Brands and Boycotts in the Middle East

A relatively modern phenomena that has been taking place in the Middle East and North Africa has been the rise of boycotts of some brand names. Boycotts are often a form of economic protest against brands, which are perceived to represent an enemy or its economy.
Probably the most enduring boycott has been of brands which are closely linked with Israel and the perceived threat of Zionism. Various institutional boycotts of Israel have been reinforced by Arab nations since 1922, and with a more comprehensive boycott by the Arab League in 1945.
However, since the last 30 years these government imposed boycotts have weakened in many countries and are even disappearing all together in some countries. Additional pressure has been put by the US government after passing its anti-boycott laws in 1977, an action especially spearheaded by the American Jewish Committee.
And yet even today boycotts of Israeli affiliated brands remain largely popular. Today, the Arab streets do not necessarily need political or legal measures to maintain boycotts, as it has now become a popular form of consumer activism. This has become even more widespread through the use of modern communication systems, especially through internet and social medias.

Boycotts often impact brands which have a strong perceived identification with political entities and countries, which are considered to be enemies. Besides having in the Arab world an anti-zionism connotation it has also an arab nationalist dimension, as well as a cultural-religious dimension to it. For example, after the infamous caricatures of Prophet Muhammad (peace be upon him) in Danish newspapers, several Danish brands and products faced boycott throughout the region and the Islamic world.
The impact of such boycotts is quite apparent. It means important loss in trade and economic benefits for corporations as well as to countries boycotting. Yet many people boycotting products are well aware of some loss in economic benefits or other material benefits, but they are willing to make such sacrifices for the sake of their principles.
Affected companies and nations react very differently to such boycott measures. For me, one wrong approach is to put legal and political pressure against popular institutional boycotts, such as measures taken by the USA against the anti-israeli boycott. Yet until today the situation has not improved a lot, on the contrary these boycotts are now been managed by the people in the Arab streets themselves. Furthermore with the changes taking place in Arab countries since the spring uprising, such boycott measures might even find new strength, especially in Egypt.
Other countries, such as in the above mentioned case of Denmark, the Danish government had been more proactive in many Arab countries with a PR campaign aimed at clarifying more clearly its position and the neutrality of Danish companies. Although Danish products were affected by the boycott, it has been far more limited than expected.
Affected companies themselves often react passively to such boycotts. This I believe is one the biggest mistakes. It is important to consider and study more clearly what brand perception one wants to communicate in the Middle East and North Africa. This should take into account the specific political and religious-cultural nature of the environment. Furthermore, there is a necessity to reconsider whether one is truly dedicated to realigning its brand image or not (i.e. Cost vs Benefit analysis). I believe that many companies that are active on the international market with their brands need to consider what impact their political affiliations would have on their business. It is especially important for companies which have consumer oriented brands to be perceived as being politically neutral.
Moreover, many companies can positively improve their image by committing themselves towards being more socially responsible within local communities and the region. It is important to have a corporate governance policy that genuinely displays a sense of social responsibility awareness and engagement.

Useful references:

• Website: Arab shoppers are abandoning western brands for local alternatives (The Economist, 31.10.2002), this is a very interesting article from The Economist, which illustrates well the huge impact of boycotts on brands.
• Book: "Brand Valued: How socially valued brands hold the key to a sustainable future and business success", a valuable book from Guy Champniss, that illustrates the point I made in my article about the importance of social value and responsibility of brands.  

Creative Souqs

A few years ago I went to a shopping center in Jeddah, which actually looked more like a small shopping mall with about 25 to 30 stores. The aspect that struck me the most (as someone coming from Europe) was that all these stores carried only one type of item: Gold jewelry. This is of course not unique to Jeddah. You will find that in practically every city in the Middle East and North Africa. And of course this is not just limited to gold jewelry. Often Souqs and bazaars are divided up into sections, each specific to a particular category of products, such as jewelry, clothing, leather goods, toys, fresh foods, spices, crafts, furnitures, ...

As a marketeer coming from Europe, you often wonder how can every one succeed in such a competitive environment? In most countries of Europe and North America, the usual marketing approach is to locate your business in an area with high demand and low competition. Therefore, stores offering similar products are more spread out.
However, there are clear benefit to be close to your competition. Besides the obvious benefit to customers which have better selection and bargaining power, the shop keeper also benefits. As customers do not need to run around the city for all their shopping needs, Souqs attract huge masses of customers.
But there is according to me a far more important benefit. In such a strong competitive environment, shop keepers need to find ways in differentiating themselves from their neighbors. This need is often translated into becoming more innovative and creative. For example, a gold jeweler would through the feedback from his customers request from his goldsmith to elaborate a newer and/or better design. That's why when I visited a jewelry store in that market in Jeddah I would rarely find a duplicate jewelry design in another neighboring store. The result is that you have literally tens of thousand of different designs in gold Souqs of the Middle East. Far more than you would find in New York or London. The same applies to many other products which are locally produced, especially by local craftsmen, which maintain this close and personalized relationship with store owners. This is probably the main reason why historically the Middle East and North Africa exhibit such a rich creativity in traditional crafts products.
Unfortunately, with the rise of standardized industrial products from local factories, from Europe, and mainly now from China, this close relationship between customer, shop seller and manufacturer has weakened a lot, but it hasn't disappeared altogether either.
I think there are important lessons to learn from the creative environments that Souqs have engendered. The fact that competitive environment fosters creativity and innovation is of course well known. But often the close relationship between end customers and manufacturers is somewhat overlooked and needs to be nurtured. This also means to create a more Souq-like environment, where new innovative products and services can develop.

