Islamic Branding and Marketing: Creating A Global Islamic Business

Chapter 1

Introduction

Islam: The Religion and the Brand

Islam has a huge following, as befits a religion that is around 14 centuries old. Islam is based on a belief in one God, Allah. The primary sources of Islamic law that believers follow are the Qur’an, a book believed to have been given by Allah to the Prophet Muhammad, and the Sunnah, a body of Islamic law based on the Prophet Muhammad’s words and deeds. Followers of Islam are known as Muslims. The word Muslim means those who accept and submit to the will of God.

Islam, as with any other well-known name, has an image. It can be considered to be a brand in its own right, with its own brand image; and like any global brand, this image is viewed differently by different people in different places. However, Islam is a very complex brand, and the differences in religious affiliation to Islam enhance this complexity; for example, the Sunni and Shia sects interpret some of the principles of Islam in different ways. And Islam, like any brand, may be perceived either positively or negatively. When left uncontrolled or unmanaged, such positive and negative perceptions will affect attitudes toward the brand.

For instance, in the West, some negative connotations of the word Islam stem principally from associations with extremist forms of behavior. While the purpose of this book is not to look at this issue, the lack of education and understanding about the religion is one reason for such perceptual differences, and this affects the acceptability of Islamic businesses globally if they choose to use their religious affiliation as a part of their brand identity. But if we take a broader view, we can see another reason for concern about Islamic businesses: that in any areas of the world where poverty is rife, more extremes of behavior occur, and this is so in the Muslim world. The fact that the majority of Muslims come from poor backgrounds can and does impact the image of Islam.

From a marketing perspective, the fact that some Muslim markets are poorer than others needs to be borne in mind by Western companies keen to offer products and services to those markets. In the next chapter, we will look at how marketers can improve their understanding and decision making in this regard.

Adding to the complexity with respect to Islam and Muslim markets is the impact of the culture of each country, whether it contains a Muslim-majority or minority population, on the behavior of Muslim companies and consumers. Culture impacts how people view the religion, and how strongly they express their beliefs. For example, Turkey is Muslim but very secular, while Iran falls more toward the other end of the religious conformity scale. Governments, businesses, and consumers in these two countries act in very different ways.

Another misperception in many people’s minds is the strong association of Islam and Muslim markets with Arabian countries. In fact, the Middle East countries don’t make up the majority of the global Muslim population, as we shall see in Chapter 2 when we look at the latest figures available for Muslim populations.

All of the above facts mean that any marketer or brand manager, whether from a Muslim or a non-Muslim company, must try to understand the structure and behavior of these markets if they are to be successful in doing business in them. But before I move on to discuss Muslim markets in detail, I would like to address a question that is uppermost in many people’s minds.

Is Islamic Branding a Myth or a Reality?

This is an interesting question, and it is one that I was required to address in public at the 6th World Islamic Economic Forum, 2010, held in Kuala Lumpur.

My answer to the question is that Islamic branding is a reality and not a myth. My reason for stating this is that there are substantial markets that want products, services, brands, and communications that are Shariah compliant, or demonstrate that they understand Islamic values and principles and are prepared to become Shariah friendly. Muslims the world over look for what is "halal, as opposed to what is haram," and so there is substantial demand for halal or Shariah-compliant products and services. The Muslim population represents around 23 percent of the world’s population and thus is a significant market. While this huge market is not homogeneous in behavior, it is—as we shall see later—bound by certain values that all Muslims share.

This fact raises related questions, such as: Is it worthwhile or proper to carry out branding based on religion? and Is it a good thing to discriminate in branding on the basis of religion? The most important thing that marketers need to bear in mind is that Islam is a way of life. The values and principles of Islam are taken much more seriously in terms of influencing the everyday way of life of Muslims than are the values and principles of other religions. In other words, from a marketing perspective, we are dealing with a huge number of people who have shared values, and therefore who share similar wants and needs, and branding is all about addressing consumers’ shared values, wants, and needs.

The major difference between other religions and Islam is that the practice of Islam influences all Muslims to a larger or lesser extent on an everyday basis, and this means that brand owners and marketers who wish to gain a strong foothold in a market of 1.57 billion people must cater to their needs—and with Islam, this means Islamic values, principles, and practices. This indisputable fact brings up the question of what information is available to assist marketers in understanding Islamic markets, because not all Muslims behave as one homogeneous group and there are many Muslim markets that vary in size and behavior.

