Consumer Behavior Assignment-II

1. Product Failure due to Cross-Culture Conflict and its subsequent Relaunch/Revamp.

Java Lounge In Saudi Arabia
Saudi Arabia is a country that is living in a cultural dichotomy. The country is dominated by strict adherence to its Muslim faith. The national government is based on the principles in the Qur'an (translated as Koran in English) and their adherence to Shari'ah (sacred law of Islam). (Royal Embassy of Saudi Arabia, 2010) They are bound by 1,400 years of deep religious and cultural beliefs. In contrast the nation is developing a modern and more western identity. Saudi Arabia has a population of 20 million native residents and over 6.5 million expatriates. This means that 1 of every 4 people are bringing a new cultural view to this Islamic nation. Technology is likewise bringing the outside world into this conservative society. Additionally, the great wealth of the country allows many people the ability to travel, further influencing their beliefs. Such growth inevitably creates a desire for more western luxuries. The Saudis are demonstrating the same desires that are created by new wealth similar to any western nation. Clothes, jewelry and other luxury items are finding their way into the lives of many citizens. However, this expression of wealth is closely guarded and often forbidden by the traditional Islamic laws. It would appear the country is eager to accept new, upscale restaurants similar to the Java Lounge. This western style establishment would fit equally well in Europe or the United States. They cater to Saudis who desire more affluent surroundings. However, unlike other European or United States restaurants they must straddle the boundary of traditional societal values and modern business. The Java Lounge must deal with this contradictory social environment. They must fulfill the same requirements of any successful business. The restaurant provides both a service and a product that is desired by the customer base while respecting the community traditions.

N.R. Institute of Business Management

Page 1

Consumer Behavior Assignment-II Cultural Traits of Saudi Arabia:

Timing hours of work of MNEs and other businesses are adjusted according to period. For example, in Ramadan, business is normally done in the evening.

Pork products and alcohol are prohibited in Saudi Arabia. In case if authorities find out any such things, MNEs stand to lose their working licenses. Individual breaking of these rules are subject to very harsh punishments.

Saudi Arabian dress strictly follows the principles.

Punishments like beheading or cutting of hands often are done in public and people are forced to watch them so they know the consequences of breaking the rules. Homos sexual are beheaded here.

Saudi Arabian people are not very punctual and meetings often start late with respect to scheduled time. They indulge a lot in idle chitchat. European and US people find this insulting and wastage of time.

Loans given in Saudi Arabia are interest free as it is considered un-Islamic to charge interest.

Most Saudis wear long white thobes. You would be expected to wear a suit.

As is seen in their naming conventions, Saudis are cognizant of their heritage, their clan, and their extended family, as well as their nuclear family.

Enjoying movies and music in public is not allowed. It is just recently that they have started screening movies publicly.

Gifts are a very important part of Saudi culture. Saying no to the gift would mean insulting them. Also when any eatables or drinks are offered by them, it is considered

N.R. Institute of Business Management

Page 2

Consumer Behavior Assignment-II

rude to refuse it. Care needs to be taken to convey this message in order to avoid misunderstanding.

Rules are more flexible for foreigners and foreign companies: for instance Saudis are more lenient toward visiting female executives than they are toward Saudi women.

Cities like Jeddah which are situated near ports have more contact with outer world and are less conservative as compared to cities situated in the interiors. Dress code in Jeddah is more relaxed as compared to other parts of Saudi. Hence cities near ports are initially targeted by MNEs. Then as people adapted to such new ideas/belief/lifestyle, they plan to move towards interiors.

Difficulties that MNEs can face in Saudi Arabian Market:

Cant rely on family-focused interviews because of customs limiting male and female interactions.

Home is considered as private and questioning about it is considered rude and invasive.

Similar kind of dressing makes it tough for the marketing teams to identify the economic status of the people.

