Saudi Arabia is among the leading nations worldwide in date production and market share. This study aims to quantify date marketing cost structure in Saudi Arabia and to identify factors causing variations among cost items using descriptive statistical analysis, ultimately, enhancing the comparative advantage of the Saudi dates in the world market. The study relied on primary data collected randomly from major date market regions in Saudi Arabia, namely, Al-Madinah Al-Munawara, Riyadh, Al-Qassim, and Al-Hasa. Results showed that average date retailing cost was almost double that of date wholesaling cost (SR 8597/ton and 4236/ton, respectively). In general terms, labor costs and storage costs were the major items among date marketing costs. They represented about 44.5% and 31.4% of the average marketing cost, respectively. Results showed, also, some significant variations among average date marketing cost items due to type of marketing channels, regional factor, educational level of date dealers/managers, level of specialty in date merchandizing, and types of other activities carried out by date dealers beside date marketing activity. The study concluded by pointing out the potential to reduce average date marketing cost in Saudi Arabia, ultimately, the potential to enhance the comparative advantage of Saudi dates in the world market.
2. Marketing cost structure of dates in Saudi Arabia: an analytical perspective
Ismaiel et al. 123
A quite number of economic studies have addressed
production and marketing cost of dates. (Al-Abdulkader,
2006) estimated the total production costs of the date
processing industry in Saudi Arabia using the weighted
least square method, based on which, the optimum
production level of the date processing industry and the
profit maximizing production level were estimated and
compared with the actual average production of the
sampled date factories. (Al-Kahtani, et al., 2007) carried
out a full and integrated study that addressed agricultural
marketing problems in Saudi Arabia from the
perspectives of producers, and focused on specific
issues concerning marketing efficiencies including price
levels, marketing margins, evaluation of market
integration, and equilibrium in time and place dimensions.
In addition, he analyzed date marketing, in terms of
dimensions, marketing risks and information. (Al- Duwais,
et al., 2008) analyzed the main factors affecting the
structure and performance of the retail date market in
Riyadh city of Saudi Arabia, and showed that the
structure of the retail date market was in general closer to
full competition, where the values of the Gini coefficient
for concentration, as well as the Herfindahl–Hirschman
values were relatively low. Marketing margin, cost and
net profit varied among outlets. The main solutions
proposed to overcome the problems of the date trade
were to increase consumers’ publicity, increase
manpower recruitment and training. Khushk et al. (2009)
described the structure and operation of dates marketing
system, in Sindh province in Pakistan and quantified
marketing margins of producers and other market
intermediaries. Akhtar et al., (2009) examined the global
competitiveness of Pakistani dates using the revealed
comparative advantage, and found that Pakistan had a
global competitive advantage in date exports. (Ismaiel, et
al., 2009) estimated the long-run cost function of Sukkari
dates and utilized indicators to understand the production
performance of Sukkari dates in Al-Qassim region of
Saudi Arabia using multiple regression analysis. The
economic farm size of Sukkari dates, cost elasticity, and
long run supply function of the dates were then specified.
(Al-Kahtani, 2011) studied the possibility of utilizing new
technologies in information, communication, and
electronic trade systems through the development of
standards and specifications for the quality of the most
important varieties of Saudi dates in the local and global
markets. Using such techniques leads to increase
efficiency and effectiveness, reduces the costs of
providing products, and increases the size of the date
market. He also identified the reality of customary norms
among parties of dates marketing, as well as the
difficulties and obstacles facing the application of e-trade
systems in Saudi Arabia. Benziouche (2014) estimated
the economic function of factors affecting the date
marketing margin, and diagnosed the situation of export
of dates in Algeria through an analysis of trends in
quantity and value, and their structures by variety and
destinations. Ben-Amoret et al., (2015) highlighted the
highly important trade position of Tunisia compared to the
Mediterranean countries, and the decline in this
comparative advantage in the recent years due to
declining competitiveness indices. Al-Abdulkader et al.,
(2016) estimated the marketing efficiency of dates at
different marketing channels in Saudi Arabia, and pointed
out the advantage of improving date marketing efficiency
in achieving an additional 30% of value added to traders
and the national economy of Saudi Arabia, equivalent to
about 6.88 billion SR annually.