Until very recently, there has been little data available to help with such understanding, but recent studies do give an insight into some of the questions marketers are asking, particularly about where Muslim populations are located and what size they are. A summary of some of this recent work will be provided in Chapter 3. However, having an understanding of the global spread of the Muslim population, and of the size of that population in various countries, doesn’t give marketers enough information, on its own, to enable them to create and manage their brands properly. Questions about how Muslim populations can be reached, and how their behavior differs or remains similar from place to place, remain largely unanswered, and much more work remain to be done to gain a proper understanding of consumer behavior in Muslim-majority and minority markets. Fortunately, some major research is now being carried out to elicit more information on these issues, as will be seen later in the book.

Despite the differences in Muslim markets around the world, we can safely say that Islam has certain principles and values upon which business is based, and these are briefly discussed below.

The Five Pillars of Islam

Islam is what is called a monotheistic faith; that is, it is based on the belief that there is only one God. As an Abrahamic-based religion, Islam—as opposed to, say, Christianity—makes no allowance for the plurality of God.

The most important Muslim practices are the Five Pillars of Islam, the five obligations that every Muslim must satisfy in order to live a good and responsible life, according to Islam. The Five Pillars of Islam consist of:

1. Shahadah: a declaration of faith that there is no god but God, and that the Prophet Muhammad is the messenger of God.

2. Salat: an obligation to perform ritual prayers five times every day in the proper way.

3. Zakat: a regular (usually annual) welfare contribution to the poor in society.

4. Sawm: the observation of fasting during the holy month of Ramadan.

5. Hajj: the undertaking of a pilgrimage journey to Mecca, at least once in a person’s lifetime (if that person has the means and is physically able to do so).

Carrying out these obligations provides the framework of a Muslim’s life, and weaves his or her everyday activities and beliefs into a single cloth of religious devotion. No matter how sincerely a person may believe, Islam regards it as pointless to live life without putting that faith into action and practice, and so it ensures that it is a way of life if practised properly. When duly carried out, the Five Pillars demonstrate that Muslims put their faith first, and do not just try to fit it in around their secular lives.¹

This is an important fact for marketers to bear in mind: that, for most Muslims, Islam is not just a component or part of one’s life; it is a way of life.

The Principles of Islamic Trade and Commerce

Islamic Law

If Islam is a way of life, then it could be liberally described as a lifestyle as well as a religion. The Islamic system of governance is based on Shariah, or Islamic law. In Arabic, Shariah means the clear, well-trodden path to water, and is regarded by Muslims as God’s guide to human behavior. Life is a journey that presents to everyone many paths, but only one of those paths is clear and straight, and this path is called the Shariah. Shariah law comes from a combination of sources, including the Qur’an (the Muslim holy book), the Hadith (the sayings and conduct of the Prophet Muhammad), and fatwas (the rulings of Islamic scholars).

Shariah deals with legal aspects of day-to-day life, including politics, economics, banking, business, contracts, family law, sexuality, and social issues. Doing business professionally, and holding fast to the values of truth, honesty, and trustworthiness, is the Shariah way. As all forms of social, economic, and political activities are governed by Shariah law, thus branding and marketing activities should also fall under Shariah law.

However, world trade, including trade with and between Islamic countries and companies, has largely been conducted under globally accepted laws and customs, and it is only in the last 30 years or so that a notable increase has been seen in trade and commerce of a truly Islamic nature, such as Islamic finance. Islamic law has often been perceived in a negative light by those Western observers who associate Islam with negative attributes, but legally it is now a system of law that is recognized throughout the world.

Islamic Economics

The underlying economic concepts behind Islamic business are fairly straightforward. Islamic economics aims to achieve the state of human falah by organizing the resources of the earth based on cooperation and participation. The word "falah" means to thrive, be happy, and be successful; and in the Islamic economic sense, it refers to being successful in this world as well as the hereafter, and so has macro- and micro-level implications for spiritual, economic, cultural, and political issues.

In focusing on the economic conditions of falah, the following must be fulfilled in order to achieve it:

Infaq: Spending on others and meeting the social needs of the community from only part of one’s total possessions.

Giving zakat (a financial levy on surplus wealth) to the poor and needy is compulsory, and is seen as an act of purifying one’s wealth.

However, there is no compulsion to spend all of one’s wealth.

Prohibition ofriba: Interest on capital is seen as perpetrating exploitation and inequity.

Islamic finance is a growing industry that is increasingly being seen as a viable alternative to the conventional financial system.

