Market Study and Action Plan for Saudi & Qatar for Furniture

Developing a Market Study & Action Plan for KSA and Qatar for Jordan

Furniture Exporter Manufacturing Association (JFEMA).

“The European Union is made up of 27 Member States who have decided to gradually link together their know-how, resources and

destinies. Together, during a period of enlargement of 50 years, they have built a zone of stability, democracy and sustainable

development whilst maintaining cultural diversity, tolerance and individual freedoms. The European Union is committed to sharing its

achievements and its values with countries and peoples beyond its borders”

August-2013

Table of Contents Introduction ..................................................................................................................................... 2

1. Current Market Position .............................................................................................................. 3

1.1 Jordan Furniture Market Analysis ......................................................................................... 3

1.2 Product mix ........................................................................................................................... 3

1.3.1 Saudi Arabia Market ....................................................................................................... 4

1.3.2 Qatari Market ................................................................................................................. 7

2. Market Trends ........................................................................................................................... 10

2.1 Saudi Arabia Market ............................................................................................................ 10

2.2 Qatari Market ...................................................................................................................... 12

3. Export Market Auditing ............................................................................................................. 13

3.1 SWOT Analysis ..................................................................................................................... 13

3.2 Target Market Auditing ....................................................................................................... 14

3.3 Competitors Analysis ........................................................................................................... 17

4 PESTEL Analysis ........................................................................................................................... 20

5. Market Entry Strategy ............................................................................................................... 22

5.1 Markets and Segments ........................................................................................................ 22

5.2 Positioning and Branding Strategy ...................................................................................... 25

5.3 Product Strategy .................................................................................................................. 26

5.4 Pricing Strategy .................................................................................................................... 27

5.5 Distribution Strategy ........................................................................................................... 27

Recommendations: ....................................................................................................................... 28

Annex List of Most Important Construction Companies in Saudi Arabia ...................................... 33

Introduction

The furniture industry in both Saudi Arabia and Qatar has come up as one of the vibrant

sectors over the past few years. Both countries and despite the 2008 economic crisis,

witnessed remarkable growth in this sector, either in retail or B2B. With the entry of a

number of real states developers and increasing demand for residential property, the

housing industry has witnessed huge growth. Young population base, government

funding for huge projects, booming economy, and world cup 2022 in Qatar, all have

provided strong base to furniture industry for developing new horizons.

The evolution of Furniture manufacturing in Jordan over the past few years along with

the existence large-scale factory with high capacity and up to date machinery has

enabled Jordan to penetrate Saudi and Qatari markets and positioned the Jordanian

Furniture Manufacturer with its high quality, short lead time and high level of

communication. This study aims to identify opportunities, setting marketing entry

strategies as well as export marketing action plans that will guide JFEMA in its future

business activities to target selected markets.

Jordan Furniture Exporters & Manufacturers Association (JFEMA) is a non-profit

association established in 2004 with the core purpose of being the sole representative

of the Jordanian furniture exporters and manufacturers on the local, regional and

international levels through delivering a wide spectrum of needed services including:

Sector promotion and marketing, export readiness consultation, networking, work force

training, and maintaining information systems.

Our study will consider the following product group representing the product groups

mostly manufactured and exported by Jordan

- HS-9403 : Other furniture and parts thereof.

1. Current Market Position

1.1 Jordan Furniture Market Analysis

Despite the global financial crisis, Saudi Arabia and Qatar are one of main targeted

markets for Furniture Producers in the globe. Jordan as rest of the Asian competitors in

this industry needs to maintain its export growth opportunities:

- Cost competitiveness

- Export diversification investments

- International competition

- Access to trade facilitation services.

Jordan is part of a large market network where the use of information technology in

business helps Jordanian exporters expand market share in the design furniture market

and build competitive positions in the global value chain.

According to the Jordan Furniture Exporters & Manufacturers Association (JFEMA),

there are around 3000-4000 furniture makers in Jordan. It is the experience of the

Jordan Exporters Association (JEA) that successful Jordanian furniture exporters are

known for supplying quality furniture and for maintaining professional supply chain

management systems. In addition, those who advanced in exporting furniture from

Jordan have implemented vigilant marketing strategies, have exhibited readiness to

conform with international labeling and certification standards, and have invested in the

technology to perform and demonstrate content analysis as much as needed by the

buyers. The most noticeable factor of export success in Jordan‘s furniture industry has

been the outgrowth of the interior design industry and increasing demand for custom

furniture products.

