Al-Mazyunah Free Zone is a free trade zone located in Oman close to the Yemeni border, which makes it well-positioned to serve the markets of Yemen and the Horn of Africa. Despite this location advantage, the zone has an insufficient number of investors from Yemen and especially from the Horn of Africa. Therefore, Al-Mazyunah’s goal is to attract more investors from these countries. This research report provides an analysis of the customer journey of investors of Al-Mazyunah Free Zone and the zone’s marketing strategies and tactics. The central research question of this study is as follows: “Which factors influence the investors’ decisions to establish a company in Al-Mazunah Free Zone?” The purpose of answering this research question is to find the ways in which Al-Mazyunah can attract new investors from Yemen and the Horn of Africa.
The research question was answered using both primary and secondary research. Primary research was of qualitative design and included two interviews with experts, namely, the Marketing Director of Madayn and the Director of the Investment Department of Al-Mazyounah, and seven interviews with Al-Mazunah’s current investors. Secondary research involved a review of the recent literature on the topic of this study and included a variety of credible sources, ranging from academic articles to online documents.
Desk research revealed that investors base their investment decisions on government, marketing, and company management factors. The most significant government factors are a favorable legislative environment, political stability, and the ease of establishing a business in the free zone. Geographic location was also a crucial factor, especially for those investors whose businesses were focused on trade. In addition, good infrastructure was found to be significant for investors, and a lack of it was usually compensated by significant financial incentives. Important marketing factors included the ease of finding the information about the free zone and the availability of information on the Internet.
The findings of the primary research revealed the profile of the current investor of Al-Mazyunah. It was found that a typical investor of Al-Mazyunah is an experienced entrepreneur aware of the subtleties of running a business in the region and able to operate in a dynamic environment. Investors of Al-Mazyunah generally do not depend on seasonality, that is, seasonal shifts of climatic conditions, but invest when there are favorable conditions in the investment location, such as political stability. Al-Mazyunah’s investors’ reasons for investment include the advantageous location of the zone, as well as fiscal incentives and government support.
Primary research also allowed for determining the customer journey of Al-Mazyunah’s investors. The awareness stage is distinguished by investors’ learning about Al-Mazyunah from the dialogue with industry peers and the Internet. The findings showed that investors are not completely satisfied with the quality of Al-Mazyunah’s website. The quality of Al-Mazyunah’s website is also lower than that of its competitors, so Al-Mazyunah should consider improving the layout and the information presented on its website. The engagement phase was characterized by the use of e-mails and phone calls to contact the administration of the zone. The findings also revealed that Al-Mazyunah was not present on social media platforms that could serve as an additional way of engagement. When analyzing the evaluation stage of the customer journey, it was found that investors compared Al-Mazyunah and its competitors in terms of their geographic location, partnerships, access to the necessary resources, and tax regulations. The purchase phase was marked by investors’ decisions to invest in Al-Mazyunah because of its advantageous location and favorable tax regulations, but the poor quality of infrastructure in Al-Mazyunah was mentioned as a shortcoming.
Introduction
Free economic zones are a group of special geographic territories that provide designated economic trade opportunities for businesses with very light or no taxation at all in order to encourage the development of prosperous economic activity. Depending on the country where the free zone is located, the taxation rules are determined differently. The conditions and benefits of free zones are controlled by the principles of the “World Trade Organization,” which also promotes the use of free ports favored through the adoptable customs regulation procedure.
The current research project evaluates the benefits of Al-Mazunah Free Zone, the investment site located in Oman four kilometers away from the Yemen border, overall covering three million square meters. The free zone includes numerous facilities such as shopping and service centers, hotels, showrooms, livestock and multipurpose shopping areas, mosque, as well as both parking and green areas. The free zone also has necessary infrastructural items such as communication channels, roads with integrated traffic controls, bridges, and sustainable mobile network. The investment opportunity envisioned by this zone is the close proximity to Yemen, which allows recruiting its workforce without excessive visas and paperwork procedures. However, it is also considered that a bulk of potential workforce could be attracted from the Horn of Africa, considering the future Al-Mazunah metropolitan development.
The reviewed free zone presents an attractive opportunity for the foreign investors because of the Oman government support. In Al-Mazunah, investors receive an exemption from the income tax for 30 years without the necessity to fill in the tax income return form, as well as get access to an eased procedure of handling foreign currency operations and capital input. Additionally, a residence permit in Oman is guaranteed through the simplified procedure, which is particularly beneficial for the Yemeni citizens. Considerably, the Al-Mazunah provides a fruitful opportunity to develop international business and trade within the scope of current governmental commitments.
While it is reasonable to consider Yemen as an opportunity to wholesale consumer goods, the Horn of Africa is a perfect source of accommodating agricultural supplies, which, in combination, provides a perfect opportunity to develop the supply framework for managing trade partnerships and generate higher sales revenues in a free trade zone. Furthermore, considering that Oman pursues a relaxed policy regarding the employment of Yemeni workforce in a free zone, it is essential to consider innovative investment opportunities to promote Omani market as a trading platform. Hence, the overarching research question for the current project could be formulated as follows:
Which factors influence the investors’ decisions to establish a company in Al-Mazunah Free Zone?
Furthermore, the management question is also formulated as follows:
What particular new marketing choices should be applied by Al-Mazunah Free Zone company to attract $ 5 million in investment from Yemen and $ 10 million in investment from Djibouti, Eritrea, Ethiopia, and Somalia in 2021?
The sub-questions considered for the research have been formulated as follows:
- What does previous research say about management and marketing factors critical to optimizing the ways of attracting investors in Free Zones?
- Who are the competitors and what channels do they use to attract investors?
- Which marketing tactics and strategies are used by Al-Mazyunah Free Zone to attract investors?
- What is the persona of current investors of Al-Mazyunah free Zone?
- What is the customer journey of Al-Mazyunah free Zone Investors?
Research Design
The research was performed using a combination of primary and secondary research methods. For the primary research, the qualitative approach of using semi-structured interviews was utilized. The initial purpose was to investigate respondents’ opinions related to the viability of making certain investments in the Al-Mazunah Free Zone based on the specific trade channels such as car showrooms, stores, small scale industries, oil and gas zone, factories and workshops, and miscellaneous and common services. The secondary purpose was to analyze whether the investors from the Horn of Africa are capable of making investments into the chosen area based on the anticipated financial capabilities. The secondary research included the review of the recent literature related to the investment attraction activities in free zones, as well as a brief analysis of Al-Mazyunah’s competitors and their marketing strategies. The summary of methods applied to the specific sub-questions is shown in Table 2.1.
Table 2.1. Research methods used to answer research sub-questions.
The first sub-question required the analysis of the extant literature about government, management, and marketing factors influencing the process of attracting investors to free zones. This question was addressed through the use of secondary research. A literature review was conducted, and the reviewed sources included academic papers and reputable online sources published within the past 5 years and related to marketing strategies used by free zones for investment attraction.
The second sub-question focused on the analysis of the competitive landscape and, therefore, was explored through the use of secondary research. The secondary sources included publications that described the business activities and marketing channels of Al-Mazyunah’s local and international competitors. In addition, the competitors’ online promotional materials were reviewed to identify the investment benefits that the competing free zones used to attract investors. The idea behind this secondary research was to understand how competitive Al-Mazyunah was compared to its rivals and what marketing strategies it could adopt to improve its competitiveness.
The third sub-question was how Al-Mazyunah Free Zone currently uses marketing strategies and tactics to attract investors. In order to fulfill the research objectives, a combination of both primary and secondary research was utilized. Primary research methods involved conducting interviews with local executives, namely, the Marketing Director of Madayn and the Director of the Investment Department of Al-Mazyounah. The interviewees were selected based on their engagement in the zone’s investment activities and sufficient knowledge and expertise in this area. In particular, the Director of the Investment Department of Al-Mazyounah was chosen as an interview subject because of his experience in interacting with the zone’s investors. The Marketing Director of Madayn was interviewed because Madayn manages Al-Mazyounah Free Zone and promotes its investment opportunities.
Secondary research included exploring Al-Mazyounah’s online marketing materials and the information on two relevant websites. The first reviewed website was Al-Mazyounah’s website, located at www.almazunah.com. It was researched because it was the initial source of information for investors looking for Al-Mazyounah’s investment opportunities online. It appears at the top of the search results, so it was assumed that investors would not miss an opportunity to visit it. The second website was Madayn’s website, in particular, the section devoted to Al-Mazyounah. It was decided to review the information about Al-Mazyounah on Madayn’s website after it was discovered that Al-Mazyounah’s website was not updated since 2013 and marketing activities for promoting Al-Mazyounah’s investment opportunities were done by Madayn.
The fourth sub-question required to analyze the persona of potential investors, and, therefore, was addressed through the application of primary research. Primary research involved semi-structured interviews, during which current Al-Mazyunah’s investors were asked to describe their investment experiences. The interviews were developed so as to create the profile of Al-Mazyunah’s current investor according to Ferrel’s 6W model. In particular, the interviews contained questions to investigate who Al-Mazyunah’s investors were, when they invested, and why they invested in Al-Mazyunah.
The fifth sub-question focused on the analysis of the customer journey. To investigate the customer journey of Al-Mazyunah’s investors, primary research methods consisting of semi-structured interviews with current investors were used. Interview questions were based on the theoretical model of customer journey consisting of the following stages: awareness, engagement, evaluation, purchase, experience, and loyalty and advocacy (Scucchi, 2019). Since the research focused on studying factors that encourage investors to invest in Al-Mazyunah, the emphasis in the interviews was put on exploring the first four stages.
The present study used two qualitative research methods, namely, in-depth interviews and secondary data analysis. The secondary sources were different for each of the sub-questions and have already been discussed in the respective sections above. In-depth interviews were divided into two subsets: interviews with experts and interviews with current investors (see Appendix B for transcripts). In both cases, the interviews were semi-structured, which means that the questions were prepared beforehand, but the researcher reserved the right to ask clarifying questions when the answers given by the respondents seemed unclear or irrelevant.
The interviews with experts, i.e., the Marketing Director of Madayn and the Director of the Investment Department of Al-Mazyounah, were conducted via the telephone, recorded, and transcribed afterward. For investors’ interviews, it was decided that 7 respondents would be enough to meet the objectives of the study, that is, to create Al-Mazyounah’s investor profile and investigate investors’ customer journey. Of the seven interviews, three were conducted via face-to-face communication, and four were conducted via video calls. Due to time constraints, all the interviews were limited to an average of 30 minutes.
Differences from the Initial Proposal
This section will identify the differences between the initial research proposal and the actual study. The reasons for changes in research design will also be provided. The discrepancies between the research proposal and the carried out research include a lack of investors from the Horn of Africa, the absence of investors from small scale industries, only three face-to-face interviews, and no need for a survey of investors.
Only One Investor from the Horn of Africa
The initial research proposal was aimed to conduct interviews with investors from Yemen and the four countries of the Horn of Africa, i.e., Djibouti, Eritrea, Ethiopia, and Somalia. However, the researcher managed to find only one investor from the Horn of Africa, namely, from Somalia. As a result, interviews were conducted with one Somalian investor and six Yemeni investors.
No Investors from Small Scale Industries
Since Al-Mazyunah has seven different zones, the researcher planned to conduct interviews with investors from several of these zones. Initially, it was expected that 7 investors for interviews would be selected as follows:
- Car showrooms (2 Interviews)
- Store (2 Interviews)
- Small scale industries (1 Interview)
- Oil and gas zone
- Factory and workshops (2 Interview)
- Miscellaneous services
- Services
However, the researcher did not manage to find any investors from small scale industries. As a result, one interview that should have been conducted with an investor from small scale industries was replaced with an interview with an investor involved in the store business. Thus, the actual selection of investors for interviews was as follows: 2 investors from car showroom business, 3 investors from the store business, and 2 investors from factory and workshop business.
Only Three Face-to-Face Interviews
Initially, it was planned that all interviews with experts and investors should be conducted face-to-face. However, due to the COVID-19 pandemic and subsequent social distancing, the researcher managed to conduct only three face-to-face interviews. The other four interviews with investors were conducted via video calls, and the interviews with experts were conducted via the telephone.
No Investor Survey was Needed
The initial research proposal suggested that the information about the marketing channels that attracted investors (sub-question 3.3) and investors’ ways of engagement with Al-Mazyunah (sub-question 5.2) should be assessed with the help of an online survey with predefined answers. However, during the actual research, it turned out that this information could be retrieved during the interviews with investors. Therefore, the researcher included the questions about how investors learned about and engaged with Al-Mazyunah in the interviews with investors. It made the use of an online survey redundant, so the survey was not conducted.
Reliability and Validity
The present study implemented the qualitative research design to meet the research objectives. In qualitative research, reliability means that the researcher uses approaches that are consistent and stable (Creswell & Creswell, 2018). The reliability of this study was ensured by developing and documenting each step of the research. The questions to all interviews were developed beforehand and were meant to investigate specific themes (see Table 2.2).
Table 2.2. Themes explored in the interviews with experts and investors.
All interviews were recorded with respondents’ permission and transcribed. The researcher also took handwritten notes during the interviews to make sure that the information would be kept if the audio recording equipment failed. For the data analysis, the researchers used interview transcripts. For the convenience of the analysis of investors’ responses, they were organized in tables according to the discussed themes.
In qualitative studies, validity means that the researcher checks whether the findings of the study are accurate (Creswell & Creswell, 2018). To ensure the validity of the study, that is, the accuracy of findings, several measures were undertaken. First, the researcher determined the required number of respondents – 2 experts and 7 investors – to support the research with multiple sources of primary data and find common themes in interviewees’ responses. The interviewed investors constitute a homogenous group since all of them come from the Middle East region and are current investors of Al-Mazyunah. Therefore, the choice of respondents is considered valid for the present research. Second, Creswell & Creswell (2018) argue that a rich description of the research process contributes to the qualitative research validity. Therefore, the researcher described the research design in elaborate detail in the respective chapter (chapter 2).
