Internet Marketing in Saudi Arabia Term Paper

Internet Marketing in Saudi Arabia

Today, Saudi Arabia is one of the most affluent nations on earth and enjoys a large percentage of the world’s known petroleum reserves. In addition, the number of Internet users and providers continue to increase regularly. In this environment, Internet marketing appears to represent a potential marketplace for virtually any export-minded enterprise anywhere in the world, but there are a number of factors involved in Internet marketing in Saudi Arabia that must be taken into account. The objectives of the study were four-fold and sought to identify current trends and patterns in Internet usage by Saudi consumers; what gender factors must be taken into account by international Internet marketers seeking to establish an online presence in the Kingdom of Saudi Arabia today and in the future; what cross-cultural factors must be taken into account by international Internet marketers seeking to establish an online presence in the Kingdom of Saudi Arabia today and in the future; and what opportunities exist – if any – for Internet marketers in Saudi Arabia today? To this end, a qualitative and quantitative analysis of the relevant peer-reviewed and scholarly literature and government and non-government statistics concerning Internet usage trends in Saudi Arabia was conducted, and a summary of the research together, conclusions and recommendations are provided in the concluding chapter.

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Chapter 1: Introduction

Background of the Problem

Objectives of Study

Importance of Study

Scope of Study

Rationale of Study

Overview of Study

Chapter 2: Review of Related Literature

Chapter 3: Methodology

Description of the Study Approach

Data-gathering Method and Database of Study

Chapter 4: Data Analysis and Results

Chapter 5: Summary, Conclusions and Recommendations

Identifying Internet Marketing Opportunities in Saudi Arabia: A Qualitative and Quantitative Analysis

Chapter 1: Introduction

The Age of Information has created a marketplace in which geographic boundaries have become virtually obsolete. The free flow of electronic information across political borders has contributed to the growth of this “Age of Information Age” and the global economy alike. From an international perspective, though, various governments have established Internet restrictions on its use for various reasons, from political to religious to economic (Vitale, 2002). Among the most prominent of these countries is desert kingdom of Saudi Arabia which enjoys a large percentage of the world’s known petroleum reserves, but which remains mired in a stagnated state in terms of its economic diversity as well as educational and employment opportunities for women. Indeed, at first blush, the Kingdom of Saudi Arabia would appear to represent a veritable gold mine for Internet marketers, but the literature quickly makes it clear that there is much to be considered in any such initiative and these issues form the basis for this study discussed further below.

Background of the Problem

Today, Saudi Arabia is one of the most affluent nations on earth and the number of Internet users and providers continue to increase regularly. In this setting, Internet marketing would appear to represent a potential marketplace for virtually any export-minded enterprise anywhere in the world, but there is more involved in Internet marketing in Saudi Arabia than many observers might think. For example, although the country enjoys enormous oil revenues, fully 90% of its economy is based solely on this product and much of this wealth does not reach the average Saudi citizen in substantive ways. The Saudi government continues to pursue economic reform and diversification, particularly since Saudi Arabian membership in the World Trade Organization took place in December 2005, and the country’s leadership encourages foreign investment in the kingdom; however, a rapidly growing population, aquifer depletion, and an economy largely dependent on petroleum output and prices remain ongoing governmental concerns (Saudi Arabia, 2008). There are also important religious, language and gender-related issues involved in formulating Internet marketing plans for Saudi Arabia that must be taken into account, and these issues relate to the objectives of the study which are discussed further below.

Objectives of Study

The objectives of the study were four-fold and were guided by the following research questions:

What are the current trends and patterns in Internet usage by Saudi consumers?

What gender factors must be taken into account by international Internet marketers seeking to establish an online presence in the Kingdom of Saudi Arabia today? In the future?

What cross-cultural factors must be taken into account by international Internet marketers seeking to establish an online presence in the Kingdom of Saudi Arabia today? In the future?

What opportunities exist – if any – for Internet marketers in Saudi Arabia today?

Importance of Study

Perhaps as no other nation on earth, the importance of the Saudi market to Internet marketers cannot be overstated; nevertheless, there are some profound challenges involved in the use of the Internet by both online marketers as well as many Saudi citizens that will undoubtedly affect how, where and why potential consumers make a purchase decision online rather than in a traditional brick-and-mortar environment. The research will show that there are some specific cultural, religious, linguistic and legal factors that adversely affect the ability of some Internet marketers to communicate freely with potential consumers in Saudi Arabia, and although things are changing, these changes are proceeding at a snail’s pace and many constraints remain firmly in place today. Identifying these constraints and any concomitant opportunities that might go hand-in-hand with them therefore represents a timely enterprise and represents the focus of this study.

Scope of Study

Although the study extended its scope to include an examination of how the Internet is being used around the world, there was a specific focus throughout on how the Internet is being used, and regulated, in the Kingdom of Saudi Arabia.

Rationale of Study

Identifying potential Internet marketing opportunities in Saudi Arabia today just makes good business sense. In October 2005, Saudi Arabia gained membership to the World Trade Organization (WTO) following 12 years of lengthy negotiations. This accession to the international trade body represented a milestone that many observers expect to have a dramatic impact on international commerce as it opens the kingdom’s long-protected economy to outside competitors (Idris, 2007). The number of Internet users and providers in Saudi Arabia has also increased significantly in recent years, and most educated Saudis now enjoy regular access to modern communications of all sorts (Cordesman, 2003). In this environment, it is reasonable to expect that there are going to be opportunities available for the well informed, and this also represents the rationale of this study.

