Dunia Finance LLC presents a unique business circumstance, being launched in the summer of 2008, a time when the recession was starting to kick into action. Dunia is one of the few business that operates in the gulf area as a financial institution (which is not the same as a bank) and is continually looking to expand its customer base within the United Arab Emirates before going international. The company was not aware that the ‘credit crunch’ would hurt the world economy, and thus they had been anticipating a successful launch in 2008 and had been preparing the business two years prior to the launch. Since Dunia was a new business in the finance market of the UAE it was interesting to see what separated them from banks and other financial institutions as they claimed they were not a bank. Furthermore it was extremely interesting to analyse a young business in its first strides into the market.
Areas of Syllabus to be covered:
1.5 External environment
1.6 Organizational planning tools4.3 Product
4.6 Place (distribution)Theoretical Framework:
I will be analyzing and assessing the future marketing strategies as the key of Dunia being a private sector company, would be to find potential customers in new and emerging markets. Thus I will need to look at the current market share, and possibly add a prediction towards the end of the research essay as to how Dunia would fare in five years time. The competitors which include any financial institution such as Emirates NBD (a local bank) or
Al-Futtaim HC Securities & Investment (local that are in the same market is Dunia, i.e private sector. I will be looking at target percentage for the market that Dunia wishes to increase their influences in, consumer profile and behaviour, and nature of the market. Also possible penetration areas within existing markets and new markets.
Primary Research: In the form of a formal interview with an employee in marketing, presenting specific questions on marketing only. This should prove effective in providing my main findings, also only one person is chosen as the data that would be shared with me would be the same if another marketing employee were asked.
Secondary Research: Secondary Research can be conducted through means of Dunia’s annual reports for both operating years 2008 and 2009 (which are accessible by the general public on http://dunia.ae/common/investor_relations/annual_report.htm); however the 2010 version is yet to be published. Also a corporate book is available (at http://dunia.ae/common/investor_relations/corporate_book.htm). Both these sources are anticipated to provide quite a lot of data.
Possible Analytical Tools: I will try to incorporate some of these analytical tools into my research essay: Boston matrix, SWOT analysis, product positioning map, accounts and break even analysis.
I am anticipating that I may not be able to obtain data from rival companies. Also I am anticipating that the data I receive from one person and online will make up for the lack of data from other sources. I am also anticipating that my time line of action will be have to be adjusted due to the fact that the person I am interviewing is at a high position and is often busy or out of the country. Also I will probably not use all the stated analytical tools possibly only two. This is because Dunia Finance LLC is a private financial institution that is a young business and is unwilling to display many figures and financial data.
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The internet is my only medium to rival financial businesses’ information such as market share and market segmentation. The only possible way to get hold of the marketing interviewee is to schedule a time and date that is possible for both of us and make sure there is no cancelation in advance. Also the analytical tools that are applicable to this report seem quite slim, however throughout the research and development of the essay, it is likely that three or more analytical tools will be used.
Decide upon Topic and Create Research Proposal
Feedback on Research Proposal
Came up with new business and Research Proposal
Approach acquaintance and try to get in contact with Marketing Representative
Start Main body of essay
Continue work and follow up with more information (from marketing slides)
Proof Read and Final Editting
Hand in First Draft
Found New Annual Report 2009
Receive First Draft back with feedback and ask questions
Improve First Draft
Hand in Final Copy
Dunia Finance LLC is a 1½ year old business which is currently on its way to breaking even. The economic turmoil in which the UAE is in presents Dunia with challenges in breaking even and eventually producing profit. I have posed the question Research Question: How could Dunia Finance LLC increase its market share in the next 5 years? Because it allows me to interpret and understand how market share can be developed and I found this business very intriguing.
The investigation is carried out through one thorough interview, accompanied by company books (annual reports marketing slides, and secondary research through the company’s website. The limitation is the cost centre figures that I analysed that are not accurate.