Some argue that the current Islamic finance system still has a strong profit motive and is a mere mirror-image of the conventional system.

Fulfillment of covenants and trusts: Meeting all of one’s social and religious obligations, including to the environment.

When extended to corporations, this strongly correlates to corporate social responsibility, where they are answerable to the society at large, and not just to their shareholders.

Justice: Lawfully acquired wealth must be protected to avoid inequality, impaired incentives, and social waste.

Personal property rights of all people are safeguarded, irrespective of their race or religion.

Enterprise: Productive economic activity contributes to the falah of society and the individual.

The Qur’an exhorts man to seek the bounty of God.

The Prophet’s statements urge people to work and earn their livelihood, and condemn idleness and beggary.

Overall, mankind’s spirit of endeavor is encouraged as long as it is for lawful and wholesome purposes.

Cultural conditions of falah should also be reviewed, as they have an impact on consumption by Muslims—in particular:

System of prayers: Islamic prayers (five times a day, with Friday congregational prayers) teach discipline and organization to individuals and the community.

Knowledge: The Qur’an emphasizes inquiry and the pursuit of knowledge, as well as prohibiting sorcery. This is so that society bases its actions on knowledge, rather than superstition.

Sexual chastity: Legitimate sexual relations as a foundation for a stable family life, which when exceeded leads to various social and health problems.

Prohibition of drinking and gambling: Seen as leading to numerous social problems, such as alcoholism, addiction, and so on.

Purification of the environment: Being responsible for the environment ties in with the concept of stewardship. The current pollution of the environment due to material development is counter to Islamic economics.

The view of Islam in relation to consumerism can be explained as follows:

Material possessions are a necessary part of human life and should not be forgone.

However, they are secondary to one’s moral and spiritual development, as the real destination is deemed to be the hereafter.

Even then, material possessions are ultimately owned by God and must be consumed, saved, or invested within the limits of one’s covenant with God.

Marketing and branding, if seen as not only satisfying consumer demand, but actually creating and perpetrating it, is at odds with Islamic economics, which espouses moderation and a resource-based view of consumption.

Islamic consumption must be governed by Taqwa (God-consciousness), based on conservation of resources and attaining satiable comforts, rather than pursuing insatiable wants.

Taking all of the above into account, any Islamic branding and marketing strategy must seek to create brand identities that address all these issues; otherwise, the result will be a mere market segmentation tool that might not be entirely acceptable.

Adhering to the principles of Shariah also means ensuring that certain ethical values are in place. The role of Islamic values in building and marketing brands will be discussed in detail in Chapter 5.

It’s important to note at this point that Islam states quite clearly that profit optimization is acceptable, as long as it is in keeping with Shariah principles and the fulfillment of covenants and trusts meets all of one’s social and religious obligations, including to the environment. The issues of social and environmental obligations are most interesting, representing great possibilities for Islamic businesses, and they will be discussed later in this book.

Islamic Halal Standards

The practice of Islam under Shariah law has for centuries been the basis of Islamic trade and business, and there are well-established rules and standards in place to ensure that the law is observed by practicing Muslims. Those rules have been described above. We shall now turn to the standards and guidelines for the consumption of products and services.

Any Muslim who wishes to buy and consume or use products and services must ensure, as far as he or she can, that those products or services are halal, an Arabic term meaning permissible, which refers to anything that is rightful and permissible under Islam. The term is most frequently linked to food that is permissible according to Islamic law, but in fact it applies to all categories of products and services used in Muslim life. The opposite of this term is "haram, which means not permissible." Conforming strictly to Islamic law means that everything a Muslim does must be halal. In reality, however, as will be seen in Chapter 3, there are different degrees of religiosity practiced, from orthodox to liberal. The concept of halal has been in existence from the birth of Islam, and Islam has always been involved in global trade.

The Interface between Islam and Trade

Several developments made Islam and the Muslim world the defining force in international trade for over 600 years (from around AD 640 to 1260), pushing Islamic civilization to the front of the world’s economic stage. These were:

the establishment of commercial law;

the expansion of property rights for women;

the prohibition of fraud;

the call for the establishment of clear standards of weights and measures; and

the uncompromising defense of property rights (even while calling for a greater responsibility for alleviating the plight of the poor and needy).