Overview of Study

This study used a five-chapter format to achieve the above-stated research objectives. In this regard, chapter one introduced the topic under consideration, a statement of the problem, the purpose and importance of the study, as well as its scope and rationale. Chapter two provides a critical review of the relevant and peer-reviewed literature, and chapter three presents the study’s methodology, a description of the study approach, the data-gathering method and the database of study consulted. Chapter four is comprised of an analysis of the data developed during the research process and chapter five presents the study’s conclusions, a summary of the research and salient recommendations for Internet marketers seeking to do business in Saudi Arabia today.

Chapter 2: Review of Related Literature

Background and Overview.

Just a decade or so ago, the Internet was regarded as a mere curiosity and a luxury at that by many consumers. By sharp contrast, today, the Internet is regarded as “an appliance of everyday life” and is accessible in varying degrees all over the world (Shabas, 1999, p. 27). The introduction of the Internet and various computer-based applications has fundamentally changed the way businesses and governments operate, and many observers now view the Internet as a vehicle by which companies can increase their market share and reach the increasingly globalized marketplace. Indeed, there has been an enormous investment on the part of domestic and foreign companies alike that compete on the Internet to attract potential customers to their Web sites and ensure a level of trust exits once they get there.

Assuming an otherwise-level playing field, almost any type of business can benefit from the Internet in a variety of ways besides marketing, but the trends are clear and an increasing number of consumers are electing to forego the long lines at the counter, high gas prices and brutal traffic to shop online rather than in a brick-and-mortar outlet. Indeed, analysts estimate that around 30% of all commercial transactions were conducted online in 2006 (Halal). The larger multinational firms are also developing increasingly sophisticated Web-based marketing tools and intranets to assist them in managing their global operations, and business-to-business (B2B) has become the standard rather than the exception in recent years because of these innovations in Internet-based technologies. Today, some analysts estimate that worldwide business-to-business e-commerce grew from $145 million in 1999 to $7.29 trillion in 2004 (Orr, 2004).

The results of a study by Martin and Hafer (2002) found that the introduction of the Internet has been especially important for the purchasing function for most businesses today. According to these authors, “The primary impact of the Internet revolution on purchasing is to break the time- and location-bound aspects of traditional ‘gravitational commerce.’ Purchasing agents can place orders, gather information, and communicate with different organizations from any place at any time” (Martin & Hafer, p. 41). Following the introduction of the Internet, many purchasing departments and purchasing representatives were better able to engage in direct communications, order taking and fulfillment as well as the provision of technical support with their business counterparts abroad (Martin & Hafer, 2002). These authors add that, “The Internet permits immediate and virtually free (to the user) two-way communications with as many or as few others as needed. In addition to text information (e-mail), it now permits audio (voice-mail) and video (video-mail) communications as well” (Martin & Hafer, 2002, p. 42).

Based on the meteoric growth of Internet for marketing purposes in recent years, though, these authors also expect that the use of electronic purchasing to facilitate B2B commerce will continue to grow in exponential ways in the years to come as well. Based on data collected by Forrester Research Inc., Martin and Hafer note that, “B2B commerce accounted for 78% of the dollar value of cybertransactions in 1998 and resulted in exchanging an estimated $17 billion in goods and services. Forrester Research also prophesizes that B2B commerce revenues will reach $2.7 trillion by 2004, with more than 74% of those revenues coming from new e-marketplaces and B2B portals” (Martin & Hafer, 2002, p. 42). The benefits from Internet usage are apparent; however, the ultimate impact of these current trends remains unclear in some parts of the world where powerful cultural, religious and legal forces remain firmly in place. Even in highly regulated Internet environments, though, the light is beginning to shine in and as De Chatel and Hunt (2003) also point out, because of the Internet, “Niche retailing is becoming increasingly important. As people get tired of global retailing, brands like Saks have become ubiquitous; they just keep on expanding, most recently into Saudi Arabia” (pp. 171-172).

It is important also to note current trends in Internet usage in terms of whether to target Saudi consumers or businesses. In this regard, Honeycutt and his associates point out, though, “Customers today order both consumer products and standard business-to-business (B2B) goods over the web. This type of economic transaction is faster, less costly, and impacts the roles played by the sales manager and the sales force” (p. 8). As these authors add, though, these changes are of such recent origin that their eventual impact remains unclear. Nevertheless, companies of all sizes are embracing the Internet as a marketing tool and even small- to medium-sized enterprises are reaping the benefits of powerful customer relationship management (CRM) software applications that allow them to better target the specific market segments they want and monitor the effectiveness of various marketing initiatives over time. According to Honeycutt et al. (2003), “Technology is changing the way people live, work, and think. While technology is impacting manufacturing processes and medical services at a rapid pace, other technological forces – the Internet, communications, and customer relationship management – are modifying global sales force management” (p. 8). As Shabaz (1999) noted early on, making any accurate estimates of current Internet usage are extremely difficult at a given point in time, though, because these data change daily and even hourly. In this regard, Shabaz emphasizes that, “Due to the explosive growth of the Internet, information scientists can only give approximations of how many connections exist. Because of the network’s expansion, it has essentially ‘deterritorialized’ the globe by making it one connected entity without defined borders” (p. 27). Indeed, the “information superhighway” represented by the Internet has created an entirely new marketing environment where small- to medium-sized enterprises can compete on equal footing with their major counterparts in many ways, and these issues are discussed further below.

Internet Marketing.