1.2 Product mix

Product

JFEMA members have a strong presence in the Jordanian market, the existing

companies are satisfying the need of the local market when it comes to furniture

demand in different aspects. They manufacture and sell:

Kitchens

Office Furniture

Bedroom Furniture

School Furniture

Lab Furniture

Doors (FR & NFR doors)

Chairs

Garden Furniture

Hotel Furniture

The local manufacturers focus on the local market as well as the gulf area. Many of

them have succeeded in penetrating Gulf markets and been awarded huge projects to

supply and install as well.

Place

Members in JFEMA have their own showrooms in Jordanian market where they exhibit

their product lines. Some of them has followed the same strategy and established

showrooms in export markets by alliancing with companies within the same industry

which enabled them to support their business services like installation, after sales

service and ongoing maintenance.

Price

Since 95% of raw materials imported for manufacturing is exempted from

custom duties, furniture manufacturer are able to compete when it comes to

total cost of raw materials. They have wide experience and exposure to sources

of raw materials around the world. The profit margin as well as overheads will

differ from one manufacturer to another, this creates competition between

Jordanian manufactures as well as manufacturers in targeted countries. 1.3

Furniture Market Potential

1.3.1 Saudi Arabia Market

The furniture industry in Saudi Arabia is a fast growing, highly untapped industry. With

the entry of a number of real estate developers and increasing demand for residential

property, the housing industry has witnessed tremendous growth in the past years. This

has infused growth in the household furniture market growth. Booming economy,

government support and young population base coupled with other secondary factors

have created a strong platform for the furniture industry to grow to new horizons.

Currently, the Saudi Arabian furniture industry is witnessing a huge demand-supply gap

due to increasing demand over local industry production and supply. Domestic

manufacturers are facing shortage of furniture raw material and parts and hence

imports become a need. However, the dependence on imports will reduce in near

future as many international furniture giants are establishing their roots in Saudi in

addition to many local companies are expanding their business and facilities to

accommodate the increasing need and demand.

Construction activities in Saudi Arabia have grown remarkably, the value of projects

planned / announced for 2010-2015 is roughly SR 1,575 Billion. This growth of

construction industry will further enhance the Saudi furniture market.

Based on Credit Suisse study for Emerging Consumer Survey 2012, the Saudi consumer

remains one of the most optimistic, expecting to see improvement in the state of their

personal finances. During 2011, there was significant increase in public sector incomes,

where minimum wage for government employees almost quadrupled. 25% of the study

respondents see excellent time to buy property or cars. The stabilizing effect from Saudi

government policy and robust oil revenues have provided government spending with

full power to support public sector income and boost spending more generally. In 2013,

a government pledge to spend USD 130 billion on housing and job creation.

Table 1 :List of Furniture imported by Saudi Arabia

Code Product label Imported

value in

2008

Imported

value in

2009

Imported

value in

2010

Imported

value in

2011

Imported

value in

2012

'940360 Furniture, wooden 6,150 11,122 142,003 199,031 359,958

'940350 Bedroom furniture,

wooden

1,060 73,252 168,266 220,413 267,338

'940320 Furniture, metal 694 490 48,495 58,981 261,366

'940390 Furniture parts 201 129 22,412 26,035 181,639

'940330 Office furniture,

wooden

- 84 103,823 141,477 98,627

'940389 Furniture of cane, osier

or similar materials

(excl. of bamboo, rattan

- - 1,809 2,272 80,602

'940310 Office furniture, metal - - 54,980 59,409 51,245

'940370 Furniture, plastic - - 14,924 17,734 30,313

'940340 Kitchen furniture,

wooden

2,259 1,188 41,974 51,078 24,904

'940381 Furniture of bamboo or

rattan (excl. seats and

medical, surgical, dent

- - 620 515 886

'940380 Furniture of materials

includgcane, osier,

bamboo similar

materials

- - - - 11

Unit : US Dollar thousand

Sources : ITC calculations based on UN COMTRADE statistics.