This study aims to achieve the following two main
objectives, so as, the potential to enhance the
comparative advantage of the Saudi dates in the world
market:
1.Quantify date marketing cost structure in Saudi Arabia.
2.Identify factors causing variations among date
marketing cost structure in Saudi Arabia.
This study aims, also, to verify the following hypothesis:
1.Most of date marketing costs are incurred in retailing
rather than other marketing outlets.
2.Labor costs and storage costs are the main items of
date marketing cost structure in Saudi Arabia.
3.The relative importance of date storage cost is much
higher in retailing compared to wholesaling.
MATERIAL AND METHODS
The study relied on primary data collected randomly from
298 date dealers representing major date market regions
in Saudi Arabia, namely, Al-Madinah Al-Munawara,
Riyadh, Al-Qassim, and Al-Hasa. The sample
represented all types of date dealers in various date
marketing channels, including, wholesaling, retailing,
wholesaling and retailing, wholesaling, retailing, and
exporting, and exporting. Descriptive statistical analysis
(analysis of variance, correlation analysis, F-test and T-
test, etc.) was utilized to analyze the collected primary
data and to identify the main factors causing variation in
marketing cost structure of dates in Saudi Arabia, namely,
type of marketing channels, regional factor, educational
level of the date dealers/managers, level of specialty in
date merchandizing, and types of other activities carried
out by date dealers beside date marketing activity.
RESULTS AND DISCUSSIONS
Basic Characteristics of Study Sample
The study regions represented in the study sample were
in line with major date market regions in Saudi Arabia.
The study sample contained all trade types, where
retailing, wholesaling and retailing, wholesaling, and
others represented about 43%, 35.6%, 15.8%, and 5.6%
of the total study sample, respectively. About 33.9% of
the study sample had done business in Al-Madinah
3. Marketing cost structure of dates in Saudi Arabia: an analytical perspective
J. Agric. Econ. Rural Devel. 124
Table 1. Average Costs of Date Marketing Services/Facilities in Saudi Arabia (SR/ton).
All marketing
outlets
Retailing,
wholesaling,
and exporting
Retailing and
wholesaling
WholesalingRetailingMarketing
Services/facilities
%SR%SR%SR%SR%SR
44.53313.332.6691.635.21758.539.71681.235.73064.7Labor
8.9663.910.9232.011.2559.811.6492.29.2789.7Transportation
31.42334.833.0699.933.71682.827.71173.139.53393.1Storage
6.2464.411.7248.87.9392.19.8416.36.2534.7
Sorting, grading,
packaging
9.0668.211.7248.511.9596.211.2473.19.5815.2Others
1007444.61002120.81004989.41004235.91008597.4Total average
Source: Al-Abdulkader, et al. (2015)
Al-Munawara, which is the most important date marketing
region for Saudi dates and combines all types of dealers
(retailers, wholesalers, and exporters). Al-Madinah Al-
Munawara region procures dates from all varieties and
locations all over Saudi Arabia. The procured dates are,
then, marketed for national and international date
consumers. Most of Date middlemen sample were
specialized only in date marketing (72.5%). While most of
non-specialized dates merchants (about 87% of them)
practiced agricultural marketing activities. A very limited
portion of date dealers were highly educated (about
8.1%) while more than 90% of them were secondary
educated or lower.