Although many observers suggest that the Internet remains in its relative infancy because it arrived virtually overnight (which in fact it did), more and more is being learned about its impact on how companies compete in an increasingly globalized marketplace. In this regard, Stone and Mccall (2004) suggest that not only has the Internet changed the way many people go about earning a living and interacting socially with others, “Without doubt, the Internet is also changing fundamentally the dynamics of competition. Investors can buy and sell shares on the Internet from New York, U.S., to Taipei, Taiwan, and Christmas shoppers can buy toys at eToys. It is also an increasing source of information for marketing decisions through the various search engines like AltaVista and Google” (p. 20). On of the major ways in which the dynamics have changed in how marketers are using customer information that can be gleaned from Internet use.

For example, in order to take advantage of the statistical data that can be discerned from customer use of the Internet, companies began collecting personal information on “surfers” that visited their Web sites as soon as the technology became available. Recent innovations in technology have made it far easier and less expensive to collect, store, retrieve, and analyze consumer data (Shabaz). According to this author, “Companies can use this information to target and maintain customers, or can organize this information into customer lists to be sold to third parties. These customer lists have become valuable resources for companies” (Shabaz, p. 27).

Such customer relationship management, or CRM, data provides Internet marketers with the ability to custom tailor their Web advertisements to target potential customers more efficiently than traditional advertisements (Shabaz). While the use of this information in this fashion has been the source of controversy concerning privacy issues and so forth, the fact remains that companies using such CRM applications will enjoy a significant competitive edge over those that do not and it is reasonable to suggest that their use will continue in the foreseeable future where such practices are allowed (Shabaz).

Cross-Cultural Constraints and Factors to Consider.

The Saudi people are much like their counterparts in other parts of the world where the Internet has been received with such great fanfare. They want access to it and they want it now. According to an analysis of the Internet’s impact on the kingdom early on, Smith (1998) reports that, “Throughout the country and neighbouring states the prospect of the Internet coming officially to Saudi Arabia has created a buzz of excitement among potential advertisers. Industry sources say there are nearly half a million computers in the Kingdom, and this number is expected to increase rapidly once the cost of international connections comes down. Already some 30,000 Saudis have applied for Internet use” (p. 23).

The implications of the “applied for” observation may escape many Western observers, but the application process is just the beginning of the fundamental differences that exist in how, where and why the Internet is used in Saudi Arabia and elsewhere in the world. In spite of enormous wealth from oil production, Saudi Arabia remains a developing economy based on its current per capita GDP of $20,700 (2007 est.) (Saudi Arabia, 2008). There are signs that things are changing in Saudi Arabia in ways that will affect the Internet in profound ways in the years to come, but virtually all analysts emphasize that such change will take place slowly and perhaps not even surely. According to Idris, “As a member of the World Trade Organization since 2005, the long-protected Saudi economy is now facing international competition. Cultural and religious traditions have made the economy dependent on foreign labor, especially in vital, skilled technical and professional positions. Most Saudis want to be managers, not computer programmers or members of other professions” (Idris, p. 36).

The implications of increased Internet marketing in Saudi Arabia will include the impact on the kingdom’s economy, certainly, but it will also impact in important ways on Saudi Arabia’s culture as well. According to Callister and Burbules (2004), “The notion that the Internet is somehow awash in pornography, child molesters, and bomb-making directions is an alarmist characterization that has been foisted upon parents and the public, neither of whom typically has much direct understanding or experience with the Internet. Thus it tends to be regarded overall as strange and threatening” (p. 648).

In this regard, Idris reports, “The need to restrict imports of certain things like pork and pornography that are prohibited by both cultural mandates and Islamic teachings must be addressed. Joining the WTO means that the kingdom’s culture will need to be immersed in the melting pot of Western culture, and the ability to implement regulatory decisions based on social, religious, or cultural issues will be restricted. In addition, small businesses that are currently providing a wealth of employment opportunities for the Saudis may suffer from competition from more experienced international companies” (p. 37). As Shapiro (1998) points out, “Saudi Arabia, for example, did not give its citizens online access until it had effectively tinkered with the code of the Net to filter out all ‘objectionable’ material” (p. 14).

According to Thierer and Crews (2003) the Saudi government continues to employ various firewalls, filters, and other devices to block and censor the Internet that will undoubtedly affect any Internet marketing initiative. In fact, these authors report that, “Among the strictest enforcers of Internet censorship are Bahrain, China, Iran, Kuwait, Saudi Arabia, Vietnam, and Yemen, each of which actively blocks Web sites for government purposes. Although these governments often claim that their censorship is necessary for reasons such as protecting public morality, in each case the government controls clearly extend to stifling political dissent and opposition” (Thierer & Crews, pp. 4-5).

Moreover, high context cultures such as Saudi Arabia’s frequently rely on interpersonal communications more than technological alternatives, a cultural factor that represents a barrier to technological diffusion (Shabazz). This observation is congruent with Smith (1998) who suggests, “While the debate about Saudi Arabia’s opening to the global economy is intensifying, the maturity and long experience of some of its key merchant families and corporate players is likely to provide a solid basis for expansion both at home and abroad within the next few years” (p. 23).

There are some important gender-related issues to take into account in any analysis of Internet marketing opportunities in Saudi Arabia today. For example, the literacy rates for women in Saudi Arabia remain dismally low compared to their male counterparts (as discussed further in chapter four below). Saudi women continue to be forbidden from taking part in many activities that women elsewhere in the world, including most parts of the Arab World, might take for granted, including driving and voting (Daly, 2005).