Figure 1 : List of supplying markets for Furniture imported by Saudi Arabia

1.3.2 Qatari Market

As a result of the government's investment and the feel-good factor leading up to

hosting the 2022 FIFA World Cup, Qatar's economy is expected to gain further

momentum. Handing of power from Sheik Hamad to Tamim, will have its own effect on

country's economy, Tamim is new mood that is making a shift in his father abroad

policy. Rebalancing, discipline and the need to centralize are the main focuses of the

new Emir.

The international Monetary Fund (IMF) forecasts an expansion in Qatar's GDP up to

18%, and the state is committed to a huge investment program that will see tens of

billions of dollars flow into the economy through new projects, most of which are aimed

at improving the nation's infrastructure, diversifying the economic base and boosting

employment.

Qatar has the highest in the world per capita GDP with more than $86,000 a year, a

figure that is foreseen to grow as the economy continues to expand. A survey conducted

by MasterCard Worldwide for Index of Consumer Confidence issued in December 2012,

found out that Qatari consumers were among the most positive in the region. Qatar was

ranked second on the index for the first half of 2011, behind only Saudi Arabia, while its

overall rating on the index of 83.6 was well above the regional average of 71.6.

The huge jump in demand is feeding growth in shopping supply, with a steep rise in

retail space coming onto the market over 2010. According to a report released by

property consultancy Colliers International at the end of 2011, the total gross leasable

(GLA) available to the retail sector in Doha topped 630,000 SQM, up by some 30% since

2009.

Qatar's retail, hospitality and tourism sectors have given a small foretaste of what to

expect in 2022 during the Asian Cup held lately in Qatar. Though there will be doubts for

some deflation for the sector following the World Cup, but it would not be that

extreme, as the expected expansion of the domestic economy and population growth

should soak up the increased retail capacity long after the final whistle in 2022.

Table 2: List of Furniture imported by Qatar

Code Product label Imported

value in

2009

Imported

value in

2010

Imported

value in

2011

Imported

value in

2012

'940360 Furniture, wooden, 47,770 68,257 133,760 103,075

'940320 Furniture, metal, 23,723 25,946 30,134 33,972

'940350 Bedroom furniture,

wooden,

27,575 33,804 30,719 33,776

'940330 Office furniture,

wooden,

24,710 27,470 28,784 24,803

'940390 Furniture parts 6,449 12,121 28,769 22,029

'940310 Office furniture,

metal,

73,933 58,871 9,275 20,495

'940389 Furniture of cane,

osier or similar

materials (excl. of

bamboo, rattan

- - 11,403 13,686

'940340 Kitchen furniture,

wooden,

27,153 26,516 9,131 9,963

'940370 Furniture, plastic, 17,139 12,701 2,354 2,992

'940381 Furniture of bamboo

or rattan (excl. seats

and medical, surgical,

dent

- - 526 335

'940380 Furniture of

othmaterials,

includgcane, osier,

bamboo/similar

materials

9,111 3,260 107

Unit: US Dollar thousand

Sources: ITC calculations based on UN COMTRADE statistics.

2. Market Trends

2.1 Saudi Arabia Market

Saudi Arabia is one of the largest markets in the Middle East and welcomes suppliers of

high standards. Wealth is driving the kingdom towards more changes. Families are

investing their existing homes and demand new or replacement furniture for home

extension and redecorations. Due to culture issues, home is considered the place where

many spend most of their time, socialize and even work from.

Taste and needs in furniture have changed to mutli-functional and space-efficient items,

including furniture for home entertainment, relaxation, socialization and work. Demand

for upholstered seating and other furniture has increased. Eco-design furniture is

becoming a trend now, where it is becoming a main requirement in B2B project

submittals and requirements.

Demand for furniture is influenced by the media with a large number of TV programs

and magazines dedicated to home makeovers and design. Technology is playing a major

role here. Where internet is becoming a more relevant marketing and selling tool for

furniture. An important development is the introduction of websites that allow

consumers to build up their own interior designs, swap ideas and see how a particular

item will look like their own home.

