Critical brand risks in marketing to the Global Muslim Community

Risk scenario planning (visual courtsey http://www.ficsas.com)

The global Muslim community at a staggering 1.57 billion people is a very large market segment that’s intriguing marketers, across product categories, for a variety of reasons. With a rising demand for products and services, fulfilling needs of day-to-day life to aspirational requirements and armed with strong purchasing power, the global Muslim community is a very attractive consumer segment to businesses.

From the perspective of market entry planning for a brand, it’s no different from entering any other market or segment.

• Identifying the key markets,
• Researching the impact of the existing product portfolio on the market segment,
• Evaluating the competitions’ actions to benchmark and obtain best practices and
• Doing an opportunity cost analysis to obtain earnings and brand sustainability are all part of the basic market entry planning.

But this is where the conformity changes!
Unlike other cultural consumer segments the global Muslim consumer segment is made up of a myriad of sociocultural sets that have been influenced by emigration (of the community)  and adaptation to social and environmental norms of current place of residence and livelihood. Thus producing today’s Muslim consumer who has a strong , individual value system and identity that is based and governed by the core values of  “Halal”(Halal is an Arabic term meaning “lawful or permissible” and not only encompasses food and drink, but all matters of daily life. Ref: isahalal).

An article in the Marketing Week highlighted that “Muslim consumers are a growing, influential and extremely loyal group, making them a desirable market for mainstream brands. But reaching them requires more than launching Sharia-compliant products. Making inroads to this sector takes a deep understanding of the values of this community and building the brand from there. They’re young, ambitious and worth at least $2 trillion globally”. The key words being “deep understanding of the values of this community and building the brand from there”.

Thus, simply communicating and delivering a fulfilling brand experience based on product or service innovations would not suffice for this segment.In order to win the loyalty of this segment the brand has to approach the relationship (with the Muslim consumer from a totally different paradigm). In order to gain the trust of this consumer, adherence to the required standards (halal guidelines) and transparency in (the brands’) operations and activities is a must.

Building a brand in this segment differs (from other consumer segments) in terms of risk and organisational demands.The risks should not be underestimated. They should be thoroughly studied and evaluated on two levels:

• Product/Brand level– A product and brand risk analysis will consider the impact that targeting the Muslim consumers might have on the organisation’s core global brand if the product is sold in non-Islamic markets.
• Corporate level– A corporate level risk analysis will take into account a wider view of potential transnational consumer activism, thereby, enabling the organisation to be ready to deal with at least three potential threats— social, political and financial.

1. Social Risk: by virtue of their numerical strength and purchasing power the Muslim consumer can choose “not to buy”. Such “not to buy” acts are not uncommon. Recall the indignation and subsequently the impact the global Muslim community had over the publication of cartoons of our beloved Prophet (P.B.U.H) in a Danish newspaper. The subsequent lack of political and cultural empathy led to a widespread boycott of Danish products to the extent that even western retailers removed Danish products from their shelves due to fear of negative repercussions.
2. Political Risk: Given the rising awareness of Islam, and a new-found resurgence of the Muslim identity, governments across Muslim countries have responded with regulatory changes. Malaysia, for example, has created its competitive advantage by promoting halal foods, Islamic Finance and halal tourism. Kuwait, had its first women ministers a year ago (ref:www.guardian.co.uk).
3. Financial Risk: An existing organisation has to evaluate the potential ‘fallout’ that may occur through alienating the existing consumer base by entering the Muslim consumer segment AND also has to check potential revenue loss from not correctly serving the Muslim consumer. This needs to be balanced out versus the projected revenue growth expected from serving the Muslim segment.

Lastly, there is a risk of a “backlash” if the organisations are seen to be exploiting the Muslim consumer. With the rise of social media, and “interest based communities” being online 24/7, blurring geographical and cultural distinctions, a backlash (on a brand) can spread like bushfire through the global Muslim community in a matter of hours. Thus affecting the brand not in just one specific region but globally across the markets it’s present in. One way to minimise this risk is to ensure that the brands’ and the organisations’ activities benefit the community .