In this environment and notwithstanding the blocking and censorship issues discussed above, it is little wonder that many Saudi women have embraced the Internet in such a major fashion when it is available to them. In this regard, Daly advises, “They [Saudi women] have leapt at the chance to participate in the stock market. In the national workforce as a whole, women account for just 6% of the number. This paltry figure is largely because of a law called ikhtilat, which is a strict prohibition against a mixing of the sexes, unless they are married or family members. As a result of ikhtilat, there is a sometimes rocky road ahead for many women trying to gain employment outside of the home” (p. 44).

The Internet holds particular advantages for females in Saudi Arabia today for other reasons as well, most particular of which is one of sheer logistics. According to Thierer and Crews, “In countries where individual access to the Internet is rare, government agents are assigned to monitor activity at Internet cafes, literally watching which sites customers visit. When unapproved Internet use becomes frequent, cafes can be closed, ostensibly for allowing Internet users to access ‘immoral’ materials. In Saudi Arabia, where the government has closed a number of Internet cafes, those established for women have been specifically targeted as being used for ‘immoral purposes'” (p. 5). As Daly emphasizes, “The problem is compounded by the fact that while they remain banned from driving, women find it hard to get around anyway. The result of such restrictions on their freedom of movement is perhaps the best explanation for why women have so readily embraced online trading. As long as one has a computer and Internet access at home, there are few reasons not to attempt to make an income for themselves and their families” (emphasis added) (p. 44). Even here, though, women in Saudi Arabia are prohibited from making online purchases outright in their own names and must rely in the male head of household to complete any online transaction. Females that impersonate a male head of households to effect online purchases run the risk of government intervention (Daly). According to this author:

Photo ID cards of one type or another are compulsory for everyone in Saudi Arabia, with foreigners being obliged to carry an Iqama, which works as a combination ID card and work permit. Saudi women have only been entitled to possess an ID card of their own since 2001, but these can still only be issued if a male guardian makes the application on the woman’s account. To date, only limited numbers of women have applied for a card of their own, partly because most are still unwilling to have a photograph showing them without a veil. As a result, the majority of ID cards are for a complete family and carry the details of all wives and children…. Thus many women find they are being denied their rights by their unscrupulous, legal guardians. (Daly, p. 45)

Despite these constraints, there are some signs that things are changing. For example, female-administered educational courses are growing as quickly as some of the more popular stocks in Saudi Arabia today and besides managing courses that teach about the workings of a stock market, a number of courses are now being offered that are intended to teach Saudi women computer literacy and computer programming, how to establish and operate a home-based business, bookkeeping skills, capital generation, marketing and advertising (Daly).

Yet another issue has emerged from these trends that has been adversely impacted by gender-related policies in place in Saudi Arabia. While the number of courses for Saudi women has increased in recent years, there is an increasing dearth of qualified female instructors to administer them as well. While the Saudi government has discussed various initiatives for ensuring that more Saudi women are able to qualify to teach as well as participate in learning these skills, many women report that the kingdom’s leadership is not doing nearly enough when it comes to satisfying the enormous demand that currently exists throughout the country (Daly). In sum, Daly suggests that, “Whatever the government’s intent, there are sure signs that the number of women tutors is on the rise” (p. 45).

As can be readily seen in Figure __ below, there are some important cultural differences that exist between the Arab World, including Saudi Arabia, and Internet marketers in the West in say, the United States.

Figure ____. Hofstede’s Five Cultural Dimensions: The Arab World and the U.S.


1) ‘Arab World’ = Egypt, Iraq, Kuwait, Lebanon, Libya, Saudi Arabia, United Arab Emirates

2) Hofstede Cultural Dimensions:

PDI = Power Distance Index

IDV = Individualism

MAS = Masculinity

UAI = Uncertainty Avoidance Index

LTO = Long-Term Orientation

Source: Hofstede, 2008 at

While there remains a paucity of timely studies of Saudi Arabian culture, the studies to date suggest that the kingdom has a relatively homogenous culture similar to that in the majority of Middle Eastern nations; this homogenous quality is due in large part to the fundamental impact of Islamic teachings on Saudi society. As Idris emphasizes, “Islam infiltrates in all aspects of life in Saudi Arabia, and there is a strong marriage of Islam and state. Islam influences all decisions for Arabs including business decisions” (emphasis added) (p. 37).

Furthermore, a sense of fatalism represents a fundamental aspect of life in the Middle East, and the vast majority of Saudi citizens continue to believe that the ultimate fate of the environment rests in the hands of God alone (Idris, 2007). As can readily be seen in Figure ____ above, the cultures of the United States and Saudi Arabia contrast sharply in terms of the Power Distance Index and Individualism. According to Idris, “Where Saudis believe their proverb that says, ‘There is something good in every delay,’ unforeseen delays are unacceptable excuses in the Western world. It should be noted, however, that the issue is not with the belief itself but rather with people’s misguided interpretations of the belief and Islam teachings” (Idris, p. 38).

Although Islam teaches that ultimate control is in the hands of God, it also teaches that people should make every effort to do their best at everyday activities in an effort to improve the condition of their lives (Idris). According to Bhuian and his colleagues (2001), misguided interpretations of these teachings have had a significant influence on the business environment in Saudi Arabia as well as on the commitment to setting and meeting goals and targets in the kingdom; moreover, accountability in business operations remains weak, and it is not uncommon to attribute business mistakes to fate (Bhuian et al.). In addition, based on his study of business practices in Saudi Arabia today, Idris found that many Saudis prefer to do business with friends and associates rather than unknown marketers; in addition, Arabic is the official language of Saudi Arabia and English remains the second language of the kingdom, and the vast majority of Web site content continues to be provided in English-only formats.

