The Principles of Islamic Marketing

Baker Ahmad Alserhan

• Publisher: Routledge
• Year: 2017
• ISBN:
  9781351145664
• Edition: 1
• Topic: Betriebswirtschaft
• Subtopic: Business allgemein

The Principles of Islamic Marketing fills a gap in international business literature covering the aspects and values of Islamic business thought. It provides a framework and practical perspectives for understanding and implementing the Islamic marketing code of conduct. It is not a religious book. The Islamic Economic System is a business model adopted by nearly one fifth of the world's population. Baker Alserhan identifies the features of the Islamic structure of International Marketing practices and ethics. Adherence to such ethical practices elevates the standards of behaviour of traders and consumers alike and creates a value-loaded framework for firms, establishing harmony and meaningful cooperation between international marketers and their Muslim target markets. His book provides a complete guide to the requirements an organization needs to follow when managing its entire marketing function within the Muslim market or when adapting part of its offering to that market. It addresses the challenges facing marketers involved in business activities with and within Islamic communities, the knowledge needs of academic institutions, and the interest of multinationals keen on tapping the huge Islamic markets. Along the way, Baker Alserhan provides insights into the various aspects of promoting to the Islamic markets such as franchising, distribution channels, and retailing practices, branding, positioning, and pricing issues; all within the Muslim legal and cultural norms. Above all, The Principles of Islamic Marketing will lay the foundation of, and advance, Islamic Marketing as a new social science.

Part 1
Understanding Islamic Marketing

1
Islamic Business Ideals

When Muslim merchants travelled to distant lands, the inhabitants of those lands were impressed by the traders’ social and business conduct and so became curious about their beliefs. Many of these inhabitants subsequently became Muslims.

Rice, 1999

Learning Objectives

After reading this chapter, you should be able to understand:

• The Islamic law, Shariah
• The three categories of Muslims’ practices and acts
• The four sources of the Islamic ethical system
• The principles governing Islamic ethics
• Islamic values in business
• Implications for business.

Introduction

In an era when there is an increased and renewed emphasis on teaching and learning business ethics, the highly pertinent question being raised is the role of faith and religious beliefs on business practices. Do religious beliefs help produce more ethical organizations and consumers? As a major world religion with clearly defined rules, restrictions and behavioural guidelines, what are Islam’s teachings regarding ethical practices in commerce and what are their implications? This chapter aims to answer some of these questions by casting light on the Islamic teachings on business conduct, or what has been known since the early Islamic periods fourteen centuries ago as the ‘rules of sales and commerce’. It identifies the Islamic business ideals and their practical implications which organizations dealing with Muslim consumers need to adopt.

The Islamic perspective on commerce is increasingly gaining momentum and importance in today’s global economy for many reasons. First, Islam, being a practical religion with clear daily procedures to follow, shapes the attitudes and behaviours of its adherents, the Muslim consumers, who represent more than a fifth of the world population. Second, the financial crises of 2008/9 shattered the world markets which had followed conventional financial wisdom, while allowing those practising Islamic finance to prosper and make significant gains. In the September 2008 quarter, when share markets in London and New York were a third of their peaks, Dow Jones’s Islamic financials index, in contrast, rose 4.75 per cent. Third, as a result of the oil boom, as well as other factors, many Muslim countries are becoming the most affluent consumers in the world. Fourth, the level of foreign investment in Muslim countries is increasing. Fifth, there is a movement towards forming a Muslim trading bloc, although such a bloc might take some time to materialize. Finally, sixth, there is a strong push towards the Islamization of countries where Muslims are a majority through laying down clear Islamic codes of conduct in all walks of life, and commerce is no exception to this (Saeed et al. 2001).

Moreover, the globalization of the world economy makes it a requirement for world businesses to be familiar with the Islamic perspective on commerce in order to understand the factors shaping the behaviours of Muslim consumers. Businesses that neglect the acquisition and utilization of such knowledge risk alienating a large proportion of their Muslim target market (Saeed et al. 2001). The Islamic religion has a finely tuned set of rules concerning all aspects of life. By recognizing these rules, the knowledgeable firm can not only serve the spiritual needs of the Muslim community but also capture a truly unique position in the Islamic marketplace (Sacharow 1995).