Limitations
The present study has several limitations. First, although the sample size of seven respondents was sufficient for the purpose of the research, the choice of respondents appeared to be different from the initial proposal. Instead of the planned four respondents from four countries of the Horn of Africa, the researcher found only one investor from Somalia. Therefore, the other six respondents were recruited from the Yemeni investors. As a result, one should take caution when generalizing the results of this study to all investors from the Horn of Africa. Second, the study has limitations pertaining to self-reported data since primary data was collected with the help of in-depth interviews. However, since the interview questions were designed to retrieve factual data rather than investors’ subjective experiences, there is a low possibility that the respondents’ answers were biased.
Context and Literature
This chapter aims to explore the context of the study and the relevant literature related to the research question. The context section will provide an overview of Al-Mazyunah Free Zone, which is the object of the present study. The literature section will summarize the extant research about free economic zones and investment attraction in free zones. The purpose of this chapter is to put the case of Al-Mazyunah in a broader concept and demonstrate the importance of the present study.
Context
This section will describe Al-Mazyunah Free Zone in relation to the research problem of attracting more investors from Yemen and the Horn of Africa. The mission and vision of the free zone will also be stated to provide an understanding of the zone’s business strategy. Finally, the target goals of Al-Mazyunah will be outlined.
Al-Mazyunah Free Zone
Al-Mazyunah is a free trade zone located in the governorate of Dhofar in the southern part of Oman. It was established in 1999 and was the first free zone created in Oman. Apart from being situated in the Gulf region, the geographic location of Al-Mazyunah is distinguished by the zone’s closeness to the Yemeni border. The zone is strategically positioned for transit trading with Yemen and East African countries. For this reason, investors from Yemen and the Horn of Africa are the most desirable group of customers for Al-Mazyunah.
Al-Mazyunah is affiliated to Madayn, also known as the Public Establishment for Industrial States, which manages and operates Al-Mazyunah, the “Knowledge Oasis Muscat,” and seven industrial cities. In addition, the lease of Al-Mazyunah is operated by Golden Hala Company. Investors in Al-Mazyunah are involved in a variety of industries in the commercial, industrial, and service sectors. In 2020, the number of companies investing in Al-Mazunah reached 240, with 90 of them being under construction (Oman Daily Observer, 2020). The free zone also witnessed significant economic growth in the first half of 2020. By the end of June, the total value of goods incoming in the zone was over 330 million Omani riyals compared to 143 million at the same period in 2019 (Oman News Agency, 2020). The volume of incoming goods and the number of incoming vehicles also considerably increased in 2020 compared to 2019 (Oman News Agency, 2020). The growth can be attributed to Al-Mazyunah’s facilities and the incentives offered to investors by the government.
In Al-Mazyunah, continuous improvements are made to make the free zone more attractive for investors. For example, currently, the zone is working on projects related to broadband and electricity transmission to the leased firms (Oman Daily Observer, 2020). Furthermore, in 2020, Madayn eliminated several storage and entry fees in Al-Mazyunah (Oman News Agency, 2020). It was done with the purpose of overcoming the consequences of the COVID-19 lockdown and attracting new local and foreign investors. The free zone also signs agreements with different firms to provide its investors with a better customer experience. For example, in 2020, Al-Mazyunah signed an agreement with “Al Madina Logistics Services,” which would increase the efficiency of logistics operations, such as the management of unloading and loading of cargoes at the dry port (Oman News Agency, 2020). Thus, Al-Mazyunah makes constant efforts to boost its attractiveness as an investment location.
The reason behind Al-Mazyunah’s pursuit of attracting more investors is that investments lead to multiple economic benefits. First, Al-Mazyunah Free Zone, along with other Omani free zones, contributes to the economic growth and development of Oman. In particular, free zones increase the volume of Omani imports and foster the development of its infrastructure, particularly the transport network. Furthermore, free zones create new job opportunities for local cadres. Al-Mazyunah and other Omani free zones also help Oman to diversify its economy by providing investors with an opportunity to establish companies not only in the oil and gas industry but also in other industries (Crowe, 2020). Hence, Al-Mazyunah is motivated to attract more investment not only for its own economic growth but also for strengthening the national economy.
Mission and Vision of Al-Mazyunah
Like any business entity aimed at strategic development, Al-Mazyunah has its vision and mission. The zone’s vision statement is a “free commercial zone participating in increasing the regional competition of Oman concerning attracting and developing the local and international investment” (The City of Free Trade, n.d., p. 5). Its mission is to build and equip a free commercial zone that is a center of national and foreign investments (The City of Free Trade, n.d.). Al-Mazyunah aims at attracting investments by providing the best services, effectively managing its operations, and partnering with authorities at local and international levels.
Target Goals of Al-Mazyunah
Al-Mazyunah is well-positioned to meet the needs of investors willing to reach the Yemeni and East African markets. In addition, the free zone offers attractive incentives and investment opportunities. Given the free zone’s valuable offering and its intention to attract new investors, it is assumed that the zone needs to improve its marketing strategies and tactics to reach and attract its potential customers.
It was decided that Al-Mazyunah’s goal should be the attraction of investors from Yemen and the Horn of Africa. The reason for this choice is that Yemen can serve as an excellent market for consumer goods, especially given the simplified customs relationships between Oman and Yemen, while the countries of the Horn of Africa can be valuable trading partners in agricultural sales. The target goal for Al-Mazyunah would be a $5 million investment from Yemen and a $10 million investment from Djibouti, Eritrea, Ethiopia, and Somalia in 2021. The present research aims at finding out what new marketing techniques could be used by Al-Mazyunah to attract investors from Yemen and the Horn of Africa in order to meet the stated target goal.
Literature
This section will provide an overview of literature related to free zones and foreign direct investment in free zones. It will help to get a better understanding of the business of Al-Mazyunah and its goal to attract more investors. The first sub-section will discuss what free economic zones are, why they are established, and how they can operate effectively. The second sub-section will define foreign direct investment and explain why free zones need it and what steps they should take to attract investment.
Free Zones
Governors have been offering preferential treatment to traders since ancient times by establishing free zones, in which traders and investors were free from regular import and export duties and regulations. In exchange, traders provided the governments with a continuous stream of goods, which was an essential condition for economic growth and development. According to Demyanova et al. (2018), the first free zones were established in the Mediterranean region in the second century BC. Since then, free zones have emerged in different parts of the world and evolved into complex structures with strong governmental support consisting of various benefits and incentives for investors.
There are four types of free zones: free trade zones, export processing zones, special economic zones, and industrial zones. Free trade zones are usually located near airports or seaports and offer customs duty exemptions on goods that are re-exported (McLoughlin, 2020). While free trade zones add little value to re-exported goods, export processing zones specialize in exports with considerable value added to the traded goods (McLoughlin, 2020). Special economic zones serve not only foreign but also domestic markets and provide incentives, such as infrastructure, customs and tax exemptions, and facilitated administrative procedures (McLoughlin, 2020). Industrial zones specialize in a particular industry, e.g., textiles, and are equipped with all the facilities necessary for that industry (McLoughlin, 2020). Al-Mazyunah classifies itself as a free trade zone, which implies that its activities are mainly focused on re-exports. However, the zone also provides incentives, including tax and customs exemptions and simplified administrative procedures.
In order to foster trade and attract investors, free zones offer a range of incentives. These incentives may include exemptions from customs duties and tariffs, fiscal incentives, favorable regulations concerned with land access and employment, and facilitation of administrative procedures (UNCTAD, 2019). Another incentive is good infrastructure, which is especially important in developing countries where infrastructure outside of free zones may be poor (UNCTAD, 2019). McLoughlin (2020) also cites added security as a benefit provided to investors by free zones since these zones are often surrounded by a perimeter fence. An exemption from restrictions on foreign ownership is also a common incentive in free zones.
The reasons for establishing free zones may differ depending on the level of development of the country in which they are created. According to UNCTAD (2019), developed countries usually establish free zones to facilitate trade logistics, while developing economies aim at industrial development. In high-income countries, free zones serve only as logistics hubs and science parks, the purpose of which is to foster innovation and provide a platform for transborder supply chains (UNCTAD, 2019). Upper-middle-income economies create free zones focused on technology and services, which are aimed at helping the country to transit to a services economy and develop new high-tech industries (UNCTAD, 2019). In middle-income economies, free zones specialized in global value chain industries (e.g., electronics or the automotive industry) and services are established to support industrial development and technology dissemination (UNCTAD, 2019). Finally, low-income economies create multi-activity and resource-based free zones focused on attracting processing industries (UNCTAD, 2019). Free zones in low-income countries aim at stimulating industrial development and diversification, as well as improving the investment climate and concentrating investment infrastructure on a limited area.
Free zones bring multiple benefits to the economies in which they are established. For example, free zones are considered to be an effective tool for stimulating investment inflows (Demyanova et al., 2018). Incentives offered by free zones are supposed to offset infrastructure weaknesses in developing economies and, thus, attract investors (UNCTAD, 2019). Free zones also stimulate and diversify exports and help developing economies to participate in global value chains, i.e., the international fragmentation of production (Demyanova et al., 2018; UNCTAD, 2019). Another positive effect of free zones is their contribution to job creation and employment growth (Demyanova et al., 2018; UNCTAD, 2019). Demyanova et al. (2018) also point out such benefits as an increase in the GDP per capita in the region, an increase in the competitiveness of national industries, the improvement of the skills of the labor force and management staff, and an overall economic and social development. Thus, free zones are entities that have a high potential to improve the industrial and economic development in a particular region.
Although free zones are a useful tool for economic development, they will operate effectively only if they are properly developed and managed. First, free zones should be built on their existing capabilities and competitive advantages (UNCTAD, 2019). If a zone wants to attract high-tech investors but lacks the highly-skilled labor force and the infrastructure necessary for such an industry, it is unlikely to succeed. Therefore, at the initial stage of the zone’s development, it is crucial to determine the proper location with access to the required infrastructure or workforce. Second, the zone’s development plan should be economically feasible to avoid a situation when the zones’ costs exceed benefits (UNCTAD, 2019). Third, free zones should foster the collaboration of firms established on their territory. When companies in a free zone share common services or engage in common training programs, it improves the performance of the zone (UNCTAD, 2019). Finally, free zones should have a solid and transparent regulatory framework, with clearly defined autonomous governing bodies (UNCTAD, 2019). Thus, free zones will be successful if they are established in an advantageous location, base their activities on their capabilities and competitive advantages, and have economically feasible development plans and solid regulatory framework.
Foreign Direct Investment Attraction
Foreign direct investment is an investment made by a company located in one country in a business situated in another country. A distinctive feature of foreign direct investment, which distinguishes it from foreign portfolio investment, is that investors have direct control over the business in another country. Sometimes, foreign direct investment may include not only a capital investment but also the investment of technology and management.
Free zones seek foreign direct investment because it is the primary purpose of their establishment. They serve as a means of motivating investors to invest in the country in which they are created. Investment attraction is necessary to gain the benefits of free zones that were outlined in the previous section. These benefits include increasing exports, the growth of employment, and overall economic development, among others. Frequently, a country builds several free zones to boost its attractiveness for investors. For example, in Oman, Al-Mazyunah is not the only free zone; there are also Salalah, Sohar, and Duqm free zones, as well as several industrial cities. It leads to internal competition, which forces the competing free zones to improve continuously and make active marketing efforts to distinguish themselves from their rivals.
There are four main stages of investment promotion in free zones: investment facilitation, lead generation, strategy and organization, and post-investment services (Loewendahl, 2018). These four stages suggest that investment promotion is not limited to introducing investors to existing investment opportunities and getting investors to set up a business in a free zone. On the contrary, investment promotion is a continuous process that goes on even after investors have become the tenants of the free zone. Further, each stage of investment promotion will be reviewed in more detail.
The first step of investment attraction is investment facilitation. It includes such activities as competitive positioning, image building, creating awareness, and investment prospecting (Loewendahl, 2018). Creating a distinctive image of the zone, developing its clear offer, and raising awareness are essential measures at this stage because investors often make investment decisions based on the available information and an understanding of the zone’s value proposition (Loewendahl, 2018). Van Den Berghe (2018) also states that, at this stage, the zones develop their marketing and promotional materials. Thus, the first step of investment promotion is determining what the free zone has to offer to investors and informing potential investors of the existing investment opportunities.
The second stage of investment promotion is lead generation. Van Den Berghe (2018) suggests that, at his phase, free zones should understand and identify their investment opportunities, as well as identify and target their investors. For these purposes, free zones can use websites and social media, country profiles and sector profiles, and investment opportunity booklets (Van Den Berghe, 2018). They can also make sure that the information about their investment opportunities is included in public and paid databases (Van Den Berghe, 2018). In addition, a Customer Relationship Management system may be helpful for free zones aiming to manage interactions with their potential investors.
At the third stage, investment promotion agencies (IPAs) are involved in strategy and organization, while free zones focus on investor servicing and facilitation. At this phase, IPAs are responsible for setting national policy context and objectives, as well as developing sector and marketing strategies (Loewendahl, 2018). While IPAs aim at promoting investment opportunities in the whole country, which can have several free zones, each of the free zones has to focus on attracting investors to their own investment opportunities. To do so, a free zone should provide effective investor services and develop training for the zone’s staff (Van Den Berghe, 2018). It is also important that the marketing efforts made by IPAs and by free zones were aligned with each other.
The fourth stage of investment promotion is post-investment services or aftercare. Successful free zones support their investors after investment by providing effective aftercare services aimed at retaining investors and encouraging them to reinvest (Van Den Berghe, 2018). Free zones’ staff training should continue at this stage to ensure that investors receive high-quality services (Van Den Berghe, 2018). Investment promotion activities should be monitored and evaluated to identify areas of improvement (Loewendahl, 2018). In addition, free zones should develop channels for policy advocacy (Van Den Berghe, 2018). Thus, free zones should care not only about attracting new investors but also about retaining existing ones and monitor the zone’s activities in search of possible improvements.
