IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
1
Global Marketing Entry Plan in the UAE:
SandyCard as an Extension of Suica Card
IBE351. International Marketing
Professor: Dr. Mariko Morimoto
Claudia Hurtado Knaster (H1310152)
Fernando Bueno (H1310117)
Gabrielle Puget (H1310202)
Jorge Alberto Izaguirre (H1310154)
Marco Greselin (H1310143)
Nicolas Zuniga (H1310232) Peter Jussel (I1302134)
January 16, 2013
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
2
Table of Contents
Part One: An Introduction to the United Arab Emirates...................................... 3
Description of United Arab Emirates ............................................................ 3
Geography and Demographics ....................................................................... 3
Economy ........................................................................................................ 7
Culture .......................................................................................................... 8
Hofstede’s cultural dimensions ...................................................................... 9
Business Customs ........................................................................................ 10
History ........................................................................................................ 11
Part Two: Product and Market ........................................................................... 12
The Company ............................................................................................... 12
The Product .................................................................................................. 12
Offered Services........................................................................................... 13
Five Forces that Shape Strategy: Michael Porter ......................................... 14
Market Size (including demand) .................................................................. 18
Part Three: Marketing Plan Outline ................................................................... 19
Marketing Strategy Overview .................................................................... 19
Marketing Strategy Statement........................................................ 19
Objectives ...................................................................................... 20
Strategic Marketing Components .............................................................. 27
Branding ......................................................................................... 27
Image and Positioning.................................................................... 28
Target Market................................................................................. 28
Competitive Advantages ................................................................ 31
Marketing Tactics ...................................................................................... 32
Product Issues ................................................................................ 32
Distribution .................................................................................... 35
Price and Strategy .......................................................................... 37
Advertising and Promotion ............................................................ 39
Electronic Commerce..................................................................... 43
Service Elements ............................................................................ 45
Implementation .......................................................................................... 45
Resources Required ....................................................................... 45
Timeline ......................................................................................... 49
Conclusion ........................................................................................................ 51
Appendix ........................................................................................................ 53
Bibliography (APA style) .................................................................................. 56
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
3
Part One: An Introduction to the United Arab Emirates
Country Overview: Demographics, Economy, Politics
Introduction
The United Arab Emirates (UAE) is a country located in the Middle East, bordered by
the Arabian Gulf in the north, and the Gulf of Oman in the East sharing common boundaries
with Oman and Saudi Arabia. The UAE is a federation of seven emirates, Abu Dhabi, Dubai,
Sharjah, Ras Al Khaimah, Ajman, Umm Al Quwain and Fujairah, each of them governed by
an emir. The area of the country is 83,600 square kilometers, with the desert dominating most
of this area with many popular oases.
Demographics
The population of the UAE, as recorded by the UAE National Bureau of Statistics
(NBS) reached 8.26 million in July 2013, and is continuing to grow at a rapid rate. In fact, the
population growth rate in 2013 was 2.87%. According to the CIA, about 88% of the
population is defined as urban, a fact that push us to introduce our product, called SandyCard,
in major cities of UAE.
Moreover, UAE is composed of a considerable number of expatriates from all over
the world, most of them living in Dubai or Abu Dhabi. An expatriate or expat is defined by
the Oxford Dictionary as “a person who lives outside their native country”; from now on, the
word “expat” will be used to facilitate the reading of this paper. In the UAE, expats stood at
nearly 7.316 million, accounting for around 88.5% of the country’s total population (NBS).
This number is a reason to focus our product mainly on expats.
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
4
Male Female Total
National 479 109 468 888 947 997
Non-national 5 682 711 1 633 362 7 316 073
Total 6 161 820 2 102 250 8 264 070
Population of the United Arab Emirates by Nationals and Non-nationals Source: National Bureau of Statistics of UAE
However as we will initially launch our product in just three emirates (Dubai, Ajman
and Sharjah) we will only consider the population distribution in those three emirates.
Emirate Population
Dubai 2,174,000
Sharjah 800,000
Ajman 237,000
Total 3,211,000
Population of the three emirates, Dubai, Sharjah and Ajman Source: National Bureau of Statistics of UAE
As 88.5% of the UAE’s population is formed by expats, the total number of them in
these three emirates will be 88.5% of 3,211,000; this basic calculation gives us a total of
2,841,735 expats.
Countries Number of resident
Asian countries (Afghanistan, China, Iran, Korea,
Philippines, Thailand)
1 million
Bangladesh 700,000
Britain 100,000
Canada 40,000
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
5
Finland 900
Greece 3,500-4,000
India 1.75 million
Italy 4,000
Japan 3,500
Krygyz Republic 3,000
The Netherlands 5,000
Pakistan 1.25 million
Philippines 600,000
Russia 25,000
Western expatriates, including Australia, Europe,
Africa, Latin America
500,000
Yemen 90,000
Population of the United Arab Emirates by Nationality Source: National Bureau of Statistics of UAE
It is important to mention that the proportion of expats varies by emirate, with the
highest percentage in Dubai (about 85-90%), followed by Abu Dhabi (about 80%).
Main Languages and Literacy
The official and national language of the UAE is Arabic, but less common languages
are also spoken throughout the nation: including English (used as a second language), Persian
(spoken by the Iranian diaspora), Hindi, Urdu and Tagalog (spoken by the large South Asian
and Filipino Diasporas).
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
6
Concerning the literacy rate, 90% of the population age 15 and over can read and
write as for 2013 data. It means that 9% of the total population is still illiterate in the country.
Climate
The UAE features a subtropical climate, characterized by extreme heat and soaring
temperatures due to the sandy and desert landscape. The weather is sunny during the whole
year with extremely humid coastal areas and cooler temperatures in the eastern mountains.
Religious Affiliation
Islam is the official and majority religion in the UAE (96%); nevertheless,
Christianity, Buddhism and Judaism (4%) are also practiced in the country although mostly
by non-nationals (Central Intelligence Agency).
Communications Channels Available
Communications in the UAE are controlled and supervised by the
telecommunications regulatory authority (TRA), which was established by federal law in
2003. Broadcast media is almost totally controlled by the government, from television
channels to radio stations; however, in 2007 a free media zone was created in Dubai,
allowing many companies to work independently.
In 2012, the number of internet users increased to 3,604,065, 70% of the total
population of the UAE, most of them living in the two major cities of Abu Dhabi and Dubai.
It has to be noticed that UAE’s government censors many websites using secure computing’s
solutions. With this the government blocks all Israeli domains, pornography, some Wikipedia
articles and, in general, any content which can be considered contrary to the perceived moral
values of the UAE. The companies in charge of committing this censure are Etisalat And Du
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
7
and The Ma. It is relevant to mention that services as Skype or dating sites have also been
blocked recently.
Economy
UAE’s GDP amounted for 360 billion USD in 2012 (ranked 30th worldwide), and its
GDP per capita was estimated in 2012 as 49,000 USD (Central Intelligence Agency). The
country’s major exports are crude petroleum oils (38%), refined petroleum oils (10%),
diamonds (10%), gold (6%), and petroleum gases (5%). Its major exporting partners are
Japan (19%), India (17%), Iran (11%), Republic of Korea (8%) and Thailand (6%).
UAE’s major imports are diamonds (10%), jewelry of precious metal (9%), refined
petroleum oils (8%), cars (6%), and transmission apparatus for radio, telephone and TV (4%).
It major importing partners are India (24%), China (13%), United States (7%), Germany (6%)
and the United Kingdom (5%).
It is relevant to stress out that the UAE benefits from a growing economy with high
export revenue and a strong inflow of FDI. It is easy to do business in the country as there is
a transparent and favorable business climate with a high level of economic freedom.
Moreover, there is no income or general sales tax while different corporate tax rates exist for
certain activities. Inflationary pressure is usually under control and there are high standards of
living due to oil wealth. The dirham (AED) is the currency of the United Arab Emirates.
Politics
The UAE is a politically stable country with strong political reforms focusing on the
overall development of the country and reducing its dependency on oil. It is governed by a
Supreme Council of Rules made up by the seven hereditary emirs, who appoint the Prime
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
8
Minister and the Cabinet. However, each state maintains a large degree of independence with
its own governmental institution.
