Marketing Strategy of Malaysia's Emerging Hypermarket - Mydin

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.