Mix and match: Clever customer segmentation in the Middle East

The cultural diversity in the Middle East (the Gulf region in particular), along with the constant fluctuation of foreign residents coming and going every few years, creates a type of market vitality that should encourage companies operating in the region to regularly revise their market segmentation techniques. The traditional method of building static consumer profiles should be replaced to create a more dynamic mechanism.

When it comes to market segmentation, many companies in the region tend to apply some sort of polarising approach to society. However, the reality is more vibrant than these companies realise. Middle East consumers today have become more unpredictable and markets are heavily affected by consumer behaviour and lifestyle factors. Consumer profiles are evolving at a more rapid rate than that determined by traditional market segmentation methods such as mere geographical clustering, revealing that consumers are looking to purchase offers that go beyond their known price thresholds.

Family income, for example, used to be a key determining factor of consumer purchasing behaviour. However, the widespread application of credit card instalment payment plans offered by banks (zero interest rate payment plans in particular) has motivated large numbers of consumers to surpass their predetermined purchasing profiles to acquire products that are beyond their normal financial means.

To deal with the challenging cultural diversity in the Gulf region, many companies begin their market segmentation process by dividing consumers geographically among three major regions (Arab, Asian and Western), and then proceed to the regular demographic sub-segment categorisation that addresses each target group through its own particular medium.

Throughout this process, companies usually do not take into account the commonalities shared by all sub-segments living in a single society and under the influence of a specific cultural behaviour pattern. Consequently, promotional campaigns play a crucial role in shaping overall consumer behaviour.

While most Asian and European consumers begin their purchasing cycle by first assigning a given budget to their product needs and then looking for suitable products that fall within their allocated budgets, the purchasing cycle of Arab consumers starts with an emotional attachment to a specific product or service, and then proceeds to work around consumers’ financial capacities. The preference of Arab consumers for a certain product is not explicitly admitted, although a purchase is often justified by discussing the qualities and benefits of the purchased product.

The telecommunication industry is a clear example of the phenomenon of duality among youth. Young people often switch from one operator to another in order to capitalise on the most profitable promotional offer. Yet when it comes to purchasing mobile devices, they do not hesitate to raise their purchasing power substantially to procure the latest smart device. The same concept applies to the automotive industry. Arab consumers tend to place too much value on owning cars with many upscale features (this enhances their social image) and are willing to pay more for options and features that they will rarely use.

Companies that operate in the Middle East should change how they apply market segmentation and contemplate the benefits of switching from an absolute ‘given data’ method to a ‘functional tool’ technique. When launching new products (or even when running a promotional campaign), instead of addressing each segment as an isolated pillar, marketing executives need to consider a mix and match method; bringing together a number of sub-segments with certain shared commonalities and using a single approach to address them. This method has led to higher sales revenues than originally anticipated.

Mohammed Nosseir is a senior marketing advisor with Simon-Kucher & Partners, Middle East