Culture
The high number of immigrants in the country, thanks to its economic success, has
provided the country a diverse, cosmopolitan and multicultural society. Fifty years ago the
Emirati cuisine consisted mainly of fish, rice, bread, yogurt, homegrown vegetables, and
meat from sheep, goats, and camels, but recently modern supermarkets offering food from
abroad has gave the country a variety of ethnic foods, and fast-food restaurants have also
become popular. The main family meal is lunch, and is eaten at home at around two o'clock.
Emiratis are known for their hospitality; they feel privileged when receiving guests, who are
welcomed with coffee and fresh dates.
The most typical dress for Emirati males is the kandura, an ankle-length white tunic
woven from wool or cotton, and for women the abaya, a black over-garment that covers most
parts of the body. Regarding the dress code each of the seven semiautonomous emirates has
its own rules about clothing; Dubai is the most liberal in that regard allowing miniskirts and
bikinis in public places. Nevertheless, Western-style clothing is becoming popular among the
Emirati youth.
The UAE is a part of the khaliji music, style of music native to the Arab states of the
Persian Gulf, and is also known for Bedouin folk music. Liwa is a type of music and dance
performed mainly in communities that contain descendants of Bantu peoples from the
African Great Lakes region.
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
9
Hofstede’s Cultural Dimensions
The following information of the Hofstede’s study for the United Arab Emirates was
gathered from The Hofstede Centre official website (Hofstede, G).
Power Distance
United Arab Emirates has a score of 90 in this dimension; this high score means that
people accept a hierarchical order in which everybody has a place which doesn’t have to be
justified. In the organization there is a hierarchy reflecting inequalities, centralization is
popular, and subordinates expect to be told what to do and the ideal boss is a kind absolute
ruler.
Individualism
The country is considered a collectivistic society with a score of 25. There are close
long-term commitment to the member 'group' and loyalty is important, and over-rides most
other societal rules and regulations. The Emirati society promotes strong relationships where
everyone takes responsibility for fellow members of their group; hiring and promotion
decisions take account of the employee’s in-group.
Masculinity / Femininity
United Arab Emirates is a masculine society with a score of 50. Emirati society is
driven by competition, achievement and success, people “live in order to work”, and
managers are expected to be decisive and assertive, and the emphasis is on equity.
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
10
Uncertainty avoidance
With a score of 80, United Arab Emirates has a high preference for avoiding
uncertainty. Emirati society maintain rigid codes of belief and behavior, and are intolerant of
untraditional behavior and ideas, there is an emotional need for rules, time is money, people
have an inner need to be busy and work hard, precision and punctuality are the norm, and
security is an important element in individual motivation.
Long term orientation
There is no score available for United Arab Emirates on this dimension.
Business Customs
In the UAE, status is very important and must be recognized by using the correct title
when addressing someone, therefore greeting the oldest person in the room first is a common
practice. Handshakes in the Middle East are always used and can last longer than expected,
being recommended to wait for the other counterpart to withdraw their hand first.
Furthermore, the right hand must be always used as in Muslim society the left hand is
considered to be unclean and thus disrespectful to extend to others.
Muslim women are unlikely to shake men’s hands in public, and men should avoid
touching and have a prolonged eye contact with Muslim women. It is improper to ask about a
man’s wife or daughter.
When doing business in the Middle East, personal relationships, family ties, honor
and trust are essential. It is a favor-based system in which favors are reciprocal and never
forgotten; when having contacts or friends, rules may be loosen and processes may become
more efficient. Personal status is determined by age, money, and family connections.
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
11
In the UAE the working week generally goes from Sunday to Thursday. Punctuality
is expected of Westerners, even though this might not be always practiced by Emiratis.
During business meetings it is appropriate to accept food and to compliment for it; refusing
might be considered offensive.
Haggling is predominant while during business in the Arab Emirates, decisions are
made slowly, and bureaucracy may delay processes. It is important to mention that Koran’s
doctrines are followed by Muslims, which forbid consumption of alcohol, pork products, and
shellfish.
History
The history of the UAE dates back almost 7,500 years with the first evidence of
human settlement in 5500 BC. Around 3000 BC trading relationships began to emerge on the
Arabian Peninsula leading to trade routes as far as China in the first century and turning the
region a major trading hub. With the arrival of Muhammad in 630 the region became part of
the Islamic world.
In the 16th century the area became known as the Trucial States. The main economic
income and employment was provided by the pearling industry which thrived in the 19th and
early 20th century. Weakened by two World Wars, the depression of the 1920’s and 1930’s
and the introduction of cultured pearls, the industry was practically non-existent after World
War II.
With the first oil export in 1962 the Trucial States experienced a strong economic
growth and massive projects to build needed infrastructure commenced. With the withdrawal
of the British Empire from the Arab Peninsula and the desire to build closer ties between the
emirates, the United Arab Emirates were established on December 2nd 1971 with all seven
emirates joining on February 10th 1972. Since its foundation the UAE managed to maintain a
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
12
strong economic growth and regained its position as a major hub in the economic landscape
(National Media Council, 2010).
Part Two: Product and Market
The Company
JR East is a private, Japan-based company with the main objective of offering
transportation services. JR East is also active in real estate development, shopping center
management and other infrastructure related activities. JR East is the largest supplier of
transportation services in eastern Japan including the Greater Tokyo area (JR East, 2013).
Besides the strong market position, the company also has a solid financial base.
Total assets of the company account for 7.2 trillion yen ($76 billion), and an equity
ratio (equity/total assets) of around 30%. Revenues in 2013 were 2.67 trillion yen ($28.4
billion) resulting in a net income of 175 billion yen ($1.8 billion). Free cash flow amount to
122 billion yen ($1.3 billion). (JR East, 2013).
The Product
The product to be introduced in the new market
is SandyCard. The card and the related services
are largely inspired from the Suica Card, a
prepaid and rechargeable card which allows a
quick and easy alternative to cash. Using Sony’s
FeliCa Radio Frequency Identification (RFID)
technology with high storage capacity and fast data transfer, contactless payments are made
in a matter of seconds. Suica was first introduced in 2004 and became one of the most
popular payment methods for transportation and other small purchases in Japan’s capital,
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
13
issuing over 40 million cards until today. During the development and expansion of the
system and its acceptance in Japan, JR East was able to acquire several business partnerships
with suppliers such as Sony Corporation, Seven Eleven Stores, as well as domestic
distributors. The choice of our partners will be made based on our target customer.
Offered Services
The core benefit of the product is the easy and quick payment that can be done with it.
The main area of usage will be public transports in Dubai, Ajman and Sharjah (buses and the
newly introduced subway) including the following functions:
● Single trip payment: Replacing ordinary paper tickets for casual transportation.
● Day trip: Charge for unlimited transportation within a specified zone for 24 hours.
● Commuter Pass: Unlimited transport on specific lines within a predefined time span
up to three months.
Besides transportation, SandyCard users will also be able to devise the card for following
services:
● Supermarkets: Payment of purchases at supermarkets and convenience stores.
● Vending machines: Payment of purchase from vending machines at train stations and
other highly frequented places.
● Petrol stations: Since gas is comparably cheap in the UAE, purchases of fuel and
other goods at petrol stations can also be paid with the card.
● Leisure: Payment of tickets at leisure instalments such as cinemas and theatres.
● Fast Food Chain: Payment of purchases at popular fast food chains.
● Bars and restaurants: Payment of purchases at selected bars and restaurants.
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
14
For a seamless use of the card, top-up points will be available at specific spots such as
ATMs, convenience stores, automatic charging via credit card or at the SandyCard branded
vending machines. Registered cards will also be charged via internet. Online registration will
give access to a series of benefits including: registration of personal information, balance
inquiry, search of special promotions, and the function of blocking credit of the card in case
of loss.
Five Forces That Shape Strategy: Michael Porter
In this next section the payment services industry in UAE will be analyzed using
Michael Porter’s Five Forces model.
Threat Of New Entry
In the industry there is a medium threat of entry of new competitors due to the
following factors:
A. Factors that make the threat of entry of new competitors lower
● Economies of scale: The profitability requires economies of scale; this is a clear factor
that affects the risk for new competitors in a positive way for us. For taking advantage
of the market with this product the creation of economies of scale is decisive, because
our profit margin depends on that.
● Initial capital is high: For entering the market, a huge initial investment is required,
thus the acquisition of new readers and the production of new cards, as well as the
renting of the communication technology between readers and the databases are
expenses that not all the competitors will be able to afford at the beginning.
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
15
● Brand name will be well-known: Being the first all-in-one card used for paying small
purchases as well as using it for other activities like public transportation, would
create a powerful brand name that will give us a first-mover competitive advantage.
