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Mon 9 Oct 2006 04:00 AM

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Looking Sharp

With a new managing director at the helm, Sharp Middle East FZE is planning to radically overhaul its commercial operations in the Middle East and Africa.

|~|Isogai,-Tomio200.gif|~|Sharp MEA managing director Tomio Isogai.|~|Founded in 1912 as a mechanical pencil manufacturer, Sharp has come a long way in the ensuing period. As one of Japan’s largest consumer electronics manufacturers it has constantly pushed the boundaries of technology with new and innovative products leading to it gaining considerable market share in the key consumer markets of Europe, North America and Asia.

However, the company has struggled to replicate this success in the Middle East and Africa (MEA), largely because product releases in the region have lagged behind other markets and the company has adopted a reluctant stance to customising products to suit local demands.

However, under the tutelage of new regional managing director Tomio Isogai, the company plans to review its approach to the MEA markets, in a bid to gain ground lost to major competitors and establish Sharp as a key consumer brand in the region.

The Middle East currently accounts for less than 5% of Sharp’s global sales excluding Japan. Isogai hopes to double the company’s sales figures in the region within three years, gaining a minimum 10% market share in each product category it boasts a presence in by 2010.

If this goal is achieved, Sharp’s turnover in the Middle East will increase from its present figure of US$200 million to more than US$500 million within three years.

This is a bold proposition for any company especially given the intensely competitive nature of the regional consumer electronics industry. Isogai is in no way circumspect when he talks of the company’s past failings but is naturally keen to focus on its future ambitions.

“The Middle East and Africa used to be the last part of the world market that Sharp took care of,” he tells ECN. “In the past, new products would be launched here later than other parts of the world.

“We have achieved great success launching new products in the Asian, European and American markets but then failed to replicate this success in the MEA region because we’ve been too slow to launch here.”

The second area that was holding the company back in regional markets, says Isogai, was customisation, not just of products but of the company’s marketing approach as well.

The growing commercial importance of the MEA region has prompted a large number of consumer electronics vendors to pursue increasingly region-centric approaches to product customisation and marketing in a bid to bolster sales.

According to Isogai, the time has come for Sharp to follow suit.

“What we need to do is listen to and analyse the specific market trends in this region,” he says. “Our message has to be different. We are working with our local agencies and may have to establish new guidelines for how we market our products.

“We have found it sometimes counterproductive stressing the technical aspects of our product range. It’s more beneficial to emphasise the key real-world benefits of particular products.

“To this purpose, we also need to ensure that we address local consumers in their own language. That’s why we have placed great priority on recruiting employees fluent in Arabic and who boast a solid understanding of trends impacting local consumer markets.”

Isogai also confirms that the markets of the Middle East, and in particular the GCC, pose additional challenges in regards to marketing as a result of their large expatriate populations.

“We have to be mindful of the multicultural nature of the Middle East. Our marketing approach must appeal to Arab, Western and Asian consumers living in the region,” Isogai explains.

“We must also ensure we distribute the right products to the right retailers catering to each sector of the market.”

In order to achieve these aims, Isogai says Sharp must also radically overhaul its approach to logistics and distribution on a local, regional and international level.

“Our distribution strategy in this region must change,” says Isogai.

“We need to focus on the key areas of operational efficiency and production efficiency. The latter requires a great deal of work and key to this strategy will be developing customised products and implementing regional marketing initiatives.”||**||New markets|~|29L200.gif|~|Sharp plans to focus its marketing efforts on its LCD TV range.|~|While the countries of the GCC generate the bulk of Sharp’s business in the Middle East, markets in the greater Middle East and African regions are growing in importance, says Isogai.

He cites Iran, Pakistan, Egypt and South Africa as key to Sharp’s regional expansion ambitions. He says the company is also keen to enter new African markets in a bid to keep pace with its competitors who are fast adopting similar strategies.

“We enjoy a strong relationship with our business products distributor in Pakistan, which is achieving solid gains there,” Isogai explains. “We believe ourconsumer electronics business could achieve similar success in the country’s domestic market, if we work closely with our established partners to better utilise existing retail channels.”

Isogai believes Iran is another country that holds huge commercial potential for Sharp. He says the company hopes to capitalise on the path forged by South Korean vendors LG Eletronics and Samsung, two companies which count Iran among their most important markets in the Middle East.

Isogai is not alone in his assessment of Iran’s potential. However, he agrees that factors including a fragmented retail model, a booming grey market driven by high import tariffs that protect local businesses and a complicated banking system, stand to hinder the company’s ambitions in the country.

Still, with Iran recently being confirmed as the UAE’s top trading partner, many consumer electronics vendors have proven it possible to effectively service the market from Dubai.

Consumer purchasing power in Iran is also greater than might otherwise be expected, with market research firm GfK Marketing confirming a sharp rise in sales of branded consumer electronics goods in the country over the past 12 months.