The Baksheesh Factor

Baksheesh is a popular term used through out the Middle East, of persian origin it means "lavish remuneration and bribes". Despite the fact that corruption is widespread in many countries of the Middle East and in North Africa, it is still a very sensitive issue and it is very difficult for individuals and companies to discuss it in a frank and open manner. Yet one of the main issues that arab spring revolutionaries have been decrying over and over again has been about the wide spread corruption in their countries. Indeed corruption has stifled the economic welfare and growth of many developing countries. The general population is nearly always confronted with additional "tips" that public servants require of them to get any bureaucratic job done. But beyond individuals, practically all corporations are victims or are complicit in the Baksheesh dilemma.

In some developing countries, several key public and administrative positions, which have a high economic value are highly sought after. Sometimes these positions are often bid over or bought. An example of such positions would be customs duty officers or at a higher level those dealing with public tenders. Corruption can be highly organized, they are often built up as complex parallel hierarchical structures.
For many non-local corporations and individuals this Baksheesh culture is initially not easily visible. Often those involved in it would out of shame and some sense of honor not openly make a display of such "lavish remuneration". But corporations often need to take account of the Baksheesh factor. Companies that stoically try to resist paying the Baksheesh are often penalized and often have difficulty in being competitive in the "open" market. This is an important moral and ethical dilemma for many. Unfortunately it is an additional cost that needs to be taken account of, whether as a direct cost, such as "additional" custom duties or as an indirect cost, such as "gifts" or as "marketing & sales cost". The problem is that the Baksheesh factor knows no limit, an unscrupulous corporation with deep enough pockets can buy its way to a monopolistic situation.
There is also an important cultural aspect to Baksheesh or the general idea of remuneration. The concept of providing assistance and providing generous gift is an important social aspect of Islamic culture. Furthermore, business negotiations is very much an issue of deepening one's trust of one another and of building relationships, this is especially true in the Middle East and North Africa. The concept that "if you scratch my back and I scratch yours" is expected. But unfortunately, this usually beneficial aspect of Islamic business ethics can become morally blurred when it starts having a negative impact on the broader society and the economy.
Nonetheless, the situation is not as bleak as it seems. Many countries in the Middle East and North Africa are on a real "Crusade" or rather on a real "Jihad" against corruption. There has been a lot of progress, especially in GCC countries, where Qatar leads the pack as the 14th least corrupt nation in the world. But on the other end of the scale, Iraq is considered to be the world's 3rd most corrupt country. The fight against corruption has also found new strength as a key demand in many recent popular uprisings and protests of the region.

Useful references:

• Website: Transparency International (Corruption perception Index 2010 results)
• Book: Economic Performance in the Middle East and North Africa: Institutions, Corruption and Reform (Routledge Political Economy of the Middle East and North Africa)

Copy Cats & Copyright

"How about a designer Louis Vuitton bag for your wife! Only 10 Euros! It is a top quality fake!" cries one of the dozen shop sellers lining the narrow bazar passage. They are all selling the same array of fake branded designer leather bags,  copies of the latest model that appeared just a couple of months ago on the expensive shelves of Parisian shops. The more discerning fake buyer might add a few euros more for a higher standard fake.

It is amazing to see how many fake goods are being sold in traditional markets in most Middle Eastern and North African countries. Many fake goods are imported from China, while others are even manufactured locally.
In some countries certain business segments have become totally dysfunctional due to copyright infringement. This is especially the case for software industry. For example you probably will not be able find more than half a dozen shops in the big metropolis of Casablanca (with a population of 7.5 Millions) that carries original Microsoft Windows or Office products. Yet you can get hacked versions practically around every street block for a few dirhams. Even many large corporations use hacked versions of software which would cost hundreds of euros in Europe.
Religious values and ethics play an important role as well. Islamic Sharia'h has a comprehensive set of ethical rules and values. Many in the region follow such rules. For example, selling a fake good as an original would be considered cheating the buyer and would be considered committing a sin for the practicing muslim. Of course the more scrupulous  and materialistic seller wouldn't care much for such ethical issues. In my experience, I have rarely found sellers trying to hide the fact that the goods are fake. However, there is a grey zone for many when it comes to copyright infringement. Copyright and intellectual property rights are recent modern concepts. All MENA countries are signatories of most international copyright acts and conventions. Although this debate among Islamic scholars is not new, but only recently have they consolidated their position on this issue. Today Islamic scholars consider most copyright infringements to be equivalent to theft or cheating and therefore sinful.
Although people throughout the region have very strong brand awareness, there is a strong lack of understanding and acceptance of the concepts of copyright and intellectual property rights. Actually this is the case in much of Asia and Africa. Some countries lack strong legal protection in this area, while others lack law enforcement for their laws.
But a few countries such as the UAE have come a long way in the last few years and have introduced strict laws against copyright infringements, which are enforced with harsh punishments (large fines, imprisonment up to 9 months and loss of business licenses).
In many poorer developing countries, the authorities often close their eyes on such matters. They do this for 2 main reasons. Firstly, because they have more urgent priorities. Secondly, because putting too much restrictions at a mass consumer level will only antagonize the regime further from the broader population. This is bad politics, especially for the remaining more autocratic regimes.
However there are a number of steps that your company can take to protect their brands and intellectual property:

