Marketing across cultures with a focus on Islamic Marketing

Table of Contents

1. Introduction
1.1 Academic Background
1.2 Research question, Hypothesis and Objectives

2. Literature review
2.1 Islamic Marketing
The Five Pillars of Islam
Shahadah
2.2. Principles of Islamic finance
Riba
Maysir
Gharar
2.3. Key differences in the marketing mix
Product
Promotion
People
Price
Place
2.4. Islamic branding (IB)
2.5. Marketing strategy for Islamic countries

3. Research methodology
3.1. Research Strategy
3.2. Population, sample and sampling
3.3. Data collection
Secondary research
Primary research
3.4. Validity and reliability
3.5. Limitations

4. Data analysis
4.1. Survey
4.2. Interviews

6. Conclusion

6.1. Recommendation

References

Appendices
Appendix 1.
Survey questions
Appendix 2.

1. Introduction

1.1 Academic Background

One third of the world’s population are Muslim and if either a Muslim or especially non-Muslim company wants to be successful in its business particularly on an Islamic market, first it has to understand the nature and structure of Islamic Marketing. Without knowing Islamic laws, beliefs or norms running a successful business would be unattainable. Besides, a great number of people in the Middle East area are considered to be among the richest consumers of the global world market. Therefore, cooperation with them would be significant for any firm or organization. Nowadays, there are huge Islamic funds available held by people who are hoping to and aiming at investing only in firms producing goods and services allowed in Islam (De Balder et al., 1993).

Recently there has been a significantly increased interest in the relevance of a new research area, namely Islamic marketing and Islamic branding hence more literature is being written on this topic. “The good news is that it is finally getting much needed attention which it deserves because if handled properly it holds the key of creating a successful system to cater for the needs of 1.7 billion Muslims worldwide.” (Hussnain, 2011, p.101). However, the promotion aspect of marketing seems to be a relatively neglected area and therefore the author chose it to be in the focus of this dissertation.

Marketing across cultures is indeed a popular topic researched and written about many times (Usunier and Lee, 2005). Nevertheless, Islamic marketing in the context of marketing across cultures still has not been explored enough (Wilson, 2012). Not many works have been written on this topic therefore, Islamic Marketing has not reached its full potential yet. In this dissertation the author intends to fill in a research gap in the area, which is not only a globally important part of business today, but also a topic that has been underresearched. In view of the fact, that almost all the available research papers and books are strictly based on facts founded in the Quran (religious book of the Islamic people) or Sunnah (sayings of the Prophet Muhammad) those sources were carefully studied. What the author found interesting but also noticed that it is still missing from existing literature is an analysis of the extent to which, the Islam affects marketing and especially the promotion of products or services in Islamic markets. The conclusion will contain a recommended strategy, acquired from secondary and primary research, for anyone who wants to cooperate with the Muslim audience.

The aim of this proposed dissertation is to examine to what extent Islam affects marketing. In order to find appropriate answer to this question, firstly the structure and major principles of Islamic marketing will be outlined. Secondly, differences between marketing mix figures as a result of cultural differences will be analyzed. Thirdly, Islamic branding and its significance will be explained. Finally, there will be a recommended strategy for non-Muslim businesses that aim to promote their products or services to a Muslim audience.

1.2 Research question, Hypothesis and Objectives

Research Question

The main purpose of this paper is to answer the following question:

To what extent does the Islam as a religion affect marketing and its components in Islamic markets?

Hypothesis

The hypothesis this research will attempt to support is the following:

Islam affects marketing and its components in Islamic markets significantly, depending on the country and on the specific industry.

Research Objectives

The specific objectives underpinning this research are:

1) to review the history of Islamic marketing;
2) to analyse the key differences between Islamic and non-Islamic marketing;
3) to identify the essence and significance of the Islamic branding;
4) to recommend a marketing strategy to non-Muslim businesses wishing to promote their products and services in Muslim countries.

