As the population of Muslims is increasing over time, there is also an increased demand of the introduction of Islamic principles in different sectors. One of these sectors that have seen a great deal of Islamization lately is the marketing sector. Muslims now want a marketing system that is in accordance with the laws of Shariah. One of the most projected examples of this is the introduction of Islamic banking to provide alternate products and services to the Muslim customers. Many researches and studies have been carried out to see what the response of the Islamic marketing strategies has been over the years. In this paper, we shall first look at in detail what is actually meant by the Islamic marketing strategy and how the Islamic laws pertaining to business differ from the conventional laws. We shall then look at how these strategies have been adopted by banks to introduce Islamic Banking. Towards the end of the paper, we will also take a look at the other markets that can be tailored according to the Islamic laws.
1.1.1 What is the Islamic Marketing Strategy?
The major difference in Islamic and conventional banking and marketing comes out when talking about interest or riba how it is put in Arabic. (Hassan, Chachi and Latiff, 2008 p.27) Islamic Banking takes part in an equity-participation system, however the rate of return is not pre-determined or guaranteed. However, when conventional banking is when the rate of return is determined and all the systems of debt and equity are driven by interest. (Hassan et.al, 2008 p 27) This difference merely stems from the idea of interest being prohibited in Islam. The concept of Interest in strictly forbidden in Islam, and any person who takes or participates in taking or giving of interest will be punished severely. Marketing stems out from this that no unfair purchase or selling is allowed in Islamic markets. Further details and explanation of the marketing strategy will be discussed below.
1.1.2 For Better or for Worse?
The mere idea of doing something different provides for Muslim or Islamic Bankers ways to differentiate their services from the rest of the banks. Even though this idea of banking only came forward like 2 decades ago, it has caused investors to look more closely into it and even prefer it. Even though this form of banking can have a negative side, the mere idea of being a new kid on the block can go on to attract more and more customers in the long run. This idea can go on to augment the number of shares Islamic banks have in the market today. Banks like Dubai Islamic Bank in the UAE and Bank Shariya Madiri Indonesia have gone to expand and make many branches in their respective companies.
There is a down side however. The downside in this entire scenario is that there would be more competition among the national and multinational conventional banks. The Banks will face more and more competition not only from the Islamic windows from the traditional banks but also amongst each other. Even though the facility that the new strategy is offering in the long run is new and attractive, it's become very common now. Thus, in order to make their strategy of Islamic banking work, the Islamic Banks must be able to secure a competitive advantage and maintain a strong position. (Hassan et.al, 2008 p.28)
1.1.3 Why Research on it?
The marketing ethics that come out forward in the Islamic banking world are under-researched. Even though many have researched the banking systems, the marketing morals linked to this are not as well studied. Even though this discipline is found all over the world, there is no proper definition of it anywhere. (Husssnain, 2011) This system has the possibility of providing a good means to of marketing to the 1.7 billion Muslims all over the world. Furthermore, the effect of this marketing is not well documented. As mentioned earlier, many countries have prominent Islamic banking systems but none of them have been looked at in detail. It should be studied how these ethics go on to benefit the customers and the consumers in the long run.
2. 1 Explaining the Islamic Marketing Strategy
2.1.1 What is marketing?
Marketing is a subject that is completely evolving over the years and is changing as the needs of the customer changes as well. The major focus that is being created in marketing all over the world is the need to make a better relationship with the customers. (Husssnain, 2011 p 2) The need for a better relationship steams from the profit and the benefits attached to being faithful with the customer. Gone are the days when things were made with a little quantity and sold instantaneously. However, with things being made on a large scale, there needs to be a strategy or a plan to attract customers and thus have your product sold. A marketing strategy is not only a tool to organize the plan with which vending will take place but a lot more now. The organization also uses marketing to look over the benefits of other stakeholders in the process of selling. This process is basically composed of systems in which the object is to make products, interact with the customers and provide them with the product or services they want. (Husssnain, 2011 p.2)
2.1.2 What Islam says about it?
Fourteen hundred years ago when the book of Islam was revealed, it had directions on how deal with vendors and purchasers. Certain morals and set of etiquettes were set out forward that guided the Muslims in acting properly in the market. As mentioned above, the major way in which Islam does business is by ensuring that none of the parties gets hurt.(Husssnain,2011 p.2) A strong emphasis is laid on the fact that any person or part will not gain profit they are not worthy of. Similarly, any person or party will not be charged with a loss that he doesn't deserve. Islam is considered a way of life and thus it provides insights on how to deal with businesses as we. It is believed that once marketing ways get mixed with a proper ethical doctrine, then it is likely that this system would be a success. (Husssnain, 2011 p.3) The fact that the Islamic Marketing strategy hints on or actually picks up from religion makes it a very sensitive topic. Thus, it should be noted that people can agree with it but not go on to criticize or condemn it.
2.1.3 The rules on production and products
The products that the Islamic market or the bank makes are different as opposed to the western thinking. In banking, Islam takes in transcendental and moral factors into the decision making process. That is to say that the products that certain firms, business or organization make have to be guided and governed by the Islamic principles. (Al-Misri, 1991) The major principle in Islamic strategy as remarked by Ibn al-Ukhuwwah (1938) is that any product that is to made should be allowed and not cause intoxication or dullness of the mind in any way. Thus the sale of any unclean or firbindden object is considered wrong. The businesses who are therefore controlling marketing of gambling, alcohol, porn or other 'unclean' products would thus be banished by the Islamic Law.(Husssnain,2011 p.3) There comes the concept of Halal and Haram in Islam that make certain products allowed for the Muslim world and certain products prohibited.
Another important feature is that the product that is being sold must be backed by an asset. That is to say that any firm wishing to launch a product can't just go on and start selling. There has to be enough support. Whatever product that is being made by the company should be able to be brought to the customers. This is to reduce the work load of the buyer and thus make business a rather peaceful and pleasant venture for both of the parties. Any features that increase the cost of the product must be declared to the customer so that if they wish to change their decision they should change it right then and there. (Hassan et.al, 2008 p 32) This is important and quite contrasting from the hidden charges gimmick many of the conventional marketing experts use to increase their products. Telephone companies and many contracts don't mention certain costs which are later discovered when the bill is mailed. It should be noted here that fair dealings are quite thoroughly emphasized in Islamic marketing. The last aspect of product production needs to be that both the parties should rightly take responsibility of their obligation towards each other and should be therefore fair, just and equal to one another. (Hassan et.al, 2008 p 31) This is to say that neither the business nor the customer can trick or fool the other and all the dealings should be done fairly.
In conventional banking, unethical decision making…