The following chapter will review in detail what factors influence investors’ decision to invest in free zones and what marketing approaches are used to attract investors.
Ways of Attracting Investors to Free Zones
The purpose of the present study is to develop an understanding of how Al-Mazunah Free Zone can attract foreign investments from Yemen and 4 countries of the Horn of Africa – Djibouti, Eritrea, Ethiopia, and Somalia – to foster its economic development. To answer this research question, it is necessary to review the extant literature on marketing and management factors that are critical to optimizing ways of attracting investors to free zones. This section will explore marketing approaches used for attracting investors to free zones, as well as government factors and the company’s management and leadership factors influencing investors’ decisions.
Marketing Approaches to Attracting Investors to Free Zones
Investment promotion in free zones requires the use of specific marketing methods. According to Van Den Berghe (2020), since free zones are part of a country, they depend on the competitiveness of their country. It means that investors may be aware of the country but may not know that the country has a free zone with valuable investment opportunities. For this reason, one best marketing strategy to attract investors is to make sure that stakeholders involved in the country promotion are aware of the free zone and include it in their marketing plans (Van Den Berghe, 2020). Collaborating with investment promotion agencies (IPAs) to raise awareness about free zones and encouraging organizations to share information about the prospects whose projects are suitable for free zones are examples of implementing this strategy (Van Den Berghe, 2020). In addition, free zones are often positioned as distinct from the country in which they are located, which helps them to successfully compete with other free zones within the country and emphasize better infrastructure than that available in the rest of the country (Papadopoulos et al., 2016). In their promotional activities, free zones tend to state the benefits of their location, including their potential to provide connections to neighboring economies (Papadopoulos et al., 2016).
Investors should clearly understand the offer of a free zone seeking their investments. To communicate their offer to investors, free zones use a variety of marketing approaches and channels. Van Den Berghe (2020) emphasizes the need for free zones to establish a distinctive brand, which should include a logo and other attributes. Loewendahl (2018) stresses the importance of choosing the right marketing channels for sharing information about investment opportunities. The leading sources of information for investors appear to be a dialogue with industry peers, business travel, newspaper and magazine articles, and meetings with IPAs (Loewendahl, 2018). Although the first two sources can hardly be influenced by marketers, the other two sources should be effectively used in investment promotion activities.
Table 1 also shows marketing techniques that turned out to be the most effective in attracting investors. The Internet is the most effective marketing technique because it allows for information sharing with investors without any time and space constraints (Khairil, 2017). However, for the Internet to be truly effective in marketing, it should align with the entire marketing strategy, and the information on free zones’ websites should be continuously updated to show there is progress in the industry (Khairil, 2017).
The way free zones formulate their marketing messages also has significance. According to Khairil (2017), marketing messages should be focused not only on regional excellence but also on the infrastructure capacity, human resources capacity, and technological advances to provide more value to investors. In print advertising, such features as the sentence and word structure, colors, font, layout design, and paper type can have an additional influence on investors’ decisions (Khairil, 2017). Furthermore, when a free zone uses marketing techniques involving a speaker, the personality of a speaker plays a critical role. Khairil (2017) argues that a speaker with excellent appearance and rhetoric but without an influential government position will not be perceived by investors as credible. Therefore, in public relations, free zones should use speakers who have an influential position in the government.
Raising brand awareness and building a strong brand image is important for investment promotion in free zones. However, it is also critical how rapidly the information about investment opportunities in free zones is communicated. IPAs, which are usually responsible for dealing with investors, should handle investors’ queries within 1-2 days (Loewendahl, 2018). This is the period of processing queries accepted in the private sector, so investors interested in investing in free zones expect the necessary information to be provided to them within this period.
Marketing approaches to attracting investors to free zones have to respond to changes caused by rapidly developing technologies. In this regard, Van Den Berghe (2020) suggests seven winning strategies that are supposed to help free zones cope with emerging challenges.
- The first strategy is focused on leadership and training.
Leadership and training are essential components of any successful business. Van Den Berghe (2020) argues that it is critical for free zones to conduct self-assessment to identify the most necessary skills, then prioritize five of them, and invite experts possessing these skills. In addition, free zones should provide their staff with access to training programs by partnering with various educational institutions (Van Den Berghe, 2020). These measures will ensure that the free zone is adapting to the new industrial environment. Zona Franca Santander in Colombia has adopted this approach, and now it has a large pool of talented and professional workers to offer to its investors (Van Den Berghe, 2020). - The second strategy – research and advocacy.
It is aimed at finding out more about potential investors and their motives for investing in free zones. Van Den Berghe (2020) argues that financial incentives are not the main determinant of investors’ decisions, so free zones should research investors’ needs and tailor targeted offerings. For example, Dubai Multi Commodities Center has used this strategy by transitioning to paperless online services, thus facilitating the process of running a business in the free zone, which has become its additional competitive advantage (Van Den Berghe, 2020). - The third strategy is the future FZ strategy.
This strategy means that free zones should be future-oriented in their activities. Van Den Berghe (2020) suggests that free zones should analyze trends in innovation and sustainability and follow them in their strategy. Identifying top technologies with the potential of influencing the free zone’s industry is an important step while implementing this strategy. - The fourth strategy is related to awareness, marketing, and promotion.
According to Van Den Berghe (2020), free zones should raise awareness about available investment opportunities among various stakeholders and make sure that all agencies involved in investment promotion use a unified marketing and promotion strategy. - The fifth strategy refers to stakeholder engagement.
Stakeholder engagement is important because an increasing number of free zones has made attracting investors a difficult task requiring coordinated teamwork. Van Den Berghe (2020) suggests that the marketing strategy of the free zone should be integrated into the economic strategy of the whole country. Therefore, the involvement of multiple stakeholders is necessary to achieve the strategy’s effectiveness. - The sixth strategy is knowledge management and aftercare.
Free zones should not regard their investors as mere tenants; instead, they should provide investors with aftercare services to foster their growth and development because investors’ success contributes to the success of the free zone. Aftercare services may include rapid service delivery, automation of services, and other activities that improve investors’ experiences. - The seventh strategy is business intelligence and performance.
According to Van Den Berghe (2020), one of the primary investors’ motivations to invest in free zones is the ease of starting a business. Therefore, establishing one-stop-shop services to facilitate the process of investment is an essential measure for attracting investors. Additionally, free zones should measure their performance each month or quarter and define metrics that have the most influence on their success.
Government Factors Critical to Attracting Investors to Free Zones
Since the government is responsible for creating free zones, it has the authority to provide various incentives to investors to influence their investment decisions. According to Condron (n.d.), the government factors critical to attracting investors to free zones include political stability, government support, and legal protection. Government support may include facilitating the process of licensing, adopting incentive policies, and imposing penalties on infringers (Khairil, 2017). Furthermore, the availability of a skilled labor force, suitable infrastructure, and linkages with different industries and educational institutions are also essential (Condron, n.d.).
Finally, investors expect to get assistance from IPAs or equivalent organizations in their day-to-day activities (Condron, n.d.). It is a good practice for IPAs to provide “one-stop-shop” services, accompanying investors at every step of their investor journey, from the decision-making to the after-care stage (Loewendahl, 2018; Van Den Berghe, 2020). Thus, the extent to which the government is willing to support investors is a crucial factor influencing investors’ decisions.
Particular attention should be given to various financial incentives provided to investors in free zones. According to the Organisation for Economic Co-operation and Development (OECD; 2017), such incentives are commonly used in developing countries. The reason for this is that it is easier to decrease costs for investors rather than makes structural changes, such as improving infrastructure or increasing the number of the skilled labor force (OECD, 2017). One way the government promotes investment in free zones is by offering tax incentives to investors.
Jasiniak and Koziński (2017) found out that tax incentives are important for attracting investors; however, their importance depended on the area, company size, and tax incentive types. Researchers discovered that in less economically developed locations, considerable tax incentives were very significant for investors because they compensated for the challenging business environment (Jasiniak and Koziński, 2017). In addition, small companies considering investment opportunities pay more attention to tax incentives than large companies because they are less resistant to challenges (Jasiniak and Koziński, 2017). Overall, investors are attracted to locations that offer lower costs of conducting business.
While financial incentives are a common way of attracting investors, OECD (2017) argues that they may benefit the investing country more than the host country. According to OECD (2017), evidence shows that such government measures as improving infrastructure, removing regulatory barriers, developing human capital, and releasing public information about investment opportunities are more effective in attracting investors to free zones. Governments should make information easily available to investors because if the information is hard to find, investors rely on private sources when making investment decisions.
The influence of the company’s management and Leadership on investors’ decisions
The management and leadership of organizations of free zones also play a vital role in investment promotion. To increase the chance of attracting investors, organizational management should incorporate efficiency, inclusivity, and sustainability (Condron, n.d.). Efficiency means that organizations in free zones should use the best practices, adapting them to their environment (Condron, n.d.). Inclusivity implies partnering with primary and secondary stakeholders, such as industry partners, investors, sponsoring government agencies, IPAs, free zones board, etc. (Condron, n.d.).
While partnerships with stakeholders are important, organizational management should avoid including all stakeholders in the board. Instead, it should maintain the board’s efficiency by appointing a limited number of directors having skills and expertise in the appropriate field (Condron, n.d.). Finally, sustainability in organizational management refers to using information and communication technology in commercial activities, possessing strong functional skills, such as financial and asset management, and having robust funding sources (Condron, n.d.). Thus, to attract investors, the management of organizations in free zones should be qualified to conduct the business in the selected field, apply best practices, and have a strong financial basis.
While management factors are concerned with organizational and financial factors of companies in free zones, leadership factors are more related to the development of human resources. According to Van Den Berghe (2020), effective leadership includes continuous assessment of the organization with the purpose of identifying skills that are most needed for organizational development at a particular moment. Further, these skills should be incorporated into the organization’s staff through training, education programs, and sharing experience with experts possessing these skills (Van Den Berghe, 2020). One best practice for effective leadership is partnering with educational institutions to make sure that employees have an opportunity for professional development (Van Den Berghe, 2020). Leadership directed toward the development of the skilled labor force attracts investors to free zones because it ensures that organizations will be capable of providing investors with the potential for growth.
Interim Conclusion
The success in attracting investors to free zones is determined by marketing approaches, government support, and management and leadership factors. In terms of marketing, free zones should integrate their marketing strategy into the country’s economic strategy and collaborate with various stakeholders to raise awareness about the available investment opportunities. The use of the Internet and influential public figures in promotion is also welcome. The government plays an important role in attracting investors because it can offer different financial incentives and make efforts toward improving the infrastructure and labor force and facilitating the business set up process. Finally, management and leadership factors crucial to attracting investors include the use of best management practices, strong financial position, appropriate qualifications, and the willingness to develop human resources.
Competitors and Their Ways of Attracting Investors
This chapter aims at answering sub-question 2: “Who is the competition, and what channels do they use to attract investors?” First, the major internal and international competitors of Al-Mazyunah will be described and compared. Second, this chapter will discuss marketing channels used by competitors to promote their investment opportunities. Finally, the benefits stated in the competitors’ online marketing materials will be reviewed to find out how the competing free zones attract investors.
The Current Competitors of Al-Mazyunah Free Zone
Interviews with the members of the management staff of Al-Mazyunah Free Zone and the search through relevant sources revealed that the free zone has both internal and international competitors. Within the country, Al-Mazyunah competes with Salalah Free Zone, Sohar Free Zone, and Duqm Special Economic Zone. Its major international competitor is Jebel Ali Free Zone (Jafza), located in Dubai. Each of the competing free zones has distinctive features that are attractive to investors.
Salalah Free Zone is located close to Yemen and is adjacent to the Port of Salalah. It is well-placed to serve African, Asian, European, and US markets (Crowe, 2020). Due to its proximity to the port, the free zone provides international ships with fuel and serves as an entry and exit point for cargoes. Among available facilities, Salalah has office space for rent and business incubators and provides access to an international airport and a deep-sea port. Salalah’s investors are offered a 30-year tax holiday, 100% foreign ownership, and competitive labor cost (Crowe, 2020). There are no customs duties, no minimum capital requirements, and non-restricted repatriation of invested capital (Crowe, 2020). Companies investing in Salalah Free Zone are involved in industrial and commercial activities, logistic services, real estate business, and tourism. For example, the list of current investors of Salalah includes such companies as Octal Petrochemicals, Sapphire Marine, Dunes Oman, and PGC Textile Corporation (Crowe, 2020). The infrastructure consists of electricity, water systems, telecommunications, parking facilities, warehouses, road infrastructure, and 24-hour security.
Sohar Free Zone is situated near Sohar Industrial Port, which is an integral part of the free zone. The location of Sohar is 220 km northwest of Muscat, the capital of Oman, and 180 km away from Dubai, UAE (Crowe, 2020). Sohar provides its investors with access to the Indian sub-continent and East African Coast, and its port can handle the world’s largest ships (Crowe, 2020). The benefits of Sohar include 100% foreign ownership for companies with at least two shareholders and a 10-year tax holiday, which can be extended to 25 years (Crowe, 2020). Like Salalah, Sohar requires no minimum capital and no customs duties. The companies investing in the free zone are involved in logistics and trade, food, metals and steel, petrochemicals, light manufacturing and assembly, minerals, and education and services. The existing investors of Sohar include such Omani companies as Oman Petrochemical Industries Company LLC, Oman Methanol Company LLC, and an Indian company Larsen & Toubro (Crowe, 2020). Sohar Free Zone also has a one-stop shop that serves as a single window in which its investors can obtain all the necessary help with establishing a company.