B. Factors that make the threat of entry of new competitors higher
● Product is undifferentiated: The product we want to introduce in the UAE is totally an
undifferentiated. It is based on a technology that is used as a standard, so if any
competitor wants to enter the market is probably that the functions and the usability of
those new products would be similar to ours.
● Others: Accessing the distribution channels is easy. Consumer switching costs are
low; and location, proprietary technology and proprietary materials are not an issue.
● Government policy is not an issue: UAE is one of the countries in which new
businesses are easier to settle because of the interest of the Government to attract
foreign investment.
Buyer Power
Regarding the buyers of the industry in the UAE, it is important to mention that these
are willing to spend on goods that would give comfort (luxury). Moreover, there is no direct
substitute for the SandyCard, which makes gives it a low price elasticity of demand, as
people cannot easily switch to other services. Additionally, since buyers are individuals and
not enterprises, there is no threat of backward integration, and also no powerful buyers. In
conclusion, the buyer power for this industry is low, and doesn’t imply downward pressure
on prices.
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
16
Supplier Power
On our market research we have found that our main suppliers are, first of all the
Radio-frequency identification (RFID) smart card system provider, FeliCa, and secondly all
of those partners that will adopt our card system in their shops, restaurants, etc., which can
also exercise a power on us. In order to determine the power of these suppliers, we have
taken into account the points shown in the table below.
FeliCa Partners / Distributors
Switching costs to other suppliers Low Low
Threat of forward integration Low Low
Price sensitiveness High High
Possibility of reducing product
availability & quality
High Low
Provide a material/service that is a key
element in the end product
High High
Degree of impact on costs High High
Number of suppliers available High High
Supplier power characteristics for FeliCa and Partners and Distributors Source: Self-made through industry analysis
The impact that these companies have on the total cost of production is high, and as a
consequence it will greatly affect our profit margin if they decide to change prices or the
quantity provided. However, due to the emergence of more companies supplying RFID,
especially based in China, it is now easier to access low-cost producers, who will compete
with each other offering more competitive prices to companies like ours. Until our service
gets more popular and is widespread, some partners may not want to join us, or could even
try to modify our payment system and the final percentage we will charge them, but if we can
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
17
attract a considerable number of partners at the beginning, the rest will just want to provide
our service when they see the competition is doing it.
Threat of Substitution
The main threats of substitution for our offered service are the other available forms
of payment for transportation and small purchases. Because credit cards are not implemented
effectively as an alternative way of payment, the only real substitute is payment by cash.
First of all, switching costs for our clients are very low; nothing will stop them to
change our SandyCard for cash if they want to. A concrete measure such as making them pay
an amount of money if the client decides to stop using our card could be implemented to
increase switching costs.
Nevertheless, the substitute is not cheaper than our product, and surely doesn't offer a
better quality service to our clients. The reason is our card is a much quicker and comfortable
way of making payments for a wide variety of services, not only for customers, but also for
shops, thus making our service performance also better than the cash-based payment.
To sum up, threat of substitutes is low. It is true that switching costs are low, but the
rest of variables indicate a non-risk situation.
Rivalry Among Existing Competitors
The only direct competitor in the contactless payment system in the Emirates is the
Hong Kongese-run company’s Nol Card, which only operates in Dubai and specifically in the
Dubai Metro System. This situation makes us differentiate from Nol Card by offering a wider
range of services and places where the service will be offered. Nevertheless, the fact that Nol
is already operating in the Dubai Metro could increase the difficulty to gain market share
since it is already the first mover. This competition on that specific market niche will
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
18
translate in intensive sales promotion and higher spending on advertising. In general,
competition is low and there is enough market that hasn’t been caught by Nol, since they only
provide the service for the Dubai Metro System.
In the other hand, since the investment to start running the business in the industry is
quite high, the exit barrier is also high; this means that competition could increase once we
enter the market, since our Hongkongese rival will try to keep its position in the market and
prevent from having to exit the industry. This could also make Nol expand its services to be
able to compete with our SandyCard payment service.
Market Size
The market size for our product includes the population of the three of the seven
emirates of UAE: Dubai, Sharjah and Ajman, since operations of the SandyCard will take
place within this metropolitan area. As already mentioned on the Demographics section of
the Country Overview, the combined population of these emirates amounts for 3,211,000
people; however, the mentioned amount is not our target market, but our market size, since
our product could potentially be used by most of the inhabitants between 15 and 64 years old
in this metropolitan area, especially because of the wide use of public transportation.
Our target market is the expats in the mentioned three emirates between 15 and 64
years old. It is important to consider there are a considerable number of expats in the whole
UAE living mostly in big cities such as Dubai and Abu Dhabi, and who are mainly attracted
by the employment and investment opportunities of country and its tax-free system. The
number of expatriates in the country surpasses by great numbers the Emiratis.
According to the United Arab Emirates National Bureau of Statistics, 82.70% of the
labor force in the country is represented by people from other non-Arab Asian countries,
11.14% of this labor force is people from other Arab countries and 1.06% from European
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
19
countries, while Emiratis represent only 3.86% of the workforce (UAE National Bureau of
Statistics).
The Standard Life Western Expat Wealth Study (2013), made by the investment
company Standard Life found that 97% of expats polled in the UAE were willing to spend
some of their disposable income on luxurious lifestyle choices (Clancy, R. 2013). The study
concludes that expats in the UAE are the ones that spend the most and save the less.
In the UAE there are special malls and specific places where expats use to go
shopping; there are even special recreation places, such as swimming clubs, where women
are not restricted to certain dressing codes. This makes foreigners attend to similar places to
shop.
Since expats represent the majority of the workforce and the population in the country,
and since these citizens are the ones that spend the most, it is possible to mention that the
SandyCard could potentially be used by this market segment. Furthermore, the fact that
expats tend to buy in special malls and go to specific places for recreation could facilitate the
focus of the SandyCard payment service in specific locations.
Part Three: Marketing Plan Outline
Marketing Strategy Overview
Marketing Strategy Statement
Our strategy focuses on the introduction of the payment system called SandyCard in
the United Arab Emirates. SandyCard will be used by citizens to pay for the public
transportation as well as for making small purchases in places such as vending machines,
petrol stations, cinemas, theatres, fast food chains, etc. The technology behind our product is
Sony’s FeliCa Radio Frequency Identification.
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
20
Objectives
As explained in detail in the following paragraphs, in order to settle our objectives
and know our growth rate, it was important to first calculate the specific target market,
average consumption, and revenues of the implementation.
On the table shown below it is possible to see the age distribution of the whole UAE’s
population. Considering that 88.5% of the total population are expats, it is possible to assume
that this age distribution will be the same for them as they make up most of the population.
From our research, we know that in the majority of the cases expats living in UAE are
families with children and as observed below the age distribution is concentrated on the ages
ranging from 15 to 64 years.
Population distribution by broad age groups in UAE, 1980 to 2050 (percent) Source: United Nations, World Population Prospects (2010)
Following this population distribution, we have assumed that this trend will apply to
the total of 3,211,000 inhabitants who live in the three emirates we will focus on, but since
88.5% of them are expats, the total number of this target market actually is 2,841,735 people.
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
21
Taking into account 82.5% are between 15 and 64 years old (as seen in the table above), that
would give us a total number of 2,344,431 people we have to target. As shown on the chart
below, we have segmented our target market considering the age distribution.
0-4 yrs old 4-15 yrs old 15-64 yrs old 65 yrs old + TOTAL
5.6% 11.4% 82.5% 0.4% 100 %
159,137 323,958 2,344,431 113,669 284,1735
Expatriates living in Dubai, Ajman and Sharjah by age distribution Source: Self-calculations with statistics from United Nations, World Population Prospects (2010)
To calculate our growth rate goals, we have taken into account previous examples
such as Octopus card in Hong Kong and the Oyster card in London.
The Octopus Example
Octopus card experienced an incredible success, with 3 million cards being sold
during the first three months after launching it in 1997 (Octopus Card Limited, 2008). The
total population in Hong Kong during that year was 6.5 million; this means that nearly 50%
of the population got a card within 3 months. The success of the Octopus card was
astronomic. However, we are aware that this is unrealistic for the UAE, as the population
density in Hong Kong is much higher being the adoption of innovation way faster and Hong
Kong is a city where this type of card is much more vital compared to cities like Dubai.
