Creative has over the years made shifts in its product line. How does creative now look at its product strategy?
We focused earlier on Sound Blaster sound cards, CD-ROMs etc. We shifted more into consumer electronics over time, focusing on the lifestyle Personal Digital Entertainment (PDE) market. We sell a wide range of interactive PDE products that comprises MP3 players, portable media centres, multimedia speakers and headphones, digital and web cameras, graphics solutions, music keyboards and PC peripherals. The boom came from mp3 and mp4 players which at one point was nearly 60 % of our market turnover. Now that market has almost reached saturation but we are seeing a rise in headphones, earphones, other peripherals etc. That has now come up to almost 20% We are now into products that are not commodities such as sound cards for notebooks, entertainment or wireless.
Tell us about you read the situation in GCC markets and you go to market strategies?
We are actively working with hypermarkets for positioning our products as these stores have become popular for retail shopping. Of course, we also continue to focus on the channel since Dubai continues to be the regional hub. Three years ago, we started our support office in Jebel Ali and last year we shifted to DSO.
We want to expand into markets like Qatar especially, which is showing impressive growth. We are looking for in-country distributors to reach these customers. All GCC markets except for Dubai are end-consumption markets and our products are also not very high investment products. We expect to see continued demand for these products from these markets since these are products that everyone would buy.
High end sound cards are a key focus for you. How are they sold into the market?
With the exception of some high end cards, which are sold through specialised stores, rest of the products are sold through all channels. The high end sound cards are for people who want exceptional sound quality for gaming and multimedia entertainment. These are very informed consumers and most of the times are quite aware of what they need. We have almost 80 % market of sound cards for gaming, home entertainment etc.
Who are your distributors?
We have Trigon of the Al-Ghurair group and Ashley for distribution in the UAE. Delta and BDL are focusing in the Saudi market. We are now seeking locally focused distributors who understand the local consumer market behaviour in markets such as Qatar.
Outside the GCC, are Iran and Egypt key markets for you?
We have built good relationships with the channel In Iran and our business is doing well. Over the past few years, we have the top market share in Iran for branded speakers, web cameras and mp3 players. We do a lot of channel activities on a regular basis in Iran. We had an event as recent as last December where had over 300 dealers attending. Egypt is classified under the North African market and is overseen by the Singapore office.
How do you support the channel?
We do a channel event once a year and support our channel regularly with incentives and rebates. We are cautious and conservative about our growth plans. At the end of the day, we are particular about keeping the bottom-line healthy and make sure that every dollar spent has a high certainty of good returns and that it is benefiting our partners. We have a small team and try to maintain sustainable growth. We focus on the service quality as well, which is critical to the bottom-line.
How do you see the growth in the mp3 market?
Key players in the market have reported a slowdown in mp3 sales. Almost everyone who wants an mp3 has already bought one. Besides consumers seek phones that come with mp3 functionality.
What reports have you got about recent sales and what growth do you expect?
Our dealers are happy with the recent DSF sales. This was a pleasant surprise considering the fears of recession are affecting the market.
This year, we are expecting modest growth in the light of the market situation. We hope to sustain our market growth.
What new products are being planned?
We are going to launch a new range of concept using the notebook which we see as an entertainment hub. This will be a wireless audio ecosystem. We have a soundcard, transmit four different sounds to four different speakers. People are willing to spend for these products.
Jordan Lee, sales manager at Creative Labs Middle East discusses plans for the company at increasing market penetration in GCC markets