Marketing professor explores strategies for SMEs in the UAE

Naufel Vilcassim is a professor of marketing at London Business School, regularly visiting the UAE to teach executive MBA students in Dubai. He has a degree in chemistry, an MBA and a doctorate from the US Ivy League university Cornell, with a background in selling agrochemicals and in economics and econometrics (the testing of economic models). Mr Vilcassim, who is from Sri Lanka, talks to The National about how small- and medium- enterprises (SMEs) should approach marketing.

What is the most cost-efficient marketing tool for SMEs?

An under-utilised opportunity in the Middle East region is digital marketing, whether because of inability, reluctance or lack of interest. It’s surprising, especially in the UAE, given the very high levels of internet and smartphone penetration and Facebook use. Traditional marketing used by big firms – newspaper and TV adverts, billboards, sponsorship – is very expensive for the SME, which can use online media to generate awareness, cost effectively, in a way that was not feasible even a few years ago.

Does an SME still need to advertise in traditional media?

Having a presence on TV or in print is still popular in the UAE and can serve as a signal to your customer that you are doing very well. This perception problem has to be addressed but, as the next generation of customers come online, it will become less of a barrier.

Why has digital marketing not progressed further in the Emirates?

Firms have to learn how to design websites better – not just do search engine optimisation. What is missing here are companies with good digital marketing software – an equivalent to Hubspot in the US or Europe, which charges around $1,000 a month for content creation and optimisation, email marketing, social media, marketing analytics, lead management, automation and analytics.

Are there lessons to be learnt from other countries?

Working in two languages is a specific issue in online marketing in the UAE – content is likely to have been developed in English and things get lost in translation to Arabic. But there is increasingly smart software to do this for you. In India there are so many languages, but businesses have figured out how to work: some in just English; others in two or three lan­guages. There, the trend has moved from elaborate desktop websites to apps, skipping a generation of technology as mobile becomes more important. Loca­tion-based advertising is also growing, which can be much more effective for SMEs – if you sell fresh juices, for instance, to tell people when you are nearby.

Any other marketing tips for the SME marketer in the region?

Use more guerrilla marketing: ride on something else, some big event, with a smaller role but create a presence in the mind of the customer. At the 2010 football World Cup in South Africa, a small manufacturer created presence by having lots of people congregating wearing orange T-shirts. They achieved awareness of a brand people had not heard of, and saw a boost in sales – but they did run foul of the organisers and got disbanded.

In what ways is doing business in the Middle East different to the West?

I teach fundamental marketing concepts in my MBA classes – I would argue they do not change from region to region. For instance, I know that in the US you can price to the cus­to­mer’s sensitivity and discriminate for those willing to pay more. In western markets that’s the customer’s problem. In this region the notion of fairness is much more important. Again, here people react negatively if they find out that essentially the same product is being sold with different branding and pricing – like painkillers with a higher price for daytime, non-drowsy ingredients. But then, in the US, you cannot discriminate the price by channel, but you can here. For example, a camera manufacturer can suggest a retail price and enforce it on retailers and distributors to ensure a level of service they fear will be cut back by the retailer undercutting on price, which may be damaging to the brand.

What can SMEs learn from the big corporates operating here?

Many firms in the UAE are under pressure now, and one thing they’re really focusing on, in terms of value for money, is their distribution channels. Take a domestic soft drink competing against Pepsi, which knows the key metrics to track when measuring distribution from the bottler to the retailer to the shelf. Domestic firms do not use such smart data collection devices or methodology to know if they are optimising on distribution costs. They are starting to realise they need to play the same game as the multinationals or they will lose out in terms of competitiveness.

Are SME strategies really so different to those of the corporates?

In the Middle East, a lot of big corporations have local or branch offices based on templates developed for European, US or big Asian markets. It’s not a bad thing, as it opti­mises across markets and makes them consistent, but it means SMEs have much more flexibility. The fundamentals of marketing stay the same for SMEs as for corporates – what is your target market and why should they buy from you and not someone else? The execution is just different, based on budget, capabilities and scale.

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