The main findings show that although Dunia is a young developing business it is likely to be able to increase market share within the next 5 years by doing the following:
Reduce salaries by 10% till break even is reached
Focus on internet advertising
Focus on the two market segments of Dunia Gold and Dunia Money
Word Count: 177
Dunia Finance LLC is a business that was recently launched as a financial institution in the U.A.E. It is new in the financial market and was launched when the ‘credit crunch’ had begun its global toll on the world’s economies. The company is made up of 5 directors. In which 4 companies: Mubadala holds 31% ownership, Fullerton Financial Holding holds 40% ownership, Waha Capital PJSC holds 25% ownership, and the remaining 4% ownership is presumably taken by A.A. Al Moosa Enterprise. Marketing plans have matured from general introduction into the market, to acknowledgement and creating awareness. Here lies the main objective currently of Dunia Finance LLC, to raise awareness. A raise in awareness implies that there is likely to be higher revenue generated and therefore leading to growth and furthermore increased market share. As consumer awareness is increased with revenue, brand loyalty and many other factors come into play as the business begins to mature. The current market share is quoted approximately at ‘5%’ (Interview with Mariam El Samny). In 2007 there were “a total of 46 domestic and foreign banks” (http://www.cluteinstitute-onlinejournals.com/PDFs/200785.pdf).
Figure 1: If we look at this product life cycle stage, we can place Dunia Finance LLC, at Point A in-between introduction and growth, as they are still raising awareness. (Original image adapted from: http://184.108.40.206/podcast/wp-content/uploads/plc.png)http://220.127.116.11/podcast/wp-content/uploads/plc.png
How could Dunia Finance LLC increase its market share in the next 5 years?
Procedure or Method:
Primary Reasearch: I conducted an interview and have looked over the company books and slides I was given. The research is sufficient as it provided me with all the data the company had and which I could use.
Secondary Research: The website provided me with two annual reports and the corporate book; also a newspaper article provided me with adequate back up data. There were no limitations except the accuracy of the article.
Target Market: When a company is trying to do anything with marketing at all they must ask the question, “For whom am I advertising the product?” Dunia Finance LLC has clearly stated to me that its target market has been defined as the Salaried Mass Market individuals, the Self Employed Mass Market individuals, Mass Affluent individuals, and Affluent individuals.
Figure 2: UAE’s population by nationality First a look is taken at the population distribution of nationalities in the UAE.
Figure 2 represents the potential target market. (Adapted from marketing slides #2)
Dunia has segmented their market to cater to the four groups. Which are: Self Employed Mass Market, Salaried Mass Market, Mass Affluent, and Affluent individuals.
Dunia Gold (Affluent) offers a “customized and tailor-made solutions” through offering “a wide range of financial products and services while delivering these with exceptional service and convenience through a single point of contact” (Adapted from Marketing Slide #6).
Dunia Trade (Self Employed Mass Market) offers a “caring community-based financial services provider designed specifically to serve the un-banked or under-served lower income self-employed, through a superior relationship experience, empathy and respect, with convenient, fast and easy access to credit for their business or personal needs” (Adapted from Marketing Slide #6).
Dunia Money (Salaried Mass Market) offers a “community-based, superior service and relationship experience based on empathy and respect, while delivering customers with easy credit, simple savings and remittance products, to meet their simple financial needs, in order to help them provide a better future for self and for family back home” (Adapted from Marketing Slide #6).
Dunia (Mass Affluent) offers “a wide range of customized financial solutions through superior products, service and relationship experience based on respect, with easy access through an empowered Relationship Manager, alternative access channels for convenience and speed to provide for better life-style and future for self and for family back home / internationally ” (Adapted from Marketing Slide #6).
Figure 3: Target Market Research and branding
The business is fairly new and it will face constraints such as high costs, technology constraints, and market constraints. Market constrains caused the most damage in the 2008-2009. Combination branding has been used effectively for these four brands, where the brand name is always associated with Dunia.