Date Marketing Cost Structure
Date marketing cost structure is based on five main
marketing functions, including: transportation and
distribution, grading and backing, cold and non-cold
storage, administrative and technical labors,
requirements for advertising, financing, and commission
in buying and selling dates. Table (1) presents the
magnitude and relative importance of such figures of
marketing cost structure in Saudi Arabia and the variation
according to the extent of business expansion of dealer
activity whether specialized in retailing, wholesaling or
mixing them with other marketing activities such as
exporting. It is obvious from the figures shown in Table (1)
that average retailing cost of dates was almost double
that of date wholesaling cost (SR 8597/ton and SR
4236/ton respectively). In general terms, labor costs and
storage costs were the major items among date
marketing costs. They represented about 44.5% and
31.4% of average marketing cost, respectively. Storage
cost represented a higher percentage in retailing, than
wholesaling (39.47%, and 27.7%, respectively), while
labor cost represented a higher percentage at
wholesaling level than that of retailing (39.7% and
35.65%, respectively).
Date Marketing Services and Facilities
To recognize existing marketing services and facilities
available for date marketing outlets involved in the study
sample. Table (2) shows that wholesalers have more date
marketing facilities than retailers do. An average retailer
employs two administrators and three technical labors.
Retailers have an average area of about 200 m
2
available
for grading dates, about 81 m
2
for non-cold storage and
42 m
2
for cold storage. Retailers usually store about 68
tons of dates annually. Date retailers usually have one to
two trucks for their own business. Wholesaling units in
the study sample employ more administrators and
technical labors than retailing units (three and six,
respectively). They also have more area available for
grading dates, for non-cold storage and 119 m
2
for cold
storage (about 220 m
2
and about 185 m
2
, respectively).
Date wholesaling units own more trucks than that of
retailing units because the scale of their business is
about double that of the retailing dealing business. Date
wholesaling total investments is about SR 535,000, while
retailing investments is only about SR 353,000.
Date marketing units in Saudi Arabia do not necessarily
own all of the date marketing facilities that they use due
to the seasonality of date marketing practices. Therefore,
in many cases they purchase some marketing services –
such as preparation, cold storage, non-cold storage –
from other marketing service institutions. Retailing units
always need an average of about 64 tons of purchased
dates to be prepared for retailing by other marketing
services providers. They, also, store about 254 tons of
dates in cold storage owned by others in the marketing
system. Moreover, they usually rent non-cold storing
capacity of about 100 tons of dates per annum. It is clear
that wholesaler need to rent fewer storage facilities as
they own their own facilities. However, they need labors
from other marketing institutions to prepare their dates;
these are usually seasonal workers during the harvesting
season, especially for date farms. It is quite clear from
the results of the one-way analysis of variance of
available marketing facilities that wholesalers (especially
those who practice retailing and exporting activities on
the same time) have significantly more technical labors,
grading areas, cold and non-cold storing areas, trucks,
and consequently total investments in marketing facilities
than all of the other types of date marketing units who
concentrate their marketing activities on wholesaling
4. Marketing cost structure of dates in Saudi Arabia: an analytical perspective
Ismaiel et al. 125
Table 2. Average Marketing Services/Facilities (Owned and Rented) Per Date Dealer in Saudi Arabia
