Direct Marketing

in
Saudi Arabia

By
Dr. Ahmed Al-Shumaimri
Business Administration Departement
King Saud University AlQasseem Branch

2002

INTRODUCTION..........................................................................................................................................
CHAPTER 1....................................................................................................................................................
DIRECT MARKETING: HISTORY AND GROWTH....................................................................................
1.1 Direct marketing History........................................................................................................................
1.2 Direct marketing growth........................................................................................................................
1.3 Direct marketing around the World......................................................................................................
1.4 Reasons for growth of direct marketing...............................................................................................
1.5 Definition of direct marketing..............................................................................................................
CHAPTER 2..................................................................................................................................................
ELEMENTS OF DIRECT MARKETING.................................................................................................................
2.1 Direct Mail...........................................................................................................................................
2.2 Mail order.............................................................................................................................................
2.3 Direct response advertising..................................................................................................................
2.4 Telemarketing.......................................................................................................................................
2.5 Interactive (On line) Marketing...........................................................................................................
2.6 Direct marketing and other terms........................................................................................................
CHAPTER 3..................................................................................................................................................
THE ROLE OF DIRECT MARKETING..................................................................................................................
3.1 The major functions of direct marketing..............................................................................................
3.2 Direct marketing as a promotional tool...............................................................................................
3.3 Direct marketing as a distribution channel..........................................................................................
3.4 Drawbacks of Direct Marketing...........................................................................................................
CHAPTER 4..................................................................................................................................................
SAUDI MARKET.........................................................................................................................................
4.1 Saudi economy......................................................................................................................................
4.2 Population and culture.........................................................................................................................
4.3 Income..................................................................................................................................................
4.4 Marketing mix......................................................................................................................................
CHAPTER 5..................................................................................................................................................
THE STATUS OF DIRECT MARKETING IN SAUDI ARABIA..................................................................................
5.1 The field interviews..............................................................................................................................
5.2 Descriptive Analysis.............................................................................................................................
5.3 Elements of direct marketing in Saudi Arabia......................................................................................
5.4 Purposes, benefits, and barriers of direct marketing in Saudi Arabia.................................................
5.5 Implications and Recommendations.....................................................................................................
REFERENCES.............................................................................................................................................

To all members
of Saudi Management Association
(SMA)

INTRODUCTION
Since World War II (1945) the global market has changed; the great
demand on consumer goods led to the revolution of mass production to fulfil
customer wants, that survived until recent years. Nowadays, there is a surplus of
goods and an abundance of places to buy. The customer has become the
monarch again, and those businesses that do not recognise this change and
accommodate their marketing strategy to it are in danger of failure. Since we
entered the 1990s, the competitive space has been altered dramatically. The
fundamental structural transitions in a wide variety of industries brought about
by major changes such as deregulation, global competition, technology,
environmental issues, and changing customer expectations are imposing new
strains on managers around the world. Old strategies do not necessarily work
effectively. Managers, concerned with restoring the competitiveness of their
firms, are abandoning traditional approaches to strategy; they are searching for
new approaches that give guidance in a changeable environment. The essence of
strategic marketing becomes the search for the set of factors that will yield a
profitable competitive advantage in the long run. Todays firms must get
acquainted with the customers again, learn who and what the customer is, and
market to the customer, rather than to their own biases. That is the essence of
introducing approaches such as direct marketing as a strategic discipline that
achieves sustainable competitive advantages.
In response to this pressure, direct marketing is growing rapidly, and is
considered one of the fastest growing marketing approaches during the last two
decades. In the UK for example, direct marketing expenditure increased by
100% between 1990 and 1999. One form of direct marketing, direct mail itself
accounted for 90% of companies external expenditure on marketing directly to
individual households or trade clients in the UK (Key Note Report 1995).
Similarly, in the US, the overall media spending for direct marketing reached
$191.6 billion in 2000. Direct marketing advertising expenditures now represent
more than half ( 56%) of total US advertising expenditures. In Japan Catalogue
sales reached $24 billion in 1996, and growth was estimated to be 10% each
year.
Although this growing appeal is witnessed in several developed countries,
direct marketing in the developing countries such as the Gulf States (Saudi
Arabia, United Arab Emirates, Kuwait, Qatar, Oman, and Bahrain) is still in its
infancy. In Saudi Arabia, official statistics for direct marketing are still not
available, and up to 2002 there were fewer than 10 agencies in the whole
country classified as direct mail services agencies. Mail order and catalogue
businesses are also scarce. Most of the existing mail order companies are
branches or agencies of major international companies such as Freemans,
Quelle, MotherCare, JC Penney, Avon, Next, and Great Universal. Banks and
financial services are the primary users of direct mail. According to the chief
executive of the Post Office in Saudi Arabia, banks account for more than 40%
of the total business-to-business direct mail. The remaining users are companies
involved in retailing, health services, hotels, and travel services. There is a
growing need to attract the attention of marketers as well as researchers to the
significance of using the approach.

The objective of publishing this book is to provide a profile of the supply

side of direct marketing in Saudi Arabia. It will present a descriptive analysis of
the practice of direct marketing, its purposes, incentives, and the barriers to
using the technique. Unlike the situation in Western countries, where a
considerable amount of research work has been conducted on both the supply
and demand side of direct marketing, to the best of the author knowledge, no
research about direct marketing has been carried out in Saudi Arabia. Therefore,
such a descriptive profile is expected to provide insights, and has implications
to improve the understanding of direct marketing in Saudi Arabia in particular
and the Gulf States that have similar characteristics in general. And finally, it
will provide researchers as well as practitioners with general views and useful
information about the characteristics of direct marketing.
This book is divided into five chapters. The first chapter provides a brief
presentation of direct marketings history, and reasons for its growth. Also, it
provides a clarification of the conceptual meaning of direct marketing, as well
as a brief discussion of its definition among academics and practitioners. The
second chapter presents a brief explanation of the elements of direct marketing.
Also, in this chapter, the relationships between direct marketing and other
marketing approaches are explained, and the characteristic differences among
these approaches are distinguished. The third chapter highlights the strategic
role of direct marketing along with a discussion of its advantages and
disadvantages. The chapter concludes by explaining that although direct
marketing has been used commonly as a promotional tool, it is extensively used
as a distribution channel. The fourth chapter presents a brief background about
Saudi Arabias market. It presents a detailed description of channel structure in
Saudi Arabia and some of the major determinants of marketing strategy
including population, income, and culture. Furthermore, this chapter throws
some light on the marketing mix in Saudi Arabia and the physical infrastructure
related to direct marketing. In the fifth chapter, the results of the author's
empirical research into the status of direct marketing in Saudi Arabia will be
discussed and the major findings will be highlighted. It discusses the significant
findings regarding the purposes, incentives, and barriers to using the approach.
Lastly, it explains the possible implications of these findings, and provides a
number of managerial implications and remarks.

Dr. Ahmed AlShumaimri

ahmed@almajd.com