The location of the Duqm Special Economic Zone (SEZ) is Central Eastern Oman. It is 450 km away from Muscat and 400 km from Salalah (Crowe, 2020). The Duqm SEZ occupies 1,777 sq. km and has 80 km of coastline (Crowe, 2020). The proximity of the zone to the Al Duqm International Airport and the Port of Duqm makes it an attractive investment location suitable for logistic services and international trade. The zone offers the benefits of 100% foreign ownership, a 30-year tax holiday, no customs duty and minimum capital requirements, and no restrictions on capital repatriation. At Duqm SEZ, investors can establish industrial estates, tourist resorts, warehouses and logistic villages, and office, commercial, and residential complexes.
Jafza is a large free zone located in Dubai, in close proximity to Al Maktoum International Airport and Jebel Ali Port. Set up in 1985 with 19 firms, Jafza has grown into a zone hosting more than 7,000 companies (Jafza, 2018). The free zone tries to make the business set up as easy as possible by providing one-stop-shop services, partnering with various service providers, and giving its investors access to e-portal and mobile app. The benefits offered by Jafza include 100% foreign ownership, 50-year tax holidays, and the ability to mortgage premises to a finance company or a bank (Jafza, 2018). The zone imposes no restrictions on foreign employees, capital repatriation, and currency. The industries available at Jafza include warehousing, showrooms, retailing, office and residential complexes, and customized development solutions (Jafza, 2018). It also offers investors plots of land to build facilities for specific purposes. Table 5.1 summarizes the features of the reviewed free zones and compares them to Al-Mazyunah.
Table 5.2. Comparison of Al-Mazyunah with its competitors.
Note. Data for the proximity of seaport and proximity of airport from Healy Consultants Group Plc (n.d.), for commercial activities, omanisation/emiratisation requirement, foreign ownership, corporate taxation, and customs duty from Sultanate of Oman (2016). Data for Jafza from Jafza (2018).
Competitors’ Marketing Channels for Investment Promotion
The competitors of Al-Mazyunah use various online and offline marketing channels. Salalah Free Zone promotes its investment opportunities through its website, on which the major benefits are listed, and the zone’s contact information is provided. Salalah also has a media center that issues press releases to the online and print media and publishes news and information important for investors. Another way in which Salalah promotes its investment opportunities is by attending major industry forums, events, and exhibitions. At these meetings, the free zone has an opportunity to inform investors about its benefits via face-to-face communication. There are also social media accounts of Salalah Free Zone on Twitter, Facebook, Instagram, and YouTube, the links to which are provided on the zone’s website.
Sohar Free Zone promotes investment on its official website by publishing relevant information and providing contact details. Investors can also subscribe to the free zone’s newsletters. In addition, the website has links to Sohar’s social media accounts on Twitter, YouTube, and LinkedIn. The free zone issues its annual magazine, SOHAR Magazine, in which it informs investors about existing investment opportunities and the progress achieved by the free zone. Furthermore, Sohar published news and photos, as well as issues whitepapers that are focused on the zone’s focus on sustainability. The free zone also takes part in various industrial events to promote its investment opportunities and arranges its own ceremonies, for example, to celebrate its anniversaries.
Like Sohar, the Duqm SEZ has an official website that describes the zone’s advantages and contact details and offers an opportunity to subscribe to newsletters. The website has links to the zone’s social media profiles on Facebook, Twitter, LinkedIn, and YouTube. The Duqm SEZ publishes news and videos with investment promotions. The zone’s website has brochures in different languages, including Japanese and Korean, which implies that it specifically targets Asian investors. The Duqm SEZ also issues its magazine, SEZAD Quarterly Magazine, to inform investors about the existing opportunities and the zone’s achievements. Along with the website, the zone has a mobile app that contains information important for investors. Industrial events and forums are also used to encourage investors to set up businesses in the zone.
The website of Jafza is available in English, Arabic, and Chinese, and each version provides extensive information about the zone, its advantages, and the business set up procedure. Jafza has an extensive social media presence, with accounts on Twitter, Facebook, Instagram, YouTube, and LinkedIn. The free zone frequently publishes high-quality photos, posts, and videos. The media center of Jafza issues news on the zone’s website and partners with various media agencies to spread the zone’s latest achievements and information about investment opportunities. Furthermore, Jafza has its print magazine, The Zone, which has also been launched as a digital interactive publication. Additionally, Jafza has its corporate blog where it publishes posts with information useful for investors, for example, about the peculiarities of setting up the business in Dubai. The representatives of the free zone also attend various events and conferences, such as Arab Health and Gulfood, where they promote their investment opportunities directly to investors. Moreover, Jafza hosts multiple special events for its customers, such as its annual Jafza Associates Forum. Table 5.3 summarizes the information about marketing channels used by the competitors of Al-Mazyunah.
Table 5.3. Comparison of marketing channels used by Al-Mazyunah and its competitors.
Overall, the competitors of Al-Mazyunah use multiple marketing channels to attract investors. All the free zones competing with Al-Mazyunah utilize social media, especially Twitter and YouTube, as part of their online marketing strategy. Sohar Free Zone, the Duqm SEZ, and Jafza seem to pay much attention to their marketing, which is evidenced by the quality of their websites, the variety of advertising, and the publication of their own corporate magazines.
An Analysis of Competitors’ Online Promotional Materials
To distinguish themselves from competitors, free zones develop their unique value propositions and state them in their promotional materials. According to Loewendahl (2018), the Internet, especially the corporate website, is the most effective marketing technique for investment promotion. It implies that the information presented on free zones’ websites and in online marketing materials may have the most influence on investors’ choice of investment location. Therefore, this section will explore what benefits the competitors of Al-Mazyunah mention in their online promotional materials.
In an effort to persuade investors to set up a business within its area, Salalah Free Zone focuses mainly on its location advantages and the ease of establishing a company. The free zone emphasizes that it is strategically located on the Equatorial Trade Route, allowing manufacturing companies to have direct access to major exporters of raw materials (Salalah Free Zone, n.d.). The zone is also located at the center of the world trade, which gives it advantages regarding shipping cost and the time of delivery (Salalah Free Zone, n.d.). Another stated benefit is cost competitiveness in terms of labor, infrastructure, and utilities, which can increase manufacturers’ cost efficiency when combined with the mentioned location advantage (Salalah Free Zone, n.d.). Salalah also states that it has a unique benefit of access to Free Trade Agreements, which allows investing companies to reduce costs by obtaining duties exemptions (Salalah Free Zone, n.d.). The zone places much emphasis on its location in Oman due to the country’s economic stability and available government support, such as tax exemptions and the establishment of the one-stop shop.
On its website, Sohar Free Zone attaches much importance to the zone’s proximity to Oman’s largest port and the availability of one-stop-shop services. It also lists such incentives as 100% foreign ownership, 10-year corporate tax holiday, 0% import and re-export duties, 0% personal income tax, and low capital requirements (Sohar Port and Free Zone, n.d.). The zone also mentions the opportunity to extend tax exemptions up to 25 years if the investing company manages to achieve the required omanisation rate (Sohar Port and Free Zone, n.d.). Free Trade Agreements of Oman with the US and Singapore are also included in incentives. Sohar also refers to itself as “the center of Oman’s logistics strategy” and emphasizes its focus on sustainability and innovation (Sohar Port and Free Zone, 2020, p. 14). Thus, like Salalah, Sohar mentions its location in Oman as a significant advantage. However, it distinguishes itself from its Omani competitors by stressing its role in Omani logistics and international trade.
The Duqm SEZ mentions several benefits on its website, such as location, area, accessibility, business-friendly ethos, and clustered development. The zone is strategically located to provide investors with access to markets in South Asia, the Middle East, and East Africa. The occupied area of about 2,000 sq. km is also mentioned as an advantage (Special Economic Zone Authority at Duqm [SEZAD], 2020). Like Salalah and Sohar, the Duqm SEZ promotes investment based on its location in Oman, which entails political stability, tax exemptions, 100% foreign ownership, and no customs duties. There are also unique benefits, such as the issue of permits for foreign employees within five days and 2-year exemption from rental fees (SEZAD, 2020). The zone also mentions the ease of setting up a business with a one-stop shop and a variety of industries available for investment.
Although Jafza also mentions in its online promotional materials that its location in Dubai is a significant advantage, the emphasis in its marketing efforts is put on the zone’s achievements and expertise. Jafza (2018) states that it carefully planned its development, which turned it from an area with only 19 businesses in 1985 into a large entity hosting more than 7,000 firms. One significant advantage is the zone’s logistics platform that includes Jebel Ali Port, Al Maktoum International Airport, Etihad rail, and a highly developed highway network (Jafza, 2018). One-stop-shop services, 100% foreign ownership, the availability of mortgage, and the absence of minimal capital requirements and customs duties are also mentioned as benefits.
Furthermore, the free zone attracts investors by showing its wide portfolio, which consists of plots of land, showrooms, warehouses, offices, retail outlets, business park, on-site residence, and customized development solutions (Jafza, 2018). Only a little attention is given to the zone’s location in Dubai, “the business capital of the Middle East” (Jafza, 2018, p. 27). Thus, while the Omani competitors of Al-Mazyunah mainly focus on their location in Oman and the advantages resulting from this, Jafza puts more emphasis on its achievements.
Interim Conclusion
Al-Mazyunah’s main local competitors are Salalah Free Zone, Sohar Free Zone, and the Duqm SEZ. Its major international competitor is Jafza, located in Dubai, UAE. The common characteristic of Al-Mazyunah’s competitors is that they are located in close proximity to seaports, which is also reflected in their online promotional materials. The competing free zones use varied marketing channels, such as official websites, social media, participation in industry events, media relations, and advertising. Sohar, the Duqm SEZ, and Jafza also promote their investment opportunities in their magazines. As for the benefits stated in the competitors’ online promotional materials, Al-Mazyunah’s local competitors emphasize their Omani location, while Jafza mentions its location in Dubai but focuses mainly on its expertise.
Marketing Tactics and Strategies Used by Al-Mazyunah
As was discussed in the previous chapter, the competitors of Al-Mazyunah use a variety of marketing channels to attract investors. The stated benefits of the competing free zones, which helped them distinguish themselves from other investment locations, were also reviewed. This chapter will describe what marketing strategies are used by Al-Mazyunah, what benefits this free zone emphasizes in its promotional activities, and what marketing channels appear to be the most effective.
The Stated Benefits of Investment in Al-Mazyunah Free Zone
Similar to its local competitors, Al-Mazyunah mentions benefits associated with its Omani location in its promotional materials. These incentives include 100% foreign ownership, the ability to operate without the income tax for 30 years, exemption from customs duties, no minimum capital requirements, and no restrictions on the use of currencies (The City of Free Trade, n.d.). Apart from a favorable legislative environment, Al-Mazyunah notes Oman’s stable political situation and advantageous geographic location. Under “advantageous geographic location” the zone implies that Oman is an appropriate destination for tourism due to its varied sceneries and 1,700 km of coastline (The City of Free Trade, n.d.). Unlike its local competitors, Al-Mazyunah does not mention Oman’s strategic location for reaching the markets of the GCC, East Africa, and the Indian subcontinent. It may be related to a lack of a port in the zone.
The major benefit that Al-Mazyunah highlights in its promotional materials is its proximity to Yemen. The zone is located 4 km away from the border with Yemen and 14 km from Shahn City (The City of Free Trade, n.d.). In addition, Yemenis are allowed to work in Al-Mazyunah without entry visas or permanent residence permit. The reduced omanisation rate of 10% compared to the rest of the country is also a stated benefit (The City of Free Trade, n.d.). These two advantages are supposed to give investors more freedom in hiring the workforce and the ability to employ Yemeni workers easily.
Al-Mazyunah also provides explanations of why easy access to Yemen may be important for investors. The reason for this is that Yemen, with its total population reaching 28 million, is a large market with a purchasing power of about 55.4 billion dollars (The City of Free Trade, n.d.). In addition, Yemen is presented as a country with growing GDP and large exports (The City of Free Trade, n.d.). In Al-Mazyunah’s promotional materials, no information about the civil war in Yemen and its effects on the country’s trade and labor force was mentioned. One possible reason for this is that the zone does not want to discourage investors by mentioning any sources of political instability in the region. Thus, Al-Mazyunah positions itself as a free zone for investors willing to trade with Yemen or have more freedom in the choice of the labor force.
Finally, Al-Mazyunah promotes its investment opportunities by describing the facilities available to investors in the free zone and the industries in which they can invest. Al-Mazyunah lists such essential facilities as the administrative center, showrooms, clinics, a mosque, secondary service center, car dealing stores, commercial stores, warehouses, a hotel, a multi-purpose area, and others (The City of Free Trade, n.d.). The industries that constitute investment opportunities are divided into commercial, industrial, and service sectors (Madayn, n.d.). Investors are offered to set up businesses dealing with import, storage, and re-export of goods; food trade; machinery and equipment trade; sorting and packaging plants; various manufacturing factories, and services such as catering or transportation (Madayn, n.d.). The interview with Madayn’s Director of Marketing and Promotion also revealed that the zone informs investors about the infrastructure that includes road networks, telecommunications, sewage, electricity, and water. In addition, Madayn assures investors that the zone is constantly developing to meet their needs better.
Al-Mazyunah’s Online and Offline Marketing Strategies
As was found during the interviews with the manager of the investment department of Al-Mazyounah Free Zone and the marketing director of Madayn, the promotion of the zone’s investment opportunities is done by Madayn. It is a public establishment that manages and operates not only Al-Mazyunah but also the “Knowledge Oasis Muscat” and seven industrial cities. In contrast, Al-Mazyunah’s competitors are managed and operated by separate companies. Salalah is managed and operated by Salalah Free Zone Company (Crowe, 2020). Sohar is managed by Sohar Industrial Port Company and operated by its subsidiary, Sohar Free Zone Company (Crowe, 2020). The Duqm SEZ is managed and operated by the Special Economic Zone Authority Duqm (Crowe, 2020). As a result, each of these companies promotes investment opportunities available in one free zone under its control, whereas Madayn promotes all entities under its control and tries to give a general overview of investment opportunities existing in Oman. Consequently, Al-Mazyunah sometimes may not receive special attention in Madayn’s promotional activities. Therefore, Al-Mazyunah is assumed to have difficulties distinguishing itself from local competitors, such as Salalah, Sohar, and the Duqm SEZ.