All
Dealers
Retailing, wholesaling,
and exporting
Retailing and
wholesaling
WholesalingRetailingUnitsMarketing services/facilities
1.852.51.262.52No.Administrative labors
3.8211.41.926.43.2No.Technical labors
194.50932.4489.96220.3199.2m
2
Grading area
118.43340.6777.96185.480.8m
2
Non-cold stores
94.72574.6385.00118.841.8m
2
Cold stores
1365.51085.883430.99165.668.1tonsStoring capacity for dates
1.63.31.42.021.5No.Trucks
438,51,281,1326,6534,9352,9000SRTotal invested capital
140.8248.087.3289.163.5tonsPreparation through others
306.62040.025.191.7253.7tons
Cold storage through
others
352.52275.035.860.0100.2tons
Non-cold storage through
others
Source: Al-Abdulkader, et al. (2015)
Table 3. One-Way Analysis of Variance Showing the Impact of Marketing Channel Type on Date Marketing Cost Structure in Saudi Arabia
(SR/ton)
Marketing
services/facilities
Type No. Mean Std. Deviation F-test Sig. level Interpretation
Labor
Wholesaling 47 1681.16 1947.45
10.47 0.000** Retailing versus all
Retailing 128 3064.80 2450.68
Retailing, wholesaling 104 1758.53 1859.68
Retailing,
wholesaling, exporting
8 691.51 773.89
Transportation
Wholesaling 47 492.21 665.12
1.77 0.153 -
Retailing 127 789.74 1293.19
Retailing, wholesaling 105 559.82 942.42
Retailing,
wholesaling, exporting
9 231.99 51.23
Storage
Wholesaling 46 1173.06 1868.40
5.00 0.002** Retailing versus all
Retailing 126 3393.11 5412.16
Retailing, wholesaling 98 1682.81 3372.81
Retailing,
wholesaling, exporting
9 699.94 667.69
Sorting, grading packaging
Wholesaling 46 416.25 440.32
1.67 0.173 -
Retailing 124 534.70 702.33
Retailing, wholesaling 104 392.15 404.53
Retailing,
wholesaling, exporting
7 248.81 129.14
Others
Wholesaling 46 473.09 641.78
2.67 0.048*
Retailing versus
retailing, wholesalers,
exporting
Retailing 127 815.24 1058.61
Retailing, wholesaling 98 596.16 831.87
Retailing,
wholesaling, exporting
9 248.47 123.69
Source: Al-Abdulkader, et al. (2015)
+means followed with same letter do not differ significantly using Duncan’s test.
*Significant at 0,05 significance level
**Significant at 0,01 significance level
5. Marketing cost structure of dates in Saudi Arabia: an analytical perspective
J. Agric. Econ. Rural Devel. 126
Table 4. One-Way Analysis of Variance Showing the Impact of Study Regions on Average Date Marketing Cost Structure in Saudi Arabia
(SR/ton)
Marketing
services/facilities
Study regions No. Mean Std. deviation F-test Sig. level Interpretation
Labor
Riyadh 72 2275.5 2609.8
0.17 0.915 -
Al-Madinah Al-
Munawara
97 2362.5 2400.6
Al-Hasa 48 2466.4 2209.1
Al-Qassim 73 2184.4 1699.3
Transportation
Riyadh 73 1001.8
a
2062.5
3.4 0.018*
Riyadh versus Al-
Madinah Al-
Munawara and Al-
Qassim
Al-Madinah Al-
Munawara
100 452.8
b
466.3
Al-Hasa 49 722.4 757.4
Al-Qassim 73 575.8
b
658.8
Storage
Riyadh 67 2915.5 7853.1
0.64 0.589 -
Al-Madinah Al-
Munawara
96 2290.9 2424.0
Al-Hasa 49 2236.9 2087.7
Al-Qassim 73 1925.5 2200.7
Sorting, grading,
packaging
Riyadh 68 596.8
a
881.0
3.4 0.018*
Riyadh and Al-Hasa
versus Al-Madinah Al-
Munawara
Al-Madinah Al-
Munawara
98 329.6
a
498.4
Al-Hasa 45 564.2
a
450.8
Al-Qassim 73 460.3 350.1
Others
Riyadh 68 873.3
a
1553.2
3.2 0.024*
Riyadh and Al-Hasa
versus Al-Madinah Al-
Munawara and Al-
Qassim
Al-Madinah Al-
Munawara
97 511.1
b
561.7
Al-Hasa 48 859.5
a
694.4
Al-Qassim 70 555.6
b
461.4
Source: Al-Abdulkader, et al. (2015)
+means followed with same letter do not differ significantly using Duncan’s test.*Significant at 0.05 significance level
and/or retailing and/or exporting.
Main Factors Affecting Date Marketing Cost Structure
Many factors are expected to cause significant variations
in date marketing cost structure, among which are type of
marketing channels, regional factor, educational level of
marketing dealers/managers, level of specialty in date
merchandizing, types of other activities carried out by
date dealers beside date marketing activity.