The Muslim consumers seek reassurance that any brand offer from an organisation is not just a “marketing ploy”. They want to feel that the brand genuinely understands and empathise with Islamic values in all aspects of their operations. Towards this, communicating transparently and providing a beneficial and meaningful brand experience will enable a brand to reduce and control risk to a great extent in marketing to the Global Muslim Community.

Related articles

• The Value Benefit of Convergence (benefitpoint.wordpress.com)
• Halal & Shari’ah Compliance.. A Process or A Value? (benefitpoint.wordpress.com)

The Value Benefit of Convergence

The global Halal industry (estimated at USD 2.3 Trillion) & Islamic Finance industry (estimated at USD 1.3 Trillion) have been in the spotlight for some time now due to the rapidly increasing size, need and purchasing power of the global Muslim community (as a primary driver of growth). As both industries reach dizzying heights of business volume, and elicit a great deal of interest, the question that still remains is one of the imminent convergence of these two industries.

Whilst, within the ambit of commercial business, a lot is being done with regards to standardisation that is meant to aid this convergence. The developments, unfortunately, are not communicated or known to the general public. This in itself, has a limiting effect on hastening the pace of the much needed convergence of these two industries.

Why is this so?

Looking back at both industries, from a strategic planning perspective, there’s one key gap area, common to both industries that stand out. And that’s the gap of a strong, consumer based, value benefit!

In both the industries, the extremely high emphasis on process i.e. –“halal certification & sharia compliance”—has led to, some extent, alienation of the consumer. There is a distinct lack of understanding, by businesses, of critical issues that affect the individual consumers, such as:

• Consumer intelligence ( which provides insight for business  planning),
• Comprehension by the consumers (of the value concepts that Halal and Shari’ah symbolise)
• Understanding the consumers’ latent emotional need for a specific value benefit from the products and services

Businesses, in both industries, undertook what is required to make the product adhere to the given, respective, standards and approached marketing, inside out
i.e. product development, standard compliance and then communicating the compliance as the value benefit.
In the process, they left aside critical knowledge (of what the consumer needs and wants) which is vitally necessary for a business to grow.

Is there a way forward?

The consumer world has changed. Within that the global Muslim community (as the mainstay for both Halal and Islamic Finance) has undergone a paradigm shift in their attitudes, perceptions and behaviour!

For starters the two industries need to get consumer-centric and have respective industry bodies undertake intensive education, at a consumer and industry level, on the two basic terms–Halal & Shari’ah compliant– in order to clearly establish the value benefit emerging for the processes of both.

Why is this a necessity?

I looked into how these words/terms are actually comprehended and, surprisingly, I came across a few references of how often “halal” is not understood clearly, and is associated only with food and how Muslims consumers themselves are, a bit in the dark due to lack of transparent information.

Through social media, a quick dip-stick research targetting Muslim professionals from various industries, comprising of various nationalities and cultural backgrounds was done. It clearly brought to fore the fact that the common man’s usage and comprehension of the terms are not the same all over the world.

In fact, the perception is that, “Halal is the process of slaughtering and packing meat and poultry products according to the (respective) country’s halal certification process” & “Shari’ah is Islamic law that governs financial products”.

This perception in itself clearly shows the lack of awareness and clarity on the concepts that Halal & Shari’ah embody.

But Halal and  Shari’ah are much more than this current comprehension!

The questions that arise are:

1. Are Halal & Shari’ah compliance only processes then?
2. Or are they “value concepts” that can be used to develop sustainable business strategies that deliver benefits?

Intriguing questions,as in the spirit of Shari’ah, a business is deemed halal if it is, end to end, adhering to certain principles and not just the manufacturing or slaughtering process.For eg: if a food brand, marketing canned beef obtains the halal certification, but its business operations like financing is using conventional finance and its organisational culture is not based on Islamic ethics and its governance is more regulatory than civic responsibility oriented–Is it truly Halal?

Similarly, if a financial product re-words, re-processes the ‘interest’ component in its product make up and ‘complies’ with known Islamic financial legalities and becomes ‘shariah-compliant’ does that make the product halal?

Questions to which,perhaps, there will be clear answers  once organisations undergo a cultural shift and look at Halal and Shari’ah as (critically needed) ethical values and focus on being consumer-centric in their business planning in order to be sustainably competitive across time.