While investigating Al-Mazyunah’s online and offline strategies, the researcher tried to find out whether this free zone makes marketing efforts of its own, in addition to investment promotion activities done by Madayn. Unfortunately, no evidence of Al-Mazyunah’s own marketing activities was found. The interviews with the Marketing Director of Madayn and the Director of the Investment Department of Al-Mazyunah revealed that the promotion of investment opportunities is performed by Madayn. The search through secondary sources also showed that Al-Mazyunah is promoted by Madayn. For example, in 2019, Al-Mazyunah’s investment opportunities were promoted at the industrial and free zones forum in Morocco and at Gulfood 2019 in Dubai, but this promotion was done by Madayn. Thus, it may be concluded that Al-Mazyunah does not perform marketing activities of its own or, even if it does, these marketing activities are less significant than those done by Madayn. Therefore, further analysis will be concerned with marketing efforts performed by Madayn.
Madayn extensively uses offline marketing to promote investment opportunities in Oman, including those existing in Al-Mazyunah. Madayn’s offline marketing involves participation in various trade events, conferences, and industry forums. For example, it was found during the interview with the Director of Investment Department of Al-Mazyunah that Madayn took part in Gulfood 2020, a large annual food and hospitality event in Dubai, and an industry forum in Marocco. Such events present an excellent opportunity for Madayn to communicate Omani investment opportunities directly to investors. The interview with Madayn’s Director of Marketing and Promotion also revealed that, due to COVID-19 restrictions, some meetings with investors were transferred to the digital domain.
For example, Madayn held an online seminar with Indian investors in 2020 to inform them about investment incentives in Oman. Although Madayn’s goal is to attract investment to any of the territories under its control, sometimes, during industry events and meetings with investors, it tells investors in detail about the advantages of investing in Al-Mazyunah. An interview with the marketing director of Madayn revealed that common Al-Mazyunah’s investment benefits that Madayn mentions in its investment promotion activities include the zone’s constant improvement, a 30-year tax holiday, customs exemptions, 10% omanisation rate, the ease of hiring Yemenis, and the ease of getting entry visas and residency permits for non-GCC investors.
Al-Mazyunah has a website located at www.almazunah.com and designed to introduce the free zone and its benefits to investors. The website is available in English, Arabic, Chinese, and Turkish. It contains information about the zone’s goals, investment opportunities and benefits, the geographic advantages of Oman, and contact details. Yet, the information is presented in a way that is not easily readable because of a lack of proper formatting. The website also allows visitors to subscribe to the zone’s newsletters. There is the news section, but the latest news was published in 2013, which implies that the website has not been updated for a long time. It also has icons of social media networks, such as Facebook, Twitter, and Google+. However, these links do not lead to the zone’s social media accounts. In addition, Google+ has not been available since April 2019, which is another indication that the website has been neglected.
Apart from the described website, the information about investment opportunities in Al-Mazyunah is presented on Madayn’s website. Madayn allows investors to explore the map of Al-Mazyunah Free Zone and find out the details about the incentives, industries available for investments, e-services, legislation, and companies operating in the zone. Furthermore, Madayn has accounts on social media platforms such as Twitter, Facebook, YouTube, Instagram, and LinkedIn. As was found in the interview with the Director of the Investment Department of Al-Mazyunah, Madayn uses social media to provide investors with the latest news and advertise Omani investment opportunities. Madayn’s social media profiles were reviewed, and it was discovered that Madayn gave more attention to its industrial cities, while Al-Mazyunah was rarely mentioned.
Within its promotional activities, Madayn also places emphasis on media relations and publicity. In particular, the news about Al-Mazyunah Free Zone is covered by such media as Oman News Center, Construction Week Online, and Oman Observer. Al-Mazyunah’s press releases often appear in ZAWYA, a trusted source of business news from the Middle East and North Africa regions. In addition, in November 2020, Madayn launched its own publication, Madayn eMagazine. This magazine is published once a month, so, as this paper is being prepared, there is only two issues of Madayn eMagazine. Although Madayn mentions Al-Mazyunah in this publication, it does not provide details about investment opportunities available there. In fact, the first issue of Madayn eMagazine contains only one mention of Al-Mazunah, and the second issue has two mentions, none of which expands on the zone’s investment opportunities.
The Effectiveness of Marketing Channels in Attracting Investors
This section aims at answering the sub-question, “Which marketing channel attracted current investors to Al-Mazyunah Free Zone?” The effectiveness of marketing channels in attracting investments was assessed in the interviews with current investors. Table 6.1. summarizes investors’ responses related to Al-Mazyunah’s marketing channels.
Table 6.1. Marketing channels that brought the interviewed investors to Al-Mazyunah.
As is seen from the table, the leading source of information for Al-Mazyunah’s investors was dialogue with industry peers. These findings are consistent with the data presented by Loewendahl (2018), who found that dialogue with industry peers was the most frequent way of learning about the investment climate. Although dialogue with industry peers is not managed directly, it may be influenced by the company’s marketing efforts. So, one may assume that Al-Mazyunah’s promotional activities, such as participation in trade events, positively affected investors’ information sharing.
The second leading source of information for investors was the Internet and, in particular, the zone’s official website. In contrast to dialogue with industry peers, this marketing channel can be directly managed by the company. These findings are also consistent with Loewendahl (2018), according to whom the Internet and the website are the most effective marketing technique for investment attraction.
Another finding from the interviews was that, although the zone’s official website was an important source of information for most investors, the interviewees noted its shortcomings. They stated that Al-Mazyunah’s official website was poorly designed and organized, and it lacked comprehensive information about the business in the zone and entry specifications. In addition, investors mentioned that they or their subordinates tried to search for the zone’s social media accounts and were disappointed about not finding any. The table also shows that, for most investors, Al-Mazyunah’s social media accounts would be important.
To sum up, most Al-Mazyunah’s investors learn about the free zone from their industry peers or from the Internet and the zone’s website. Investors find the zone’s website generally informative, but it could be improved by a more convenient design and more comprehensive information about investment opportunities. Finally, a lack of social media accounts is a gap in the zone’s marketing strategy.
Interim Conclusion
Al-Mazyunah’s benefits stated in promotional activities include tax and customs exemptions, stable political situation in Oman, geographic location suitable for tourism, closeness to Yemen, and the ease of hiring the Yemeni workforce. The zone’s online and offline marketing strategies are developed and implemented by Madayn. Since this establishment also oversees seven industrial cities and the “Knowledge Oasis Muscat,” Al-Mazyunah gets little individual attention in Madayn’s promotional activities. Al-Mazyunah’s online marketing includes the website, e-mail newsletters, and relations with online media. Madayn’s social media accounts can also be considered part of Al-Mazyunah’s online marketing, but they contain little information about Al-Mazyunah. The Zone does not have its own social media accounts. Al-Mazyunah’s offline marketing strategy includes participation in industry forums and events and media relations and publicity. Al-Mazyunah’s most effective marketing channels are dialogue with industry peers and the website because most investors learn about the free zone from these channels. Investors find the zone’s website generally informative, but it could be improved by a more convenient design and more comprehensive information about investment opportunities. Finally, a lack of social media accounts is a gap in the zone’s marketing strategy.
The Persona of Current Investors
The Profile of the Current Investor: A Resulting Matrix
Investing requires assessing existing market trends comprehensively, which, in turn, affects the image of investors and their business behavior. Operating in Al-Mazunah Free Zone as a region with rich opportunities and active market participants is dynamic. Based on the interviews with seven respondents, a matrix will be compiled and presented in Table 1 to provide views on what an investor in this zone looks like.
Table 7.1. The profile of the current investor.
As can be seen from this matrix, the respondents assume that the current investment environment in Al-Mazunah Free Zone is active and dynamic, and participants need to have appropriate skills. Experience and ambitions are the qualities that are cited often and mentioned as optimal for working in the area. The awareness of related financial issues, for example, tax regulation, is also an aspect to take into account.
The Time to Invest: A Resulting Matrix
Different investment businesses require distinctive approaches to market assessment and conventions that influence specific decisions. Individual investors are guided by the criterion of seasonality, while other entrepreneurs seek to enter the market at a favorable time when changes in the investment environment can contribute to capital growth. In Table 2, the opinions of the respondents are presented on when entrepreneurs invest in Al-Mazyunah Free Zone.
Table 7.2. The time to invest.
While taking into account the respondents’ answers, one can note that only one of them mentioned the importance of the seasonality aspect for investment. For most others, this criterion was not critical and might be ignored without any problems. Changes in the investment environment were assessed as crucial drivers that could stimulate the decision to become a participant in Al-Mazunah Free Zone and build productive partnerships.
Reasons for Investment: A Resulting Matrix
One of the main factors that can be highlighted through the analysis of the interviews performed is the reason that prompted the respondents to invest in Al-Mazunah Free Zone. Investors can pursue a variety of goals, including capital growth, building credibility, acquiring valuable partnerships, and other prospects. In Table 3, the respondents’ answers to this question are presented according to their personal vision of business perspectives.
Table 7.3. Reasons for investment.
The analysis of the respondents’ answers makes it possible to find out the common factors explaining the reasons for investing and the favorable conditions that Al-Mazunah Free Zone offers in contrast to competitors. Firstly, almost all respondents noted the factor of geographical location as one of the main criteria that prompted them to pay attention to this zone. Secondly, the majority of the respondents mentioned a loyal tax policy as one of the advantages. Thirdly, the safety factor was also highlighted as crucial, and government control over Al-Mazunah Free Zone was perceived positively.
The Customer Journey of Al- Mazyunah Free Zone Current Investors
In order to conduct an in-depth investigation of the customer journey of Al-Mazyunah’s current investors, the 6-stage customer journey model was chosen (see Figure 8.1). However, for the purpose of this study, the first four stages of this model were selected for investors’ journey analysis. Since the management question, stated in chapter 1, is focused on attracting new investors, it has been decided that the stages of awareness, engagement, evaluation, and purchase were the most relevant to the study. The experience phase and the loyalty and advocacy phase are more relevant to the retention of current investors rather than attracting new ones, which is why they were not researched.
The Awareness Stage
In addition to the reasons to pay attention to Al-Mazunah Free Zone, the sources of information about this zone can be cited as important resources to stimulate the interest of the target audience to cooperate. Searching for the data about this region on the Internet, discussing with colleagues, and other channels for obtaining the necessary information are also included in the list of sources. In Table 4, the respondents’ answers are collected about how they learned about Al-Mazunah Free Zone and its features.
Table 8.1. The sources of information about the zone.
The analysis of the respondents’ answers demonstrates that there were two main ways to learn about Al-Mazunah Free Zone. They learned about it due to recommendations from colleagues and partners and by searching for information on the Internet about potentially successful free zones. None of them mentioned social media because the zone has no accounts on them. At the same time, on the official website, the basic data is presented, which allows contacting and discussing the terms of cooperation.
The Engagement Stage
Engaging investors in Al-Mazunah Free Zone is an aspect that largely determines the value of the zone’s marketing channels and its recognition among customers. The ability to establish productive interaction with the target audience is a valuable factor that can increase the credibility of the region among competitors. In Table 5, the information from the interviewed investors is compiled concerning how they are engaged in the Al-Mazunah Free Zone.
Table 8.2. Ways of engagement.
Without exception, all the respondents confirmed that the engagement process took place in the format of remote communication via e-mails and by phone. On the official website of Al-Mazunah Free Zone, the required information is offered. At the same time, the zone does not have official social media accounts, which is perceived by all the respondents as an omission. The engagement phase could be more convenient and advanced if interaction through popular online platforms took place.
The Evaluation Stage
As a rule, when deciding where to allocate available funds, investors assess business opportunities and explore the prospects for operating in a specific market environment. While analyzing the specifics of Al-Mazunah Free Zone, the respondents of the interviews answered the questions about what characteristics of investment opportunities they compared. In Table 6, their responses are compiled, and each interested party presented a personal vision of these perspectives.
Table 8.3. Features of investment opportunities.
The geographical location was still one of the key factors that the investors took into account when evaluating their business growth opportunities. As additional characteristics, they mentioned expanding partnerships, free access to the necessary resources, as well as favorable terms of the current tax policy. None of them expressed doubts about business perspectives, which indicates their confidence in the investment potential of Al-Mazunah Free Zone.
The Purchase Stage
The choice of Al-Mazunah Free Zone as a region for investment in favor of other competitive zones is an important aspect to review based on the interviews conducted. The respondents provided their opinions on why they chose this zone and selected it as a place to develop their businesses and increase capital. In Table 7, their responses are presented in accordance with the given criterion.
Table 8.4. The choice in a competitive environment.
All the respondents expressed confidence that the geographical location of Al-Mazunah Free Zone was one of the main factors that prompted them to opt for this region. Some of them mentioned loyal tax and legal regulations as valuable criteria. At the same time, all, without exception, expressed concern about the current poor infrastructure as a significant gap, which explains the need for the control boards to pay attention to this omission.
Marketing Analysis and Advice
The aim of this chapter is to provide a marketing analysis of the findings obtained while investigating the research question. It also aims to offer advice on how Al-Mazyunah can achieve its target goal formulated in chapter 1 as the management question. The marketing analysis and advice will be based on the appropriate marketing models, which will be described in the respective sections. Further, specific steps leading to the attainment of the free zone’s goal will be outlined, and the costs and feasibility of the proposed action plan will be discussed.