The Oyster Example
The Oyster card was launched in 2002 in London (Star Card Alliance, 2005), and it
was initially only used for the tube and bus staff. In June 2003, it became open to all but it
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
22
was just sold online. However, ticket offices sales were introduced in September 2003, and
by that date 26,000 cards had been issued. It was anticipated that when the penetration was
stabilized, more than 5 million cards were going to be issued in the great London area with a
total population of 7 million.
Following these two successful stories, we have estimated the penetration rate of our
SandyCard in the UAE to be at 35% of our target group (expatriates between 15-64 years old)
during the first six months, reaching 60% during the first year. The adoption of innovation of
products like ours is very quick and a considerable size of the market share will be gained
during the first year.
Cash Flow Calculations
The consumption per person per month is calculated based on the following equation:
Cash Inflows: Card deposit + Transportation + Small purchases
It is important to explain that the card deposit of 5 USD will be only paid on the first
month when the card is being purchased for the first time.
The average transportation cost per month was calculated taking the average of the
three different prices of the 30-day pass. Although the Nol Card is currently the one dealing
with the ticket sales offering their various cards, it is actually the Dubai Metro the one
deciding the fares so we will also have to charge clients these prices.
As seen below, the prices for the 30-day pass are 270 AED, 170 AED and 200 AED
giving us an average of 213 AED which equals to 58 USD (Exchange rate: 1 USD = 3.67295
AED as for December 10th, 2013).
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
23
List of prices for the different Nol card types.
Source: Dubai Metro Website (2013)
To calculate the average consumption we had to look into the cost of living in the
UAE, and for that we have taken into account the Big Mac Index. As seen on the graph below,
Dubai’s Big Mac costs 12 AED (3.27 USD) and the Happy Meal 11 AED (2.99 USD) being
both of them the cheapest compared to the ones in cities such as Sydney, London or New
York where the Big Mac costs 19.06 AED, 15.02 AED and 13.55 AED respectively. For this
reason, even though the purchasing power of the people living in the UAE is very high, our
card will be mainly used for small purchases; therefore we have estimated an average
consumption of 25 USD per customer, per month during the first six months.
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
24
Big Mac Index for Dubai, Australia, England, USA and Canada Source: The Economist (2013)
Furthermore, after these initial six months we have predicted the average spent will
increase by 10 USD, as clients will start being confident about our SandyCard and they will
value the benefits of its usage, recharging it more frequently and thus spending more money.
After this increase of 10 USD we predict the average consumption rate will further
rise during the next years as we will have more convenience stores, restaurants, clubs, taxis
adopting our system and SandyCard will be used in a higher number of places. Moreover,
more consumers will be confident about our product and we will surely observe the
consumption rate increase until the fifth year when it should stabilize.
The expected average consumption during the first five years of our product’s lifetime
can be seen in the following Excel table lifetime can be seen in the following Excel table.
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
25
Expected average consumption during the first 5 years of SandyCard’s customers Source: Self-made
Revenue Goals and Client Growth Rates
Our revenue calculations and goals have been calculated taking into account the
following issues. During the first six months, in order to attract companies to adopt our
service, we will not charge businesses such as convenience stores, fast food chains, transport
companies etc. for using our services. We will even set up their card readers, take care of the
technical installation and provide the service for free. This period of “free trial” will finish at
the end of the sixth month and our revenue during these months will be solely based on the 5
USD paid by each customer when purchasing our card.
After the initial six months, our revenue will consist of 5 USD per client plus 3% of
the purchases made and the public transportation fares, which have been calculated using the
average consumption per period and average transportation prices already explained in the
previous section.
In order to calculate the final revenue goals, we have firstly calculated the revenue per
person. As it has been previously explained, this was done in the following way:
5 USD + 3% average transportation cost per person (58 USD = 312 AED) + 3% average
consumption per person
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
26
Then, we have multiplied that number by the expected number of clients (explained
below) and arrived to our total expected revenue, marked in orange on this Excel table.
Expected revenues of the first 5 years Source: Self-made
Our expected number of clients during this period and therefore the desired client
growth rate is the following:
During the first six months we would like to reach 35% of our target market,
(2,344,431 customers) giving us a total of 820,550 clients. As it was explained with the
Octopus and Oyster example, this can be possible as the diffusion of innovation within our
target market will be very fast.
During the last six months of the first year, our expected increase is estimated to be
25% of the target market; this is an increase of 586,107 customers.
For the second year, the intended growth rate will be of 17%, a total of 398,553
customers. We have then predicted the same increase for the third year, when we will strive
to stabilize our market share increasing the amount of customers by the same amount, having
a total of 2,203,765 clients.
For the fourth and fifth year an increase of 4% and 2% respectively will take place,
after then we will expand our service to other emirates, especially to Abu Dhabi, trying to
have an established position in all the UAE by 2020 when the Expo takes place.
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
27
Strategic Marketing Components
Branding
Our payment service will be offered under a new brand named SandyCard. By using a
new brand we avoid any consumer’s perception of the brand with JR East or Japan. There are
two main reasons for this decision. First of all, JR East is almost unknown outside Japan, thus
not providing any equity we could draw on. Secondly, the image of Japan may vary
significantly depending on the country of origin of customers, and it may even be considered
as a competing country in some cases. Although our target customers are expats, the
perceived support of a domestic company will still be preferred over a Japanese one, since
there is usually an emotional attachment of expats to the country of residence (Azhari, 2013),
so our decision to create a new brand is mainly for giving it a “local brand-touch”.
Our brand name is also designed to carry an international accent. The name is easy to
pronounce for English-speaking customers and for many other Europeans and even Asians.
Shrum et al. found that this fact can enhance the positive perception of a brand (Shrum, 2012).
According to our research, the brand name doesn’t seem to have any negative impact in the
local language.
By the simply nature of our product, at the time of its introduction into the market we
will already have some brand equity, since most people have used IC Cards before and
already connect some sense of convenience and usefulness with these type of cards. The
name SandyCard naturally evokes an image of a desert or beach, especially in the UAE,
which makes it easy for consumers to remember the name.
Aside from constantly improving the quality of our service to build up more brand
equity, we also plan on performing various promotional activities that will make both current
and prospect customers associate the brand name with its easiness and convenience. As an
example, we plan on supporting campaigns that promote the use of public transportation, thus
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
28
reflecting social responsibility, and encouraging the use of our product by supporting this
cause. In our plan for enhancing brand equity we have decided to provide passengers of the
emirate’s public transportation system with maps, magazines and other useful products
sponsored by SandyCard.
Image & Positioning
The image we want for our product is that of its easiness to use and its wide
acceptance. This is already expressed in our slogan ‘Easy. Everyday. Everywhere.’ We
clearly position ourselves as a product designed for expats that can be used in a wide range of
places. All our services will be offered in English and Arabic, and the core functions of the
website and card registration will also be offered in German, French, Russian and Chinese.
To support this image and position we plan to clearly mark every store, public transport,
vending machine, etc., where the SandyCard can be used at, so that customers can easily
identify where the services is provided.
The Target Market
Under this section we will determine the target segments taking into account
competitive issues, cultural implications and consumer trends. We will finally calculate the
potential of the target market considering the expectations of the customer’s lifetime value.
Target Segments
As we have previously mentioned, our target market consists of the expat community
ranging from 15 to 64 years old living in the three chosen emirates: Dubai, Sharjah and
Ajman. These three emirates are extremely close to each other, even forming a big
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
29
metropolitan area with no clear distinction between them, because of this we believe that
entering the three emirates at the same time is a wise choice.
Choosing the expats between 15 and 64 years as our target market is mainly based on
the high percentage of them living in the whole Dubai metropolitan area (currently more than
80% of the total population), as well as in the two other mentioned emirates. We truly believe
our service is interesting for this segment of the population.
To divide our target market into a more accessible and understandable target segments,
we have mainly considered a demographic approach, therefore dividing the target market into
four main segments.
First of all we have the youngsters between 15 and 21 years old who are usually the
expats’ children and are supposed to reside permanently in the country until the conclusion of
their parents’ job. These young people are one of the most suitable SandyCard users,
especially for making small purchases, even if they don’t have any real income, as their
parents will give them money for the SandyCard as part of their pocket money. Moreover, it
is important to consider this segment further, as if youngsters acquire the SandyCard and find
it useful, brand loyalty will be assured for a long period of time.
The second target segment consists of the expats ranging from 22 to 35 years old.