Type of marketing channels
In terms of average marketing cost per ton, it is clear
from Table (3) that labor cost, storage cost, and other
costs apart from transportation and storing/grading costs
were the main items causing significant variations
between different marketing outlets in Saudi Arabia. This
was, of course, due to the nature of the time and spatial
dimensions in retailing as retailing has more extended
space and time elements.
The major two cost items of date marketing in Saudi
Arabia (labor and storage cost) varied significantly among
retailing units and wholesaling units. The average retiling
storage cost (SR 3393.11/ton) was significantly higher
than that of wholesaling (SR1173.06/ton). In addition, the
average retailing labor cost (SR 3064.80/ton) was
significantly higher than that of wholesaling (SR
1681.16/ton).
Regional factor
Average date marketing costs at major date market
regions in Saudi Arabia are presented in table (4). The
highest average marketing cost was observed in Riyadh
region with about SR 7662.9/ton, while, the lowest
average marketing cost was observed at Al-Qassim
region with about SR 5701.6/ton. Significant variations at
(5%) significance level were observed in Riyadh region
versus the other study regions for transportation cost
item, and were observed in Riyadh and Al-Hasa regions
versus the other study regions in sorting, grading,
packaging, and other marketing services. Cold and non-
cold storage facilities were the most costly items of the
marketing cost structure in Riyadh region at about SR
2915.5 /ton, which should attract interest to find out why.
While, the minimum
6. Marketing cost structure of dates in Saudi Arabia: an analytical perspective
Ismaiel et al. 127
Table 5. One-Way Analysis of Variance Showing the Impact of Educational Level of the Dealer on Average Date Marketing Cost Structure in
Saudi Arabia (SR/ ton)
Marketing
services/facilities
Level of
education
No. Mean Std. deviation F-test Sig. level Interpretation
Labor
Lower than
secondary
education
146 2041 2220.6
1.81 0.165 -Secondary
education
117 2568 2247.7
Higher
education
23 2323 2262.4
Transportation
Lower than
secondary
education
149 575 907.7
2.21 0.111
-Secondary
education
118 779 1313.9
Higher
education
24 346 228.9
Storage
Lower than
secondary
education
141 1866
b
2583.7
2.72 0.049*
Secondary education
versus lower than
secondary education
and higher education
Secondary
education
117 3028
a
5944.4
Higher
education
24 1613
b
1942.2
Sorting, grading
packaging
Lower than
secondary
education
146 430 576.0
1.59 0.205 -Secondary
education
113 509 584.3
Higher
education
21 288 149.6
Others
Lower than
secondary
education
144 589
b
814.2
3.20 0.042*
Secondary education
versus lower than
secondary education
and higher education
Secondary
education
112 820
a
1103.5
Higher
education
24 390
b
251.3
Source: Al-Abdulkader, et al. (2015)
+means followed with same letter do not differ significantly using Duncan’s test.
*Significant at 0,05 significance level
average marketing costs were observed in Al-Qassim
region with about SR 1925.5 /ton. This benefit must be
taken advantage of in other regions to reduce the
average marketing costs and increase marketing
margins.
Educational level of date marketing
dealers/managers
Table (5) presents analysis of variance to investigate the
effect of date marketing dealer/manager educational level
on the date marketing cost structure in Saudi Arabia. The
results indicated that secondary school education date
dealers/managers faced the highest average marketing
cost at about SR 7703.6/ton compared to about SR
5499.7/ton and about SR 4959.2/ton for lower the
secondary school education and higher education
dealers, respectively. Storage costs and other cost items
showed significant differences at 5% significance level,
with secondary educated dealers/managers facing higher
costs compared to higher educated dealers/managers
and less-than-secondary educated dealers/managers.
Speciality in date merchandising
Table (6) shows the impact of specialty in date
merchandising on the average date marketing cost
structure in Saudi Arabia. The results indicated that
specialized date dealers incurred higher average
marketing costs in the short run at about SR 7296.3/ton
compared to the non-specialized dealers at about SR
5916.3/ton. Also, results showed that there were
insignificant differences among all date marketing cost
structure items but that of sorting, grading packaging
according to specialty in date merchandising.