2. Literature review

2.1 Islamic Marketing

Although Islamic business ethics and Islamic law have existed for more than 1400 years already, the main problem is that they were not widely recognized and accessible for non-Muslim populations (Nawwab et al., 2006). Until recently, most of the companies were competing to achieve success on Chinese or Indian markets, until someone realized Islamic market should be the one to invest in. Anyone dealing with issues related to Islam or its followers needs to know and understand their priorities, obligations and laws. This was proven by the statement of the CEO of Ogilvy and Mather, Miles Young who said that if only non-Muslim markets and its marketers would understand needs and values of the Islamic people, their market shares would grow enormously, and for this reason Islamic branding and marketing too should be “created” as soon as possible. The Muslim market is expanding at a high pace and that is why this is one of the marketers’ priorities. Marketers must ensure that all Islamic marketing activities are in line with Islamic rules, otherwise it will not be accepted among Islamic people.

There are several reasons for the increased interest in Islamic marketing in the past few years. First of all, 23% of the world’s population are Muslims, and the number is constantly growing. In the next two decades the number of Muslims is forecast to increase approximately two times more than non-Muslim populations (Temporal, 2011). Secondly, as a result of such a fast growth of the Muslim population, consumption and demand for Islamic products will obviously increase as well. Last but not the least, development of Islamic marketing and branding started at this time due to the acceleration of globalization (Temporal, 2011).

As Islamic marketing was until very recent times a relatively neglected topic, there are not many definitions yet in the academic literature. There is, however, one that is most commonly used and is probably the best definition:

“Islamic Marketing is the study of marketing phenomena in relation to Islamic principles and practices or within the context of Muslim societies.” (Jafari, 2012, cited in Nurhafihz, 2013, Available at: http://islamicmarketing.org/principles/what-is-islamic-marketing/).

Honesty, sincerity, modesty, discipline, peacefulness are only some of the words that describe Islam and its core values. All these and many other Islamic values have to be part of the value system of the entire company that wants to be present in the Islamic market.

Main sources of the Islam and its laws are stated in two books: firstly the Quran, the holy book of the Islam and the Hadith, also known as Sunnah (Vicary and Chee, 2010). The Hadith or Sunnah is a book that consists the thoughts and sayings of Prophet Muhammad (PBUH or Peace Be Upon Him is an abbreviation Muslims use after saying or writing the name of any Islamic prophet). The Hadith or Sunnah provide behavioral norms that every Muslim is supposed to fulfill. Similarly, it is important to know that one of the most important goals of Islam is to generate justice in the Muslim community and reduce differences between the rich and the poor people. These perspectives of Islam and especially Islamic Marketing will be expanded later.

Generally speaking, Islamic marketing combines relationship and social marketing with the main aim of satisfying customers’ wants and needs while trying not to damage society in any sense. It has certain criteria that must be respected and followed according to the Quran and the Sunnah (Hussnain, 2011).

In order to understand Islam and the essence of Islamic businesses particularly Islamic marketing, one must be familiar with the five pillars on which Islam rests. Islam is not only a religion, and neither is it a belief; it is rather a life style. Islamic way of living basically provides to its followers guidelines for day-to-day life activities. To understand this religion better and to understand it in a right way, it is significant to be familiar with the five pillars of Islam. According to this religion, every Muslim is supposed to fulfill these obligations in order to live a good and peaceful life.

The Five Pillars of Islam

Shahadah

The first pillar of Islam means the proclamation of faith. "There is no God but God and Muhammad is the Messenger of God." No God but Allah and Prophet who is God’s messenger (The Five Pillars of Islam, 2009).

Salah

The second pillar is the prayer meaning that one has to have five prayers a day. Follower should pray at dawn, in the noon, mid-afternoon, during sunset and in the evening, in a mosque if possible (The Five Pillars of Islam, 2009).

Zakat

The third pillar is almsgiving. More closely, it is the act of giving part of one’s fortune to the poor, preferably once a year. This social duty should equal 2,5% of the total wealth of an individual, without any personal or family expenditure (The Five Pillars of Islam, 2009).

Sawm

The fourth pillar of Islam stands for fasting during the holy month of Ramadan. Fasting means that one should abstain from hedonism including food, drinks and other personal satisfactions from dawn until the sunset (The Five Pillars of Islam, 2009).

Hajj

The pilgrimage to Makkah (Mecca) is the fifth pillar and the most important one. The journey to Mecca is an essential for Muslims who can afford it both financially and physically (The Five Pillars of Islam, 2009).

