From ring to bling

Product customisation is becoming an increasingly important tool for vendors looking to consolidate their position in the Middle East’s booming consumer electronics market. Michael Thorne reports on the latest product innovations from mobile phone ringtones to gold plated TVs

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By  Michael Thorne Published  April 6, 2006

|~|Gold-Plated-Plasma.gif|~|LG’s 71-inch 24-carat gold-plated Royal Plasma TV and home entertainment system is specifically designed to capture the attention of the Middle East’s exclusive band of super-wealthy consumers.|~|Product customisation is becoming an increasingly important tool for vendors looking to consolidate their position in the Middle East’s booming consumer electronics market. Michael Thorne reports on the latest product innovations from mobile phone ringtones to gold plated TVs The development of new and innovative products specifically designed for Middle Eastern consumers by some of the industry’s biggest players is an indication of the growing importance of the region in terms of the global consumer electronics market. It also demonstrates the intensely competitive nature of the regional consumer market, with manufacturers working to distinguish their products from their competitors’ and build brand awareness with Arab, Persian and Islamic consumers. The process is taking place on a number of levels targeting language, culture and religion, with the applications developed either to cater for a desired aesthetic or functionality. Raed Nasser, the managing director of market research firm, GfK, says the combination of rapid economic growth and rising household incomes across the region is forcing many vendors to redress their strategies in the Middle East. “The influx of new brands and the creation of new product categories has also led to intense competition between consumer electronics vendors, transforming the retail sector in the region from a seller to a buyer’s market,” he explains. Nasser says that whereas in the past vendors were content to bring generic products to the region with little regard for local requirements, times are changing fast. As more and more consumer electronics vendors look to target the region’s significant purchasing power they are coming up with new ways to distinguish their product ranges and develop brand association in a bid to expand their share of the market. Middle East retailers are also stressing the importance of customisation to the growth of their businesses. Dubai-based retailer Jumbo Electronics recently revealed that customisation was fundamental to its retail growth strategy and its efforts to improve its ability to meet individual consumer demands. The obvious place to start in this process is language, perhaps the most essential and developed aspect of consumer electronics goods in the region. The recently staged Middle East International Cable Satellite, Broadcast and Communications Exhibition (CABSAT) saw the launch of the world’s first Arabic digital satellite receiver and home media centre PC that has fully Arabised features allowing viewers to browse information for all channels, regardless of origin, in Arabic. To many this may seem long overdue, but Eurostar’s receiver, which incorporates satellite, computer and consumer electronics technology with an Arabised format, represents only one dimension in the process. Motorola’s product marketing manager for the Middle East, Africa & Turkey, Harout Bedrossian, tells ECN: “Arabic language is a must for any phone in this region. If we ship a phone with only English language capabilities we can expect to get almost zero sales in many Middle Eastern countries. “Similarly Farsi is a must in Iran. The language makes a difference in demand and directly impacts sales results. We include Arabic, Urdu and Farsi in all our phones shipped in the Middle East in order to cater for both local populations and the large transient workforce coming from the sub-continent.” Super-wealthy consumers who seek exclusivity in design and boast considerable purchasing power are another important target market for vendors producing customised products. In terms of brand association and marketing, high profile designs produced for these consumers can have knock-on effects for a vendor’s entire product range. Consumer electronics vendor Nikai has built a successful business specialising in entry-level consumer electronics products and household appliances. “We have a high level of customisation across our product range throughout the Middle East in our consumer electronics, appliances and white goods categories.,” says Harsh Gupta, Nikai’s regional manager for Iran and the GCC. “In Iran, for example we market over 450 products, more than most other vendors and customisation is essential to our strategy. For example, all TVs must have Persian menus and be compatible with local Persian teletext services otherwise there will be almost no market for them.” As part of its Middle East marketing initiative the company launched a 22-carat gold-plated plasma TV last year as the flagship model of its plasma range. LG also