The term ‘macro-environment’ refers to the set of forces that influence the functioning of all the businesses at the market (Dibb and Simkin, 2008, p.26). In political terms, the fragrance market is likely to be impacted by the major trends in international relations (e.g., the conclusion of international agreements, openings and closings of markets). Similar, given the fact that the Middle Eastern producers of fragrances tend to export them to the markets of other countries, the state of the economic relations between the Middle Eastern countries and the rest of the world is highly important for exporters. Moreover, the economic situation in target countries is crucial for conditioning the demand for fragrances. Following the Europe’s recovery from the Eurozone crisis and the strengthening of the U.S. dollar, the prospects for exporting fragrances both to the EU and U.S. enhance.
Social factors doubtlessly play a key role in determining the demand for Arabic fragrances. The important social trends that can help the promotion of fragrances include the growing popularity of aromatherapy and various mood enhancers and the development of custom-tailored fragrances. The growing number of metrosexual men, ready to spend money on the enhancement of their appearance can be viewed as an important social prerequisite for the rise of the men fragrances and perfumes market (Global Industry Analysts, 2016). Technological forces can impact the market, provided that the invented new technologies make it more cost-effective to produce fragrances.
Environmental forces can exert large impact on the market of perfumes due to the fact that the trade in raw materials, required for producing fragrances is subject to the environmental regulations that vary worldwide and can also change unpredictably due to the growing attention to environment protection. Finally, taxation, company law, accounting rules and a number of other fields of legislation in the EU, USA and other import destinations are likely to influence the export of Arabic fragrances.
The micro-environment refers to the immediate environment, wherein the company operates. The micro-environment includes the company itself, suppliers, competitors, marketing intermediaries (wholesalers, distributors and retailers), as well as customers (Dibb and Simkin, 2008, p.26). With regard to the micro-environment, the firm itself shall be viewed as an aggregate of actors (the board of directors, management and employees) and functions (strategic management, marketing, marketing, HR management and development). Given the fact that in case of the Arabic fragrances’ export to the U.S. and Europe, competitors and customers come from different cultural backgrounds, intercultural competences would be crucial for success.
The prognoses reveal that the global market for fragrances and perfumes can reach the size of $51 billion U.S. dollars, because perfumes play an ever increasing role in the personal toilette of both women and mean, and scents are important for therapy, massage and mood enhancement worldwide (Global Industry Analysts, 2016). In this view, the producers of fragrances worldwide tend to expand the directions of their exports and reach as many customers all over the world as possible.
Given the different cultural approaches to appearance, attractiveness and sexuality, local perceptions and demands regarding perfumes and fragrances also differ, and it is crucial for a company to be flexible enough to capture the differences and make best use of them. The idea of a global company that understands the local needs and adapts to them (used by Christian Dior, Coty, Revlon) helps to bring together two mutually contradicting needs and wants of local customers. On the one hand, local customers evidently seek to appeal to the local perceptions of attractiveness, not going far beyond the conventional features of the region. On the other hand, they may seek to adhere to the Western style of appearance enhancement and fashion and, thus, be interested in exploring the global trends. Being both local and global, international producers of fragrances help customers satisfy both the described needs. Moreover, the combination of global and local appeals helps companies to target broader group of customers due to the fact that the tastes of different customers can be accommodated.
There is a number of reasons why international fragrance companies choose the Middle East as the destination for selling their products. First, the general reason for choosing to expand is that companies require opening up new markets to get revenue and ensure further growth, necessary for sustaining competitive advantage. While the majority of the international companies already function both in the USA and the EU, it is natural that they try going beyond the conventional markets to tackle Russia, Central and East Asia and Middle East.
Importantly, Middle Eastern countries are well-off and are usually scored quite high in terms of the World Bank ‘Doing Business’ rating. For instance, the United Arab Emirates (UAE) are ranked 34th in the World Bank rating, being the world’s top country in terms of the ease of paying taxes by legal entities. It also has very high scores regarding the obtaining of construction permits and getting access to electricity (World Bank, 2016). Despite low official Doing Business scores, the Kingdom of Saudi Arabia is considered to be a good place for doing business (especially in partnership with the local businesses) due to the presence of a significant number of legal incentives for favouring and facilitating foreign investment. Using ‘joint stock companies’, foreigners can get make best use of the peculiarities of the legal system of the Kingdom (PwC, 2016, p.3). Further countries of the Middle East, such as Qatar and Bahrain, are also rich with their citizens, looking forward to getting access to a broader scope of goods, available worldwide.