7. Marketing cost structure of dates in Saudi Arabia: an analytical perspective
J. Agric. Econ. Rural Devel. 128
Table 6. T-test Showing the Impact of Specialty in Date Merchandising on Date Marketing Cost Structure in Saudi Arabia (SR/ton)
Marketing services/facilities Type No. Mean
Std.
deviation
T-test Sig. level
Labor
Non-specialized 180 2133.2 2206.5
-1.74 0.083
Specialized 110 2607.9 2326.4
Transportation
Non-specialized 180 595.0 1211.9
-1.27 0.205
Specialized 115 771.7 1088.3
Storage
Non-specialized 175 2193.6 4211.0
-0.70 0.484
Specialized 110 2559.6 4417.8
Sorting, grading packaging
Non-specialized 175 400.6 505.9
-2.34 0.02*
Specialized 109 566.7 686.6
Others
Non-specialized 176 593.9 877.8
-1.75 0.081
Specialized 107 790.4 970.1
Source: Al-Abdulkader, et al. (2015)
*Significant at 0.05 significance level
Table 7. T-test Showing the Impact of Engaging in Other Activity on Date Marketing Costs Structure in Saudi Arabia (SR/ton)
Marketing
services/facilities
Type No Mean Std. deviation T-test Sig. level
Labor
Agricultural 68 2682.0 2390.6
0.54 0.594
Commercial 11 2270.1 2208.5
Transportation
Agricultural 70 741.1 1237.7
0.70 0.485
Commercial 11 476.2 401.6
Storage
Agricultural 67 2884.8 5071.7
0.13 0.896
Commercial 11 2678.8 2550.6
Sorting, grading, packaging
Agricultural 66 604.5 807.0
2.02 0.049*
Commercial 9 358.1 213.6
Others
Agricultural 67 724.7 997.2
-0.12 0.901
Commercial 11 763.7 665.3
Source: Al-Abdulkader, et al. (2015)
*Significant at 0,05 significance level
Type of other activity beside date marketing activities
Table (7) shows the impact of engagement of date
dealers in other activities besides date marketing activity.
Results indicated that dealers engaged in agricultural
activities besides date marketing activity incurred higher
average marketing costs in the short run at about SR
7637.1/ton compared to dealers engaged in commercial
(non-agricultural) activities at about SR 6546.9/ton. Also,
results indicated in significant variations among all cost
items but that of sorting, grading packaging according to
the type of other activity besides date marketing at 5%
significance level.
CONCLUSIONS AND RECOMENDATIONS
Average date marketing cost structure was quantified and
analyzed on a basis of some main factors affecting the
cost structure of date marketing in Saudi Arabia,
ultimately, enhancing the comparative advantage of the
Saudi dates in the world market. Results showed that
average date retailing cost was almost double that of
date wholesaling marketing cost. Labor costs and storage
costs were the major items among date marketing costs
in Saudi Arabia. Results showed, also, some significant
variations among average date marketing cost items due
to type of marketing channels, regional factor,
educational level of the date dealers/managers, level of
specialty in date merchandizing, types of other activities
carried out by date dealers beside date marketing activity.
According to these results, the followings are
recommendations to reduce the average date marketing
cost and, thus, to enhance the comparative advantage of
Saudi dates in the world market.
1.Building robust infrastructure (e-commerce, efficient
marketing services/facilities, strengthen agricultural
cooperative associations, establishing an accurate
marketing databases).
2.Setting rules and regulations (standards and
metrologies, monitoring systems, quality assurance, e-
commerce regulations and standards, quality
trademarks).
3.Insuring financial resources (venture capital) to finance
date marketing entrepreneurs.
4.Enhancing manpower capacity (youth incubators,
minimum wage, enhance capacity of national manpower
to improve marketing efficiency).
5.Raising public awareness and promoting culture of
citizenship (health and nutrition awareness,
advertisement campaigns, and exhibitions and food
fairs).