offers a 71-inch, 24-carat gold-plated plasma TV in the Middle East. It claims that the plasma, known as the ‘LG Royal’, has generated significant sales both in the UAE and Saudi Arabia. It is a limited edition product that can be sold individually or complete with a home theatre package and a digital broadcast receiver, which is also gold-plated. Only 1,000 sets have been manufactured and each plasma is individually numbered to ensure exclusivity. “The Middle East displays considerable diversity in customer demand,” says the company’s Middle East and Africa president, K W Kim. “[The gold-plated] plasma fills an important gap in the market for high-end home entertainment systems addressing the specific needs of niche customers who demand exclusivity, while also catering specifically to some of our most exclusive customers in the region.” Kim stresses the importance of the product in developing and enhancing LG’s image as a producer of high-quality consumer electronics goods. “The ‘LG Royal’ TV puts a clear distance between LG and its competition in the region,” he claims. In addition, LG provides wealthy Middle East consumers with an exclusive refrigeration option, a three-door Swarovski-encrusted refrigerator. Each unit features 4,900 crystals embedded into its handles, home bar and unit logo. Extravagant details such as these are key as the company works to meet the demand for size, status and exclusivity at the top-end of the market. ||**||Different customisation levels|~|Swarovski-Dios-Refrigerator.gif|~|LG’s three-door Swarovski crystal-encrusted refrigerator is another premium customised model pitched at regional consumers who demand exclusive household appliances regardless of the price.|~|LG is also working to meet the practical requirements of Middle East consumers. The company spent US$5 million in research and development to produce the LG Primian refrigerator, which is designed to keep dates fresh and to preserve the taste of other foods stored in the unit. LG even went as far as gaining the endorsement of Bateel, one of Saudi’s leading date producers, to help market the fridge. The Primian uses state-of-the-art ‘soft freezing’ technology to preserve meat and fish items for up to 20 days. The company’s range of fridge-freezers and AC units can be customised further to meet individual demands, with a selection of exterior image panels to help units blend in with household décor. Its ‘art cool’ picture series features a choice of popular images, including writings from the Quran and images of Mecca. Samsung Electronics is another vendor working to corner the market for customised products in the Middle East. The company’s sales and marketing manager for home appliances, Robin Kadyan, says that air conditioning units are one example of the company’s research and development in this area. “Air conditioners are very strategic in terms of our business growth in the region,” he says. “High temperatures in the Middle East, combined with high humidity levels on account of the coastal proximity of most areas in the region, means that air conditioners need to be specially customised with very sturdy compressors. Samsung’s UTR air conditioning technology was exclusively developed for this purpose in the Middle East. One of the largest contributions to our sales comes through the commercial air conditioner business. With a boom in the construction industry we expect to gain a sizeable business and market presence in this segment over the coming years.” Panasonic also places product customisation at the forefront of its Middle East growth strategy. The company markets a host of unique products boasting features that emphasise size and capacity to cater for larger Middle East families. The NA-W1350T is the world’s largest twin tub washing machine and was specifically designed for the Middle East market. It has a 13kg capacity and features Panasonic’s ‘triple pulsator’ technology with a reinforced plastic body. The company markets a blender and juicer (MJ-W176P) with increased capacity for the local market and a heavyweight dry iron (NI-21AWTXJ) that it claims is more popular in many Middle Eastern countries than western style wet-iron products. In addition to these items, it produces high capacity air conditioning units to deal with the added strain of cooling large rooms in villas during the extreme heat of desert summers. Its split cycle air conditioners have capacities ranging from 30,000-36,000 Btu/h, enough, Panasonic claims, to deal easily with the largest rooms at the hottest times of year. The units are designed with features such as power cooling and blue-fin condensers, while the condenser fins are specially coated to enhance durability and protect against water, air and other corrosives, something Panasonic say is vital in the hot and humid Middle East climate. The booming market for mobile handsets and peripheral technologies in the Middle East is also leading to the development of unique products specifically designed for local consumers. Among the most popular customised options are software modifications and unique aesthetic designs developed with local tastes and preferences in