Marketing Analysis
Since the primary and secondary research was focused on studying Al-Mazyunah, its customers, and its major competitors, it was decided that the 3Cs model would be appropriate for the marketing analysis. Figure 9.1 demonstrates the key components of the 3Cs model, which include customers, competitors, and the company. Customers and competitors refer to the external analysis, while the analysis of the company is an internal analysis (Shepherd, 2011). The intersection of these three areas represents a good business strategy. The implementation of the 3Cs model helps businesses to determine what they offer, how they offer it, what is their unique value proposition and the positioning on the market, and what message they should develop to connect with their target market (Shepherd, 2011). Thus, the marketing analysis of Al-Mazyunah using the 3Cs model is aimed at developing an understanding of the zone’s strengths and weaknesses, as well as its target market and competition. It will allow for giving feasible marketing advice that would help the free zone achieve its goal.
Further in this section, the conclusions obtained during primary and secondary research will be divided into three groups according to the 3Cs model. First, conclusions related to Al-Mazyunah’s customers will be discussed because customers are the most important of the three components of the model. Next, findings regarding Al-Mazyunah’s competition will be analyzed. Competitors will be analyzed before the analysis of the company because, if the company is discussed first, there is a risk that competitors will be described from the position of the company’s strengths. As a result, the analysis of competitors and the company may become biased. Finally, the findings pertaining to Al-Mazyunah will be discussed to determine what the zone’s strategy should be.
Customers
Primary research revealed several findings on Al-Mazyunah’s investors’ characteristics, wants, and needs:
- The profile of the current investors
- Location is the main reason for investment; favorable tax regulations and the ease of business setup are additional reasons
- The primary sources of information about the zone – dialogue with peers and the Internet, especially the zone’s website
- Expressed concerns about the zone’s poor website design and missing information
- E-mails are the preferred way of engagement with the zone; contacts by phone are the second-best choice
- Searched for the zone’s accounts in social media
- Good infrastructure, the location that provides access to large markets and low costs of doing business, political and economic stability, and the availability of online services are the most important needs and wants
- Voiced concerns about poor infrastructure
The findings of this study allowed for creating the profile of a current investor of Al-Mazyunah. It was found that a typical investor of this free zone is an experienced entrepreneur who is well aware of the peculiarities of running a business in the Middle East region. The major investment goals of Al-Mazyunah’s investors are to set up a profitable business and expand the markets. A typical investor wants to have direct control over the business, which is why he/she chooses foreign direct investment over investment portfolio. The profile of Al-Mazyunah’s investors positively influences the management question because it will help the zone better target its customers.
Al-Mazyunah’s advantageous location near the border with Yemen was found to be the main reason why investors invested in this free zone. The proximity to Yemen gives investors access to the Yemeni market, which is an important advantage. Favorable tax regulations and the facilitated procedure of business set up also contributed to investors’ decision to invest in Al-Mazyunah. It was also found that the businesses of most Al-Mazyunah’s investors do not depend on the season of the year. Therefore, the time of investment is influenced only by the state of the investment environment rather than seasonality. These findings positively affect the management question since they show that Al-Mazyunah has a good value proposition, which will help it achieve its goal.
The research revealed that Al-Mazyunah’s investors learn about the free zone from dialogue with industry peers and the Internet. The zone’s website was an important source of information about available investment opportunities and incentives. However, investors stated that the zone’s website was inconvenient and lacked some information about the business in the free zone and its entry specifications. These results negatively affect the management question since they reveal a drawback in Al-Mazyunah’s marketing, which can lead the zone to lose some potential investors.
After learning about Al-Mazyunah’s investment opportunities, investors contacted the zone via e-mail or the telephone. E-mails were the most frequently mentioned way of engagement, while phone calls were the second most used way of communicating with the zone’s administration. It was also found that investors tried to find Al-Mazyunah in social media and were disappointed at not finding any accounts. The availability of contact details (e-mail address and phone number) on Al-Mazyunah’s website positively influences the management question since it shows that Al-Mazyunah provides investors with convenient ways of contacting the zone. However, the zone’s lack of presence in social media negatively affects the management question because Al-Mazyunah may miss an additional opportunity of engaging with its potential investors.
Finally, investors were not completely satisfied with the quality of infrastructure in Al-Mazyunah. Many of them expressed concerns about problems with water and electricity supply and hoped that the zone would address these issues in the near future. This problem negatively affects the management question and requires the zone to develop a strong value proposition to offset this drawback.
Competitors
The following conclusions were obtained regarding Al-Mazyunah’s major competitors:
- Salalah, Sohar, and the Duqm SEZ are local competitors, Jafza is an international competitor
- All competitors are managed and operated by the companies that have only one free zone under control
- All competitors are located close to seaports and airports
- Al-Mazyunah’s local competitors’ value proposition is the proximity to ports and favorable regulations; Jafza focuses mainly on its expertise
- Competitors use such marketing channels as official websites, social media, participation in industry events, media relations, and advertising
- All competitors have accounts on Twitter and YouTube, and most of them are present on Facebook and LinkedIn
- Sohar, the Duqm SEZ, and Jafza have their own magazines
While researching Al-Mazyunah’s competition, it was found that the free zone competes with Salalah, Sohar, and the Duqm SEZ within Oman and with Jafza outside of the country. The companies that manage and operate each of these free zones have only one free zone under their control, on which they concentrate all their marketing efforts. As a result, they can allocate more resources to attracting investors than Al-Mazyunah, which negatively affects the management question.
All Al-Mazyunah’s competitors are located in close proximity to seaports and airports. Al-Mazyunah’s Omani competitors use this location advantage as their value proposition, along with favorable Omani regulations, such as the availability of tax holidays, exemptions from customs duties, and 100% foreign ownership. Jafza’s value proposition is based on its expertise in the management of the free zone and highly-developed infrastructure and logistics, while its location in Dubai is mentioned only as a bonus to other advantages. An understanding of competitors’ value propositions positively affects the management question because it will help Al-Mazyunah realize how it can distinguish itself from competitors.
Al-Mazyunah’s competitors use a variety of marketing channels, including official websites, social media, participation in industry events, media relations, and advertising. They have an extensive presence on social media platforms. All competitors are present on Twitter and YouTube, and three of them have accounts on Facebook and LinkedIn. Two competitors, Salalah and Jafza, also have accounts on Instagram. Additionally, Sohar, Duqm, and Jafza issue their own magazines to promote investment opportunities. Overall, competitors’ use of various marketing channels seems to be more extensive than that of Al-Mazyunah, which negatively influences the management question.
Company
The research revealed the following findings on Al-Mazyunah:
- Good value proposition
- Marketing activities are done by Madayn; no findings on Al-Mazyunah’s own marketing efforts
- Extensive offline promotion of Al-Mazyunah at industry forums and trade events
- Insufficient online marketing, no separate social media accounts
- Poor website design, information has not been updated since 2013
- Only a few mentions of Al-Mazyunah in Madayn eMagazine
- Issues with e-mail newsletters
The findings showed that Al-Mazyunah had a good value proposition. Its value proposition is the proximity to the Yemeni border and facilitated entry requirements for Yemenis. It is a strong competitive advantage that distinguishes Al-Mazyunah from its competitors. Additional benefits offered by Al-Mazyunah, such as tax incentives and easy business setup procedures, further strengthen its competitive position. Thus, this finding has a positive influence on Al-Mazyunah’s management question.
It was also found that Al-Mazyunah was managed and operated by Madayn. Marketing activities are also performed by Madayn. It turns out to be a drawback because Madayn has to split its marketing efforts between all entities under its control, which include Al-Mazyunah, “Knowledge Oasis Muscat,” and seven industrial cities. At the same time, no evidence of Al-Mazyunah’s own marketing efforts was found. This has a negative impact on the management question because it reveals that, in contrast to Al-Mazyunah, its competitors’ own marketing efforts are easily distinguishable.
The research showed that Madayn extensively promoted Al-Mazyunah offline. During industrial forums and trade events, Madayn sometimes focuses on promoting Al-Mazyunah’s investment opportunities. Al-Mazyunah makes good use of media relations by making its news and press releases appear on reputable news websites and TV channels. However, Al-Mazyunah’s online marketing is insufficient for several reasons.
First, the zone has no separate social media accounts, and Madayn rarely mentions Al-Mazyunah on its social media. Second, Al-Mazyunah’s official website is poorly designed and has not been updated since 2013. This is a weakness, especially given the fact that competitors’ websites are well-designed and contain recent news about their business activities. Third, the recently launched Madayn eMagazine has only a few mentions of Al-Mazyunah and does not promote its investment opportunities. Finally, Al-Mazyunah’s website contains a subscription form; however, when the researcher attempted to subscribe to newsletters, no newsletters were actually sent, except for the request to confirm the subscription. Madayn’s website also offers a subscription to newsletters, but its newsletters are not focused solely on Al-Mazyunah.
These findings have a negative influence on the management question because they reveal an issue with Al-Mazyunah’s online marketing. Table 9.1 summarizes the positive and negative influences on the management question regarding the relationships between customers and the company, competitors and the company, and customers and the competition.
Table 9.1. Summary of positive and negative influences on the management question.
Marketing Advice
This section will outline specific steps that will help Al-Mazyunah to attract new investors from Yemen and the Horn of Africa. The advice will be based on the findings of the present research and the marketing analysis performed in the previous section. The action plan that will be proposed further will aim at addressing the following management question: “What particular new marketing choices should be applied by Al-Mazunah Free Zone company to attract $5 million in investment from Yemen and $10 million in investment from Djibouti, Eritrea, Ethiopia, and Somalia in 2021?”
Advice Model
The marketing advice will be given based on the customer journey model (see Figure 9.2). However, only the first four stages of the customer journey are directly related to the management question, that is, attracting new investors. Therefore, advice will be given regarding the awareness, engagement, evaluation, and purchase stages of the customer journey of Al-Mazyunah’s investors. The last two phases – the experience phase and the loyalty and advocacy phase – are related to the post-purchase part of the customer journey and will not be discussed.
Advice
The Awareness Stage
The awareness stage begins as soon as the customer realizes its problem and starts educational research to find possible solutions. In the case of Al-Mazyunah, its potential investors realize their need to expand their international business through investment and explore possible opportunities and investment locations. Therefore, Al-Mazyunah’s objectives at this stage should be to raise potential investors’ awareness of its existence and the available investment opportunities. Given the purpose of this stage and the issues identified in the marketing analysis, the following steps are recommended to Al-Mazyunah:
- Redesign Al-Mazyunah’s official website and supply it with all the necessary information about investment opportunities and the free zone’s business activities.
As was found during the research and the marketing analysis, a considerable part of investors learned about Al-Mazyunah’s investment opportunities from its website. However, they noted the website’s poor design and missing information. According to Raganowicz (2019), a good investment promotion website should contain information about the business environment, infrastructure, labor market, innovation and R&D potential, contact details, financial incentives, and investment opportunities. The website should have credible and up-to-date content, relevant graphics, and clear business-oriented purpose (Raganowicz, 2019). The technical requirements of the website include easy navigation, responsive web design, the ease of finding it via search engines, and readability ensured by the use of regular fonts (Raganowicz, 2019). The availability of downloadable materials is a common practice, and access for disabled users is optional (Raganowicz, 2019). - Create social media accounts on Twitter and LinkedIn and have an active structured and targeted content strategy.
As was found during the research, investors expected Al-Mazyunah to have accounts on social media platforms. In addition, all Al-Mazyunah’s competitors are present in at least three social networks. Therefore, creating accounts on social media will help Al-Mazyunah to meet investors’ expectations, improve its competitive position, and provide an additional opportunity to raise potential investors’ awareness of the free zone. It is suggested that Al-Mazyunah should focus on Twitter and LinkedIn because they are considered business social media (Raganowicz, 2019). The design of the zone’s social media profiles should be consistent with the design of its website, and the website should contain links to the zone’s social media accounts. - Organize trade missions to Yemen and the countries of the Horn of Africa (Djibouti, Eritrea, Ethiopia, and Somalia).
The findings of the research showed that Al-Mazyunah had no specific marketing and promotion actions for investors from the Horn of Africa. Since the zone aims to attract investors from Yemen and the Horn of Africa, it is suggested that it should deliver the message about its investment opportunities directly to the investors in these countries, which can be done with the help of trade missions. There are some trade events that Al-Mazyunah may attend to promote its investment opportunities. In Yemen, these events include Foodex Yemen, a trade event similar to Gulfood in Dubai. In the Horn of Africa, Al-Mazyunah can consider attending the Ethiopia International Trade Exhibition (EITE). In addition, online seminars with investors from Yemen and the Horn of Africa can be organized. - Establish Al-Mazyunah’s own marketing department or at least hire several employees who would focus on promoting only Al-Mazyunah’s investment opportunities
The research revealed that Al-Mazyunah’s marketing and investment promotion was done by Madayn, while no evidence of the zone’s own marketing efforts was found. This seems to be an issue because, while competitors put all their efforts into promoting one zone under their control, Madayn promotes nine business entities at once. Although Madayn is successful in its efforts, Al-Mazyunah would benefit from either establishing its own marketing department or at least hiring several employees who would focus on promoting only Al-Mazyunah’s investment opportunities. These employees could be responsible for updating the news section of Al-Mazyunah’s website, develop newsletters, and regularly publish posts on social media.