A number of reasons, why it is profitable for the global companies to expand to the Middle Eastern markets may deal with the social issues. In the majority of the Muslim Middle Eastern countries women tend to wear traditional clothes and are precluded from showing their faces. Therefore, stylish eye cosmetics and original fragrances can be of special demand of the Middle Eastern women, willing to differentiate and create their unique image. Despite the fact that the attitudes to women in the Middle East tend to be to great extent influenced by religion, increased gender equality and women’s greater enrolment into educational establishments at home and abroad represent the crucial trends, influencing the markets of Middle East. Provided that the gender equality trend represents an important stimulus for girls and women to enhance their appearance and follow the Western patterns of appearance enhancement. Thus, a move forward in the domain of protecting women’s rights and improving their participation is likely to strengthen the demand for cosmetics, perfumes and fragrances.
As it was already mentioned above, the global market of fragrance and perfumes is expected to demonstrate significant growth before the 2020. This prognosis is based on the investigation of a number of trends. First, the European and U.S. recovery from the economic crisis of the 2008, as well as the current economic stability of the Middle Eastern countries and the rise of elites in the emerging powers gave an important impetus for the development of luxury segment of the market (Global Industry Analysts, 2016). An increase in the sales of the luxury and prestige brands serves as a precondition for developing ever new exotic scents and fragrances, expanding the luxury fragrances’ segment.
Second, the modern trend to individualism and finding the means to reflect it in clothes and cosmetics lads to the fact that individually designed and customized fragrances become increasingly popular among the customers worldwide. In this regard, it is important not only to be able customers a variety of scents and their combinations, capable of calling for specific associations, but design the service itself in a conceptually rich way. That can convert the process of creating an individually targeted scent into the performance, attracting lots of attention of the different target groups’ representatives. Third, as nowadays men tend to pay much more attention to their appearance than before, men’s perfumes and fragrances are becoming an increasingly important segment of the fragrances market. Last, but not least, as modern urban people tend to suffer from stress and actively look forward the ways to relax, inventing new scents and fragrances for aromatherapy is also a prospective segment of the global market of perfumes. To conclude, the key segments of fragrance market to be emphasized include luxury brands, creating individual scents, expanding the number of the currently available scents for men and developing the aromatherapy scents.
In view of the above segments of the fragrance market the following basic targeting strategies can be distinguished. First, special emphasis is to be paid to targeting the prospective buyers of the luxury and prestigious fragrances. This requires promoting specific fragrances through advertizing with TV stars and costly presentations during social events. In this regard, it is also important to promote the individually customized fragrances as the part of an individual’s high social position and image. The second group of customers to be targeted includes women, who cannot afford buying luxury and prestigious perfumes, but still strive for both fashion and reflecting their personality through perfumes. Third, lighter standard perfumes and the individually customized fragrances need to be developed to target adolescent girls. Particularly they can find the game of creating individual scents especially exciting and come to shops as groups.
Next, the producers of fragrances need to target two categories of men. First, there are the ones that value being brutal and brave, and, thus, require original scents to underline these values. Second, it is crucial to target metrosexual men, who view scents as an essential part of their image. Finally, introducing the variety of scents, suitable for aromatherapy, сan be useful for targeting both women and men, who feel themselves tired and are looking forward to relaxation.
References
Dibb, S., Simkin, L. (2008). Marketing planning: a workbook for marketing managers. London: Cengage Learning
Global Industry Analysts, Inc. (2016). Growing popularity of premium, niche and innovative fragrances and perfumes to outline growth in the global fragrances and perfumes market. Retrieved from http://www.strategyr.com/MarketResearch/Fragrances_and_Perfumes_Market_Trends.asp
PwC (2016). Doing business in the Kingdom of Saudi Arabia. A tax and legal guide. Retrieved from Retrieved from https://www.pwc.com/m1/en/tax/documents/doing-business-guide-ksa.pdf
World Bank (2016). Doing Business in the UAE. Retrieved from http://www.doingbusiness.org/data/exploreeconomies/united-arab-emirates
