, most perfume producers have to use social media to reach this target market. Comprehensively, based on the affect of consumer behavior on firm strategies, the client energy is robust.
There is a strong competitors in the UAE fragrance market. As mentioned in this paper, the competition primarily stems from the entry of worldwide firms that introduce new merchandise available in the market yearly. However, competitors also plays out at the regional degree, where regional fragrance manufacturers, such as, Ajmal compete for a similar market share as different firms in the market (like Arabian Oud, Swiss Arabian perfumes, Royal Diwan group, and Zahras perfumes). Since there may be plenty of competitive rivalry amongst these fragrance producers, the aggressive rivalry among these corporations outweigh some other. Appendix one exhibits a summary of Porter’s Five-Force Analysis.
Industry Profile and Attractiveness
Based on the porter’s 5-force analysis described above, the trade profile of the UAE perfume market is unattractive for brand spanking new and emerging brands. The buyer power, aggressive rivalry, threat of recent entrants, and the threat of substitutes are all strong. The supplier energy is the one moderate drive. The strength of those forces are unattractive to the industry as a result of they show that the business is fiercely competitive and even if one firm manages to command a substantial stake available in the market, it can’t be comfortable on this place because different companies may destabilize its position.
The macro-setting also exhibits that unpredictable legislation and increased competitors add to the unattractiveness of the trade. The favorable financial situations (and the technological vibrancy of the market) nevertheless pose positive prospects for the business, but they can solely improve the operational features of company operations (like using technology to enhance the supply chain effectivity). To this extent, the macroeconomic and business analyses of the UAE perfume market reveals that the industry is just reasonably enticing.
The significance of understanding an organization’s scenario (via the macro-economic environment and its business dynamics) surface when understanding how internal firm dynamics complement (or clash) with environmental/industry dynamics. Therefore, relying on how well, or poorly built-in, the company dynamics are with the exterior setting, or industry dynamics, an organization may succeed, or fail, to sustain its enterprise activities in the future.
There is little information offered to evaluate Ajmal’s monetary state of affairs. However, there’s a common agreement that the company’s financial position is determined by the successes of its core manufacturers. So far, a lot of the company’s 70 brands are promoting well in the market as a result of observers regard Ajmal as a key regional participant in the perfume market. The company’s manufacturing facility (positioned in Dubai’s warehouse District) can also be valued at $200,000,000.
According to trade statistics, brand differentiation, as pursued by Ajmal, accounts for most of the company’s complete revenue. Even although there are inadequate statistics exhibiting the corporate’s gross sales development, business statistics show that the company ought to post between 3% and 7% development charges. The implication of such sales growth estimates show that the company ought to invest extra in the advertising and advertising methods to exploit the new opportunities for increasing its overall gross sales. Comprehensively, Ajmal has a powerful financial place, which it could possibly use to leverage its products above the rivals’ (by way of better marketing and innovation methods).
A SWOT evaluation primarily evaluates the corporate’s inner setting. In element, this analysis incorporates the assessment of the strengths, weaknesses, alternatives, and threats of a company.
EA’s firm strategy facilities on adopting innovative practices. Indeed, the company has circumnavigated some of the most urgent problems of the trade (like unfavorable financial situations) to emerge a powerful regional participant in the industry. Ajmal’s deputy general supervisor recently admitted that the company’s progressive technique (coupled with the search to strike a cautious stability between ethnic ethos and modernity) informs the company’s success for the past 60 years of operation. In this regard, the company has posted important earnings in some of its key manufacturers. Most of those model successes stem from the corporate’s progressive methods of creating an ideal Arabian fragrance that positions the corporate because the leader in the sale of ethnic chic manufacturers. These internal firm competencies affirm the corporate’s vibrant innovation methods.
Ajmal has constructed a reputation for itself by interesting to a novel market section – prosperous Middle Eastern Clientele. Notably, the company has made a name for promoting prestige manufacturers as a niche within the fragrance market. Consequently, the corporate’s brand appeals to the excessive-end Arabian market. Comprehensively, the company’s model superiority improves its competitive edge available in the market as a prime-notch prestige model seller.
Since Ajmal appeals to the prosperous Middle East society, it suffers a notable weakness of its brands having a short shelf life. This is a notable attribute of status manufacturers as a result of specialists view such brands to have a short life span. Moreover, such products are sometimes vulnerable to the risks of having a minority market (affluent folks) as a result of ordinary people, who could understand such products as costly or replaceable, shun such merchandise. The company needs to broaden its market reach to attraction to a wider market (possibly center-class individuals as nicely)
This paper already exhibits that a vibrant expertise market characterizes the UAE perfume market. This surroundings complements one key opportunity of Ajmal’s firm strategy – digital advertising. The introduction of the digital advertising platform is part of Ajmal’s innovation technique, which aims to update its retail retailer designs and enhance the efficiency of its supply chain. These are just some advantages loved from the adoption of the digital marketing platform. More alternatives exist relating to the adoption of this digital marketing platform. Redesigning the corporate marketing and product technique outlines possible areas that could doubtlessly profit from this growth. These improvements may probably improve the corporate’s effectivity.
