Boycott of Arla Foods in Middle East, a Danish ?ompany seling to Muslims Essay
In September 2005, cartoons featuring caricatures of the Prophet Muhammad were published in Danish newspaper Jyllands-Posten. The row erupted on the beginning of February when the cartoons were republished in a number of other European newspapers.
Now the Muslim world is refusing to buy Danish goods in protest over the cartoons published in the Danish newspaper. Due to this boycott Arla is losing 1million a day.
Arla has also sent home 170 employees across Denmark due to the impact of the reduced sales. In total so far, Arla foods say that the ongoing boycott in the Middle East has so far cost them between ï¿½40million and ï¿½50million.
The Danish newspaper Jyllands-Posten has apologized for any offence caused, but not for publishing the cartoon, and Denmark’s Prime Minister has also tried to diffuse the crisis, but still sales of the Danish products have grounded to a halt across the Middle East.
Arla had built up their business in the Middle Eastern countries for 40 years, and had production in Saudi Arabia for 20 years, and then within five days it was all in ruins.
Outside Europe, the Middle East is Arla Foods’ most important market, with Saudi Arabia as the largest single market. Butter, feta, processed cheese and full-cream milk powder are the core products in Middle Eastern markets.
“Our challenge is to regain consumer confidence in the Middle East,” Managing Director Peder Tuborgh told Arla Foods’ 140 co-operative members and 10 staff representatives gathered at the Board of Representatives’ meeting in Aalborg on Wednesday and Thursday. “Despite the difficult situation, we believe that Arla has a future in the Middle East,” adds Peder Tuborgh. “Over 40 years, we have worked hard to build our brands in the Middle East in order to provide our co-operative members with a stable income. As a result, we have an intimate knowledge of the market and we will not give up easily.” (Source from www.arlafoods.com).
The two issues I am going to relate the article to are, consumer behaviour, and consumer social responiblity. With consumer behaviour I am going to find out the external factors influencing the consumers’ buying decisions in Saudi Arabia, also I am going to discuss how Arla Foods have tried to advertise to influence the people who make the buying decisions. I will also find out where this product is ranked in importance to the consumers’ needs, and how it affects the consumers’ behaviour. With consumer social responsibility I will discuss how the negative PR is giving Arla a bad name world wide.
The prospect for Arla Foods does not look great now. This is purely due to the fact that the Middle East is heavily orientated to Islam, their main religion, and now their religion has been insulted, they are taking it out on all Danish goods and services. The consumer behaviour in this Middle Eastern environment has changed, and now the consumer chooses their product by where the product originates from and not how much it costs, or the quality. The competition in the dairy product market in the Middle East is quite competitive, so it is easy for the consumer to not purchase Danish products such as Arla Foods, and instead purchase another brand. So the only external factor that has influence on the consumers’ buying decision, is the fact that the Danish newspaper insulted the consumers’ religion, and now all Danish products and services are to be boycotted.
Arla Foods tried influencing the consumers by putting a full size advertisement in the major Saudi newspapers, showing the official Danish line on Islam, but that didn’t help at all. The firm has no prospects at all now by advertising. They should not waste their money on Marketing via advertisements. The consumer behaviour has also changed in the fact that their priority has changed when it comes to buying food. Their religion comes first now, so no matter what they will never purchase Danish products such as Arla Foods just because of the cartoons published.
Consumer behaviour has changed and now the customer relationship management team will now have to think off how they are going to improve their relationships with the consumers.
Arla Foods are stuck in a bad position. It is not their fault, and it is not the Danish governments’ fault. No level of marketing will now change the consumers’ behaviour.
The negative PR that Arla foods are getting from news coverage from the media is harming them, not just in the Middle East but world wide.
The ways they could get out of this situation, is by having good public relations with he people of the Middle East. The people generally listen to a religious leader, and so Arla Foods should try and have good public relations with these people to improve their relationship and hopefully get out of this situation. They could conduct marketing, like hiring local people to conduct surveys as to why they are not buying Arla foods, and what would make them buy it. Other method could be tried to increase sales, and lift the boycott, but truthfully I feel that none of it will work for the Middle East. I think Arla Foods should try and have increased good public relations with the consumers’ world wide to stop having a bad name, just for being Danish. They should maintain their remaining consumers trust and relations, and then just waiting patiently until the situation in the Middle East is resolved.
Arla foods could re-orientate the entire Middle Eastern organisation to satisfy customers. For example they could have their Middle Eastern organisation wholly operating, producing, and manufacturing from the Middle East, operating under a Middle Eastern name and management team, where 5% of profits could go to develop schools and hospitals in the Middle East. This is an idea to improve public relations, and to change consumer behaviour. Or Arla could just operate as normal but offer that 5% scheme.
Arla foods should offer incentives for the wholesalers who purchase off of them. For example give them extra money for purchase off of them.
To conclude, Arla Foods have been put in a bad position in the Middle Eastern market. It isn’t their fault but because of their origin, they are losing sales. No matter what, the Middle Eastern consumers will not buy Danish products, however hard Arla try. So Arla should not advertise at all. Instead they should try to increase their public relations and keep them good. They should keep maintaining that the cartoons released in the newspaper, are nothing to do with them. They should contact high members of power of the Middle East related to the Economy and try and find a solution to this boycott. Arla cannot afford to carry on in this environment, and the fact is that how ever hard they try, they will never change consumers’ behaviour, until the public as a whole are satisfied with Danish newspaper who published the cartoons.
Arla foods could withdraw from the market as a whole if things get bad financially, and look at other markets such as India. But the best thing I can suggest is not wasting any money on advertising, because this would just anger the general public more, and just concentrating in maintaining sales else where and keeping good public relations. They should seek financial help from the Danish Government if thing get bad.
Sources for information
Black board in class documents