The Islamic Law, Shariah

Islam possesses a religious law called Shariah which governs the life of Muslims and which Muslims consider to be the embodiment of the will of God. This law, which caters to the needs of Islamic society, is essentially preventative and is not based on harsh punishment except as a last measure. The faith of the Muslim causes him or her to have respect for the rights of all others; it aims at preventing transgression against the universe as a whole (the living, the land, the sea and the heavens).

Islam consists of five pillars: affirmation of the faith (Shahadah), that is, witnessing that there is no divinity but Allah and that Mohammad is the messenger of Allah; the five daily prayers which Muslims perform facing Makkah (Mecca); fasting from dawn to sunset during the lunar month of Ramadan; making the pilgrimage to Makkah once in a lifetime; and paying an obligatory charity of 2.5 per cent tax on one’s capital. Muslims are also commanded to encourage others to perform good acts and to abstain from evil.

The term Islam itself is an Arabic word meaning ‘submission to God – Allah,’ with its roots in the Arabic word ‘Salam’ which literally means peace. That may come as a surprise to many non-Muslims, whose perceptions of the belief have been distorted by terrorists, many from the Middle East, whose acts in the name of Islam have been condemned by Muslim leaders everywhere.

Belt 2002

Submission to God’s will (accepting the Muslim faith) implies that all actions undertaken by Muslims are acts of worship. Thus eating, drinking, socializing, buying, selling, promoting, manufacturing, education and so on have to comply with God’s rules. These rules are stated in the Shariah law. According to Islam, God’s rules are stated explicitly or implicitly in the Muslims’ holy book, the Quran, or in the teachings of Islam’s prophet, Mohammad, and it is the responsibility of Muslim scholars to identify these rules and live according to them. These rules apply to commerce as much as they apply to personal purification and cleanliness.

Islam provides either general or detailed instructions about what is permissible and what is not. Detailed instructions are provided on the acts of pure worship such as prayer, pilgrimage, fasting and charity, as well as a multitude of other aspects of life. However, general guidelines are provided in what is referred to by Prophet Mohammad as ‘the affairs of your worldly life’. For example, some rules, like forbidding the use of interest rates as a method of making money, represent a general guideline. The responsibility of Muslim scholars throughout the ages is to identify which trade practices fall under this category and to advise Muslims against them or, in addition, provide alternative Shariah-compliant practices.

Companies seeking to engage in business with Muslim consumers need to know these underlying beliefs that drive the Muslim consumers’ behaviour. Multinational corporations should be multicultural as well and not simply impose their own culture; they need to adapt their operations to make their Muslim customers, employees, and suppliers comfortable with their practices (Pomeranz 2004). These companies can constructively use the power of religion through accommodating and harnessing Muslim values more effectively when conducting their businesses in the Muslim marketplace (Rice 1999).

In general, all Muslim practices and acts are classified under the following categories.

• 1. Halal, or permissible. It has three levels:

• Wajib, or duty; obligatory acts. Failure to perform them is a sin. Duty can be described as the Core Halal, without which a firm can’t be seen as Shariah-compliant. Implications: firms must perform Wajib. Examples include being honest and transparent.
• Mandoob, or likeable; preferable but not obligatory. Not performing Mandoob is not a sin. Likeable can be described as the Supplementary Halal. Implications: do if possible. Examples include being helpful and going the extra mile.
• Makrooh, or despised; not preferable, discouraged by religion and usually seen as a last resort. Engaging in Makrooh doesn’t result in a sin unless it leads to one. The most obvious example of Makrooh in Islam is divorce! Although it is Shariah-compliant, it represents the border between compliance and non-compliance. It is loathed by society. Implications: avoid if possible.

• 2. Mushtabeh, or doubted; acts that a Muslim should refrain from because they might be Haram themselves or they might lead to Haram. Businesses should refrain as much as they can from engaging in doubted activities for the fear of being perceived to be unscrupulous by Muslim consumers. Firms engaging in these activities risk a Fatwa being issued against them.
• 3. Haram, or not permissible; all acts condemned explicitly or implicitly by the Islamic religion. Engaging in them or in activities leading to them is a sin.

These categories have obvious implications on what companies planning to engage the Muslim marketplace should and shouldn’t do. It is of no relevance whether these companies are Muslim or not, what is of relevance is what they should do, i.e., value maximization, and how they do it – by fair play and just dealing. To illustrate, the duty Wajib of a company in Islam is to maximize the good of the society as a whole, not profit maximization. Therefore, a company (its personnel) will be committing a sin if it doesn’t actively seek societal value maximization. A company however is at ease in choosing the means to do that, as long as those means are not Haram (as long as they are permissible or not a sin).