Some of the trading expeditions are quite legendary. For example, as described by Chinese Premier Wen Jiabao, In the 15th century, the famous [Muslim] Chinese navigator Zheng He led seven maritime expeditions to the Western Seas and reached over 30 countries. He took with him Chinese tea, silk and porcelain and helped local people fight pirates as he sailed along. He was truly a messenger of love and friendship.²

Trading is still an innate skill and a natural activity in Islamic culture, and can be seen in many Muslim countries. The resource-rich countries of the Middle East continued to rely on commodity trading, as opposed to the building of diverse manufacturing and service economies, until recently. The shift from trading to modern business is really a result of the depletion of oil in some areas—for example, Dubai in the United Arab Emirates (UAE). The poorer countries have had little choice but to rely on trading, but as economic development improves, the shift from trading to production and service-related industries tends to follow. And with this shift comes the demand for branded products and services. But if Islamic nations have survived through the centuries via trading, why do they need to produce their own brands? This question will be answered in depth in Chapter 2. Let’s reflect first a little more on the situation to date.

How Are Islamic Brands Doing?

In short, the answer is: Not very well. Given the clear benefits for any nation of developing and encouraging the growth of strong brands, it is perplexing to see that few, if any, truly global brands have come from Islamic countries. The reasons for this seem to be similar to those that accounted for the state of Asian branding 10 years ago, and are as follows:

companies focusing on short-term profits and operational efficiency, and neglecting the longer-term nature of brand building;

a tendency to rely on the Original Equipment Manufacturing (OEM) trap—that is, making products for other companies that would then put their own brand names on them;

a prevalent mindset among chief executives that brand building is not strategic and is really only done tactically via advertising, promotion, and other communications activities;

lack of acknowledgment that brands are assets with consider-able value;

over-reliance on the status quo, especially in those countries endowed with an abundance of natural resources; and

lack of government support of brand building by companies in Islamic countries. This is reminiscent of Asian brands during the 20th century, when only Japanese and Korean brands succeeded due to their receiving government support.

Given the success of Islamic trade in past centuries, it is interesting to note that the focus is now switching from trading to branding and strategic marketing.

Why the Interest in Islamic Branding and Marketing?

There are many reasons for the increasing interest in Islamic branding and marketing. First, there is the compelling argument provided by the sheer size of the market, with its relatively young and growing population, and rising affluence. This, in itself, is providing a growth in demand for Islamic products. Second, there is a growing awareness of Islamic consumption as a result of the above, and a greater empowerment of Islamic consumers. A third reason is the fact that Islamic countries and companies have seen the power of branding in global markets, and witnessed Western brands moving into their markets. Coupled with this is the realization that Islamic brands have the potential to cross over to non-Muslim markets, due to:

shared universal values in relation to purity, health, and wellness;

increasing quality standard of Islamic products and services; and

increasing availability of Islamic products and services in non-Muslim-majority markets.

Why Now and Not Before?

Stemming from the above trends, there is now a growing interest in establishing and growing Islamic brands. This interest is following a similar path to that of branding in Asia over the last two decades.

In Asia during the early 1990s there were few brands of importance, as local companies remained focused on profits and efficiency. A short-term, trader mentality was prevalent, and owners of businesses tended to seek short-term profits and operational efficiency, as opposed to investment in the intangibles of brand building—a long-term pursuit. It took several years for companies to change their business strategies to move out of the OEM trap and start to brand themselves. The same situation is now to be seen with companies from Islamic countries. But one more factor is speeding up the process of brand building for Muslim companies, and that is the acceleration of globalization.

Globalization has made an impact in three main ways. First, recent increases in exposure to global brands and lifestyles both abroad and at home have revealed to business owners and consumers what the power of branding can bring. Second, there has been an increase in Muslims studying and working abroad, who are bringing marketing and branding know-how back to their home countries. Third, and importantly, foreign brands have made vast incursions into the lives of Muslim people all over the world.

One extraneous factor that is also helping the brand movement is the need for some Islamic countries to diversify as their traditional resource base starts to reduce, such as Dubai and Brunei, which are now looking at finite oil horizons.

Finally, some countries—such as Kuwait, Qatar, and Abu Dhabi from the UAE—are investing their cash reserves in buying foreign brands in order to kick-start the brand-building process.

These and other possible reasons mean that the Islamic business world is waking up to the fact that brands are good news, and that we will soon be seeing a lot more of them.

Could There Be an Islamic Economic Union?

