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Marketing Strategy of Malaysia’s Emerging Hypermarket – Mydin

| 09/03/2008 | Reply

By Maria Zain

Mydin
Mohamed Holdings Berhad (Mydin) first established its presence in the
Klang Valley of Kuala Lumpur (KL) through their 2 emporiums in the
early 80s. They sold mostly economically-priced clothes and Muslim
prayer equipment and apparel.

Today,
the outlets are nicknamed “KL’s best kept secrets” and have diversified
their product lines offering a wide range of different goods.
Nevertheless, they are still perceived as the best place to buy Muslim
clothes, prayer rugs and other attire related to Islamic worship at
affordable prices.

In
the years that followed, Mydin developed a vision to become Malaysia’s
leading hypermarket – appealing to Muslims and non-Muslims alike. 25
Mydin branches, a Mydin mart and 2 Mydin wholesale hypermarkets later –
these establishments are challenging the large foreign players Tesco,
Carrefour and Giant.

In
a recent interview with Mingguan Editor (a Malaysian business and
economic newspaper), Managing Director Dato’ Ameer Ali Mydin revealed
that Mydin’s hypermarket was set to reap MYR1 billion (approximately
USD310 million) annually.


In
2007, Dato’ Ameer Ali, was recognized as Malaysia’s Master Entrepreneur
Of The Year driving the enterprise into head on competition with large
foreign players and has emerged as one of the largest in terms of
retail trade among hypermarkets in Malaysia.

Here is an overview of Mydin’s marketing strategies that have led to its success to-date.

Halal-wide Product Lines for Halal-wide Target Market

Mydin’s
entrepreneurship vision takes a wholesome point of view, embracing the
concept of halal (permissible) products. In accordance to Islam,
nothing is haraam (forbidden) unless explicitly declared as forbidden
(by the Qur’an or Prophetic Sunnah). Visit any one of the Mydin
emporiums and consumers will find themselves walking single-file down
jam-packed shelves and baskets of goods ever imaginable to the human
need or want.

The
emporiums cater for almost any need that fall into the categories of
worship, apparel, accessories, food, household goods, travel, fittings
and furnishings, electronics, cars, digital technology, children and
even exercise equipment. Basically, if it is not haraam, it is there.


With
approximately 60% of Malaysians being followers of the Islamic faith,
this goes down well with Muslims, especially those looking for economic
purchases. Mydin is able to transgress pass the diverse backgrounds,
upbringing, educational levels of different Malaysian Muslims. Their
low prices seem to provide their Muslim consumers the “balanced way of
life.” Less money spent on cleaning detergents translates into a higher
disposable income for childrens’ education.

The
halal market spectrum is widened even still. Mydin also caters for
wholesalers and retailers in addition to household consumers. Their
target market is as halal-wide as their range of products.

Razman
Dahlan has been operating PT Ceria Resources, a small-scale stationery
enterprise, for four years, after years of experience in the corporate
world. By taking advantage of Mydin’s wholesale prices, he manages to
achieve up to a 100% profit margin on the range of stationery he sells
at his store.

Mydin’s
major obstable here is really to break away from the commonly narrow
definition of “Muslim goods” and educate non-Muslim consumers of their
rights to purchase goods in a “Muslim” store. Non-Muslim consumers are
rarely seen to shop at Mydin. The name Mydin itself, denotes a Muslim
outlet.

This obstacle
hinders the opportunity for Mydin to further expand their target
market. Financial service providers in Malaysia have been masters at
attracting non-Muslim investors to shari’ah compliant financial
products, proving that the infancy of unit trusts and takaful (Islamic
insurance) in Malaysia was set to flourish.

With
purchasing power weighing towards the Chinese minority (mostly
non-Muslim), Mydin’s opportunities lie vested in breaking ranks with
religious / racial barriers that are inherent in the country’s culture.


Understanding the Consumer Led to Low Pricing Strategies

With
continuous price hikes attributed to reductions in government subsidies
(such as oil), “change your [expenditure] lifestlye” campaigns have
graced national media as a public service reminder from the government.

Mydin has been able to
address both issues – they have mitigated the harshness of price-hikes
by allowing an alternative shopping avenue for both household and
business necessities.

