Saudi Arabia's demographics - the winds of change

Often, such segmentations are based on brand/category usership, psychographics, lifestyle or even brand values. However, in markets where the demographic structure itself is dynamic, a more conventional approach still has much to offer; understanding the changing demographic landscape might offer some clever segmentation opportunities.

For example -

• Are family sizes what they used to be in Saudi Arabia?

• Are there potential opportunities for specific targeting by this variable?

• Are there segments where disposable incomes are high enough to warrant targeting premium product offerings?

• Can the usual SKUs continue to be sold or is a rethink of the SKU strategy needed?

• Should simple, direct advertising be used or more subtle, evolved advertising?

To answer questions like these and more TNS Middle East conducted a largescale 6,000 sample size, syndicated study in Saudi Arabia in 2006 to try and capture changes in the country's basic demographics. We compared the results of this 2006 study with a similar largescale study done in 2001 to identify significant changes.

The study shows that the average family size - defined as all family members in the household excluding friends and helpers - is 5.2; with a fourth of all households being small (family size up to 3 members), a third being medium (family size of 4 to 5) and 40% being large households (family size of 6 or more).

Which of these segments are most attractive? Is it sufficient to say the medium and large family segments as they account for 75% of the households? Yes and no.

Yes, because they account for three in every four households; but monthly household income (MHI) should be included in the analysis before drawing any conclusions.

The average MHI in Saudi Arabia has increased since 2001 to approximately SAR 6,600 with the large households having the largest MHI ( approximately SAR 7,450), followed by the medium households (approximately SAR 6,400) and the small households (approximately SAR 5,500).

But the real story in these numbers vs. 2001 is that the smaller households have seen the largest growth in MHI - a growth of 58% vis-à-vis the medium households which have seen a growth of only 10% and the large households which have only seen a growth of 4% since 2001. Coupled with the fact that small households have the highest per capita income makes them an attractive target.

Not only do the smaller households have more disposable income, they also tend to be better educated than the medium and large households - and this is true for both genders; 38% of women and 45% of men in small families are graduates, compared to 22% of females and 31% males in large households. Here we are witnessing the growth of the nuclear family in Saudi as predicted in our Arab As Consumer study back in 2001.

All of the above can have a profound impact on how to market to Saudi consumers. The challenge for marketers is to continue tracking the rapidly changing demographic characteristics and adapt marketing strategies accordingly to best leverage brand growth opportunities.