Living by the rules given by Allah is crucial for almost all Muslims worldwide. One whose religion is not Islam must be aware of the five pillars in order to show respect and honor towards Islamic followers. Everything including business and the development of marketing strategies is built on the five pillars hence, its respect must be shown at all times by all partners cooperating with Muslim people. Marketers need to consider these five pillars so they can develop appropriate promotion strategies for specific goods or services. Timing is important part of Islamic marketing strategy too. Every marketer should know when exactly are the prayers or when the Ramadan is, time when Muslims abstain from any kind of personal satisfaction.

2.2. Principles of Islamic finance

Islamic law consists of three crucial principles relating to Islamic finance and every single transaction has to be in compliance with them. “In them lies grave sin, though some benefit, to mankind. But their sin is more grave than their benefit.” (Quran, 2:219).

One has to know these principles in case he or she aims to start cooperation with Muslims or generally Islamic markets. Not respecting any of these three financial principles is a great sin. These financial rules are important for the Islamic marketing mix, in fact they are part of it. The key principles of Islamic finance are the following:

Riba

This term means prohibition of interest and earning money on money. It is forbidden to charge interest in any form. This principle actually presents the main difference between the Islamic financial system and the banking system of western countries.

According to the Islamic law or the Shariah, fairness in business is most paramount especially in economic transactions in Arabic called muamalat thus, riba is not permitted as it creates social injustice due to the interest on the loan that borrower is supposed to pay to the lender from its weak position (Vicary and Chee, 2010).

Maysir

Maysir is the prohibition against gambling. The Quran forbids earning money on games of chance (Hussien, 2010). Only few forms of gambling or beating Prophet Muhammad allowed and those were horse and camel races and archery contests.

Gharar

This is an Arabic term that stands for risk, hazard or uncertainty. Selling a product that conditions are not clear or are uncertain is prohibited under the Shariah. Contracts should contain real, truthful information and strictly avoid all speculations. It is necessary for all parties to have a high level of knowledge, otherwise the transaction, sale or exchange process will take time or will not even take place.

Two types of gharar exist: minor and major. The major type consists of three more types: uncertainty of ownership, inadequacy of information and last one, conditional contracts (Vicary and Chee, 2010).

The principles mentioned, which are part of Islamic law are relevant not only for Islamic finance but also for marketing. Acquiring knowledge about these crucial rules can help businesses understand what is allowed and what is strictly prohibited in the Islamic population. Moreover, the way of doing business was described in the above paragraphs. Knowing about these principles is one of the first steps in developing a marketing strategy or generally business strategy for Islamic market.

2.3. Key differences in the marketing mix

Normally when a company enters a new market, firstly it needs to decide if it will use standardized marketing mix or will adapt an existing one to the new environment. As Keegan and Green (1999) said the main point of marketing is to actually find some balance between standardized and adapted approach. Marketers should always have to brainstorm and decide to what extent they will keep the standardized marketing mix or, alternatively to what extent they will adapt already an existing approach. When it comes to the Islamic marketing mix, a completely new approach has to be developed that relies fully on the religion, its principles and norms. Therefore, designing marketing mix for Islamic markets is at the same time extremely easy but also extremely complicated.

(Doole and Lowe, 2004).

On the graph above we can see which, marketing factors are mostly being adapted and which ones stay the same even in different markets. In the case of the Islamic market, this line would stay on the same level since all factors have to be adapted. Pricing, distribution, the product itself, strategy and all other factors are equally important to be adapted to the Islamic markets.

The marketing mix is a set of strategies and tactics that companies use in order to attract and keep customers (Kotler, 2008). Islamic marketing, similarly to international marketing has defined five out of 7Ps (Borden, 1984). Until now Islamic marketing has covered the following marketing terms: price, place, promotion, product and people. The remaining two, process and physical evidence are still not identified, as there are no definitions in the existing academic literature.

From an Islamic perspective these five Ps in the marketing mix that were covered until now absolutely coincide with Islam and its regulations. Certain sets of norms need to be respected at each step. It begins by deciding about the nature of product, then packaging, applied type of promotion and finally the price level. The most important factor in the Islamic marketing mix is surely man himself. Everything depends on us, people. If we were all to accept Islam and live by its regulations, this would be a wonderful and peaceful place to live in, at least that is what Islam followers presume and believe.