Even with the rise of technical abilities to filter the information one places on the Internet according to viewers’ locations, overseas sites may still be reluctant to comply with local Saudi governments’ demands for change. In this regard, Thierer and Crews emphasize that, “Rather than writing off, say, Saudi Arabia as an Internet destination for fear of legal liability, an online newspaper might continue to make itself available there anyway, figuring that without in-country assets or other countries willing to enforce its judgments, there is little Saudi Arabia can do to call the newspaper to account (p. 27). While some Internet marketers might be tempted to “slip something by” the Saudi authorities, the kingdom is highly organization and prepared to deal with such attempts in potentially harsh ways. According to Thierer and Crews, Saudi Arabia has implemented a comprehensive nationwide regimen by which Internet destinations that are considered to violate local law or convention are made unavailable to resident Internet users. As these authors emphasize:

In Saudi Arabia, all Internet traffic in the country is routed through a proxy server at the country’s Internet Services Unit, the staff of which maintains a list of sites to be filtered, acting both to apply filtering criteria promulgated by the state and on specific filtering requests from individual state agencies. The fact of filtering and some general descriptions of the criteria are available on the Internet Services Unit’s Web site, and thousands of sites — “including anonymizers and translators that might themselves be easy launching pads to otherwise-blocked sites — “are blocked. (Thierer & Crews, p. 228)

There are also restrictions on what type of content that surveys can contain when soliciting feedback from Saudi consumers. For example, Stone and Mccall (2004) report that, “Questions concerning alcohol have to be left out of surveys in Saudi Arabia” (p. 95).

In addition, Saudi Arabia prohibits publishing or even accessing various types of online speech, including “anything contrary to the state or its system,” “news damaging to the Saudi Arabian armed forces,” “anything damaging to the dignity of heads of states,” “any false information ascribed to state officials,” “subversive ideas,” and “slanderous or ibelous [sic] material” (quoted in Thierer & Crews at p. 228). Moreover, all of the country’s Internet service providers (ISPs) are networked to a ground-floor room at the Riyadh Internet entranceway; there, all of the kingdom’s Web activity is saved in enormous cache files and later analyzed for offensive or sacrilegious material prior to its release to individual Internet users. According to these authors, “The central servers are configured to block access to ‘sensitive’ sites that might violate ‘the social, cultural, political, media, economic, and religious values of the Kingdom'” (quoted in Thierer & Crews at p. 228). In this regard, a number of foreign Web sites have received special scrutiny and blocking, including the Movement for Islamic Reform in Arabia (an organization headquartered in the United Kingdom); in addition, authorities in Saudi Arabia have also promulgated a fatwa against the seemingly innocuous children’s gaming site, Pokemon, based on their assertions that the popular children’s games and cards “possess the minds of children while promoting gambling and Zionism” (Thierer & Crews, p. 228).

The elements of the international marketing environment are inter-linked and do not exist in isolation. The global economy could not exist to any degree without the technology that makes it possible; pressure from the market provides incentives for further technological innovation. Many markets previously closed by regulation and public control have been prised open as a result of political action” (Stone & Mccall, p. 25). Taken together, the foregoing cross-cultural factors suggest that some products and services are better suited to the Saudi market and those Internet marketers wanting to sell fine wines or classic etchings would be well advised to pursue their enterprise elsewhere while the Saudi marketplace continues to be “prised open as a result of political action.” The foregoing also suggests that some marketers, such as those specializing in online educational service delivery, are well situated to take advantage of existing niche opportunities that do exist in Saudi Arabia. Beyond these considerations is the decision as to whether to pursue Saudi consumers or Saudi business or governmental agencies as customers. While the same cross-cultural factors would likely affect the interchanges between the parties involved, the type of messages that would need to be communicated in these various settings would also be vastly different from each other.

Chapter Summary.

This chapter provided an introduction to the literature review, an overview of Internet marketing and some important cross-cultural constraints and factors that must be taken into account when formulating Internet marketing initiatives. A complete description of the study’s methodology is provided in chapter three and an analysis and interpolation of relevant demographic, economic performance and Internet usage data is provided in chapter four below.

Chapter 3: Methodology

Description of the Study Approach

This study used an exploratory study approach that employed both qualitative and quantitative elements. A mixed methodology frequently provides researchers with a better picture of the topic under investigation (Neuman, 2003). The study proceeded in a step-wise fashion following the outline provided by Gratton and Jones (2003) shown in Figure __ below.

Figure ____. Research steps recommended by Gratton and Jones.

Source: Gratton & Jones, p. 32.

Data-gathering Method and Database of Study

The data-gathering method used by this study consisted of a review of the relevant peer-reviewed and scholarly literature and a review and interpolation of existing statistical data concerning demographic, economic performance and Internet usage in Saudi Arabia today to identify key trends and opportunities for Internet marketing initiatives. This approach is highly congruent with a number of social researchers that emphasize the need for such a review as part of any meaningful research enterprise today. For example, according to Gratton and Jones (2003), a critical review of the relevant literature is an essential element in all research. As these authors point out:

No matter how original you think the research question may be, it is almost certain that your work will be building on the work of others. It is here that the review of such existing work is important. A literature review is the background to the research, where it is important to demonstrate a clear understanding of the relevant theories and concepts, the results of past research into the area, the types of methodologies and research designs employed in such research, and areas where the literature is deficient. (Gratton & Jones, p. 51)

Likewise, Wood and Ellis (2003) identified the following as important outcomes of a well conducted literature review:

It helps describe a topic of interest and refine either research questions or directions in which to look;

It presents a clear description and evaluation of the theories and concepts that have informed research into the topic of interest;

It clarifies the relationship to previous research and highlights where new research may contribute by identifying research possibilities which have been overlooked so far in the literature;

It provides insights into the topic of interest that are both methodological and substantive;

It demonstrates powers of critical analysis by, for instance, exposing taken for granted assumptions underpinning previous research and identifying the possibilities of replacing them with alternative assumptions;

It justifies any new research through a coherent critique of what has gone before and demonstrates why new research is both timely and important.