The youth taste is towards finer lifestyle and comfort, due to their travels around the

world and exposure to other cultures. The upper and upper middle class families buy

American furniture from major local trading establishment including Habitat, American

Furniture and Elegant Home. Middle class usually buys Far Eastern furniture and

occasionally locally made purchase from souks and informal markets.

There are number of other retailers who carry a large variety of furniture from global

suppliers. Key retailers include Al-Mutlaq, Qutub & Sagaff, Al Mira and Abdellatif

Furniture.

Most of the large Western Brands already exist in SA, like Rowe, Blackstone, Henerdon,

Lane and Bernhardt. Significant opportunity exists for smaller firms, especially those

with quality product targeting the upper middle and high end designed sectors.

To succeed as exporter to Saudi Market products and marketing efforts should focus on

helping wholesale buyers reach targets and achieve policies. Demand is always for great

quality products at low prices for customers, while maintaining the ethical standards

they require. Product testing, certification, and labelling are important aspects, and

more important is the exporter's invoicing and order management system.

2.2 Qatari Market

Qatar has many specialist furniture stores, but only a few which cater to Western tastes,

so Qatar's Western expat community often imports goods from abroad or sticks to very

specific ranges in the country's biggest furniture retailers, Homes R Us and Home

Centre.

Qataris in general love elaborate, extravagantly designed furniture and there are many

stores which cater to their tastes. There are no online shopping options for consumers

looking to buy furniture.

3. Export Market Auditing

3.1 SWOT Analysis

Jordanian Manufacturer auditing

Strengths

High Quality, durable, reliable product

Qualified designers & architects

Flexible manufacturing capabilities

State of art technologies & modern machinery

Most companies have ISO9000 and other quality certificates

Clustering and unified activities between stakeholders to have collaborative

activities

Short Lead time

High and easiness level of communication

Joint ventures and partnerships with international companies

Good reputation and good projects lists

Weaknesses

Absence of specialized institutes in professional training

Deficiency in local market protection

Lack of knowledge in required submittals for awarded projects

Well-structured marketing plan for furniture sector

Packaging and labelling to meet high standards.

High quality raw materials available in local market to enable quicker delivery.

Inefficient product distribution

Presence of JFEMA members in targeted markets is project driven

Disability to develop highly qualified future managers specialized in this field.

High distribution cost

Lack of market research and competitors watch

High dependency on foreign suppliers

High raw materials cost

3.2 Target Market Auditing

Jordanian Market

Opportunities Threats

Proximity to both targeted markets Depletion of wood supplies in the

world

Stable Environment compared to

other countries in the region

Financial crisis reduced the cash

flow

Increased consumers' awareness

regarding furniture and its brands.

The effect of fuel fluctuation price

on shipping and production cost

Tendency and ability to imitate the

consumption behaviour of the

upper class

High competition in terms of

individual sales

Lack proper technical training

programs and facilities

Saudi Market

Opportunities Threats

Application of GCC common

external tariff of 5% for imported

goods, while Jordanian imports are

exempted Pan Arab agreement

SA gives priority in government

purchasing program to GCC

products. They receive up to 10%

price preference over non GCC

products

Alliances and distributors are of

Jordanian nationality familiar with

Jordanian manufacturing brands.

Law of commercial disputes

settlement

Large population and growing rate Trade barriers – ziad report #31

Overall string economic

development

Competitive business environment

is expected to make Saudi Arabia

appealing to investors once risk

appetite returns to global markets

Qatari Market

Opportunities Threats

Population is young, the proportion

of the population under 15 years in

GCC will account for 24% in 2020.

(The Economist Intelligence Unit)

Fluctuating Jordan-Qatar relations

Increase in infrastructure and real

estate development.

Change in Qatar Leaders and new

country strategy.

Infrastructure development,

construction activity and real estate

development and tourism are all in

rise.

Manufacturers coming from UAE

and mainly moving from Dubai

after 2008 financial crisis.

FIFA World Cup in 2022 is

prompting heavy government

spending in infrastructure.