N.R. Institute of Business Management

Page 3

Consumer Behavior Assignment-II Java Lounge Case Facts:

Four young Saudis opened a Lounge catering to affluent clientele, having experience of foreign restaurants and sampled foreign nightlife and reasoned there were enough Saudis like them to support a lounge like those they knew abroad.

The business was started by 4 persons, an upscale 250 seat establishment. The business model of Java Lounge was B2C (Business to Customer) but it followed the rules set up by the Saudi government like:

Entire staff was male. During daytime, men coming without female were made to use a different entrance and sat upstairs where they could not be seen by the families and female group on the floor. In the evening time, only families were allowed inside.

Pork and alcohol were not served. Also live music was prohibited.

Saudi Arabia strived for economic growth and they interact with foreigners for the same. They needed a place like Java lounge to interact with the foreigners. Saudi wanted a restaurant offering western amenities, and which adjusted to suit their culture. A huge niche market was available for the same. The owners of Java Lounge were successful in finding out this huge potential and starting out a business that fulfilled this needs and hence become successful.

N.R. Institute of Business Management

Page 4

Consumer Behavior Assignment-II The Java Lounge:

This case provides a striking example of the challenges presented to foreign firms by a pervasive, theocratic, national culture. It shows why companies have had mixed success in Saudi Arabia, a modern yet ancient society grounded in Islamic law, religious convictions, and behavioural traditions.

This is the study of four young Saudis who concluded to open a restaurant/lounge in Saudi Arabia because they thought there were enough Saudis like themselves to support a foreign type restaurant/ lounge. But their market research groups in Saudi Arabia have not been able to rely on Family- focused interviews because of customs limiting male-female interactions except among the family members and because Saudis view the home as private and even consider questions and about their families as rude and an invasion of privacy.

Nevertheless the researchers successfully interviewed. They reasoned that the people who were affluent and who had travelled abroad would talk to them. They noted peoples demeanour, such as their manners and confidence in the way they comforted themselves. The expensive wrist watches showing at the lower edge of sleeves and the neatness of mens beards showed that there was sufficient market potential.

The very upscale Restaurant/Lounge was opened carefully in Jeddah because it had more contact with foreigners and less conservative. In Jeddah woman did not wear traditional garhas and cover their faces. But in most of the places in Saudi Arabia men and woman were separated in every profession. If women were employed where men worked, they would have separate entrances and be separated from males by partitions. This was the very difficult part to cope up with in Saudi Arabia.

The Saudi Arabian Culture is very strict in case of woman. It is a male dominated society in which women have lots of boundaries and strict rules and regulations. Woman were not allowed to walk freely, they were not allowed to let their hair and faces seen in the public. There are very strict laws and the punishments could be extreme public death by government.

N.R. Institute of Business Management

Page 5

Consumer Behavior Assignment-II

The Java lounge carefully treated these assumptions and they were able to make the separate entrances and separate cabins and halls for men and female.

A single male without female accompaniment was not allowed to enter to the sight of families or on the ground floor where there were groups of females. The religious beliefs and the culture were also taken care of.

N.R. Institute of Business Management

Page 6

Consumer Behavior Assignment-II Some of the other companies affected by pervasiveness of religion in Saudi Arabia.
1. Sales of Children game Pokemon was halted because they thought that the game might encourage the un-Islamic practice of gambling 2. A franchisor was forced to remove the face under the in Starbuks logo because Saudi authorities felt the public display of womans face was religiously immoral.

3. Companies also adjusted voluntarily by converting revenue-generating space to prayer areas to gain goodwill of the customers.

4. Saudi Arabian Airlines has space on the rear of the plane for prayer and so does Harvey Nichols department in Saudi from the UK.

5. McDonalds Dims its lights, closes the doors, and stops attending to customers during the five times per day that men are calls to pray.