Likewise, Silverman (2005, p. 300) suggests that a literature review should aim to answer the following questions:

What do we know about the topic?

What do we have to say critically about what is already known?

Has anyone else ever done anything exactly the same?

Has anyone else done anything that is related?

Where does your work fit in with what has gone before?

Why is your research worth doing in the light of what has already been done?

Chapter 4: Data Analysis and Results

Data Analysis


Current Estimates


Note: includes 5,576,076 non-nationals (July 2008 est.)

Age structure:

0-14 years: 38.1% (male 5,469,641/female 5,258,508)

15-64 years: 59.5% (male 9,467,325/female 7,284,077)

65 years and over: 2.4% (male 355,173/female 326,693) (2008 est.)

Median age:

total: 21.5 years male: 22.9 years female: 19.7 years (2008 est.)

Population growth rate:

1.945% (2008 est.)

Birth rate:

28.83 births/1,000 population (2008 est.)

Death rate:

2.52 deaths/1,000 population (2008 est.)

Net migration rate:

6.86 migrant(s)/1,000 population (2008 est.)

Sex ratio:

at birth: 1.05 male(s)/female under 15 years: 1.04 male(s)/female

15-64 years: 1.3 male(s)/female

65 years and over: 1.09 male(s)/female total population: 1.19 male(s)/female (2008 est.)

Table ____.

Saudi Demographics.

Source: Saudi Arabia, 2008.


Current Estimates

Ethnic groups:

Arab 90%, Afro-Asian 10%


Muslim 100%




definition: age 15 and over can read and write total population: 78.8% male: 84.7% female: 70.8% (2003 est.)

Table ____.

Saudi Religious, Ethnic, Languages and Literacy Rates.

Source: Saudi Arabia, 2008.

Standard Arabic is the official language of Saudi Arabia, but the other variants listed below are also prominent.



Arabic, Gulf Spoken

200,000 in Saudi Arabia. Northern and southern Eastern Province. Alternate names: Gulf Spoken. Dialects: Al-Hasaa.

Arabic, Hijazi Spoken

6,000,000 in Saudi Arabia (1996). Dialects: North Hijazi, South Hijazi, Valley Tihaamah, Coastal Tihaamah. North Hijazi has 4 subdialects, South Hijazi has 16.

Arabic, Najdi Spoken

8,000,000 in Saudi Arabia. Some dialects are spoken by Bedouins.

Egyptian Spoken Arabic



Table ____.

Languages of Saudi Arabia.

Source: Gordon, 2005.


Current Estimates

GDP (purchasing power parity):

572.2 billion (2007 est.)

GDP (official exchange rate):

374.5 billion (2007 est.)

GDP – real growth rate:

4.7% (2007 est.)

GDP – per capita (PPP):

20,700 (2007 est.)

GDP – composition by sector:

agriculture: 3% industry: 61.8% services: 35.2% (2007 est.)

Agriculture – products:

wheat, barley, tomatoes, melons, dates, citrus; mutton, chickens, eggs, milk


crude oil production, petroleum refining, basic petrochemicals, ammonia, industrial gases, sodium hydroxide (caustic soda), cement, fertilizer, plastics, metals, commercial ship repair, commercial aircraft repair, construction

Exports – partners:

Japan 17.7%, U.S. 15.8%, South Korea 9%, China 7.2%, Taiwan 4.6%, Singapore 4.4% (2006)


82.77 billion f.o.b. (2007 est.)

Imports – commodities:

machinery and equipment, foodstuffs, chemicals, motor vehicles, textiles

Imports – partners:

US 12.2%, Germany 9.1%, China 7.9%, Japan 7.3%, UK 4.8%, Italy 4.8%, South Korea 4.1% (2006)

Table ____.

Saudi Economic performance.

Source: Saudi Arabia, 2008.


Current Estimates

Telephones – main lines in use:

4.5 million (2006)

Telephones – mobile cellular:

19.663 million (2006)

Telephone system:

general assessment: modern system domestic: extensive microwave radio relay, coaxial cable, and fiber-optic cable systems; mobile-cellular subscribership has been increasing rapidly international: country code – 966; landing point for the international submarine cable Fiber-Optic Link Around the Globe (FLAG) and for both the SEA-ME-WE-3 and SEA-ME-WE-4 submarine cable networks providing connectivity to Asia, Middle East, Europe, and U.S.; microwave radio relay to Bahrain, Jordan, Kuwait, Qatar, UAE, Yemen, and Sudan; coaxial cable to Kuwait and Jordan; satellite earth stations – 5 Intelsat (3 Atlantic Ocean and 2 Indian Ocean), 1 Arabsat, and 1 Inmarsat (Indian Ocean region)

Radio broadcast stations:

I am 43, FM 31, shortwave 2 (1998)

Television broadcast stations:

Internet hosts:

Internet users:

4.7 million (2006)

Table ____.

Saudi Telephone and Internet Usage.

Source: Saudi Arabia, 2008.


Population, total*

Population growth (annual %)

Life expectancy at birth, total (years)

Table ____.