Most of the decision makers in

construction sector are of

Jordanian Origins- Local Jordanian

manufacturers are well known to

them

3.3 Competitors Analysis

Both the Saudi and Qatari Markets are import oriented and local production is only able

to meet a fraction of the domestic demand. Some of the main countries competing in

these two markets include China, Italy, Egypt, USA and the South-East Asian like

Malaysia.

Available Data for Saudi Market shows that the inefficient wood product industry has

been the major growth inhibitor for furniture industry in the Kingdom. The supply of

materials including plywood, processes timber items, hardwood lumber, laminated

veneer, etc. has been very limited and the country is highly dependent on semi-finished

and finished furniture products imports from other countries and that too on higher

prices.

Figure 2: Number of Operating Industrial Units and employees in Wood Product

Industry

200720082009

53 52 53

4298 3932 4052

Number of Operating Industrial Units and Emlpoyees in Wood Product Industry (2007 - 2009)

Industrial Units

Employees

Figure 3: Total Finance of Wood Product Industry

Despite a dull performance of wood product industry, the furniture sector has shown

phenomenal positive developments in recent years. The sector also showed notable

growth in terms of employment generation. Total finance in furniture product industry

has grown substantially in the last decade. It was around SAR 4.8 Billion (US$ 1.25

Billion) in 2000, which reached to SAR 6.4 Billion (US$ 1.66 Billion) in 2009.

Figure 4: Number of Operating Industrial Units and employees in Furniture Product

Industry

200720082009

784 784

843

Total Finance of Wood Product Industry (Million SAR), 2007 - 2009

200720082009

290 293 312

26,264 27,394 29,567

Number of Operating Industrial Units and Emlpoyees in Furniture Product Industry (2007 - 2009)

Industrial Units

Employees

Figure 5: Total Finance of Furniture Product Industry

In Saudi Arabia, high demand of office furniture is raising the competition among

producers, especially after polarization of the local factories to high –tech, high

performance-oriented, and provision of operational efficiency that inevitably facilitated

the transfer of advanced technology and high performance. It is anticipated that in the

coming years, improved operational efficiency will function as catalyst for the reduction

of office furniture pries in the kingdom and bulk purchases will benefit the most from

these proceedings.

200720082009

5.2 5.2

6.4

Total Finance of Furniture Product Industry (Billion SAR), 2007 - 2009

4 PESTEL Analysis

In this analysis the main political, economic, social, and technological factors that affect

the furniture industry in general and Jordan particularly are identified. The main

objective of this analysis is to assess the main impact of the external factors on the

business and to come up with actions to exploit the points with positive effect and avoid

the points with negative effect on Jordan.

Political Environment

- Stable environment in Jordan compared to other countries in the region

- Benefit from the migration from other countries due to regional conflicts

- International political support to Jordan in the form of funding, projects and

agreements

- Good governmental relationship with targeted countries

Economic Environment

- Inflation rate reflects on expenses.

- Fluctuating currency exchange rate for Euro vs Dollar

- Depletion of wood supplies

- Financial crisis and region instability reduce the cash flow.

- The effect of oil price fluctuation and expected increase in electricity pricing

on shipping and production cost

- The industry sector presented about 10%of the Jordanian GDP in 2008

Social Environment

- Increased consumers' awareness regarding furniture and brands of furniture

- Tendency to imitate the consumption behaviour of the upper class.

Technological, Environmental & Legal Environment

- Availability of automated and semi-automated machinery than can affect

production positively.

- Availability of advanced designing and drafting production software.

- Rapid development of finishing materials & accessories.

- Rapid improvement cycles of information technology (means of

communication)

- Limited number of local experts in this type of industry

- Absence of regulations or code of ethics to organize the furniture sector.

- Increase in computer literacy among Jordanian companies, as it became a

necessity for all operating companies in the Jordanian market to have

comprehensive and user friendly websites

- Signing multi-trade agreements including accession to WTO, Arab free trade,

Euro med partnership, as well as, having economic industrial zones and Arab

special economic zone.

5. Market Entry Strategy

5.1 Markets and Segments

Market segments for both markets currently can be segregated to:

- Household Furniture

- Office Furniture

- Hotels

- Retail

- Residential

Household Furniture

In Saudi Arabia, the construction boom infused furniture demand and the industry

achieved one of the highest growth among all the economically active industries. The

future furniture demand will largely depend on domestic manufacturer's capacity to

fulfil the premium segment household furniture requirements. The fast growing

population, rising wealth, western furniture look and feel impacts, rising spending on

furniture products, and decreasing costs will continue to force furniture demand in the

coming years.