The Engagement Stage
During the engagement stage, customers want to know more about the brands that they learned about during the awareness stage. At this phase, the free zone has an excellent opportunity to target its potential investors, and the following steps are recommended to improve this process:
- Launch e-mail newsletters with Al-Mazyunah’s news and investment promotion
The research showed that e-mails were the preferred way for investors to contact with Al-Mazyunah. It means that Al-Mazyunah’s investors actively use e-mail and may be willing to subscribe to the zone’s newsletters. Currently, Al-Mazyunah’s investors cannot receive newsletters that would contain the information only about this free zone. Potential investors can provide Al-Mazyunah with their e-mail addresses via the subscription form but get no newsletters in return. Therefore, Al-Mazyunah can make use of potential investors’ contact information to give them an opportunity to engage with the free zone via e-mail newsletters. Al-Mazyunah can use a CRM system to manage its communication with investors more effectively. - Publish posts with the zone’s news and investment promotion on Twitter
According to Van Den Berghe (2018), social media are useful for investment attraction not only at the awareness stage but also at the engagement stage. Therefore, Al-Mazyunah can engage with investors by regularly publishing posts on Twitter. Its competitors, e.g., Salalah and Sohar, publish at least ten posts on Twitter each month, with the interval between publications ranging from one to seven days. So, Al-Mazyunah can aim at publishing one post every three days to maintain its activity on Twitter.
The Evaluation Stage
At the evaluation phase, customers do research and often check what solutions to their problem different competing companies have to offer. The goal of the company at this stage is to let customers find all the necessary information on their own and provide them with an opportunity to contact the company (Scucchi, 2019). The following advice may be given to Al-Mazyunah to facilitate investors’ evaluation of its investment opportunities:
- Add an investor inquiry form to the website
Al-Mazyunah has a good value proposition that distinguishes it from its competitors. The website, the redesign of which has been proposed for the awareness stage, is expected to provide investors with the necessary information about Al-Mazyunah’s investment opportunities, presented in a convenient and readable form. Yet, the free zone also should consider how to facilitate the communication between potential investors at this stage. Since Al-Mazyunah’s investors prefer to contact the zone via e-mail, it should add an investor inquiry form to the contact page of its website. As evidenced by competitors’ websites, it is common practice to have inquiry forms that ask the investor to fill in his/her name, position, organization, e-mail address, phone, objectives, business sector, and the message.
Currently, both Al-Mazyunah’s and Madayn’s contact forms require only the name, e-mail, phone, subject, and the message. This can be improved by adding the fields asking investors to fill in some information about their business, which would make Al-Mazyunah’s staff more prepared for communicating with investors.
The Purchase Stage
At the purchase stage, the customer makes a decision; he/she may decide to buy from this company or from its competitors, or he/she may continue searching. The goal of the company at this stage is to be ready to help the customer at the moment of purchase and make this procedure as easy as possible. Al-Mazyunah is good at helping its investors with setting up a business in the free zone, which is evidenced by the availability of one-stop-shop services and investors’ responses during the interviews. The zone offers supporting services to assist investors throughout the business setup process, so there is no need for additional personnel to provide investors with personal assistance. However, there is one step that can further facilitate the process:
- Develop an investor guide and make it downloadable from Al-Mazyunah’s and Madayn’s websites
It is common practice for free zones to offer investors an investor guide, which explores the available investment opportunities and provides a detailed description of the investment and business set up process. Currently, Al-Mazyunah does not offer a comprehensive investor guide. It only provides investors with application forms written in the Arabic language. A well-developed investor guide would facilitate the business setup procedure for investors because they will know what specific steps they should take.
Implementation
This section represents the steps outlined in the previous section according to the 5W1H method. 5W stands for who, what, when, where, and why, and 1H means how. Answering these questions in relation to the outlined steps will provide a clearer picture of how Al-Mazyunah can implement these steps in practice (see Table 9.1).
Table 9.2. The implementation plan.
Costs
Costs are often an issue when implementing various organizational improvements. Therefore, it was decided to review the expenditures that Al-Mazyunah would incur when implementing the proposed plan. Table 9.2 summarizes the costs that would be necessary to put the outlined steps into practice.
Table 9.3. The cost of the proposed action plan.
The cost of web design appears to be the highest, but it is essential because free zones’ official websites are the most effective investment promotion tool according to both investors and IPAs (Loewendahl, 2018). The website should be properly maintained and updated, which will cost the company about $300 each month. Finally, e-mail marketing, i.e., the zone’s newsletters to investors, will also require monthly spending of about $300 because the content of newsletters should be continuously updated, and the e-mails should be regularly delivered to all subscribers.
Recommendations
The research revealed that Al-Mazyunah’s marketing and investment promotion was done by Madayn. However, this research did not explore how Al-Mazyunah could improve marketing cooperation with Madayn to ensure that Al-Mazyunah got enough attention in Madayn’s investment promotion activities. While this issue goes beyond the scope of the current study, it still needs to be researched because the alignment between Al-Mazyunah’s and Madayn’s marketing strategies is crucial for Al-Mazyunah’s success in attracting new investors. Therefore, future research should focus on investigating the ways in which Al-Mazyunah can coordinate its marketing efforts with Madayn.
Feasibility
The advice is given based on the findings of the primary and secondary research. The study identified several gaps in Al-Mazyunah’s marketing strategy, such as poor website design and the absence of separate social media accounts. These gaps were also confirmed during the interviews with current investors from Yemen and Somalia, which proves their significance. The proposed plan aims at closing these gaps, which will help Al-Mazyunah reach its target goal of attracting investments from investors residing in Yemen and the Horn of Africa in 2021. Therefore, it may be concluded that the advice is feasible for the free zone.
Conclusion
The current study focused on the research question of which factors influenced the investors’ decision to establish a company in Al-Mazyunah Free Zone. The purpose of answering this research question was to understand the investment attraction in the Middle East economic zones and to suggest marketing strategies in order to help Al-Mazyunah attract investors from Yemen and the Horn of Africa. Based on this management issue, the conceptual model was developed (see Appendix 1). The conceptual model demonstrated how independent variables (management decisions, marketing strategies, and customer needs) and contextual variables (government factors, the market environment, and CSR) influenced the dependent variable (investment attraction). Since all the factors included in independent and contextual variables have an impact on investment attraction, they were investigated in this study.
The findings of this research indicate that investors deciding to invest in Al-Mazyunah are influenced by government and marketing factors. The most important government factors include a favorable legislative environment, especially tax regulations, political stability, and the ease of setting up a business in the free zone. Geographic location was also a crucial factor, especially for those investors, whose businesses were focused on trade. In addition, good infrastructure was found to be significant for investors, and a lack of it was usually compensated by significant financial incentives. Important marketing factors included the ease of finding the information about the free zone and its investment opportunities and the availability of information on the Internet.
The answers to the research sub-questions provide more detailed explanation of factors influencing investors’ decision to invest in Al-Mazyunah. The first sub-question was to discover marketing, government, and management and leadership factors influencing investors’ decisions. It was found out that the marketing efforts of free zones should be directed toward raising investors’ awareness of the existence of free zones within a particular country and investment opportunities available there. The Internet appears to be the most effective marketing technique for investment promotion.
However, free zones’ websites should be consistent with their overall marketing strategies and contain up-to-date information. The information layout may have an additional impact on investors’ decisions. Furthermore, promotional materials should focus not only on the advantages of the location but also on other benefits, such as infrastructure or a highly-skilled labor force. The amount of government support is also crucial for investors’ choice of investment location. Political stability, legal protection, the ease of establishing a business, financial incentives, and structural changes, such as improving infrastructure, are important government factors affecting investors’ decisions. Finally, crucial management and leadership factors include qualified organizational management, a strong financial basis, application of best practices, and the focus on developing human resources.
The second sub-question was related to Al-Mazyunah’s competitors, the marketing channels they used, and their stated benefits. The findings showed that Al-Mazyunah’s local competitors were Salalah, Sohar, and the Duqm SEZ, and its international competitor was Jafza. While Al-Mazyunah’s Omani competitors emphasized their strategic location and the proximity of ports in their marketing materials, Jafza focused on its expertise and highly-developed infrastructure. The competing free zones used a variety of marketing channels, such as official websites, relations with different media, hosting and participation in industry events, advertising, and social media. Sohar, the Duqm SEZ, and Jafza also have their own magazines designed to inform investors about the latest news and promote investment opportunities.
The third sub-question was focused on marketing tactics and strategies used by Al-Mazyunah. The main drawback of Al-Mazyunah’s marketing strategy was that the zone was promoted by Madayn, the public establishment that has seven industrial cities and “Knowledge Oasis Muscat” under its control, in addition to Al-Mazyunah. This is a shortcoming because Madayn promotes investment opportunities in all entities under its control. As a consequence, Al-Mazyunah often does not receive particular attention in Madayn’s promotional activities. Furthermore, Al-Mazyunah does not have its separate accounts on social media platforms, which is considered a marketing gap by its current investors, especially given the fact that all its competitors are present on social media.
Furthermore, it has been found that the Al-Mazyunah website, which is an important source of information for investors, is not organized properly and has not been updated since 2013. In its promotional activities, Al-Mazyunah emphasizes its proximity to Yemen and government incentives, such as tax and customs exemptions and benefits that allow for hiring the Yemeni workforce easily. It was also found out that Al-Mazyunah does not specifically target investors from the Horn of Africa in its promotional activities.
The fourth sub-question was to investigate the persona of the current investor of Al-Mazyunah according to Ferrell’s 6W model, with special attention given to the who, the when, and the why. The findings indicate that the investor of Al-Mazyunah is an experienced entrepreneur who is able to operate in a dynamic environment. In addition, the investor’s persona is characterized by ambitiousness and awareness of various issues that one can face when setting up a business in the region. Regarding the timing of investments, most of Al-Mazyunah’s investors do not depend on seasonality, but they are driven by changes in the investment environment and invest when the conditions are optimal. Finally, the main reasons for investing in Al-Mazyunah were the zone’s advantageous geographic location, favorable tax policies, and safety ensured by government control.
The fifth sub-question was aimed at investigating the customer journey of Al-Mazyunah’s investors. At the awareness stage, investors learned about Al-Mazyunah Free Zone through word of mouth and via the Internet. The engagement phase was characterized by the use of e-mails and phone calls to contact the administration of the zone. At the same time, investors mentioned a lack of Al-Mazyunah’s presence on social media platforms that could serve as an additional way of engagement. When analyzing the evaluation stage of the customer journey, it was found that investors compared the geographic location of Al-Mazyunah and its competitors, partnerships, access to the necessary resources, and tax policies. At the purchase phase, investors decided to invest in Al-Mazyunah because of its advantageous location and favorable tax regulations. It was also discovered that most investors were not satisfied with the quality of infrastructure in Al-Mazyunah.
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Appendix 1: Research Proposal
Introduction
The state project Al-Mazunah Free Zone is an investment site with tremendous opportunities. The zone is located in Oman, 4 km from the border with Yemen, near the ancient metropolis Al-Mada’in, and covers 3 million square meters (The project, n.d.). Numerous facilities are located in this area, such as shopping centers, hotels, car showrooms, administrative centers, showrooms, service centers, clinics, shops, livestock areas, multipurpose areas, parking, green areas, and a mosque. The zone has the entire necessary infrastructure – roads, bridges, drainage systems, Internet, telephone, and mobile communication.
A unique investment advantage of the project is its proximity to the border with Yemen, which creates the preconditions for attracting the Yemeni workforce without visas and paperwork. As a result, investors will be able to choose the future employees of enterprises more freely. It is assumed that the site will become a location for commercial, investment, industrial, and tourism businesses. Besides, the state offers investment advantages in the form of tax and administrative benefits.
The site
Al-Mazunah Free Zone project was launched in1999 and includes sites for several industries. The commercial sector provides opportunities for the storage and trade of cars, equipment, and agricultural goods. Further, the industrial sector offers sites for food, clothing, plastics, woodworking, automotive and machinery plants, and factories. There are also platforms for assistant services in the zone, including transport, distribution, clearing services, restaurants, translation bureaus, office services such as printing, Internet, fax.
Given the overall attractiveness of the Yemeni market, with a total purchasing power of $55.4 billion and a population of 28 million people and the high purchasing power of the Omani market, the project is an ideal trading platform (Investment opportunities, n.d.).
Governmental incentives
Another benefit of Al-Mazunah Free Zone is government support, as Oman has developed a package of incentives to attract investors to the zone. In particular, all investors receive an exemption from income tax for 30 years without filing an income tax return (Investment benefits, n.d.). The zone also provides an opportunity for easy handling of foreign currencies and capital input. Besides, Oman guarantees investors exemption from the Commercial Agency Act, customs duties, and import tax on all permitted goods. Investors are also not subject to the minimum investment requirement and receive 100% equity ownership.
Finally, Oman guarantees visa-free employment for Yemeni labor and reduces Omani labor’s recruitment rate to 10%. Moreover, all factories and plants receive a national certificate of origin. Besides, investors receive a residence permit in Oman under a simplified procedure and permission to open a representative office in Oman’s customs zone. Among other benefits of the location, the ease of movement between Oman and Yemen should be mentioned, and the Yemeni capitals’ vast potential.
The Al-Mazunah Free Zone was developed, taking into account investors’ interests. It provides a massive range of services for conducting international business and trade. The primary stake is that Al-Mazunah Free Zone will become a trade hub with the presence of small and large entrepreneurs. Al-Mazunah Free Zone also includes enterprises that will serve businessmen’s needs,restaurants, parking lots, green areas, a mosque. The target group of investors comprises European, Asian, Asia-Pacific, American, Australian, and African businesses.
Description of the marketing issue
In particular, Yemen is an excellent market for consumer goods, while (Horn of Africa) Djibouti, Eritrea, Ethiopia, and Somalia could be useful trading partners in agriculture sales. It is also important to note that, thanks to the simplified customs relations between Yemen and Oman, it will be easier to establish trade and business processes in this direction. Simultaneously, the taxation and administration benefits will be particularly advantageous in the formation of connections with investors from Djibouti, Eritrea, Ethiopia, and Somalia.
