Nowadays, Almarai is one of the largest enterprises in Saudi Arabia’s dairy industry. Along with its main brand, Almarai Group includes such brands as Alyoum, L’usine, 7 Days, and Nuralac (“Almarai Brands” par. 1-5). In business conduct, the company adheres to transparency policy. Moreover, Almarai‘s corporate values are quality, innovation, fairness, and trust which represent organizational responsible social behavior.
The company offers a wide range of dairy products: fresh dairy, long-life dairy, fruit juice, cheese, butter, bakery, poultry, and other categories (“Annual Report” 2). Product diversification, organizational culture, and added customer values help Almarai to retain its firm competitive position in the market and hold a leading position in the industry on the domestic market.
Dairy products constitute an essential component of the Saudi diet, and the demand for milk, cheese, and other milk-related items is always high (Sadi 461). To meet increased demand, the dairy industry in Saudi Arabia is actively growing and, nowadays, it is characterized by intense competition. At the current stage of the industry’s development, a lot of similar product substitutes are offered by Almarai‘s major competitors, such as Fromageries Bel and National Agricultural Development Co., and the manufacturers shift their focus from product diversification to the enhancement of marketing activities, communication with consumers, and advertising to increase sales progress and attract potential customers (“Dairy in Saudi Arabia” par. 1).
It is observed that Almarai led the competition in cheese category “with a 26%value share in 2015” (“Dairy in Saudi Arabia” par. 2). Along with strong promotion campaigns and consumer communication strategies, the major company’s competitive advantages include technology-based production, innovation, effective supply chain and distribution management (Sadi 463). It is possible to say that the optimization of the firm’s internal connections and interaction patterns allows the increase in manufacturing and service operations’ cost-efficiency.
Researchers suggest that the integration of distribution channels and supply systems helps to optimize organizational activity in time and facilitates the reduction of expenses (Ma et al. 123). Thus, by exploiting its competitive advantages, Almarai gains an opportunity to adhere to customer-friendly price policies which allow it to keep the leadership position in the market.
While implementing the low-price strategy, Almarai strives to achieve a sufficient level of product differentiation which supports the company’s price leadership. Moreover, the company has a significant capacity for value creation regarding product quality which helps to retain consumers and prevent them from switching to product substitutes offered by other manufacturers and avoid adverse impacts on profitability and overall organizational performance.
The generation of competitive advantages through the implementation of differentiation strategy requires the consideration of consumers’ needs and preferences. Effective customer communication mediated through social media helps Almarai to improve its marketing approach and develop unique products that are always in demand and can be easily distinguished from the competitors’ offers.
It is worth mentioning that in addition to creating a standard set of customer values – price, customer involvement, and quality – Almarai targets an extended range of social interests and strives to act according to the principles of corporate social responsibility by taking into account environmental issues, social problems, and ethical values (“Almarai in the Community” par. 2).
Overall, Almarai‘s business model and marketing strategies significantly increase its competitiveness in the traditional dairy industry in Saudi Arabia. Due to the effective product distribution and supply chain management, product range extension and differentiation, the company managed to develop its core competencies which helped to increase Almarai‘s ability to meet customers’ needs and effectively integrate its brands in the domestic market.
Works Cited
“Almarai Brands.” Almarai, 2016.
“Almarai in the Community.” Almarai, 2016.
“Annual Report.” Almarai, 2015.
“Dairy in Saudi Arabia.” Euromonitor International, 2015.
Ma, Yanfang, et al. “A Novel Integrated Production-Distribution Planning Model With Conflict And Coordination In A Supply Chain Network.” Knowledge-Based Systems 105. (2016): 119-133. Academic Search Complete.
Sadi, Muhammad A. “Marketing Trends and Future Challenges: A Review of Dairy Industry in Saudi Arabia.” International Journal of Dairy Technology 67.4 (2014): 459-466.