This is the segment with the greater potential for our product; it consists of young ambitious
men and women, who have recently finished their degrees and in most cases live alone and
are trying to make money in the UAE. From our point of view, it really doesn’t matter if they
are men or women, neither if they are working in the bank sector, leisure or construction
industry. They are dynamic, and understand the benefits of using public transport as well as
the quickness of the SandyCard payment system.
Thirdly, we have another segment, formed by expats between 35 to 50 years old. This
is one of the largest segments, and in most cases consists of married couples who bring their
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
30
family from abroad. They usually work as directives of big companies and go to expats clubs
for relaxing. It is harder to fully communicate the benefits of our product to this segment in
comparison to the previous ones, as they have already established purchasing patterns and do
not use public transportation on a daily basis. However, SandyCard will still be attractive for
small purchases (especially for housewives), usage in private clubs and even for public
transportation for the youngest part of the segment.
Finally, we have the last segment, formed by expats between 51 to 65 years old.
These people share many characteristics with the previous market segment, but have a
fundamental difference in terms of age. As they are older, they tend to avoid using public
transportation, and if they even use it by any chance, it is more difficult to change established
consumer behavior patterns and convince them to use our card. This also applies for the small
purchases payment service.
In conclusion, the first two segments are vital for us, as we expect they will assimilate
our product quickly for the reasons explained above. The two last segments, and specially the
last one, are more complicated to reach at the beginning, but after some time we are confident
they will value the benefits of SandyCard as well. Consequently, we initially must focus on
promoting our product in the first two segments, and then gradually expand to the rest.
The Potential of the Target Market
We expect reaching a high amount of people with our product, for several reasons.
First of all, from our previous experience with Suica card in Japan as well as the observation
of other cases such as Octopus in Hong Kong and Oyster in London, we can assure that, for
this type of products, the market penetration is very fast if the selected country fits the
product´s characteristic. In UAE, we think that it fits because of the increasingly dynamism
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
31
of its economy, as well as the needs for a more efficient transport system in metropolitan
areas such as Dubai.
If we manage to reach our target market, nearly 80% of Dubai's metropolitan area
(together with Sharjah and Ajman) population will possess our card. It is also interesting that
the vast majority of owners will most likely stay with our product once acquired because this
kind of products make people’s daily life easier, and in reality there is no point in returning
the card unless they leave the country, which in most cases is after several years.
Competitive Advantages
In order to foster the plethora of competitors of SandyCard in the UAE, it is important
to underline that the Dubai Metro was introduced in 2009. In order to best manage the
uprising need for public transportation in the region, a series of infrastructures and services
were implemented. A suitable payment method for tickets was needed along with the related
services. To answer the need of a contactless card allowing fast processing and payment of
subway tickets, the Government of Dubai assigned the bid to Octopus, a Hong Kong based
company which was the first to introduce a contactless smart-card for online and offline
payments back in 1997.
The card was renamed Nol Card in Dubai and currently can be used to purchase metro,
bus and taxi tickets. Nol Card was introduced in Dubai in 2007, two years before the launch
of the Dubai Metro. Although further efforts to expand the usability of the card for payments
in stores and different locations have been announced, the project is still under evaluation.
Our goal is to play in advance, leveraging the delay and lack of results from Nol Card to
make it a comprehensive payment method for small purchases in the country.
Furthermore, the technology used by Nol Card’s terminals (Sony’s FeliCa) is the
same that we will use for SandyCard since this is also the same standard devised by JR’s
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
32
Suica Card. This will considerably reduce costs and hassle since there will be no need to
install new terminals at the Dubai Metro gates.
The key advantage against Nol Card is indeed the much wider usability of our card.
SandyCard can be devised to pay small amounts in key shops and resellers. Since our target
are expats, we will ensure that SandyCard terminals are placed in all usual locations where
expats spend their time such as supermarkets, international cafés and clubs.
Nol Card is available in four different versions (red, silver, gold and blue). This
complicates the offer and may be an overwhelming experience for the customer. By contrast,
we will sell just one card with online balance and money retrieval if the card is lost (this
service is only available for the Blue version of the Nol Card).
Moreover, the customer’s key information will be saved in the micro-chip inside the
card. This will allow vendors to offer different discount prices to selected segments. For
instance, if a cinema charges a reduced price to people under 18 years, the card will
automatically offer the discount to those who apply for the discount, and the customer will
not be asked for his age since the SandyCard will include the age, along with a picture and
other compelling data of the customer. Among other things, this will allow the introduction of
a parental control option for children. Their parents will be able to check the balance and set a
maximum amount for their children’s cards.
Marketing Tactics
Product Issues
Under this point we will further explore SandyCard’s uniqueness which enhances the
product’s differentiating points and we will then support our chosen product strategy with the
previous experiences of Suica in Japan.
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
33
Why using SandyCard?
Easy. Everyday. Everywhere.
SandyCard’s slogan summarizes our product and the differentiating services we will provide
our customers.
Why Easy?
Using SandyCard to buy is convenient and fast. Being a contactless card enables
clients to make purchases without taking the SandyCard outside their wallets, just placing it
on top of the electronic reader. Moreover, downloading the SandyApp will enable clients to
keep a track of the balance on their card and quickly react if they don’t have any money left,
going to the nearest charging spot to recharge it and use it over and over again.
Why Everyday?
Clients will not only make a practical use of the card but will also enjoy its usage.
Working men and women will benefit from it on a daily basis to go to their workplace as well
as students who go to class by bus, metro or taxi and non-working women who want to go to
different parts of the city during the day. However, clients can also use SandyCard in other
aspects of their everyday life: at sports clubs, when buying a cinema ticket or even to pay for
a coffee on the way to work.
Clients will receive discounts on different products and will be further attracted to use
it to collect points and enjoy additional benefits.
Why Everywhere?
SandyCard can be used everywhere in Dubai, Sharjah and Ajman. As seen in the map
below, these three emirates are very close to each other and people indistinctly go from one
to another on a daily basis. Even though we plan an expansion program to the rest of the
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
34
emirates after the fourth year operating in Dubai, Sharjah and Ajman, the initial plan is for
clients to be able to use it everywhere within the boundaries of these three emirates.
The utility of the SandyCard is multiple: it is not only available to use in the Dubai
metro, taxis, buses and ferries, but also for retail, leisure activities, schools, making small
purchases in convenience stores and buying drinks in vending machines.
As seen in the map below, Dubai, Ajman and Sharjah are extremely close to each
other and there are only differentiated by a slim line on a map. People go from one emirate to
another on a daily basis and the three emirates are even considered to form a big metropolitan
area.
Map of Dubai, Ajman and Sharjah
Source: Landvest Dubai
R&D Supporting the Product Strategy
Being part of JR East means the company can take into account previous experience
with Suica card in Japan to successfully introduce SandyCard in the UAE. As described in
previous sections, the product strategy will be based on the fact that SandyCard is not just a
transportation card but customers will also be able to use it to pay for small purchases.
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
35
JR East’s main aim is to provide its customers with safe and reliable transport services
based on its main business as a trustworthy company while enabling clients to use the card
for other purposes such as making small purchases.
After conducting a detailed research, it was found out that the features that Suica
customers like the most are smooth passages through gates without needing to remove Suica
from the wallet or card case, no need to line up at fare adjustments machines and the security
of being able to have a card reissued if lost or stolen. All of these will be guaranteed under
the SandyCard to make sure UAE’s clients are also satisfied in the same way as the
company’s Japanese clients.
However, Suica customers highlighted as the most relevant missing feature that they
wanted to see the expansion of the card’s usability, such as a joint use on lines operated by
other railway companies and the ability to use Suica for other rail services such as
Shinkansen. For this reason, with SandyCard this will be different. SandyCard will be eligible
to use with all rail companies operating in Dubai, Ajman and Sharjah as well as ferry, taxi
and bus operators.
The contribution of the Suica system to Japanese society was recognized on the 17th
of April 2002 when it won the Prime Minister’ awards at the 31st Japan Industrial
Technology Awards and people have always had high expectations for its future success and
development. The company wants to contribute in the same way to the UAE’s society and
change how people shop and move around the Emirates, being the product strategy basically
based on this.
Distribution
Our distribution strategy in the UAE market is divided into two main challenges: one
for the cards and the other for the cards’ readers.