mind. “For a brand to succeed in any market you need to speak the language of the communities you are targeting, whether it be in terms of the actual language or more subtle features such as local content applications,” says Motorola’s Bedrossian. “This all impacts heavily on brand image, giving the perception to users that a specific vendor is working to meet the demands of specific markets.” Outlining Motorola’s strategy, Bedrossian explains that the company includes certain features in its handsets that are very popular across the entire region, such as a prayer time reminder function. However other features need to be tailored to specific domestic markets; for example the Hijri calendar is widely used in the Islamic Middle East, whereas people in Iran demand a distinctive Farsi calendar. “This is the second level of customisation vendors can apply by tailoring their products to meet consumer demands in various countries,” he explains. BenQ Mobile product manager for the Middle East and Africa, Mansoor Ahmed, tells ECN: “There are a lot of handsets on the market that have similar features, aesthetics and are comparatively priced. One way a vendor can differentiate its product range is by providing consumers with tailored applications such as ring tones, market-specific features and games. We are currently developing a vast range of customised features for our handsets including traditional Arabic games and other special region-specific applications.” LG is also increasingly engaging market demand for region-specific handset applications. One of the company’s most popular customised handsets is the F7100 Qiblah phone, which features a Qiblah indicator that employs a built-in longitude and latitude orientation to provide a graphical interface of the direction of Mecca from the user. The handset comes complete with a compass and prayer time alarm functions. Likewise, Samsung’s i300 smart phone offers a full Arabic language suite, comprising Qiblah director, Hijri calendar, text and audio recitation of the Holy Koran, Arabic-English electronic dictionary and an Arabic dialler and localiser. “Having a presence in the Middle East region means that it is very important for us to cater to the preferences of the local community whether they be cultural or religious. By modifying products to suit local tastes, we not only aim to acquire a larger customer base but also generate a deeper degree of loyalty from our existing customer base,” says Sandeep Saihgal, Samsung’s senior sales and marketing manager for telecommunications. “Furthermore, customisation initiatives help boost Samsung’s profile in the regional consumer electronics market as a multinational brand that is working to meet the demands of local communities.”||**||Localised R&D|~|Psonic200.gif|~|Panasonic's NA-W1350T washing machine boasts 15kg capacity.|~|According to Bedrossian, the process Motorola follows for developing region- or country-specific features begins with basic marketing. He says the company has learnt a great deal from organising focus groups involving consumers, retailers and operators across the Islamic world, adding that such initiatives have provided the company with a clear charter for developing specific features for Islamic consumers. “We do this kind of research regularly,” Bedrossian says. “Sometimes it is focused on a specific country in order for us to gauge how the market is operating and what consumer demands there are. “It enables us to be very focused in terms of our product development, particularly for specific markets across the Middle East. “Motorola Middle East has its own budget for research and development. If a new application runs on top of the core device software then we can develop this locally either in conjunction with our third-party developers or software development companies based across the region. If it presents a more complex proposition involving changes to the core software then we charge our development teams in India and Singapore with the task. However, our plan is to bring some of that development into the Middle East, most probably by establishing a research and development centre in Dubai sometime in the next 12 months. “Motorola is dedicated to developing customised products. It is an effective tool for empowering our regional channel partners and providing them with a commercial incentive to promote Motorola products. It is the role of the regional offices to do their own research and to look into building these applications.” The increasing availability of customised products specifically designed for Middle East consumers is testament to the region’s increasing commercial importance to consumer electronics vendors worldwide. The market for these products is likely to continue to expand, which will provide further incentive for vendors to increase their regional research and development in a bid to expand their market presence. Consumers are key to this process. While they continue to demand customised products, vendors will be forced to develop new technological innovations specifically designed for local markets. ||**||

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