Since there are numerous gamers within the UAE fragrance market, competitors is the major risk to the sustainability of Ajmal. Not only does the corporate expertise stiff competition from regional corporations, it additionally experiences the identical competition from world companies that have set base in the UAE. A key implication of this risk is a discount of profitability and the rise in manufacturing prices (especially concerning the adoption of aggressive market strategies needed to compete with other merchandise).
Expatriates form the bulk of the UAE’s perfume shoppers. In truth, about ninety% of the total percentage of retail consumers within the fragrance market is comprised of expatriates. This market profile is a menace to the sustainability of Ajmal’s operations as a result of expatriates are often short-term residents of a rustic. Therefore, whereas they might provide a good market for perfumes, their momentary stay within the country offers an unstable market, especially in the event that they depart. Appendix two shows a summary of the SWOT analysis.
Situational Profile and Prospects
The UAE fragrance market is a promising destination for brand new traders meaning to enterprise into the Middle East market. Like many developing markets, the UAE poses favorable financial conditions for the introduction of latest world manufacturers. However, because of the uniqueness of the market, many global fragrance manufactures need to mix native and international manufacturing processes to realize an acceptable product mix that sells in the goal market. Nonetheless, due to the entry of many international gamers and the existence of other regional fragrance manufacturing companies, the stage is ready for fierce competition among incumbent and new fragrance manufacturing corporations.
Furthermore, because of the deregulated nature of the fragrance market, an analysis of the Porter’s five forces present that the market is open for brand new entrants, increased competitors, unpredictable legislations, and a reasonable supplier energy. These market dynamics show that the UAE fragrance market is reasonably attractive to new and incumbent buyers. The favorable financial situation within the Middle East and the vibrancy of the market additionally supports this fact. Comprehensively, these market dynamics present an unpredictable market environment that will weaken or strengthen a company’s market position. The vibrancy of an organization’s technique due to this fact determines the success or failure of the corporate in the UAE market. This is the dilemma dealing with most incumbent corporations, including Ajmal perfumes. However, as this examine shows on this part of the report, the corporate’s prospect of succeeding within the UAE market is poor.
How will Ajmal’s strategic competencies overcome the unfavorable market situations in the UAE perfume market to extend its shareholder worth, profitability, and sustained aggressive benefit?
The technique suggestions for Ajmal middle on maximizing its key competencies and alternatives, while limiting its weaknesses and threats.
Ajmal may reap the benefits of its key competencies by creating brand loyalty. This means, the company may enhance its market share by selling the corporate’s story to its buyer and commanding a powerful brand loyalty, even as its rivals pursue aggressive advertising campaigns. Since the corporate intends to use digital communication as its primary communication tool, the company ought to use the same platform to speak the company’s story to its customers. For instance, via social media, the corporate ought to spotlight personal tales, classes discovered from errors, and the general work that the company does. Broadly, the corporate should present the “human side” of the company. This method, customers might develop a strong brand loyalty that transcends the competitive strain from different corporations.
Creating a strong model loyalty poses a number of advantages to the company because it minimizes the impact of aggressive pressures (prospects ignore merchandise from other firms), exploits the digital marketing platform – social media communication, and exploits the company’s model superiority (a key energy of the corporate).
Another technique that the company can use is exploiting its progressive technique to supply superior merchandise which might be distinct from the competition. People already know Ajmal for creating a robust “ethnic” model that appeals to the Middle East market. The company might additional lengthen this innovation in product improvement processes in order that it is ready to create a special product (say utilizing additional raw materials that the opponents do not use) to have an edge above its competition. In this regard, the company should invest extra in analysis and development. This technique minimizes the competitors and maximizes the company’s innovative energy.
The objectives of adopting the above recommendations aim to increase the company’s market share (within the short time period) and enhance the company’s profitability in the long term). Because of the unpredictable nature of the market, it’s troublesome to ascertain future profitability targets.
By adopting the above strategy recommendations, new opportunities for Ajmal to extend its market share and increase its market dominance available in the market manifest. Creating a robust model loyalty and exploiting the revolutionary competencies of the company offers a practical channel for attaining these goals. The main implications for adopting these methods are the extra assets the company may require to implement these strategies. More importantly, investments in innovation and product redesign require extra monetary resources (in analysis and improvement) and new technical expertise. Even though the implementation of the brand new strategies require these resources, the advantages accrued are crucial to the corporate’s survival.
With a fiercely aggressive trade and a market that hosts new products (virtually yearly), it’s essential for Ajmal to edge a new identification for itself available in the market. It can only achieve this by investing in analysis and growth. This method, the corporate differentiates itself from its opponents (and presumably offers superior merchandise in the market that outshines the competitors). Exploiting the corporate’s innovative strategy is nonetheless cheap because the digital communication platform is the main platform of communication. Few sources are required to undertake an effective advertising campaign that creates model loyalty. The potential benefits of adopting the above strategies therefore greatly outweigh their disadvantages.
Porter’s Five Forces
Short product life cycle
Digital advertising platform
Poor market profiling