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
36
We will introduce the contact-less smart card system in Dubai, Sharjah and Ajman in
partnership with Sony’s FeliCa technology. As we already did with Suica in Japan, we will
develop, launch, and operate the SandyCard smart card system. This will be developed to
decrease congestion by improving services and speeding ticket purchases as well as having a
faster processing system through the fare gates. It has a secondary financial benefit of
reducing maintenance, lowering ticket stock costs and generating new business opportunities.
SandyCard uses Sony’s FeliCa smart card system as in Japan and Hong Kong. The
FeliCa’s transaction system is completed in 200ms compared to 700ms for the magnetic card.
Although SandyCard’s average lifetime is about five years, cards are issued with a three year
expiration date and in some cases, even cards that are in good conditions are reissued. If a
card has not been used during nine months, it is automatically suspended so we can have an
exact numbers of how many cards are actually active. SandyCards will be reactivated at any
of our Customer Service Centre points.
As the Dubai metro already operates using FeliCa card readers that the Nol card needs,
the installation of new readers will only be necessary in the rest of transports (ferries, taxis,
buses) and in all stores, restaurants, clubs, etc. adopting our card system. This reader
equipment called multi-vendor model will be delivered with the FeliCa smart card processors
by Sony.
SandyCard can be purchased, charged and used in any participant of the SandyCard
network such as: metro station and bus company offices, airport and planes (before landing in
the flights to Dubai), taxi stations, convenience stores, malls (including international cafés),
tourist offices, post offices, sport clubs and ports.
Our card design and slogan “Easy. Everyday. Everywhere.” will be displayed at shops,
automatic vending machines, parking lots, etc., where SandyCard is accepted. To acquire the
card, users will pay 5 USD at issuance with the amount they choose from as stored value.
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
37
Customers will be able to charge as much money as they want to but we will impose a
balance limit of 500 USD for security reasons.
In order to use it for public transportation, SandyCard has to be placed on top of the
ticket gate’s reader to confirm the entry to and exit from the station. To use SandyCard in a
shop, convenience store or in any other partner of the SandyCard network, the consumer will
have to tell the shop assistant that s/he wishes to pay with SandyCard. To confirm the
payment amount displayed on the terminal, the consumer will need to place the SandyCard
on top of the reader. S/he will listen to a beeping sound when the payment is complete. After
the payment, the total balance will be displayed, and the client will be pleased to confirm the
details.
Our services provide a refund in case of termination of the SandyCard. When
receiving a SandyCard refund, an official identification document as proof of identity has to
be presented to any train stations offices.
Consumers have to be aware that even if they notify a lost SandyCard, we are not
responsible for any losses resulting from refunds. Nevertheless, SandyCards can be reissued
if lost. In the event of this happening, it has to be notified at a SandyCard office in train
stations or bus companies. After repaying the initial $5 USD, clients will receive a new card.
Pricing Strategy
Our pricing strategy is very characteristic, as SandyCard is not a usual product. Being
an electronic card created for the purpose of making payments in various means of transport
as well as in shops, restaurants and convenience stores, actually means the impossibility for
pricing the goods that are purchased with our card. Being this evident, we cannot decide the
transportation fee as it is an exclusive competence of the public transportation companies and
the same occurs for the good’s prices in shops.
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
38
The only thing we can actually charge to the mentioned enterprises is a small
percentage of the total amount of money spent by each individual with our card in each store
or transport. Therefore, our B2B pricing strategy consists of charging at the end of the month
a percentage of the total expenditure to stores, restaurants, taxis, vending machines and public
transport companies.
In order to determine how much we will charge businesses accepting our SandyCard
in their convenience stores, restaurants, transportation system, and so on we will take into
account the fees credit card companies usually charge merchants with.
Merchants are charged two different commissions: an interchange fee which is around
1 to 4 percent of the value of the transaction made, plus a flat fee for using its service. In the
US the average interchange fee is about 2% so when deciding our transaction fee we need to
take into account we are only charging one fee to the businesses accepting our cards. Hence,
we have decided to charge 3% of the value of all purchases made, which is slightly higher
than the average US fee but will not be higher than what merchants pay credit card
companies as they also have to pay them the flat rate fee. This will make us be in a
competitive position compared to credit card companies as accepting SandyCard will involve
a lower cost for businesses.
Moreover, the process by which we will charge this 3% will be the following: each
time an individual makes a payment with our card, we will take account of that payment and
where it was done, but we won’t pay the shop, transportation companies or others companies
immediately. At the end of the month, we will pay to every single one of them the total
amount of money spent by SandyCard users, minus a 3% that we will keep as revenue. It is
important to mention that having the possibility of not paying these companies in the exact
moment when the client’s payment is made enables us to use that cash flow for two main
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
39
purposes: first of all, protecting ourselves from unexpected problems or costs and secondly,
using the cash flow to make a profit by investing the money elsewhere.
Our B2C pricing strategy is also quite different from the standard one, and the
explanation for this is within our product’s nature. Our card is attractive to customers because
it makes their daily life easier, facilitating payments in a wide variety of situations. However,
our service wouldn’t be appealing at all if it implied a cost for customers. Basically, they
wouldn't see the point in choosing our card instead of paying by other means, especially
directly by cash. The reason for it lies on the fact that our card is a service with a very elastic
demand; consequently, maintaining near-zero price for the customers is very important. As a
result, the only money the customers are going to pay us directly is 5 USD as a refundable
deposit. We don’t expect many customers to return our card as the opportunity cost is high
and only the ones that leave the country would have interest in returning it.
To conclude our pricing strategy analysis, we have to mention that we have a price
competitive advantage over Nol, the company that, even though not is not a direct competitor
yet basically because it is not in the small purchases business, it can be so in a few years. This
competitive advantage over price is seen in the refundable deposit, which is 13.61 USD in
Nol’s case in contrast to the 5 USD we are planning to charge.
Advertising & Promotions
The strategy to support our advertising and promotion campaign has to be a solid one
as creating brand awareness of our product during the first months is vital in order to achieve
our sales and revenue goals.
The advertising campaign we will soon implement as well as the SandyApp design
and our first contact with the social networks can be seen in the appendix.
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
40
Advertising
It is important to note that we will launch our service for the first time in the target
market. The most important aspect of this phase of the product life cycle is to create
awareness for the product and clearly communicate its position. The main goal is thus
communicating the existence of the SandyCard and its main features: its easiness and its wide
range of acceptability in stores. To gain popularity as fast as possible we will dedicate a large
amount of financial resources to advertising.
To accomplish this we will conduct the following advertising strategies:
● Taxis and Buses
Taxis and buses are one of the most efficient communication channels in Dubai. They
frequently pass densely populated areas and public spaces and draw a lot of attention. It also
directly connected to the use of SandyCard for public transportation. We will avoid putting
too much information on these transit advertisements and just display our card design and the
slogan “Easy.Everyday.Everywhere.” or very simple phrases on the vehicles. There are
several marketing agencies offering this service.
● Advertising at the point of sale or “point of usage”
We will directly advertise SandyCard at places it can be purchased or used at. This
mainly includes small flyers or stickers at registers of shops or restaurants, which will remind
a customer about the possibility to pay with the card or spark curiosity about the service. It
will also benefit our “Everywhere” theme.
● TV Commercials
During the first three months we will support the building of awareness with TV
Commercials. The main focus in these commercials is again the communication of the
existence of the service as well as the slogan “Easy.Everytime.Everywhere.” Since we do not
want to attack our public with too much information, the ads will not be longer than 20
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
41
seconds. The reach the largest part of the working population we will focus on showing the
commercials during the evening and early morning.
● Zeppelin
A special advertising activity will be a zeppelin that will fly around the target market
area showing our logo and slogan. This will be limited to weekends. Since a zeppelin carries
a certain feeling of uniqueness and environment friendliness it will also contribute to our
public relations plans explained in a later section of the document.
● Social Networks
With a high penetration rate of social networks such as Facebook in the UAE, it will
be a cost-effective way to advertise our product through such media. The main feature will be
a Facebook and Twitter fan page where consumers will get information on latest promotional
activities, suggest new partners for the cards, or interact in any other way with our company.
The Facebook page will also be tightly integrated into the SandyApp.
Direct Selling
Direct selling activities will be confined to B2B offerings. Our representatives will
visit foreign companies or companies employing a high number of expats. They will offer
them cards waiving the $5 USD deposit and if required, additional functions tailored to the
company’s needs, such as the commuter pass function. A firm can, for example, use this card
as part of its social care program for employees.
