Encouraging consumers to buy is both an art and science. Market researchers hold firmly onto two facts about the grocery-buying habits of Saudi families: They do not buy all their food at a single outlet and shopping is a form of entertainment, to see what is new, on sale and is discounted. Marketers and supermarket managers know, be it Ramadan or other times, the desire to consume food has its limits, no matter how attractive the price. They also are aware that Saudis, in general, consider shopping a form of entertainment. “Women homemakers brag about how much it cost them to buy a food item but there is no mention of cosmetics or dresses. For the latter, the more expensive the better,” says Abdulghani Yagmour, market analyst with Saudi United Researchers (SUR) in Jeddah. SUR data shows Ramadan is when the most is spent on food. So supermarkets managers are caught between a rock and a hard place. Cutting down on prices per unit may not increase sales and can hurt revenues. “It is what economists call low demand price elasticity, where price cutting hurts more than it invigorates additional sales since all units have to be sold at the lower price,” adds Dr. Hussain Al-Attas, Accounting Professor at Prince Sultan College for Business and Tourism Jeddah (PSCJ). So how to encourage people to spend on high-consumption items to make up for price cuts? The answer lies in what marketers call “sell more but hold average prices steady”. This motto is seen clearly in the Ramadan promotional leaflets from Jeddah supermarkets. They are bombarding consumers with specials from tomato pastes to chicken Kiev to frozen mango slices. A sample of six Jeddah supermarkets' promotional leaflets — Al Raya, Bin Dawood, Danube, Manuel, Marhaba and Panda — was subjected to content analysis by the 2011 summer graduating class at PSCJ. The findings reveal researchers' preconceived notions about customers' shopping behavior. Al-Raya's promotional leaflet, in addition to sale items, carried products such as tea, caramel, cream, light tuna, corn and sunflower cooking oils, were either offered with a complimentary gift of the same kind or sold as part of a “buy more for less” strategy. At Bin Dawood, in addition to most of the items at Al-Raya's, added whole chickens, nuggets, franks, macaroni, hot sauce, canned beans and mushrooms. Danube added soft drinks, tomato paste, ketchup, tissues and aluminum foil. “A supermarket manager's selection of what to put out for sale as ‘two-for-one' items or reduced per unit price depends on whether the outlet is selling for its account or on a commission basis. If a manager has to move a stock of items bought outright by the store then he has more leeway to offer in-kind coupled with a gift or reduce the unit price,” said Waleed Al-Sindi of PSCJ. But regardless of the marketing strategy of stores, sellers know they compete for a limited amount of money – the monthly income of an individual or a family. SUR data also shows families tend to spend more. “It is true Saudis set a spending limit in advance but in many cases they spend 30 to 40 percent more than intended,” added Yagmour. And, it is precisely here where in-store advertisements and discounts tip the scale. Manuel, Marhaba and Panda share similar features to the other stores and include home appliances such as cooking pots, kitchen utensils, microwave ovens and electric mixers. Commenting on the results of the content analysis, Al-Attas said: “Sample items show high awareness by store managers and marketers of the buying environment and it is obvious promo leaflets are effective means to reach and deliver to targeted consumers.” __