Office Furniture

Office Furniture segment has accelerated its growth pace in recent years with both

countries' focus to diversify its GDP in non-oil sectors. An increasing focus on developing

education infrastructure has started paying rewards and the countries are receiving

large number of skilled professionals domestically. In addition, relaxed investment

regulations attracted large number of multinationals to enter the market in various

sectors like IT, Energy, Education, Manufacturing, etc.

Hotels

The Saudi hotel industry has emerged as one of the flexible pillars of economic

development. Despite challenges of oversupply in the short to medium term, investors

in the hotel industry are optimistic about future prospects with a paradigm shift from

development to investment-led market. The kingdom attracts millions of visitors

through religious tourism in Makkah and Madinah, which is one of the prime

contributes to the country's economic growth. There were around 7.7 Million visitors in

2010, which increased demand for construction of hotels and allied sectors.

Majority of international hotel chains including Hyatt, Raffles, Accor, Rotana, etc have

started to expand its existing number of hotel chains to leading market players to attract

tourists as much as possible.

Figure : Hotel Spending on Interior Design Contracting and Fit-out Industry

Retail

Known to remain the most preferred sector for diversification and sustainable economic

development by most nations in GCC, the retail sector is driven by a healthy population

growth, increased per capita income, growing standard of living, improving service

sector, and an encouraging travel and tourism sector. Home to numerous state of the

art modern plush hypermarkets and malls, the GCC countries encourages retail trade by

providing highly developed free trade zones, various shopping festivals and events

relaxed tax provisions.

This rapid growth in the retail sector is due to the fact that the retailers are increasingly

adopting advanced and attractive IDC and fit-out solutions for both malls and local

shops.

20102011e

40.7

220.5

Hotel spending on IDC & Fit-outs (Million US$), 2010 & 2011e

Figure : Retail sector Spending on Interior Design Contracting and Fit-out Industry

20102011e

34

343.4

Retail sector spending on IDC & Fit-outs (Million US$), 2010 & 2011e

5.2 Positioning and Branding Strategy

JFEMA members should position themselves in both retail and B2B at the medium to

medium high end of the market. Jordanian products are perceived of high quality with

fair price, which means that staying away from Chinese red ocean low quality products.

Most of the decision makers in related sectors like construction, design consultancy

firms and same trade partners in both Saudi Arabia and Qatar are of Jordanian origins,

accordingly company name and origin will ring a bell and tackle the positioning in target

customer. Jordanian Furniture Manufacturer should be branded as reliable and

innovative partner for consistent high quality products.

Marketing Jordanian Furniture in these 2 markets should be through finding a suitable

trade partner. Potential trade partners can be:

- Companies with same industry where the Jordanian product can complement its

product range.

- Direct relationship with main contractors – especially in Saudi Arabia.

- Marketing offices in Qatar and Saudi Arabia well experienced and knowledgeable

with Jordanian Manufacturer capabilities.

Each member should hold an identification plan to define who matches its own profile

and product range as well as communication level.

Also Sales promotion can be made by trade missions, trade fairs, websites and free

publicity and some advertising in trade magazines.

Participation in national and international furniture trade fairs can be useful sales

promotion tool. It needs comprehensive and detailed examination with regards to:

- Selection of a suitable trade fair.

- Participation

- Follow-up

5.3 Product Strategy

Each JFEMA member and based on its own competence should be able to develop its

product range in accordance with the end customer needs. They should be aware if

their standard range product can appeal to these 2 targeted markets or does it need

adaptation. By all means, its own competence and strength should be the driving

factors.

Features / benefits analysis

JFEMA members should acquire needed tests and certifications according to latest

trends and requirements of the global market. Such as Fire Rated Doors Certification

according to BS standards and American Standards, as well as ISO 9001, LEED.

Unique selling proposition

Each member should be able to define one unique property for each P in the market mix

(Product, Price, Promotion, Place) for its product that is considered an incentive for the

customer to buy.