Saudi Population and GDP.

Source: World Bank, 2008.

Figure ____. Saudi Population, total: 2000-2006 (in millions).

Source: Based on tabular data in Saudi Arabia at p. 3.

Figure ____. Saudi Population growth: 2000-2006 (annual percentage).

Source: Based on tabular data in Saudi Arabia at p. 3.

Figure ____. Saudi Life expectancy at birth total (years): 2000-2006.

Source: Based on tabular data in Saudi Arabia at p. 4.


GDP (current U.S.$)**

GDP growth (annual %)

Inflation, GDP deflator (annual %)

Agriculture, value added (% of GDP)

Industry, value added (% of GDP)

Services, etc., value added (% of GDP)

Exports of goods and services (% of GDP)

Imports of goods and services (% of GDP)

Table ____.

Saudi Economy.

Source: World Bank, 2008.

Figure ____. Saudi GDP: 2000-2006.

Source: Based on tabular data in World Bank at p. 2.

Figure ____. Saudi GDP growth (annual percentage): 2000-2006.

Source: Based on tabular data in World Bank at p. 2.

Figure ____. Saudi Inflation Rate: 2000-2006.

Source: Based on tabular data in World Bank at p. 2.

Figure ____. Saudi Agriculture (% of GDP): 2000-2006.

Source: Based on tabular data in World Bank at p. 2.

Figure ____. Saudi Industry (% of GDP): 2000-2006.

Source: Based on tabular data in World Bank at p. 2.

Figure ____. Saudi Services (% of GDP): 2000-2006.

Source: Based on tabular data in World Bank at p. 2.

Figure ____. Saudi Exports of Goods and Services (% of GDP): 2000-2006.

Source: Based on tabular data in World Bank at p. 2.

Figure ____. Saudi Imports of Goods and Services (% of GDP): 2000-2006.

Source: Based on tabular data in World Bank at p. 2.


Fixed-line and mobile subscribers (per 100 people)

Internet users (per 100 people)

High-technology exports (% of manufactured exports)

Table ____.

States and market

Figure ____. Saudi Fixed-Line and Mobile Subscribers: 2000-2006.

Source: Based on tabular data in World Bank at p. 4.

Figure ____. Saudi Internet Users (per 100 people): 2000-2006.

Source: Based on tabular data in World Bank at p. 4.

Figure ____. Saudi High-Technology Exports (percentage of manufactured exports): 2000-2006.

Source: Based on tabular data in World Bank at p. 4.


Merchandise trade (% of GDP)

Table ____.

Saudi Global links.

Figure ____. Saudi Merchandise Trade (percentage of GDP):


Source: Based on tabular data in World Bank at p. 4 millions billions


Current Estimates

World Rank

Broadband subscribers

64th of 117] per capita)

874.415 per 1 million people

92nd of 146]

Country code sa


84th of 227] per capita)

472.815 per 1 million people

124th of 203]

International Internet bandwidth > Mbps

750 Mbps

61st of 167] per $ GDP)

2.996 Mbps per $1 trillion of 118th of 184] per capita)

33.29 Mbps per 1 billion people

87th of 188]

Internet Service Providers

44th of 229] per capita)

0.000832766 per 1,000 people

132nd of 215] per capita)

0.998 per 1 billion people

2nd of 196]

Livejournal users

117th of 226]

Price basket for Internet > U.S.$ per month

21.33 $/month

98th of 180]

Secure Internet servers

59th of 183] per capita)

3.331 per 1 million people

113rd of 189]

Table ____.

Internet Usage and Provider Statistics.

Source: NationMaster, 2008.




Table ____.

Internet Growth and Population Statistics.

Source: Saudi Arabia Internet Usage and Marketing Report, 2007.

Figure ____. Saudi Internet Users: 2000-2007.

Source: Based on tabular data in Saudi Arabia Internet Usage and Marketing Report at p. 3.

Figure ____. Saudi Internet Users as a Percentage of Population: 2000-2007.

Source: Based on tabular data in Saudi Arabia Internet Usage and Marketing Report at p. 3.

Finally, a recapitulation and summary of key press releases from the Royal Embassy of Saudi Arabia in Washington, DC, is provided in Table ____ below.

Key Points

October 13, 1998

Internet providers to be announced soon President of the King Abdul Aziz City for Science and Technology (KACST) Dr. Saleh Abdulrahman Al-Athel said today that the names of the licensed Internet service providers (ISPs) will be announced on October 19, 1998. He added that 41 companies had completed the procedures to receive an ISP license. Local access to the Internet was expected to be launched by the end of the year, during the Islamic month of Ramadan. The private-sector Saudi Telecommunications Company (STC) will link ISPs with the Internet facility at KACST.

Kingdom’s Internet services expanding

Since the Internet was introduced to the Kingdom in 1999, the number of subscribers has grown by more than 160%. In a recent seminar, Minister of Commerce Osama Faqih reported that Saudi Arabia is now in the top five Arab countries in terms of Internet growth. Plans are underway by the Saudi Telecommunications Company (STC) to triple the number of subscribers this year, by increasing the number of telephone lines available. In January, Lucent Technologies was awarded a U.S. $35 million contract for this purpose.

Saudi Telecom cuts Internet charges

Saudi Telecommunications Company (STC) announced reductions in charges for data transmission on the Internet. Asymmetric digital subscriber lines (ADSL) that provide unlimited open access to the Internet at ten times the speed of ordinary telephone lines will cost SR 220 [U.S. $58.67] a month after an initial installation fee of SR 300 [$80]. STC has also reduced by 20% the cost of the international link to the Internet via the server at King Abdulaziz City for Science and Technology (KACST); all leased circuits by 45%; links to Internet service providers (ISPs) through the national network by 30%; charges for contact ports by 50%; and installation charges for these services by 70%.