N.R. Institute of Business Management

Page 7

Consumer Behavior Assignment-II

2. A major Change in Industry Dynamics Due to change in technology.

NO VOC in Paint Industry
Paint Industry in India:
The Indian paint industry has substantially grown over the last few years and caught the attention of many international players. It continues to enjoy a healthy growth rate compared to other economies, backed by increasing levels of disposable income, and demand from infrastructure, industrial and automotive sectors, which is expected to facilitate the growth momentum in future. Accordingly, the sector is expected to post a CAGR of around 15% in FY12-15E. Presently, the industry is witnessing growth from new demand pockets, especially in Tier-II and Tier-III cities, thus signaling the growing acceptance of quality products among the masses.

The organized players of the industry cater to about 65% of the overall demand, whereas the unorganized players constitute the remaining 35%, in value terms. The unorganized players mainly dominate the distemper segment.

The industry consists of two segments, namely: Decorative segment, catering to the housing sector; and Industrial segment, consisting of powder coatings, floor coatings and other protective coatings, catering to the automobile, marine and other industries.

In the domestic market, the decorative segment accounts for 70% of the total demand for paints, whereas the industrial segment accounts for the remaining 30%. Globally, the demand for paints is almost equally distributed, where both the segments constitute nearly 50% of the demand.

N.R. Institute of Business Management

Page 8

Consumer Behavior Assignment-II

Volatile organic compounds (VOCs):

Some of the most harmful chemicals found in paint are volatile organic compounds, or VOCs. These chemicals aren't something you want to spray on your body or potentially even keep inside your house.

Volatile organic compounds (VOCs) in paint are considered harmful to the environment and especially for people who work with them on a regular basis. Exposure to VOCs has been related to organic solvent syndrome, although this relation has been somewhat controversial. In the United States, environmental regulations, consumer demand, and advances in technology led to the development of low-VOC and zero-VOC paints and finishes

Volatile organic compounds (VOCs) are organic chemicals that have a high vapor pressure at ordinary, room-temperature conditions. Their high vapor pressure results from a low boiling point, which causes large numbers of molecules to evaporate from the liquid or solid form of the compound and enter the surrounding air.
N.R. Institute of Business Management Page 9

Consumer Behavior Assignment-II

VOCs are unstable, carbon-containing compounds that readily vaporize into the air. When they enter the air, they react with other elements to produce ozone, which causes air pollution and a host of health issues including breathing problems, headache, burning, watery eyes and nausea. Some VOCs also have been linked to cancer, as well as kidney and liver damage.

As paint dries, these harmful VOCs are released into the air at high levels. Indoor VOC levels are routinely 10 times higher than outdoor levels and up to 1,000 times higher immediately after painting. Although VOC levels are highest during and soon after painting, they continue seeping out for several years. In fact, only 50 percent of the VOCs may be released in the first year.

So perhaps it's not so hard to believe that paint-related products are one of the worst environmental offenders. They're the second largest source of VOC emissions into the atmosphere after automobiles, responsible for roughly 11 billion pounds every year. Painters regularly exposed to paint vapors have an increased incidence of several types of cancers, impaired brain function, renal dysfunction and other health problems.

VOCs were once considered essential to the paint's performance. As you apply the second or third coat of paint to your do-it-yourself project, you're probably thinking more about how tired you are than about what is in the paint. But the paint's composition actually has a lot to do with how many coats of it you'll need. Paint is typically made of three major components: 1. Pigment: gives the paint its color 2. Binders: also known as the vehicle or medium, binders help the pigment stick to the applied surface. 3. Solvents: sometimes called carrier or thinner, keep the paint in liquid form, making it easier to apply.