Dunia uses a “risk reward based pricing for asset products” ( http://dunia.ae/common/pdf/dunia_AnnualReport2009.pdf, pg.12) Dunia sets its interest rates at “5.5%” (http://dunia.ae/common/pdf/dunia_annual_report_spread_page.pdf, page 116).
The next question is “how do I cater to and attract customers from this target market?”
Above the line promotion: Dunia employs both reassuring advertising and informative advertising.
Informative Advertising: Dunia has understood that in recent times its customer base can be reached more effectively through the advertising medium of the Internet. This stage of advertising is still in the trial process but it has yielded a high response. Internet marketing is the cheaper alternative and is far more effective.
Reassuring Advertising: Another marketing strategy was to ensure that old customers would generate even more faith in the company. We can see this in Figure 4, as in four days the average response has been quite high, showing that newspaper ads are still worthy of being incorporated into the marketing budget.
Figure 4: Here is a result of a survey conducted on the feedback of news paper advertisements.
(adapted from extra marketing slides )
Below the Line Advertising:
Dunia uses sales promotions such as the current one which stated “fly away free with your Dunia loan” (http://dunia.ae/common/pdf/21625_Dunia_Fly%20Away%2020x12_1(GN).pdf). This is a sales promotion in the form of a free offer. Merchandising is conducted from the point of sale of atm’s, Dunia centres, mobile banking, internet banking, and a 24 hour helpline. Personal selling happens primarily through the helpline, the centres, and via e-mail.
Dunia uses the channel of distribution directly to the customer. Direct marketing occurs as customer can plan their finance online, via mobile banking, and through the helpline. Also direct response advertisements are used through the newspaper ads and internet ad campaigns. Furthermore the call centre ensures rapid response and feedback to the customer.
Analysis and Discussion:
For a small company such as Dunia Finance LLC, I personally feel that it is unadvisable to start with such a broadly defined target market and 4 product portfolios. It seems that expansion was too rapid. A SWOT analysis, PEST analysis, Boston Matrix, and Finance will be analysed.
SWOT ANALYSIS of INTERNET ADVERTISING VS. NEWSPAPER ADVERTISING
Strengths (Internal): 1) It is low cost. 2) Proves to be quite effective in producing results and responses are easily tracked.
Weaknesses (Internal): 1) Not able to reach as many potential and existing customers. 2) Ads on websites and emails are often ignored or found annoying by internet users. 3) Message can often be misinterpreted.
Opportunities (External): 1) the young entrepreneurial, business individuals are affluent in the UAE and Dunia is targeting these individuals through internet ads. 2) Easily accessible to those who have internet access even in other countries.
Threats (External): 1) Stronger more effective ad campaigns on the internet from established and well known companies. 2) Possible worsening economic status Dunia is already cutting costs and this would probably hurt investment in advertising.
Strengths (Internal): 1) Older more traditional individual will see the ads.
Weaknesses (Internal): 1) Expensive to finance. 2) Response is not easily tracked. 3) Not being read as much as online sources.
Threats: 1) Changing consumer tastes to internet media is making newspaper companies bankrupt and they are less read. 2) Cannot be seen outside of the UAE.
In Depth Analysis:
It is clear from the above brief swot analysis that internet advertising is much more efficient. This is extremely important to help Dunia increase market share, as they haven’t broken even yet and cutting costs must be enforced to increase profit margins and overall efficiency. There is only one strength of newspaper advertising, as opposed to two strength’s for internet advertising, has greatly triumphed over newspaper advertising. Internet advertising (even though Dunia is not going international) can be accessed anywhere in the world thus is extremely efficient. However in both cases sometimes the message and aim of the advertisement is lost. This is because advertisements are generally considered a nuisance and are not looked at extensively. Conclusively it would definitely be wise for Dunia to switch most or all of their advertising to online.
Political – The political aspects haven’t affected Dunia and this factor should not hinder Dunia’s efforts to increase market share. Only if new political policies are put into place specifically aimed at finance companies then and then only will Dunia be affected.