Kingdom’s telephone and Internet costs to be reduced

The Communications and Information Technology Commission (CITC) announced that the Saudi Telecom Company (STC) is reducing charges for domestic telephone calls, with a monthly subscription of SR15 [U.S.$4.0] for a land line, from 40 to 10 halalas (from just over $0.10 to under $.03) per minute. STC is estimated to have more than 13 million customers. Internet charges are also being reduced, by 25%, to SR2.25 [$0.60] an hour for the combined internet service provider (ISP) and contact charges. STC is offering new Internet packages, to come into effect during Ramadan and Shawwal, one of which gives customers direct access for five halalas (just over $0.01) per minute. Mobile phone charges will also be reduced, with two new packages, offering monthly subscriptions of SR45 [$12] and SR35 [$9.40] charging 35 halalas [$0.09] and 45 halalas [$0.12] per minute respectively. Pre-paid mobile calling cards (SAWA) are reduced from SR1.20 [$0.32] to 85 halalas [$0.23] a minute. Text messaging is cut from 30 to 25 halalas [$0.08 to $0.07] per message inside the Kingdom, and from 70 to 60 halalas [$0.19 to $0.16] overseas. Other reductions apply to rented telephone circuits and to calls made from land lines to cell phones.

Table ____.

Recapitulation of Press Releases from Royal Embassy of Saudi Arabia, Washington, DC.

Source: Royal Embassy of Saudi Arabia, Washington, DC, 2008 at


Current estimates place Saudi Arabia’s population at about 28 million people, of which more than five-and-a-half million residents being non-nationals. The age structure of the kingdom shows that it is a relatively young nation with a median age of 21.5 years, with just over 38% of the population being between the ages of 1 and 14 years and almost 60% being between the ages of 15 and 64 years; just 2.4% of the population is aged 65 years or older. The kingdom is also experiencing a sluggish growth rate at just under 2% a year.

Chapter 5: Summary, Conclusions and Recommendations


Bhuian, S., Abdulmuhmin, a., and Kim, D. (2001, March/April). Business education and its influence on attitudes to business, consumerism, and government Saudi Arabia. Journal of Education for Business, 76(4), 226-230.

Callister, T.A., Jr. & Burbules, N.C. (2004). Just give it to me straight: A case against filtering the Internet. Phi Delta Kappan, 85(9), 648.

Cordesman, a.H. (2003). Saudi Arabia enters the twenty-first century: The political, foreign policy, economic, and energy dimensions. Westport, CT: Praeger.

Daly, F. (2005, October). Stocks and shares take off Saudi Arabia: The Saudi Arabian stock market is growing fast, spurred on by a public who have caught the trading bug in a big way, especially women traders. The Middle East, 360, 44.

De Chatel, F. & Hunt, R. (2003). Retailisation: The Here, There and Everywhere of Retail. London: Europa.

Fraenkel, J.R. & Wallen, N.E. (2001). Educational research: A guide to the process. Mahwah, NJ: Lawrence Erlbaum Associates.

Gordon, R.G., Jr. (2005). Ethnologue: Languages of the world (15th ed.). Dallas, TX: SIL International. [Online version]. Available:

Gratton, C., & Jones, I. (2003). Research methods for sport studies. New York: Routledge.

Honeycutt, D., Ford, J.B., & Simintiras, a.C. (2003). Sales management: A global perspective. London: Routledge.

Idris, a.M. (2007). Cultural barriers to improved organizational performance in Saudi Arabia. SAM Advanced Management Journal, 72(2), 36-38.

Martin, T.N., & Hafer, J.C. (2002). Procurement by corporate purchasing agents: Is it all hype? SAM Advanced Management Journal, 67(1), 41-2.

NationMaster. (2008). Saudi Arabia Internet statistics. [Online]. Available:

Neuman, W.L. (2003). Social research methods: Qualitative and quantitative approaches, 5th ed. New York: Allyn & Bacon.

Orr, B. (2004). B2B e-commerce gets a made-for-Internet payment system. ABA Banking Journal, 93(1), 53.

Saudi Arabia. (2008). U.S. government: CIA world factbook. [Online]. Available:

Saudi Arabia Internet usage and marketing report. (2008). Internet growth and population statistics [Online]. Available:

Shabazz, D. (1999). Internet politics and the creation of a virtual world. International Journal on World Peace, 16(3), 27.

Shapiro, a.L. (1999, Summer). The Internet. Foreign Policy, 115, 14.

Smith, P.A. (1998, October). Saudi Arabia. The Middle East, 23.

Stone, M.A. & Mccall, J.B. (2004). International strategic marketing: A[n] European perspective. New York: Routledge.

Thierer, a. & Crews, C.W., Jr. (2003). Who rules the Net? Internet governance and jurisdiction. Washington, DC: Cato Institute.

Vitale, a. (2002). The EU privacy directive and the resulting safe harbor: The negative effects on U.S. legislation concerning privacy on the Internet. Vanderbilt Journal of Transnational Law, 35(1), 321.

Wood, G.D., & Ellis, R.C. (2003). Risk management practices of leading UK cost consultants. Engineering, Construction and Architectural Management, 10(4), 254-62.

World Bank. (2008). Economic Development Indicators. [Online]. Available:

Appendix ____.

Map of Saudi Arabia

Source: World Factbook, 2008.

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