Product Development

JFEMA Members need to know very well that their products will be directly acceptable

to the market only for exceptional cases and for certain period of time. Therefore,

product development as well as process management development should be on-going

process.

Product Packaging

Packaging is one the features that should be highly considered, it should be practical,

convenient and well defined-especially when furniture for projects is been delivered.

5.4 Pricing Strategy

Price needs continuous extended market research that will provide insight for retail and

wholesale prices, appropriate margins to choose and competitor prices. Main items to

consider upon building price; demand, competition, cost, image, delivery, installation

(included or not included), segment. Also counter act from competitors should be

considered.

Four main types of pricing strategy can be considered upon building the price:

Cost –plus pricing

In cost-plus pricing, cost of product is added up to required profit, used in opportunity

market where selling is more focused on than long term sustainability.

Competitive Pricing

Market price is built up by benchmarking with competitors' prices and differentiated by

its marketing mix.

Penetration Pricing

Low margins are added here for the sake of to sell at the lowest price of all competitors.

Focus is on entry and high volume. It is workable in case of high volume projects. High

quality should be maintained since low price is always related to low –quality image

which may affect market position later.

Value Pricing

Where no competition exists or when the product is perceived as unique or high end

product. Volume is small, but margin is high. This is workable in case of retail business

for high end furniture such as Executive Office Furniture or Kitchens supplied to palaces

and large villas.

5.5 Distribution Strategy

"Just across the border" is a fact that is reflected on the geographic location of Jordan

along with Saudi Arabia and Qatar. Recommendations go here toward indirect

distribution to these two markets, finding the right business partner in this case will

elude JFEMA members the large investment of cash and efforts for in-market stocks, in-

market promotion and in-market sales.

Recommendations:

Recommendations to enter the two Targeted Markets

Matching products and the product range (Adding Unique Selling Proposition)

In order to differentiate from others competitors, it will be very important that the

furniture item will be differentiated and be unique by meeting the taste and needs- that

are more familiar to Jordanian than other world competitors, its special materials,

design and skills in craftsmanship or in finish .

Packaging

Transportation to Saudi Arabia and Qatar is usually done through land freight by Trucks.

Special transport packaging and well defined labeling is necessary to ensure the safe

arrival of goods to its destination.

Goods are usually cleared on the Saudi Borders regardless of the GCC imported country,

so double handling is expected for exported goods.

Building up a relationship with suitable trade partner

Each company in Jordan with Furniture sector should be able to identify who matches

its own profile and product range and accordingly who are the best for building up a

business relationship.

JFEMA – Marketing Office for its members

Establish within JFEMA or through some external parties marketing department for

JFEMA members. Its responsibilities should be to well define the Strength and

Weaknesses of each company and guide external customers to best fit manufacturer in

Jordanian market. Through this, projects will not be lost to others and each will have its

own share of the cake.

Saudi Arabia Market

- The Saudi market should be constantly reviewed for product adaptation in

addition to process management.

- Manufacturer should ensure that their supplies are as per specifications, at the

specified time and place.

- Contacts with Saudi Importer should be direct and regular. Complete product

line rather than single products is much better to introduce to benefit from great

demand and achieve economies of scale.

- Exporters are highly recommended to check with Saudi Arabian Standards

Organization on precise implementation of Saudi Arabian Standards related to

their exported products to Kingdom.

For future planning:

1. Give the opportunity for the members to share their opinions and suggestions

about the association.

2. Work with the cooperation of the executive manager to raise the efficiency of

the association to meet the needs of the sector, by determining the services that

the association should provide the members with.

3. To assure the importance of commitment and participation of the members in

the association.

Methodology:

Prepare a methodology to facilitate in addition to supporting exercises:

1. The services that the association should provide concerning the following:

a. Human Resources

b. Customs

c. Supply and transportation

d. Increasing the capacity

e. Dealing with competitors

2. What are the challenges that face the furniture sector?

3. What are the measures that should be done by local companies to overcome

these challenges?

The aim is to assist the executive manager in developing a work plan suitable for the

needs of JFEMA members.

