Background

The consumer electronics market is big and particularly in the UAE. In 2008, the UAE was considered the favorite testing ground for International consumer electronics vendors in terms of new product launches and marketing initiatives targeted for this region.

Other factors played part in creating this position for the UAE. The Brand Protection Group (BPG) aimed at stemming the trade of counterfeit goods in the GCC and Yemen, and the Dubai Department of Economic Development separately announced plans to increase the penalties for convicted counterfeit goods traders in the UAE.

Rising disposable incomes in the region, a large and technology-hungry expatriate population and the booming of the tourism and real estate industries, have led the consumer electronics market to flourish in 2008.

The consumer electronics sector’s only downfall in 2008 was highlighted in June 22, 2008 by Vishesh Bhatia, Special to Gulf News. He said that the end-user’s decision-making process is not supported by skilled technical and sales staff. Many resellers sell products in a commodity form, which often means that many essential features – such as performance benefits and front-of-panel aspects which may set that particular product apart from others in the market.

In 2009 amidst the gloomy economic conditions, the situation differs. The hungry expatriate population is shrinking, the tourism and real estate industries are not doing well and the disposable income in the region is no longer rising. 41% of UAE consumer survey respondents told Datamonitor that wealth or income was very important in creating a feeling of wellbeing compared to an average of 26% of respondents in 15 other countries. This reflects the comparatively higher propensity to save in the UAE.

The UAE retailers and manufacturers have to adapt to survive in 2009. UAE consumer sentiment has shifted, and will continue to shift in the months ahead, according to a Datamonitor report in March 2009.

Saudi’s consumer electronics market is big as well, and has been demonstrating resilience, with a positive growth forecast that retail sales will reach about $40Bn in 2009, according to a study by GFK Group.

Media Coverage

7 consumer electronics’ companies were monitored in the UAE and Saudi media from 15 March – 15 April, 2009; Dell, Hitachi, HP, LG, Sanyo, Sony and Toshiba. A total of 635 clippings were analyzed for the purpose of this report.

HP, followed by Sony and LG were the top 3 in terms of amount of coverage throughout the monitored period. HP came in first place in terms of the Advertising Value Equivalent (AVE), magazines’ impressions, and coverage size.

Sony came in 1st place in terms of newspapers’ impressions, while LG came in 1st place in terms of websites’ AVE. Sanyo ranked well below others in all categories, with the exception of magazines’ impressions, which featured Hitachi in the last position.

The 7 companies were featured in ‘Press Release’, ‘Financial Report’, ‘Feature Report’, ‘Investigation’, ‘News’, ‘Financial Analysis’, ‘Interview’ and ‘Review’ clipping types throughout the monitored period. Sony had substantially more coverage in the form of ‘Financial Report’, ‘Investigation’ and ‘News’, probably due to its financial status.

Dell, Sony and LG were the most popular in the KSA market, while HP, Sony and LG were the most popular in the UAE market. While all 7 companies had substantially greater English coverage, HP and LG’s English coverage was only slightly more.

In terms of genres penetration, LG, followed by Sony and HP were the most diversified. LG targeted all age groups. With coverage from ‘Celebrity & Society’, ‘Fashion & Shopping’ and ‘Students’ publications, the young demographic is reached. ‘Parenting & Childcare’, ‘Architecture & Interior Design’ and ‘Business’ publications helps reach the older demographic.

The pattern for almost all of the 7 companies is for the coverage to be mainly from newspapers, followed magazines, and websites. Dell and LG, however, had more magazines than newspapers.

Content Analysis

The coverage was analyzed and broken down by message types, reputation drivers and PR influence. Sony, followed by LG and HP were the top 3 in terms of amount of manifest (direct) mentions. LG, followed by HP and Sony were the top 3 in terms of amount of PR influence and positive reputation drivers. Finally, Sony, followed by Hitachi and Toshiba were the top 3 in terms of amount of negative reputation drivers.