1. Determine first if similar products to what you would like to introduce are widely copied and distributed illegally already. For example if you are trying to market an Arabic version of a graphic design software, well you can be sure that it will be widely copied.
2. Secondly be sure that your brand, trade marks and intellectual properties are registered within your target countries. In my experience it is more worthwhile to get international coverage with WIPO (for selected countries), than directly with the local organization. WIPO based registration have more weight in case of dispute.
3. Get a competent local specialized property rights law firm to represent you. You need to spend some time on this to do a proper screening.
4. You need to actively monitor the market.
5. You need to decide on how far you want to pursue any copyright infringements. Not all cases are worth it, especially if you are targeting more vulnerable poorer segments of the market. It could cause a PR backlash on your firm and products.

Despite many challenges faced today by infringement on copyright today, the situation is improving in many MENA countries. It pays to play it safe and get proper protection and be vigilant, and as MENA economic growth perspective remain strong, the rewards you can reap can be great.

Useful references:
Book: Middle East And Arabic Countries Copyright Law Handbook (World Business, Investment and Government Library)

"I heard it through the Grapevine"

Whenever I go through the traditional Souqs in Casablanca, I am amazed on how fast new products and trends get spread. Most often such products are rarely advertised. The popularity of successful products and brands are spread mainly from word of mouth.
This is not just true with mass consumer products. I had a similar experience with my own company in Morocco, when we first introduced new moped models in the market. We initially did just a small market trial. But during this trial period the motorcycles become successful very fast and the word spread of the quality, features-rich and price value that was been offered. The demand quickly grew. Although we had originally made plans to launch a marketing communication campaign using advertisements, we soon found out that this costly effort had become redundant. Instead we concentrated in trying to get a better feel for the word on the street and worked on ways of staying on top of it.
The informal word of mouth marketing communication is far more important in North Africa and Middle East than it is in Europe or the USA. Social networks are much more broader and more widespread in the Arab Culture.
Unfortunately, it is a communication system over which one does not have any control over. However, one can pay closer attention to the word on the street and gather information on what opinions are being built up through this organic network. Often the consequences are that through this network, products and brands, which are perceived to be "good" have their market value and reputation amplified, but the reverse is also true.

Is There Such a Thing as a Coherent MENA Market?

When you travel from country to country throughout the MENA region you don't fail to notice the great diversity and contrast between them. Morocco for example has a quite different cultural, economical and social structure than let's say Saudi Arabia. This is true of most MENA countries.
You might say that they share a common language: Arabic. Yet this is not exactly true. It is true that classical Arabic is common to all these countries as far as a written and as an official communication language is concerned. But the language that people use for dealing with one another orally has strong differentiated dialects from country to country. This is especially audible when comparing Moroccan dialect to that of let's say Oman. So can we really talk of a common MENA market?
In a way I think you can. In fact this common market is actually in the development process, especially within the last 20 or some odd years. The main driving forces for this are political and economical. There has been stronger economic ties between countries of the region. In fact many countries have seen an important shift in trade relationship from country to country. This is today mainly driven by GCC countries potential for investment. Today two-thirds of GCC's investment outside of their common market takes place within the MENA region. Many local companies and brands are now spreading throughout the region.
Furthermore, the current political changes taking place throughout the region due to the "Arab Spring" is a challenge mainly to the old nationalist regimes. The fire of revolution (or evolution) is been inspired across the border within the region, a sign of common aspirations and values. As many countries become more democratic, barriers between them will come down even further and trade exchange will increase as well.
So you can say that a strong common MENA market is in the making.

Welcome to Souketing

Souketing is my way of combining the modern and more "Western" approach to Marketing with the arabic concept of "Souq", which can be translated as a market or a commercial district.
Although I believe that modern marketing concepts and tools provide a universal means to determine what products and services can be offered to a market, they do however need to fit the specific cultural background and in the case of the North African and Middle-eastern (MENA) region: the islamic/arabic culture. Furthermore, this region itself has a rich commercial history and has developed its own business ethics, rules and values, which need to be taken account of. While on the other hand, many cities in the region are becoming more modern and where unadapted western marketing strategies are also been used, but often with mixed results.
Therefore, I think there is a great need for a platform to discuss these issues and develop a proper approach to the MENA market with more appropriate marketing strategies. Moreover, there are lessons to be learned that could be of use in other regions.