Although profit maximization is not the ultimate goal of trade in Islam, Islam accepts profits and trade and does not aim to remove all differences in income and wealth that may result in various social and economic classes (Beekun 1996). In fact Islam acknowledges that people will differ and that this difference is for a purpose ‘It is We Who portion out between them their livelihood in this world, and We raised some of them above others in ranks, so that some may employ others in their work. But the Mercy of your Lord is better than the (wealth of this world) which they amass.’ (Quran 43:32).

The implications of these categories on the marketing aspect of business are very thorough and encompass the entire marketing mix for both services and goods. The first component of the conventional marketing mix, e.g., is the product. In Islamic marketing, however, it is the Halal product, and the difference between the two is huge. From an Islamic marketing perspective the product that a company sells must be entirely Halal. This means that all inputs, processes and outputs must be Shariah-compliant, i.e., the product and all that has been involved in its creation, delivery, and consumption must be environmentally friendly and totally harmless, as Islam clearly prohibits causing harm to anything that God created (all-embracing harmony in the universe). An un-Halal or Haram product will be very difficult to sell to the Muslim consumer because the Muslim consumer’s behaviour is mostly dictated by the common understanding of what is permissible and what is prohibited under the Shariah law. Being Shariah-compliant is the quickest way to promote the company and its products.

Products and acts that might be seen or interpreted as Makrooh (despised) or Mushtabeh (doubted) will be immensely difficult to sell to Muslims. The same is true for companies producing these products or engaging in such acts. The Muslim consumer is ultra sensitive and the Muslim masses are easily swayed against anything that can be classified as un-Islamic – be it a country, a company, a product, a process and so on. It doesn’t matter that most of a certain company’s business is legitimate according to the Islamic law, what this law and its adherents take into consideration are all the small business streams that a company is engaged in as part of the business entirety. Just as a drop of oil ruins the taste of an entire tank of pure water, it is enough for one insignificant stream to be not Shariah-compliant for the image of the remaining fully legitimate business streams to be ruined. The bright side of this is that a company will need to purify all of its actions, resources and operations in order to be able to brand itself as Islamic and position itself favourably in the mind of the Muslim consumer. Such purification of the entire company can’t be anything but good since it results in value maximization for the community as a whole, including the company itself. For example, a company that produces pork products will find it difficult to sell anything else it produces to Muslims because pork and all that is associated with it is forbidden in Islam. Muslim consumers will not look at how good its other products are but will see only that it manufactures pork products. This image reflection is applicable worldwide, and more so in the Muslim societies, because the numerous religious self-appointed private and public dogwatches operating in these societies relentlessly scan for non-compliance. Any company found to be engaged in anything other than Halal will be stamped as un-Islamic, a very costly stigma indeed! It took Coca-Cola 14 years to be removed from the Arab boycott list; engaging in business with Coca-Cola was shunned religiously almost entirely over the Arab and Muslim world. Between the years 1977 and 1991 and prior to the signing of the various Arab-Israeli peace agreements Coca-Cola was banned from trading in the Arab world because the company refused to abide by the Arab League economic boycott of Israel. For decades, this cost Coca-Cola the opportunity to sell its products in Arab countries. By contrast, prior to 1992, Pepsi had abided by the boycott and enjoyed the bounties of the lucrative Coke-less Arab markets in the boycott days. The image of the company was severely hurt that it took Coca-Cola many years after the peace agreements of 1991 to build its brand in the Arab market.

Finally, although achieving the status of Shariah-compliant might seem hard at first sight, it is essential for success in the Muslim market. A compliant company will get a distinctive competitive advantage over the less compliant competitors. Failure to observe these rules means that the company and its brands will be stamped as Shariah non-compliant and thus un-Islamic; an image that no company can afford to have in the biggest unified market in the history of manki...

Table of contents

• Cover
• Half Title
• Dediaction
• Title
• Copyright
• Contents
• List of Figures
• List of Tables
• Preface
• PART 1 UNDERSTANDING ISLAMIC MARKETING
• PART 2 THE ISLAMIC MARKETING MIX
• PART 3 ISSUES IN ISLAMIC MARKETING
• Index