Suzanna
Abdullah, proprietor of a virtual flower boutique in Putrajaya, sources
for her home-office supplies at Mydin. “Buying my supplies at Mydin
reduces my business cost substantially,” she says, after comparing them
to other hypermarkets and shops.

She
adds, “I can even find items for gift packs [there], when I need to
cater for large corporate or social events.” Besides her business
interests, Suzanna also shops at Mydin as a household consumer for
personal effects.

With
Mydin’s hypermarkets proving to be stiff competitors to neighbouring
international giants such as Carrefour and Tesco, Mydin is confident
that consumers would turn away from the international players and
support their local hypermarket.

Through
their outlet’s impressive appearance, the Mydin hypermarket has been
able to slowly extinguish the perception that their economically-priced
goods represent low-quality products.

Like
other retailers who accomplish economics of scale, Mydin purchases in
bulk (a strategic advantage) to enjoy lower prices. Their business
philosophy of wholesale pricing is thus fulfilled through their
reduction of cost. Mydin sources merchandise both locally and from
other countries including Bangladesh, China, France, Hong Kong, India,
Indonesia, Korea, Pakistan, Singapore, Taiwan, Thailand, Turkey, United
Arab Emirates and United Kingdom.

Promotional Strategies fall Secondary to Pricing and Products

Mydin’s
emergence as a hypermarket has posed stiff local compteition to major
players such as Carrefour, Giant, Tesco (and soon, Wal-Mart). Even as a
hypermarket offering groceries similar to the international hypermarket
range, Mydin is able to undercut prices by a reasonable percentage.

Husband
and wife, Saiful Azman and Husna Sarirah, were bought over by the
hypermarket’s aggressive low-price promotion when they first moved into
the outlet’s neighbourhood. “They seem to undercut prices of other
hypermarkets by an average of 10%,” Husna says, “which really is
cost-savings for a family of three.”

But
how aggressive is Mydin in promoting their store itself as compared to
their competitors? So far, Mydin is seen only to respond to promotional
materials of their rivals, by setting up corresponding billboards and
by buying similar advertisement placements in the newspapers as and
when the need arises.

Their
confidence in maintaining their market share probably stems from their
shleves of Islamic products- inclusive of Islamic artifacts, prayer
rugs, ihraam attire (for prospective pilgrims) and other “Islamic”
props, tools and accessories. Mydin’s competitors have yet to add this
similar range of Islamic items to their shelves.

Additionally,
Mydin’s emphasis on bulk-buying and bulk-selling has also resulted in
their favour. Hypermarkets have a notoriouos reputation of displacing
small-time businesses from all international markets. In Malaysia,
small grocers, hardware stores, stationery shops, clothes boutiques and
other medium scale enterprises play an important role in spurring
entrepreneurship activity. Mydin’s philosophy in supporting these local
businesses, through their pricing schemes, adds promotional value to
Mydin’s social responsibility in solidifying the spirit of
entrepreneurship.

Aggressive Geographic Placement Threatens Competitors

Mydin
outlets first opened in less developed states where competition was
close to nil and when costs were extremely low. Currently, they place
themselves in areas that are accessible to homeowners and traders, such
as in small residential towns as well as the congested Kuala Lumpur.
Some of their stores are placed in more aggressive positions than
others.

Their
emporiums in the Klang Valley cater for the masses of people who work
in the city and need to do quick, easy and affordable shopping during
their lunch breaks.

Subang
Jaya residents, Saiful and Husna, frequent the Mydin hypermarket twice
or thrice a month for groceries and baby gear. Since their price
comparisons, they have never visited Giant, which sits right next to
Mydin, or Carrefour, which is a 15 minute drive away, also in
residential Subang Jaya.

The variation of locations represents the mass product range and target market that Mydin have worked towards.

Conclusion

Mydin
represents the emergence of Malaysia’s first hypermarket. They were
very much perceived as a “Muslim” store catering for “Muslims,” due to
their debut line of products from earlier years in the Klang Valley.
Their product ranges have expanded extensively and now they shelf a
whole range of necessities for household consumers as well as
businesses. Mydin’s product spread coupled with their aggressively low
prices represents their main marketing strategies that have led to
their success.

Category: Asia, Retail

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