Although this marketing mix was developed in accordance with the Quran and Shariah (Islamic law and morale code) it is still an unanswered question to what extent Muslims themselves respect their laws and principles in reality, but this is a complex question that would demand a lot deeper research than this one. This is a problem for non-Muslim marketers who need to develop appropriate marketing strategies based on Islamic beliefs and values in order to help non-Muslim companies and organizations to run successful businesses on the Islamic markets.

Product

According to Islam’s holy book, the Quran some particular products and services are strictly prohibited. Such products should not be offered in Islamic market at all as it is completely forbidden to make profit on unclean products or services. In the Arabic world the word Haram means “forbidden” and according to this principle Islam followers should not, under any circumstances invest money in harmful industries such as tobacco, alcoholic beverages, weapons or pornography (Abdullah and Haji Ishak, 2012). The products and services that consumptions of which have been explicitly forbidden are pork, carrion, alcoholic drinks, animal’s blood and prostitution. In general it is prohibited to invest in such businesses, which go against society’s well being as it was written in the Shariah. Gambling and any other activities that generate profit through playing games also count as unclean. The special term used for the prohibition against gambling is Maysir.

The reason why all mentioned products are not allowed to be marketed is that is for sake of people’s, i.e., ours own welfare and safety. Islam is trying to teach people to appreciate life and not to consume damaging goods or services.

According to the Quran too, a Muslim should seek pleasure in any kind of actions he/she is taking as long as it is in line with Shariah. Islam followers believe that their actions will be assessed on the Day of Judgment, when the God and the Prophet (PBUH) will decide if they deserve heaven or eternal punishment in hell. It is believed that decision is made based on the behavior of the follower and whether he or she managed to abstain from food, drinks etc. that are forbidden in Islam (Qur’an, 109: 6).

Promotion

After finding appropriate product for the Islamic market, it is important to decide how that certain product or service will be promoted on that same market. Regarding promotion, there are no many distinct regulations required by religion in the Islamic world. Despite this, a marketer needs to fulfill a numerous conditions such as providing correct and right data about the promoted products or service and using appropriate packaging. Providing misleading information similarly to trying to manipulate the public should be completely avoided.

The marketing communication channels used for Muslims are the same as those used for a non-Muslim audience. Some very typical ones are the following: TV, radio, although nowadays rarely used, then newspapers, Internet (social media such as Facebook, Twitter, blogs, YouTube), posters, billboards, mega boards, newsletters, magazines.

Packaging plays very important role in promotional strategy. As usual packaging has the role of attracting customers. This can be accomplished by designing interesting package shapes, or maybe by using strong colors that are very easy to notice. All in all, it is perfectly fine to use these typical promotional methods as long as they are in line with Islamic norms. Some of them were already mentioned, such as providing true data on the product label or in the advertisement of the products/service.

One of the primary sources a marketer can use to better understand its customers are customers databases. This source should contain all relevant data about existing customers and the targeted group in order to make decision making proceses easier and more efficient. Customers preferences can be obtained through surveys or some kind of questionnaires, even though these are not always sufficient sources. Observing customers, their buying habits and behavior, could be very useful in identifying consumers shopping patterns (Abdullah and Haji Ishak, 2012).

Additionally, using women only as a sexual object, in promotion processes is absolutely unethical and forbidden (Abdullah, 2008). To give an example: IKEA is a Swedish company that, when started operations in majority Muslim country, rather conservative Saudi Arabia, deleted women from its catalogues. After receiving heavy criticism from the western public, representatives of IKEA apologized to them. It was a bit contradictory situation because its part of IKEA’s values to respect all people regardless of their gender, religion, age etc. but they still did leave out women from their marketing material. Some consider it to be an act of discrimination (Molin, 2012), however author believes IKEA made the right move since they satisfied and respected the values of Saudi people by leaving out uncovered women and also they apologized to the non-Muslim audience in order to please them too. What IKEA should have done at the first place was to find a compromise and include women in the promotional material who would be dressed properly according to Islamic preferences.

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