The Implementation

1. Holding primary discussions with concerned persons in the furniture sector to

underline the challenges that face this sector and more importantly is:

a. Competitive pressures from China, Malaysia, Indonesia and turkey.

b. The members do not know each other; additionally they are unaware of their

abilities.

c. The possibility of the cooperation between members stems out from the

knowledge of every member’s capabilities.

2. Secondary discussions about the questions that are raised in the meeting

(Facilitation)

It was clear that the members are from four sub-sectors related to the furniture

sector:

a. Kitchens

b. Office furniture

c. Doors and furniture

d. Wood and Carpets

3. It’s clear also that the requirements of these sub-sectors may differ and JFEMA

should take that in to consideration.

4. And the request from JFEMA to these sub-sectors to be separated in to different

groups.

5. Then these groups are asked to ask questions and share them with the other

groups for discussion and clarification.

Proposed Approach:

The following actions are to be taken into consideration:

Wood Doors Kitchens Office Furniture JFEMA Objectives

Improving the

workers skills by

holding training

courses

specialized in

Selling &

Marketing

To assist in

providing skilled

work force.

Looking forward

to putting an

agreement with

the Gov. to

provide this

work force until

local skilled work

force is available

Representing the

sector locally and

internationally

Providing the

sector’s need from

workers: rapid

provision of skilled

labour- develop

the local skills

through training

courses to meet

the needs of the

members and

sector.

The assistance in

providing skilled

Organizing

lectures on wood

Increasing

exports of the

Exempt the inputs

& raw materials

work force to the

sector by

simplifying the

procedures of

importing these

workers.

exports &

furniture trade

plus training

courses by

experts on new

machinery to

raise the level of

local industries

sector from customs fees

Publishing on

regular basis all

the activities of

each company

and general

Exhibitions.

Marketing the

sector&

promoting

exports

Give the priority to

local products in

Gov. bids

Assisting the

Gov. in

discussions

concerning

Bilateral trade

agreements

Decrease the

income tax on

exports

JFEMA Services

Improve the

capabilities of

the sector

through lectures

& seminars

Facilitate the

import of skilled

work force

Solve the problems

that face this

sector

Define new

markets through

participation in

regional

Exhibitions.

Cancelling all

customs fees on

raw material.

To Be the official

representative of

this sector.

Wood Doors Kitchens Office furniture JFEMA Objectives

Providing

information

about new

construction

projects.

Providing

information on

exports.

Improving exports

through complete

knowledge of the

exporting

opportunities&

export markets

Facilitate the

import of skilled

work force.

To Determine &

Participate in

Exhibitions

suitable for

Jordanian

products.

Offering support

& grants to

participate in

exhibitions

(carpets).

Provide data base

for the investors in

the construction

projects about the

local capabilities

Facilitate building

relationships

among the

members

Define the

challenges that

face the sector,

and put forward

strategies to solve

and face them.

Annex

List of Most Important Construction Companies in Saudi Arabia

During the last few years, Saudi Arabia construction market has shown tremendous growth. National companies are constructing the new kingdom, from roads and railways to the hundreds of thousands of new homes and complete industrial and medical cities.

The list is dominated by family-run firms like the Saudi Binladin Group and Saudi Oger, both of which have held their place for decades and still secure the largest projects. However, the last few years have also seen a creation of fast-growing local firms along with joint ventures between KSA contractors and international companies.

Business culture in Saudi Arabia in construction sector is preferable towards direct contact between the supplier and contractor. Contractors have the last word to say. The list includes top 10 companies in construction in Saudi Arabia:

1- Saudi Bin Ladin Group

2- Al Rashid Trading & Contracting Co. (RTCC)

3- Al Ayuni Investment & Contracting Co.

4- Al Harbi Trading & Contracting Co. Ltd.

5- Arabian Bemco Contracting Co.

6- Al Shoula Group

7- Almabani General Contractors

8- Al Fouzan Trading & General Construction Company

9- ABV Rock Group

10- El Seif Engineering & Contacting

“This publication has been with the assistance of the European Union & Jordan

Enterprise Development Corporation. The contents of this publication are the sole

responsibility of JFEMA and can in no way be taken to reflect the views of the

European Union & Jordan Enterprise Development Corporation.”