Such a change will provide organisations a new business model that would be fully value centric than the current practice of being stakeholder profit centric.

 

Related articles

• Consuming Islam – the Rise of the Halal Economy (hifzanshafiee.wordpress.com)

Islamic Finance Incommunicado

By Bernardo Vizcaino, CAIA

The following article was first published in the Opalesque Islamic Finance Intelligence – Fifteenth Issue (see reference link) and is reprinted here with permission.

Incommunicado

It seems that Islamic finance is getting a makeover. Recently there have been various (some light-hearted) attempts to dissect Islamic finance: from comparing Islamic finance to every-day items, tongue-in-cheek forecasting of industry developments, clever use of soccer metaphors, to berating the much-hyped self-congratulation that we periodically witness in conferences and industry events. This kind of commentary, taken as a whole, hints to a desire to revisit the message of Islamic finance and how this is communicated.

One of our contributors recently inquired about who had coined the term Islamic finance, and this led to discussions surrounding the first forays into Islamic Economics and looking further back to the early days of Muslim commerce.Almost simultaneously I had been asked to provide feedback to one of the above-mentioned questionnaires, one of them asking us to identify what  everyday items best resembled Islamic finance. The latter was an intriguing exercise since it was effectively reaching out to our subconscious perception of the industry.

These were intriguing queries, looking at the origins of Islamic finance (exactly where it came from) and the characteristics we ascribe to this industry (metaphorically speaking that is). Overall, these and many other approaches carry a common denominator, they are all trying to make the topic more accessible to the masses.

Perhaps…
Perhaps the definition of Islamic finance is too eccentric for a lay person, in other words it doesn’t make sense except to those who are already familiar with Islamic finance in the first place. Furthermore, it appears that there is no standard definition of Islamic finance (some are even circular – making reference to Islamic banking… what good is that!) and all of them lack simplicity (often degenerating into multi-paragraphed expositions).

Naturally, the core of Islamic finance is Shariah, but once again it does not lend itself for easy assimilation by newcomers. Then again, there have been many qualities ascribed to Islamic finance: borrowing from ethical and sustainable finance, focusing on the interest-free and participatory nature of its products, to the socially responsible and community engagement role of its member banks. All of these terms are valid, but there is yet to be a definition that is all-encompassing.

Perhaps…
Perhaps the message is not being communicated effectively, not reaching or catering to the right audience (specifically those weird people outside of the industry which we will refer to from now on as “consumers”). Yes consumers are the ultimate audience, and as we see discussions gravitate around the definition it is equally important to observe how such definitions are being delivered.

Even a cursory survey of industry portals yields very few definitions of Islamic finance or Islamic banking, presumably because they are such obvious terms that they don’t require an introduction. However, communicating what is Islamic finance could use novel tools and some lateral-thinking. Sometimes metaphor, symbolism, and even parody can help illustrate the inner-workings of the industry.

Perhaps…
Perhaps it matters little what we consider to be the ‘correct’ definition of Islamic finance. Notice my attempt to avoid offering a definition (attribute this to laziness if you will). It might be that what needs to be redefined is the focus of the industry. The most important concern is not a few sentences or a nominal description, but rather to engage more people and broaden the appeal of Islamic finance – beyond the limited walls of a few service providers. Definitions are useful, but they are of little use if the industry keeps talking to itself.

Your feedback and comments are very important to us, please feel free to contact us by using the comments facility.

Related Articles

• EPL for Islamic Finance (benefitpoint.wordpress.com)
• E.P.L. in Islamic Finance: EDUCATION – How & What (benefitpoint.wordpress.com)
• Tackling Operational Issues faced by Islamic Banks – Mufti Ehsan Waquar Ahmed, Shariah Advisor UBL Ameen Islamic Banking, in discussion with Furqan Ayub in program “Live Wire InFocus” on Business Plus. (benefitpoint.wordpress.com)

Critical Brand Risks in marketing to the Global Muslim Community

 

Risk scenario planning (visual courtsey http://www.ficsas.com)

 

The global Muslim community at a staggering 1.57 billion people is a very large market segment that’s intriguing marketers, across product categories, for a variety of reasons. With a rising demand for products and services, fulfilling needs of day-to-day life to aspirational requirements and armed with strong purchasing power, the global Muslim community is a very attractive consumer segment to businesses.