“When I visited Iran in August I was amazed by the number of flat panel displays on sale in consumer electronics outlets across the country,” says Isogai.

“Iran is another country with huge potential for consumer electronics vendors and we need to be there competing with our rivals for market share.”

The key to Sharp’s fortunes, Isogai claims, is the establishment of new retail channels and the enhancement of the company’s product positioning with its established partners. he claims this will help raise the company’s brand profile in conjunction with a reinvigorated marketing campaign playing to consumer trends.

“We need to raise the profile of our brand and product range,” Isogai explains.

“Our strategy is to focus on the benefits that our technology can bring to consumers and then we work with retailers to effectively deliver this message. We look at how we can support our retail partners in terms of advertising campaigns and after-sales service support.

"The basic set-up required for achieving this is in place in the majority of markets we boast a presence in, but we will obviously expand on this strategy in some of the new markets we’re targeting.”

Isogai says this strategy could call for the establishment of a dealer retail channel in Iran and Pakistan either in conjunction with new or existing business partners.

The benefits of this strategy would be two-fold, he says. Firstly, it would provide Sharp a direct, guaranteed route-to-market in its own stores while also raising its brand profile on the high street.

Ultimately, Isogai predicts this would increase demand for the company’s product range from independent retailers.

“A significant financial investment would be required and we may look at securing partnerships with our distributors in these countries to establish new retail showrooms. We are actively seeking a partner in Iran at the moment that is capable of initiating this plan.”

Isogai is also committed to forging closer ties with retailers in a bid to ensure Sharp’s product range is showcased in their stores.

“I personally approach retailers about tying with them for new product launches and negotiating store front displays,” he says. “We can provide retailers with a range of incentives. With regard to power retailers and hypermarkets, we might look to secure an alliance whereby they provide us with increased shelf space and in return we provide extensive support including staff training services.

“We are also willing to take a flexible approach to margins to ensure that both our businesses flourish.

“I have already briefed a number of our distribution partners about this new strategy and they have expressed a willingness to work with us to develop a portfolio of training services.

“We have also received support from Japan to make the resources available locally. Sharp Japan has expressed a willingness to provide greater resources in support of our initiative, because it fully recognises the commercial opportunities this region has to offer. It also fully supports our regional expansion plans.”||**||New products|~|Four-Door-Fridge200.gif|~|Sharp plans to develop 'eco-friendly' products, including refrigerators.|~|In terms of new product releases, Isogai says Sharp is committed to providing improved connectivity and home-networking options in its next-generation consumer electronics and home appliance products.

He adds that the company is also firmly committed to developing eco-friendly products boasting improved energy efficiency, particularly large domestic appliances, in addition to new technologies focused on consumer health.

When asked how this eco-friendly approach would appeal to consumers in the Middle East, given the local tendency towards power-hungry, full-size major appliances, Isogai stresses that the strategy is ultimately designed to provide Sharp with a key point of difference from its competitors in the marketplace.

“There are many markets in this region, particularly some of those less developed, where energy consumption is a major issue and consumers are keen to reduce their domestic electricity costs.

Personal health and safety is also a huge priority of consumers regardless of where they live. We have developed a range of technologies catering to these demands, including a plasma-ion cluster refrigerator that reduces the presence of bacteria. These technologies will particularly appeal to the mid- to high-end market where consumers seek products with unique features.

“Every vendor offers a range of major appliances and competition in the sector is fierce. However, our eco-products provide us with a point-of-difference and its up to us to ensure that consumers fully appreciate the benefits they offer.”

Isogai refuses to buy into the current battle raging between next-generation DVD rivals HD-DVD and Blu-ray. He says the company may look at developing a dual-format player in the future, but it was not a priority at the moment.

“I don’t believe Sharp is in a position to take the initiative in the HD-DVD-Blu-ray issue,” he says. “We will however respond to consumer demands, if one format is installed as the industry standard.

“In terms of digital displays, we foresee high definition receivers as becoming standard items in flat panel TVs in the future. We need to play an active role in promoting the development of HD content and the expansion of HD broadcasting services, particularly in the Middle East.”

In the longer term, Isogai reveals that Sharp may establish a second regional distribution hub to support its planned expansion in African markets.

“We are currently weighing the benefits that such a hub would provide in terms of distribution opportunities,” he says. “Also, if we successfully establish a presence in markets such as Pakistan and Iran then we may consider expanding our facility in Jebel Ali to accommodate future growth.”

However, Isogai concedes that Sharp has a long way to go to make up lost ground on its competitors in the Middle East. He reiterates that increasing efficiencies in the company’s supply chain and nurturing relationships with key retailers are top priorities in the months ahead.

Sharp’s renewed focus on developing enhanced marketing and product customisation initiatives should also lead to new opportunities for Middle East distributors and retailers keen to jump on the company’s bandwagon.||**||

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