Economical: The business faced an extremely hard start up due to the fact that its launch initiated around the same time as the ‘credit crunch.’ However Dunia has a bright future due to its hands on approach to providing service, and ensuring trust by offering loans even in times of economic despair.
Social: The UAE presents a working environment, which is good in terms of Dunia, as they want to serve those hard working individuals with credit cards, loans, and insurance. As a young prospecting ambitious individual I feel it is a great place for a finance company, however setbacks such as the above mentioned ‘economic recession’ have not helped.
Technological: Dunia has been nominated winner of best use of technology in the Middle East Banker category in 2009. This proves that Dunia is doing quite well in this category. However they are quite late in making the transition to internet campaigns.
Here is the boston matrix that I have prepared for Dunia as a general business outlook. I am predicting that Dunia will become a cash cow although it is currently a dog. Which is demonstrated in the financial analysis. A star of course is the best position and a question mark may also happen if the market grows.Untitled9.png
Dunia issued 17,311,000 AED worth of loans in the 2009-2010 year, however I was unable to get a quote for the interest rate on these loans, which range from auto loans, credit cards, and personal loans. The interest income, loans and advances, and deposit with banks, only generated 39,131,000 AED in this year. This emphasizes the ability that people lacked to pay back their loans. This is one of the main causes for Dunia’s reported loss of “116 million AED” in the 2009 year, and a “114 million AED” loss in the first period. The “general and administrative expenses” listed as “123,040,000” (http://dunia.ae/common/pdf/dunia_annual_report_spread_page.pdf, pg.92), seem to jump out as the reason for the 116 million loss. Furthermore, I received information on the cost centres which include rent for “19 offices 1,000 square feet and one headquarter 50,000 square feet” at roughly “800-1000 AED per a square foot”(Interview with Gnei Shahana Dole). It can be calculated as 62,100,000 AED. The average”700 employees salaries at 2.5% senior management, 35% middle management and the rest office level” (Interview with Mariam El Samny) based on Dubia faqs information the salaries range from 2,500 AED to 150,000 AED monthly. This adds up to 123,420,000 AED alone. The last cost centre is the marketing ad’s which adds up to 45000AED for 150 ads in one year.
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Recommendations and Conclusion:
Recommendations: Dunia has clear cut targets currently which are in the awareness stage. The future targets to gain credibility and further acceptance into the market seem reachable although the extremely high 116 million AED losses must be corrected for the future. To achieve this goal Dunia must make some workers redundant or for a short period of time reduce the salaries. Making workers redundant however is not a viable option as these workers were trained by Dunia. Thus Dunia must incorporate a time of salary ‘tolerance,’ where every employees salary should be lowered by 10% changing the total to 2,370,000, once Dunia breaks even then the salaries can be put back to the previous level. Another recommendation is that Dunia focus their marketing energy on internet advertising mainly and leave a small portion to the newspaper advertising. This would help to ensure that the ‘young’ market will be well informed. Also the sales promotions should be continued as they will help increase awareness. Furthermore Dunia can focus more specifically on Dunia Gold and Dunia Money. As the two segments were most likely the least hurt by the recession. Also allowing the business to focus on two segments for a while will increase efficiency.
Conclusion: There are many approaches to increase market share for Dunia Finance LLC. The main concern involved was how will Dunia do it cost effectively within the next 5 years. A lack of internal sources of finances may present a problem, as I have stated before Dunia must break-even to consider further expansion. The PESTLE analysis revealed that Dunia’s external environment is only dangerous in the sense of the ‘economic recession,’ which is a global concern and cannot be dealt with as an individual company. Also as the Boston Matrix revealed, Dunia is currently a dog quoted at 5% market share. My recommendations if employed are likely to help Dunia increase their market share within the next 5 years. Also the world economy is expected to readjust itself in this time ridding Dunia of the economic problem it had.
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