Direct Marketing
Regarding direct marketing, an application called SandyApp will be launched
together with the payment service in which customers who have been enrolled to SandyCard
will have access to information such as events, important notifications and promotions. This
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
42
application will have each customer’s profile and will serve as a channel for enterprises, such
as retail stores or restaurants, to offer promotions and special offers.
The SandyApp will serve as a database for companies to promote themselves, and for
our company to incentivize the usage of the card through promotions that would be set by
these enterprises. It is important to mention that SandyApp would enable customers to check
their balance for free, and they will also be able to choose whether or not to receive coupons
and promotions.
Furthermore, the balance checking and promotions services will also be available on
short mobile text messages and via e-mail in which special offers and promotion codes will
be offered; with this feature we will be able to reach a wider range of customers, including
those who do not use smartphones or those who are not familiarized with the usage of mobile
applications. New customers buying SandyCard will also receive an e-mail thanking them for
choosing SandyCard and promoting the services available as well as other relevant features.
Sales Promotions
Since sales promotion is needed to attract new customers, especially to counteract
competition, and to maintain current customers, we have developed a plan that will enable us
to achieve this.
First of all, because SandyCard is a personalized card that includes basic customer
information, it will automatically check whether that customer applies for certain discounts in
different stores. Student discounts, for example, will be applied to those customers who
proved to be students when getting their card, so the discount will automatically be applied in
the metro system without having to ask for it, just by proving its veracity. To accomplish this,
we will make agreements with enterprises to enable the automatic application of discounts in
their stores, making customers’ purchases easier.
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
43
Another action we will take is the one called Freebie Marketing. SandyCards will be
offered completely for free for a limited time period, this means that customers will not have
to pay the initial and only cost of 5 USD for the card if they rush to get it within the first
month of its launch. This action is supported by the idea that customers will more likely be
willing to try the new service if it is free and then decide whether or not they like it,
increasing this way the number of customers.
Finally, coupons will be offered to our current customers through the SandyApp we
mentioned earlier, this will be achieved through agreements with certain main stores or
brands to offer discounts to our new customers as a way to thank them for choosing us, and to
those that have stayed with us for a long period of time.
Public Relations
Our company will focus on promoting a good relationship with the UAE government,
and provide humanitarian support (CSR) when profits stabilize.
It is also vital, from our point of view, to create campaigns supporting the use of
public transportation as an alternative to conventional means such as cars. By doing this, we
will spread our product faster. This message also links with the one that the UAE’s
government in general, and Dubai’s authorities in particular, have recently adopted trying to
promote the use of public transportation between its citizens due to the increasingly traffic
problems that cities such as Dubai are experiencing.
Electronic Commerce
Architecture
In order to appreciate our online services and estimate a cost, it is essential to create
system architecture able to deal with the exchange of information on different layers. We will
take inspiration from the architecture developed by Octopus (a similar service) in Hong Kong.
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
44
Source: Octopus Card Limited (2005)
As we can see from the flowchart above, users at the 4th levels are directly dealing
with customers and collect customer data using SandyCard terminals. This information is
then passed to some intermediary systems (level 3) that deal with dedicated servers for each
of the transport companies (or PSTN for taxis) or with a dedicated network for retail stores.
All the information is then sent to a centralized database (SandyCard DB) that stores and
retrieves data from our customers, keeps the balance up-to-date and serves as a reference for
our online services.
Understanding the architecture allows us to estimate costs related to the infrastructure
needed. We suggest relying on cloud solution for managing our databases. This comes with a
series of advantages: no initial one-time investment, no maintenance costs which may be very
high in a very hot area (data centers need to be continuously cooled down) and easy
scalability.
Therefore, we want to rent space on Amazon Web Services (AWS) and we suggest an
allocated space of 1MB per customer priced 0.000095 (reduced redundancy rate). This shall
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
45
be multiplied by the number of expected customers. This has to be treated as a variable cost
(it varies depending on the number of customers) and it's paid monthly to our supplier (AWS).
Of course, in addition to the costs related to the storage, we expect to face the cost of
FeliCa terminals as part of our system architecture.
Service Elements
SandyCard’s service is one based on easy-to-use electronic machines that make
transactions faster, more precise and automatic. SandyCard aims to facilitate the payment
method among buyers and sellers and is therefore designed in such a way that allows these
transactions to be processed rapidly and with the lowest error margin, this feature and the
availability of the payment service in a wide range of places gives SandyCard a competitive
advantage over competitors, by offering faster service in a wider number of places.
Implementation
Resources Required
The costs for the implementation of our market entry in Dubai can be roughly split up
into four categories:
● Technology cost
● Real estate
● Human resources
● Marketing
We have calculated the cost, as the revenue, for the next five years splitting the first
year up into six months and one year.
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
46
Technology costs
Our main costs in this section will be the purchase and installation of the card readers,
the cards itself and server costs. Sony supplies the reader terminals at a cost of around 30
USD per piece (Alibaba, 2014b). The devices use USB standard and do therefore not require
any special equipment or training for installation. The cards come at a price of 2 USD per
card (Alibaba, 2014) if ordered in large amounts. As mentioned before the server cost is very
low.
Time Reader Card Server Sum
6 Months $ 300.000 $ 1.640.000 $ 820 $ 1.940.820
1 Year $ 300.000 $ 1.172.000 $ 1.406 $ 1.473.406
2 Years $ 450.000 $ 796.000 $ 1.804 $ 1.247.804
3 Years $ 150.000 $ 796.000 $ 2.202 $ 948.202
4 Years $ 150.000 $ 187.554 $ 2.296 $ 339.850
5 Years $ 150.000 $ 93.778 $ 2.343 $ 246.121
Expected average consumption during the first 5 years of SandyCard’s customers Source: Self-made
Real Estate
We mainly need office space and some storage for the cards and readers. Prices for
offices in the Dubai area range from about 1,000 USD to 10,000 USD (Instant Offices, 2014).
We will assume a cost of 20,000 USD per office-employee per year for office space. We will
start to rent office space six months before the launch.
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
47
Human Resources
We plan to have a constant staff of ten people in the UAE. This will include office
workers such as marketers and accountants as well as field staff responsible for maintenance
and additional services. The average salary for office workers and service staff is around
3,000 USD per month (Dubai FAQ, 2014). Adding taxes, insurance and recruiting costs we
will expect an average cost of 6,000 Dollars per employee per month. Our staff will also
receive intensive training in the six months before the launch.
Marketing
The planned marketing efforts have already been described. We also have included
some costs for promotion in the six months before the launch. To ensure we have realistic
numbers for the marketing costs we compared our estimates with the marketing expenses of
octopus card in Hong Kong which amount to roughly 5,000,000 USD per year (Octupus Card
Limited, 2008, p.27).
Estimates
The following table and graph show our estimates for the costs described above. We
also included an annual rise in costs of 2% to account for inflation.
Time Technology Real Estate Advertisement Human Resources Sum
-6 Months $ 100.000 $ 100.000 $ 1.000.000 $ 360.000 $ 1.560.000
6 Months $ 1.940.820 $ 100.000 $ 7.000.000 $ 720.000 $ 9.760.820
1 Year $ 1.473.406 $ 102.000 $ 4.000.000 $ 748.800 $ 6.324.206
2 Years $ 1.247.804 $ 104.040 $ 4.000.000 $ 778.752 $ 6.130.596
3 Years $ 948.202 $ 106.121 $ 4.000.000 $ 809.902 $ 5.864.225
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
48
4 Years $ 339.850 $ 108.243 $ 4.000.000 $ 842.298 $ 5.290.391
5 Years $ 246.121 $ 110.408 $ 4.000.000 $ 875.990 $ 5.232.519
Estimated costs per business section Source: Self-made
Graph: Estimated costs per business section Source: Self-made
To calculate our profit we combined the cost with the already mentioned revenue.
Negative results of the previous period are subtracted from the profit in the next period. A
positive profit therefore refers to final profit of the project. Using this calculation we expect
to start making a profit within the third year.