Looking at it from a ratio perspective, it was LG and Sony who shared the top position in terms of percentage of manifest mentions. LG, followed by Dell and Toshiba were the top 3 in terms of percentage of PR influence. LG, followed by Dell and HP were the top 3 in terms of percentage of positive reputation drivers. Finally, it was Hitachi, followed by Sanyo and Toshiba that came in the top positions in terms of percentage of negative reputation drivers. Interestingly, LG ranked last in terms of negative reputation drivers.

In terms of the messages penetrated throughout the period by the 7 companies, some stood out as stars, some had their coverage split between the good news and the bad news, while some had predominately negative coverage.

Hitachi’s coverage had messages on it possibly considering capital increase through government lending program, on it demanding lower prices of steel plates since steel demand dropped, on it freezing pay of non-managerial staff and on it expecting dramatic losses. Sony was the other company to be featured in predominately negative coverage. It has messages on stock prices decreasing, forecasting operating loss, cutting jobs, scaling back capacity and freezing pay for non-managerial staff. However, it also penetrated messages on PS3 utilizing WildCarge technology, stock prices increasing, selling Ultraportables and on Dubai Holding being an investor.

Sanyo had little coverage, mainly on its expectation of dramatic losses and on it being a member of the ‘Wireless Power Consortium’. Toshiba was also split down the middle. It had messages on its joint venture to build electric cars, and another joint venture with Sharp on solar power business, on its stocks movement, on the possibility to increase capital and on the possibility of freezing pay to non-managerial staff.

HP had a lot of coverage and while it was mainly positive, it does not compare to Dell’s and LG’s. HP had messages on it selling Ultraportables, on it being part of the ‘Biggest Personalities Scenarios’, on investing in tech-savvy infrastructure, on its subsidiary EDS’ deal with Mubadala, on its update of its simulation solutions products, on its prediction that environment friendly large format printers will become popular. HP’s coverage also mentioned its Vice President joining AMD, and that the IBM-Sun deal pose a threat in the high-end Unix server market.

Dell had highly positive messages. It had messages on BDP graduates being placed at various centers of excellence around the globe, including Dell. It also had messages on Dell celebrating 2nd anniversary of Creative Solutions Center’s establishment, on launching the thinnest laptop in the world, unveiling new servers for tight budgets, partnering up with NVidia, its stocks movement, having offices at the Grosvernor Business Tower in Dubai and on its CEO giving optimistic forecasts. The coverage also included a comparison of Dell to Apple, as similar.

LG, the star, had powerful positive messages throughout the period. LG was described as a family firm, LG sponsored the LG Forum Awards 2007 and 2008, won 2 awards, launched a new projector, launched the Remoir phone and launched the first transparent phone in the world. LG also sponsored the Dead Sea Ultra Marathon and launched a new monitor.

Conclusion

Obviously the conditions previously enjoyed by the UAE and KSA markets that stimulated an environment that harbors much growth for the consumer electronics market, are disappearing. Falling population and lower consumer spending will surely have an impact on the market in 2009.

With companies like Sony and Hitachi allowing 29.5% and 31.25%, respectively, of the coverage to be negative, others stand a much better chance differentiating themselves as the survivors, achievers and producers of the new wave of consumer electronics products.

LG stood out as the star in this period. Its messages were all powerful and positive. It achieved 0 negative coverage. It ranked 1st in terms of manifestation of messages, PR Influence and positive reputation drivers. It was the most diversified in terms of genres penetration, thereby targeting a bigger slice than its competitors. It was ranked from the top 3 covered in the UAE and KSA markets. It was also one of 2 that broke the rule and had higher magazine coverage.

Datamonitor is of the opinion that maintaining brand support through difficult times helps take advantage of competitors who often reduce marketing efforts. As consumers spend more time considering options before they spend money, this increases the likelihood of getting their attention with effective communications. We agree with the sentiment. Brand differentiation and powerful positive communication are much more important in 2009 than in 2008.