From the perspective of market entry planning for a brand, it’s no different from entering any other market or segment.

• Identifying the key markets,
• Researching the impact of the existing product portfolio on the market segment,
• Evaluating the competitions’ actions to benchmark and obtain best practices and
• Doing an opportunity cost analysis to obtain earnings and brand sustainability are all part of the basic market entry planning.

But this is where the conformity changes!
Unlike other cultural consumer segments the global Muslim consumer segment is made up of a myriad of sociocultural sets that have been influenced by emigration (of the community)  and adaptation to social and environmental norms of current place of residence and livelihood. Thus producing today’s Muslim consumer who has a strong , individual value system and identity that is based and governed by the core values of  “Halal”(Halal is an Arabic term meaning “lawful or permissible” and not only encompasses food and drink, but all matters of daily life. Ref: http://www.isahalal.org/Content/Halal-Information.aspx).

An article in the Marketing Week highlighted that “Muslim consumers are a growing, influential and extremely loyal group, making them a desirable market for mainstream brands. But reaching them requires more than launching Sharia-compliant products. Making inroads to this sector takes a deep understanding of the values of this community and building the brand from there. They’re young, ambitious and worth at least $2 trillion globally”. The key words being “deep understanding of the values of this community and building the brand from there”.

Thus, simply communicating and delivering a fulfilling brand experience based on product or service innovations would not suffice for this segment.In order to win the loyalty of this segment the brand has to approach the relationship (with the Muslim consumer from a totally different paradigm). In order to gain the trust of this consumer, adherence to the required standards (halal guidelines) and transparency in (the brands’) operations and activities is a must.

Building a brand in this segment differs (from other consumer segments) in terms of risk and organisational demands.The risks should not be underestimated. They should be thoroughly studied and evaluated on two levels:

• Product/Brand level– A product and brand risk analysis will consider the impact that targeting the Muslim consumers might have on the organisation’s core global brand if the product is sold in non-Islamic markets.
• Corporate level– A corporate level risk analysis will take into account a wider view of potential transnational consumer activism, thereby, enabling the organisation to be ready to deal with at least three potential threats— social, political and financial.

1. Social Risk: by virtue of their numerical strength and purchasing power the Muslim consumer can choose “not to buy”. Such “not to buy” acts are not uncommon. Recall the indignation and subsequently the impact the global Muslim community had over the publication of cartoons of our beloved Prophet (P.B.U.H) in a Danish newspaper. The subsequent lack of political and cultural empathy led to a widespread boycott of Danish products to the extent that even western retailers removed Danish products from their shelves due to fear of negative repercussions.
2. Political Risk: Given the rising awareness of Islam, and a new-found resurgence of the Muslim identity, governments across Muslim countries have responded with regulatory changes. Malaysia, for example, has created its competitive advantage by promoting halal foods, Islamic Finance and halal tourism. Kuwait, had its first women ministers a year ago (ref:www.guardian.co.uk).
3. Financial Risk: An existing organisation has to evaluate the potential ‘fallout’ that may occur through alienating the existing consumer base by entering the Muslim consumer segment AND also has to check potential revenue loss from not correctly serving the Muslim consumer. This needs to be balanced out versus the projected revenue growth expected from serving the Muslim segment.

Lastly, there is a risk of a “backlash” if the organisations are seen to be exploiting the Muslim consumer. With the rise of social media, and “interest based communities” being online 24/7, blurring geographical and cultural distinctions, a backlash (on a brand) can spread like bushfire through the global Muslim community in a matter of hours. Thus affecting the brand not in just one specific region but globally across the markets it’s present in. One way to minimise this risk is to ensure that the brands’ and the organisations’ activities benefit the community .

The Muslim consumers seek reassurance that any brand offer from an organisation is not just a “marketing ploy”. They want to feel that the brand genuinely understands and empathise with Islamic values in all aspects of their operations. Towards this, communicating transparently and providing a beneficial and meaningful brand experience will enable a brand to reduce and control risk to a great extent in marketing to the Global Muslim Community.