Time Costs Revenue Profit Debt
-6 Months $ 1.560.000 $ - $ -1.560.000 $ -1.560.000
6 Months $ 9.760.820 $ 4.102.754 $ -5.658.066 $ -
7.218.066
1 Year $ 6.324.206 $ 6.679.283 $ -6.862.989 $ -6.862.989
2 Years $ 6.130.596 $10.707.719 $ -2.285.866 $ -2.285.866
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
49
3 Years $ 5.864.225 $17.661.536 $ 9.511.445 $ -
4 Years $ 5.290.391 $24.271.659 $ 18.981.268 $ -
5 Years $ 5.232.519 $30.644.292 $ 25.411.773 $ -
Estimated profit Source: Self-made
Graph: Estimated profit
Source: Self-made
Timeline (see the Appendix for the graphical representation)
We have developed a very defined strategy regarding the timeline, as it can be
observed in the upper figure.
First of all, 6 months before the launching of Sandy Card, which is the “0” point of
the timeline, we will install the readers at the stores and everywhere it’s needed. It is
important to notice that we won´t need to install the readers at Dubai´s metro because it has
already been done by Nol.
Also, in the mentioned 6 months, we will start our marketing campaign to promote
our product in order to ensure the understanding of our product between the selected target
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
50
segments before the launching of it. For our company, a strong marketing campaign is vital to
differentiate our SandyCard from the already existing Nol card, clearly explaining the huge
differences between the two products. Also, introducing a new and complex product in a
market is always difficult for the population, as they tend to need some time to understand
effectively the benefits of it. Therefore, spending 6 months in advertising SandyCard it is a
reasonable period from our point of view to solve this issue.
Immediately after the launching of SandyCard we will offer it for free, to stimulate
the early adopters to get our product quickly. However, this promotion will only last for the
first month after the official launching of the product. After that period, Sandy Card will be
distributed normally, charging 5 USD per card. Nevertheless, after the first 6 months
following our launch we will follow another B2B strategy to promote our products at the
stores and clubs. This strategy will consist on not charging the already mentioned 3% of total
purchases to the stores and other partners which have started to accept SandyCard. The main
reason for this strategy is to convince the stores about the benefits of implementing our card
as a way of payment. As soon as the 6th month passes, we will start charging the 3% that, as
we have previously mentioned, is our main source of revenue.
We have also thought in a progressive way of promoting our product, as is reflected in
the timeline. At the beginning we will introduce many promoting mechanisms in different
channels, such as direct selling, TV commercials and so on, and during each period we will
stop with one of them and focus on potentiating other. Also, after some time, our main idea is
to visit some of the most important companies of the region and try to make an arrangement
with them for selling our product or promoting it.
Summarizing, with our timeline we have carefully thought in a time based strategy for
our product in order to minimize our costs and take advantage of the many benefits of our
product in the best possible way.
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
51
Conclusion
To best appreciate our decision to enter this market it is important to fully realize our
competitive advantages. Nol Card is, in fact, a facilitator to our project. It is not to be
conceived as an obstacle or a problem, but rather as a factor that will leverage our success.
The reasons for this approach are multiple.
Our product’s value proposition is fundamentally different. We aim to launch a
payment card that will be used easily, everyday but, above all, everywhere. That is, not just to
pay for transportation but to pay for all the small purchases that our target market faces on a
daily basis. We will play to leverage the weaknesses of our competitor. Prospective customer
will rather choose a card that allows them to pay in a wider range of places.
We will build confidence and unique brand equity. While Nol Card doesn’t really
have distinctive brand equity and has a larger target market, we will be regarded as the one
payment option for expats. We will build this conception by presenting our logo in all major
spots of interest for the expat community such as clubs, bars and premium services. Further,
by becoming a family-oriented product with the introduction of parental control capabilities,
we will look to shape a long lasting relationship with our customers over the future. In fact,
we are clearly building and defining the future, while proactively reshaping the present.
By doing this work, we have undoubtedly learned many things we didn't know about
the country and the industry. From the very beginning we were interested in doing something
in Dubai because lately it is becoming a very dynamic city; however, it was a surprise for us
learning that nearly 80% of the population was formed by expats. Initially, we thought about
entering only Dubai city, but right after doing some intensive research we realized the
potential of two emirates (Sharjah and Ajman) that are so linked to Dubai that the only
distinction between them is an imaginary line in the map. This fact was pretty convenient for
our product, because many workers live in the others emirates and go daily to Dubai for
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
52
working, and also to differentiate from our competitor, which only offers the card in Dubai's
metro. After realizing all that, we changed many important parts of the work, but it was
worthy because in our opinion the product looks more coherent now thanks to this changes.
We also did an intense research of UAE's population in general and Dubai´s in
particular in order to develop our target market, as well as a study of expats behavior in
Dubai, which lead us to interesting facts such as the special clubs and shops purely made for
expats. The industry was also a field we studied extensively, being the technology of the
readers the most difficult part for us. It should be noticed that it is a very special industry,
only fully developed in a very little number of countries such as Hong Kong or Japan, so it
wasn't easy to understand how it works.
To sum up, we learned a lot of interesting new thing about the country and the
industry, and we think we end the work with improved teamwork cooperation and many
valuable experiences for all of us.
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
53
Appendix
A1. Advertising design with SandyCard’s logo
A2. Advertising design with short phrase 1
A3. Advertising design with short phrase 2
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
54
A4. SandyApp design for smartphones
A5. SandyCard’s Facebook fanpage
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
55
A6. Timeline
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
56
Bibliography
Azhari, S. (2013). Investment and the Role of Expatriates. Retrieved October 20, 2013 from
http://www.planetlebanon.net/letters/letters?page=3
Alibaba. (2014a). Retrieved January 10, 2014, from http://www.alibaba.com/product-
gs/754959284/Promotion_High_Quality_Felica_Cards_Top.html
Alibaba. (2014b). Retrieved January 10, 2014, from http://www.alibaba.com/product-
gs/622779525/usb_mifare_rfid_reader_IC_Felica.html
Business Etiquette in the U.A.E. (n.d.). Retrieved October 20, 2013 from
http://usuaebusiness.org/about-the-uae/business-etiquette-in-the-uae/
Dubai FAQ. (2014). Retrieved January 10, 2014, from http://www.dubaifaqs.com/salaries-
dubai.php
Hofstede, G. (n.d.). Arab Emirates. Retrieved October 20, 2013 from http://geert-
hofstede.com/arab-emirates.html
Instant offices. (2014). Retrieved January 10, 2014, from
http://www.instantoffices.ae/global/jp/results.aspx?wzid=10&cnid=39&rgid=0&ctid=356&d
sid=0&pcs=&mapid=1205
Najm Khalaf, S. (2013). United Arab Emirates. Retrieved October 20, 2013, from
http://www.everyculture.com/To-Z/United-Arab-Emirates.html
National Media Council. (2010). UAE Yearbook 2010. London: Trident.
JR East. (2013). Annual Report 2013. Tokyo: Author.
Shrum, L. J., et al. (2012). Sound symbolism effects across languages: Implications for global
brand names. Intern. J. of Research in Marketing, pp. 1-5.
Octupus Card Limited. (2008). Annual Report 2008. Hong Kong.
IBE351. International Marketing
Global Marketing Entry Plan In The UAE for SandyCard
57
Octopus Technology Team. (2005). Octopus Technology. Retrieved October 20, 2013, from
http://www.octopus.com.hk/octopus-for-businesses/octopus-technology/system/en/index.html
Statistics Center. (2013). Total Population of the United Arab Emirates. Retrieved October
20, 2013, from http://www.dubaifaqs.com/population-of-uae.php
Amoroso, Donald L. and Magnier-Watanabe, R. (2012). Building a Research Model for
Mobile Wallet Consumer Adoption: The Case of Mobile Suica in Japan. Retrieved October
20, 2013, from http://www.scielo.cl/scielo.php?pid=S0718-
18762012000100008&script=sci_arttext
UAE National Bureau of Statistics. (n.d.). Methodology of estimating the population in UAE.
Retrieved October 20, 2013, from
http://www.uaestatistics.gov.ae/ReportPDF/Population%20Estimates%202006%20-
%202010.pdf
Central Intelligence Agency. (n.d.). The World Factbook: UAE. Retrieved October 20, 2013,
from https://www.cia.gov/library/publications/the-world-factbook/geos/ae.html
Clancy, R. (2013). Expats in UAE spend most on luxuries. Retrieved October 20, 2013, from
http://www.expatforum.com/dubai/expats-in-uae-spend-most-on-luxuries.html
Star Card Alliance. (2005). London Oyster Card. Retrieved October 20, 2013, from
http://www.smartcardalliance.org/resources/lib/London_Oyster_Card_Profile.pdf
Top Related