As can be seen from the information above, Al-Mazunah Free Zone is a government high potential organization. The project was created to attract investors from all over the world. However, investors from Yemen, Djibouti, Eritrea, Ethiopia, and Somalia deserve special attention, as these markets are traditionally considered the closest to the Omani market. Therefore, the marketing issue there is a low number of investors from Yemen, Djibouti, Eritrea, Ethiopia, and Somalia.
Management question: What particular new marketing choices should be applied by Al-Mazunah Free Zone company to attract $ 5 million in investment from Yemen and $ 10 million in investment from Djibouti, Eritrea, Ethiopia, and Somalia in 2021?
Research framework
The purpose of the future study will be to expand the understanding of attracting investments in the Middle East economic zone and the subsequent determination of marketing strategies to attract investors to the Al-Mazunah Free Zone. To gather information is to conduct semi-structured interviews head-quarter of the Free Zone and surveys with existing investors. A list of investors will be compiled, emphasizing companies from Yemen, Djibouti, Eritrea, Ethiopia, and Somalia ( the Horn of Africa).
Central question and sub-questions
The central research question (CRQ) is the question that the study answers:
Which factors influence the investors’ decisions to establish a company in Al-Mazunah Free Zone?
The list of the sub-questions:
- What does previous research say about management and marketing factors critical to optimizing the ways of attracting investors in Free Zones?
- Who is the competition and what channels do they use to attract investors?
- Which marketing tactics and strategies are used by Al-Mazyunah Free Zone to attract investors?
- What is the persona of current investors of Al-Mazyunah free Zone?
- What is the customer journey of Al-Mazyunah free Zone Investors?
Theoretical framework
A well-founded choice for at least one model from the theory. Research models are a handy tool to organize research questions and sub-questions. Since the research topic concerns attracting new investors who are the company’s customers, a customer journey model will be used (The customer journey model, n.d.).
This model will be applied as a theoretical basis for research. Therefore, the model illustrates how current investors make their way through the customer journey.
A 6W model by Ferrell will be used as a theoretical basis for conducting customer analysis. This tool implies the study of the external environment of an organization, which is critical for the design of a well-structured marketing plan. Namely, the needs and expectations of potential customers will be analyzed based on their behaviors and attitudes (Newman, 2018).
The 6W model involves several dimensions of research, including the identification of customers: their geographic, demographic, psychological, financial, and other relevant characteristics. In the given case, the characteristics of customers primarily from Oman, but also Djibouti, Eritrea, Ethiopia, and Somalia will be taken into account to build closer relationships. The direction of value proposition implies answering what exactly potential customers of the Al-Mazunah Free Zone do with the proposed products or services. The time and place of purchasing are two more areas to study to understand how to adjust the purchase environment, with the emphasis on physical and social changes that can be important for customers of the Al-Mazunah Free Zone.
Ultimately, the chosen model will allow for considering the questions of why customers buy or do not buy products (Newman, 2018). The application of the 6W model would reveal potential problems and prepare for their prevention to succeed with the proposed project
Conceptual model
A conceptual model gives clarity and the visual representation of the theoretical constructs that will be used in the proposed project. Regarding the given case, the initiatives of the Al-Mazunah Free Zone can be considered as the dependent variables since they can be adjusted according to the wishes and preferences of customers. In turn, the needs and expectations of customers compose the dependent variable that can change with time, but it is relatively stable in terms of this project. Since the market environment impacts the decisions of customers and strategies of the target organization, this variable can be identified as a contextual one. The above variable would also include the impact of the government and CSR.
In addition, the policies and approaches that are adopted by the potential partnering countries should be taken into account as the context of the study. It should be stressed that a critical analysis of the literature would allow proposing a classification of theoretical approaches to the study and interpretation of the content of the organization’s marketing orientation. The research was would be aimed at interpreting the link between the identified variables and following the conceptual research model. Furthermore, in-depth interviews with marketing directors, managers, sales departments, and HR would also be conducted according to the proposed conceptual model.
Research model
Appendix 2: Interviews with Experts
Transcript of the Interview with the Director of the Investment Department of Al-Mazyounah Free Zone
The interview was conducted with the manager of the investment department of Al-Mazyounah free zone, Mr. Seed, on December 3, 2020.
Author: What is the vision of your free zone?
Mr. Seed: Our free zone’s vision is a free commercial zone that participates in increasing the regional competition of Oman with regard to attracting and developing local and international investments.
Author: What marketing strategy do you use?
Mr. Seed: The marketing activities are done by Madayn mainly offline. Madayn actively uses publishing in magazines and trade events in Dubai. For example, earlier this year, our free zone took part in Gulfood 2020. It is a food and hospitality event held in Dubai, and we took the opportunity to promote our investment opportunities to the large and diverse audience attending the event. In the previous year, Madayn promoted the free zone investment opportunities at an industry forum in Morocco, where representatives from many other Arab countries were present. The use of online marketing is also part of our overall marketing strategy. For example, the free zone issues press releases to appear in online magazines.
Author: How good is the free zone at satisfying the needs and the wants of customers?
Mr. Seed: The free zone is quite successful in meeting customers’ needs. We provide investors with attractive incentives, such as customs duty exemptions, lower Organization rates, and no minimum capital requirements. Yemenis can enter the free zone and find employment there without visas. Besides, our investors are particularly satisfied with the one-stop-station established in our free zone. It helps investors complete all the necessary procedures easier and faster.
Author: How do you reach your potential customers?
Mr. Seed: As I mentioned, we promote opportunities available in our free zones to investors at various events, in which we participate as part of our marketing activities. Madayn also organizes meetings with investors to discuss investment opportunities. In addition, the free zone has its website with information on the available opportunities, investment benefits, and contact details for investors willing to find out more. Potential investors can also subscribe to our newsletters and receive news and notifications about available opportunities in their inbox.
Author: How does the free zone make use of social media?
Mr. Seed: There are accounts on Twitter and Instagram held by Madayn. The accounts are used to make posts about the free zones and industrial cities in Oman, including Al-Mazyounah free zone. On these social media, you can find news posted by Madayn, as well as advertisements promoting available investing opportunities. Madayn also has an account on YouTube, but it is paid little attention to. So, as you can see, there are no separate social media accounts for Al-Mazyounah free zone, which somewhat hinders its ability to distinguish itself from local and international competitors, such as Sohar free zone.
Author: What are the most important needs and wants of your investors?
Mr. Seed: Good infrastructure is, perhaps, the most important investors’ need because it facilitates doing business. Highways, airports, communications, warehouses, and other infrastructures are significant characteristics that investors consider when deciding where to invest. In Al-Mazyounah, constant efforts are made to improve infrastructure. Currently, it has multiple facilities, such as warehouses and customs offices, as well as the infrastructure necessary for running a business, including electricity, telecoms, water, transport networks, sewage, and others. In the current situation of the coronavirus pandemic, investors’ need for online services significantly increased.
Author: How do they decide on the free zone?
Mr. Seed: They make their investment decisions mainly based on word of mouth. Investors constantly communicate with their industry peers to share information and advice. Therefore, we try to make sure we make a good reputation among our current investors. Yemeni investors are particularly motivated by the location of the free zone, that is, its closeness to Yemen, and no requirements for a visa.
Author: Geographically, where do your current investors come from?
Mr. Seed: The vast majority of our current investors are from Yemen and Oman. This is related to the location of the free zone. Since it borders on Yemen, Yemeni investors are attracted by an opportunity of trading with Oman.
Author: What sectors receive the most amount of investments from current customers?
Mr. Seed: Our customers mostly invest in warehouses and car showrooms. The free zone is particularly attractive to investors willing to locate warehouse facilities in the region. In addition, the zone encourages investments in car showrooms because attracting firms specialized in trading automobiles, both new and used, will boost the economy of the region and help further develop the transport infrastructure in the free zone.
Author: Who are your main competitors?
Mr. Seed: Locally, the free zone is competing with Salalah free zone and Sohar free zone. Sohar free zone occupies a large area with a port, which is its main competitive advantage. Salalah free zone is located not far from Al-Mazyounah and has similar incentives, but it also has access to a port and an airport. Internationally, Al-Mazyounah is competing with Jabel Ali free zone in Dubai. It is a strong competitor, providing attractive incentives and excellent infrastructure to investors and housing more than 7,000 companies.
Author: What do competitors do better in satisfying customers?
Mr. Seed: In Dubai, the city is big, and it has all the needed services such as airports, foreign schools, and many other daily services, which Al-Mazyounah free zone does not have. Locally, the locations of both Salalah free zone and Sohar free zone are on the coast, which helps them be close to marine navigation. In fact, all our main competitors have access to ports, which allows companies located in those free zones to reach more customers via ships. Salalah free zone better satisfies the needs of investors willing to invest in logistics, R&D, and manufacturing. It has also speeded up the process of licensing, so its investors can obtain a license in an hour. In Al-Mazyounah, our one-stop station provides services to investors within three hours. As for Sohar free zone, it attracts those who aim to invest in logistics, oil, and petrochemicals. Besides, companies in Sohar and Salalah can be incorporated online, while our free zone does not provide investors with such an opportunity.
Author: What things to satisfy investors’ wants does the free zone do better than competitors?
Mr. Seed: The location of Al-Mazyounah free zone is very close to Yemen, which cuts a lot of time and money for the Yemeni investors. As I mentioned, the free zone also does not require Yemenis to obtain visas. As a result, our free zone satisfies the needs of Yemeni investors better than competitors. In addition, Al-Mazyounah offers better incentives than Sohar free zone. For example, we offer our investors a 30-year tax holiday and a 10% organization rate, while Sohar offers only 25 years of tax holiday and requires a 15% Organization rate for the first ten years.
The Transcript of the Interview with Mr. Salah Al-Alawi, the Marketing Director of Madayn
I: What is the vision and mission of your organization?
S: The vision of Madayn is to make the Sultanate of Oman the leading center of innovation, manufacturing, and entrepreneurial excellence in the region. Our mission is to attract investments and provide our investors with continuous support through value-adding services, good infrastructure, and easy governmental procedures.
I: What marketing strategy do you use to attract investment?
S: We focus on meeting our potential investors to communicate our investment opportunities directly. We launch promotional campaigns, during which we introduce investment opportunities existing in Oman to our investors at b2b meetings, seminars, and field visits. Madayn regularly updates its website because it is one of the most important sources of information for our investors. We also have a digital magazine, Madayn eMagazine, which helps us promote our free zones and industrial cities. In addition, media relations and print and online publications are an important element of our marketing strategy.
I: Does Madayn pay special attention to attracting investors to Al-Mazyunah Free Zone?
S: Madayn manages and operates not only Al-Mazyunah Free Zone but also the Knowledge Oasis Muscat and seven industrial cities. So, we are interested in promoting investment in all these locations. At our meetings with investors, we try to provide a general overview of investment opportunities existing in Oman. Sometimes, we also deliver briefs on incentives offered by particular zones under our control, including Al-Mazyunah.
I: How do you reach your potential investors?
S: As I said, we often hold meetings with our investors. We participate in conferences, trade events, and similar activities in which we can get in direct contact with potential investors. In the time of the pandemic, we have started to use online meetings. For example, recently, we held an online seminar with Indian investors. Madayn also advertises in newspapers and on social media platforms.
I: How does your organization use social media to promote investment?
S: Madayn has accounts on Twitter, Facebook, YouTube, Instagram, and LinkedIn. We use social media platforms to inform investors about the latest news and remind them about the incentives existing in Oman.
I: Does Madayn vary its marketing approaches when attracting investors from different countries?
S: We offer similar incentives to investors from different countries, so there is no special need to elaborate on different marketing strategies. However, we conduct meetings with different groups of our investors, for example, those coming from China and those from India. The purpose is to build relationships and make sure that the desired groups of investors are aware of our investment opportunities.
I: Are there any investors from the Horn of Africa in Al-Mazyunah Free Zone?
S: Currently, there is only one investor from the Horn of Africa in Al-Mazyunah.
I: Does Madayn specifically target investors from the Horn of Africa?
S: No, Madayn focuses its efforts on attracting investors from such countries as India and China, among others. The investors from the Horn of Africa are usually small-scale. Moreover, these countries themselves are in crucial need of inward investment. Therefore, at this stage, we find it more rational to focus on countries with a greater potential for outward investment.
I: What are the most important needs of your investors?
S: Our investors are motivated to invest by the economic and political stability in the region. In addition, our investors seek locations that provide access to large markets, especially with high purchasing power and low costs of doing business. Good infrastructure is also a very desirable feature. Our free zones and industrial cities are well-suited for meeting these needs. Oman is a country with political and economic stability, favorable laws and government policies, low tax rates. Moreover, there are business incubators to facilitate the establishment of small and medium-sized enterprises.
I: What benefits do you emphasize in your promotional activities?
S: We inform investors about such incentives as tax exemptions and exemptions from customs duties on production inputs. We mention that investors will be provided with developed lands equipped with essential services, such as electricity, water, telecommunications, and roads. Our investors can expect the necessary services to be delivered to them within the stipulated period of time. They can also take part in local and international industrial exhibitions, which is the opportunity provided within the Made in Oman campaign. Investors can lease lands and facilities for a period of up to 30 years. Finally, an important benefit of investing in Oman is transparent legal frameworks, making investors’ rights and obligations clear to them.
I: What advantages of Al-Mazyunah Free Zone do you emphasize when you specifically mention this zone?
S: We assure our investors that the zone is constantly developing to meet their needs better. For example, in recent years, Al-Mazyunah was completely equipped with such services as road networks, telecommunications, sewage, electricity, and water. We also mention a 30-year tax holiday, customs exemptions, the absence of minimum capital requirements, and 100% foreign ownership. The omanisation rate of only 10% is also a significant incentive. Moreover, it is easy for our non-GCC investors to get visas and residency permits. Finally, investors in Al-Mazyunah Free Zone can easily employ Yemeni workers because Yemenis are not required to have entry visas.