N.R. Institute of Business Management

Page 10

Consumer Behavior Assignment-II

Of these three components, the solvents contribute the most to the paint's level of VOCs. That's because the solvent (a liquid) is designed to evaporate quickly, leaving only the pigment and its binder (the solids) behind on your walls. Paints with a greater percentage of solids typically leave more pigment behind, thus requiring fewer applications. Solvents tend to be either oil-based (high VOC content) or water-based (low or no VOC content). Latex paint, which has lower VOC levels and is generally more environmentally friendly than oil-based paints, uses water-based solvents. Latex paint does not have the strong odor of an oil based paint -- that means less VOCs (volatile organic compounds) to harm the environment. Common oil-based solvents include white spirit, formaldehyde and toluene, along with a variety of other alcohols, ketones, acetates and aromatic compounds. Before volatile solvents like these were introduced to painting, oil paints were difficult to apply and rarely used. Now they're being phased out again as environmental and health concerns trump their convenience.

Changes that Paint industry made:

In continuation of the objective of safe paints and which minimize the impact on environment paint industry put Water-Based decorative products which having Low VOC. VOCs are the substances found in paint that are emitted as gases from a freshly painted wall. While paint fumes in general are not a healthy thing and the most concerning components of paint are known as volatile organic compounds or VOCs. These compounds can be readily inhaled and when absorbed in significant amounts can result in the commonly seen side effects of paint fumes including eye and respiratory irritation, headache, dizziness, and even memory problems. Some studies show that exposure to paint fumes can also increase the risk of asthma. In short, VOC in paints pollutes the indoor as well as outdoor air, water and soil and in turn has adverse effects on human health.

Ideally, to avoid negative paint fume effects, one should leave his/her home until the paint has completely dried, although this isnt practical for everyone. The dangerous period is while the drying process is taking place at which time these unhealthy compounds are being slowly released into the air. Once released into the air, air movement will help to disperse the
N.R. Institute of Business Management Page 11

Consumer Behavior Assignment-II

fumes to other parts of the house. VOCs are also bad for the environment, because they create ozone, and this same trait makes them harmful for human health. VOCs were once considered essential to the paint's performance. As you apply the second or third coat of paint to your do-it-yourself project, you're probably thinking more about how tired you are than about what is in the paint. But the paint's composition actually has a lot to do with how many coats of it you'll need. Of these three components, the solvents contribute the most to the paint's level of VOCs. That's because the solvent (a liquid) is designed to evaporate quickly, leaving only the pigment and its binder (the solids) behind on your walls. Paints with a greater percentage of solids typically leave more pigment behind, thus requiring fewer applications. Solvents tend to be either oil-based (high VOC content) or water-based (low or no VOC content). Latex paint, which has lower VOC levels and is generally more environmentally friendly than oil-based paints, uses water-based solvents. Latex paint does not have the strong odor of an oil based paint -- that means less VOCs (volatile organic compounds) to harm the environment. Common oil-based solvents include white spirit, formaldehyde and toluene, along with a variety of other alcohols, acetates and aromatic compounds. Before volatile solvents like these were introduced to painting, oil paints were difficult to apply and rarely used. Now they're being phased out again as environmental and health concerns trump their convenience.

With low VOC paint, the formulation of the paint has been changed to reduce the overall VOC content of the paint. In addition to making the paint more pleasant to work with because it does not smell as strong, this also reduces the health risks associated with exposure to VOCs. VOC levels are very high inside most homes, and paints are a major contributor to this. Low VOC paint is designed to perform like conventional paint, without the harmful ingredients. Now home owners do not have to avoid their home during and after painting process. Painters too, who are most vulnerable to serious health hazards caused by prolonged exposure, can now breathe a sigh of relief. Low VOC in paint will help in maintaining the air quality in home.

N.R. Institute of Business Management

Page 12

Consumer Behavior Assignment-II

Low VOC paint is especially recommended for parents, because children are particularly vulnerable to health problems from VOCs. Being exposed to these compounds can cause breathing problems and other health issues in a developing child.

Paint companies do not add any lead or other such heavy metals in its manufacturing process. However, lead contamination may take place through ingredients like solvents and thinners. But in any case the same will be lower than limits certified by various organizations and also considered safe from health norms.

N.R. Institute of Business Management

Page 13