With this in mind, it has been suggested that such is the extent of the Islamic population and its spread across various countries that, just like the European Union, there could be an Islamic Economic Union stretching across the Middle East, Africa, and Asia, maybe as early as 2020. It could cover 77 countries where Muslims are the majority—or the largest minority—group, and would be a theologically based cultural and economic community, with a common economic platform and currency based on gold dinars and dirhams, according to the traditional weights and measures under the standards of the World Islamic Trade Organization. This Islamic bloc would control the majority of strategic and natural resources, including oil and gas; and the guiding principle of the Islamic Union would be the concept of stewardship, or "khalifah," as prescribed in the Qur’an. This would differ from capitalism, socialism, and communism, as it would entail a resource management system involving sustainable development and accountability, as well as profits.

Whether this hypothesis is feasible or not is arguable, but the fact that it has even been thought of presents us with a view of the potential of the Islamic business world with its 1.57 billion people.

However, the huge number of people that constitutes the global Muslim market is by no means homogeneous from a consumer behavior perspective, and the distribution of Muslims across the globe means that the application and degree of adherence to the religion of Islam and Shariah ethics and law differs considerably, depending largely on the country and culture within which Muslims reside.

The scale and nature of the global Muslim market will be the subject of Chapter 3. However, let’s first consider why branding is good both for nations, and for the companies and organizations that operate in them.

Notes

1. www.bbc.co.uk/religion/religions/islam/practices/fivepillars.shtml.

2. Excerpt from a speech by Chinese Premier Wen Jiabao at the University of Cambridge, February 2, 2009.

Chapter 2

Why Muslim Nations Need to Develop Strong Brands

Introduction

In this chapter, we shall consider why Muslim countries should encourage brand building in both the public and private sectors as well as at the national level, in order to reap the benefits of branding and not get left behind in the titanic global struggle for national success.

It is no coincidence that countries such as Argentina, Australia, Iceland, Ireland, Kenya, Lithuania, Poland, Scotland, Slovenia, South Korea, Spain, the UK and others have been through some form of national branding exercise. They would not have done so without the expectation of considerable benefits accruing, and many have benefited tremendously. The benefits that can be achieved are discussed in this chapter.

Why Do Countries Need Branding?

Countries and sectors within countries, are just like large companies. And of course, like companies, they can be branded. Anything can be branded, as the principles are applicable no matter what the subject of the exercise. However, national branding is not an easy matter. Although the revenues of certain companies are larger than the gross domestic product (GDP) of some countries, branding a country is far more complex in nature than branding a company. But while the degree of difficulty is greater with nation branding, it is nevertheless worthwhile.

Some of the complexities of nation branding arise because there exists within countries a great deal of internal competition, as different institutions, government-related organizations, and ministries/departments compete for funding, public support, and talent. Other competitive influences exist via the private sector, from companies that clearly have their own agendas. Yet another difficulty is getting inclusivity—that is, buy-in from all the people who represent the country. This is difficult enough in a large company, let alone in a country.

However, there is no disputing the fact that nations and public sector organizations need branding, both as a means of differentiation and as a route to survival in commercial terms, because we now live in a world of parity and mediocrity.

The World of Parity

The trend that has caused most concern in every market in the world in recent years is that of parity. Faced with a situation where their products, services, systems, and technology are so easily replicable, the biggest problem for companies around the world is differentiation. How can they appear to be different and better than their competitors while marketing and selling the same things?

In the world of parity, the only true differentiator is brand image. This is why people pay 1,000 times the price of a Casio watch to own a Rolex, and why Nokia has for many years captured around 40 percent of the market share in mobile phones. It is why Armani makes greater profits during Asia’s recessions than during normal times. And it is why the waiting list for Mercedes cars in some countries grows longer the more prices go up. It is because there are other associations in the minds of consumers: status, prestige, and the need for self-expression. These associations appear in people’s minds because they have been deliberately positioned as such. The commodity label can be shrugged off with powerful branding.

But what has this to do with Islamic branding and marketing? Why should Islamic countries concern themselves with brand image?

Why Do Islamic Countries Need to Undertake and Encourage Branding?

There are several reasons why Islamic countries should be concerned with national, public sector, and private sector branding.

The first reason is because the problems they face are the same: parity and the need to differentiate in the face of increasing competition. Just like companies in Asia and the West, countries have to attract various customer groups and must market and sell their products, ideas, and services to people in other countries.

Just as companies have found that the best way to do this is not usually via the lowest price, but through building perceived value, so countries are beginning to do so as well. There is a dawning recognition that a nation’s image is made up of perceived value, and that value can consist of intangible as well as tangible elements. Countries have entered the world of branding.

Second, countries must change if they are to survive in a changing world, because relying on past reputation doesn’t always ensure success in the future.