8.         WILL THOSE TARGETED PAY MORE? THE ISSUE OF HALAL LOGO                           Ernest Cyril de Run*, Lau Wee M...
BRIEF LITERATURE REVIEWReligion is important for human being to reflect their value and attitude for an individual to shap...
Figure 1: Advertisement UsedThe questionnaire contained three sections. The first portion consisted of demographics. These...
Table 1: Respondent Profile  Variable                                       n            % Gender        Female           ...
The second stage of the study looked at relationship. This was initially measured using acorrelation followed by a simple ...
Table 5: Linear Regression on Willingness to Pay                                                         Ad with Halal Sig...
be because in Malaysia, any fast food restaurant is expected to be Halal compliant. Nevertheless,this may not be true as m...
Delener, N. (1994). Religious contrasts in consumer decision behaviour patterns: their dimensions        and marketing imp...
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Halal Signage

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This is based on a research with Lau Wee Ming and soon to be published as a chapter in a book

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Halal Signage

  1. 1. 8. WILL THOSE TARGETED PAY MORE? THE ISSUE OF HALAL LOGO Ernest Cyril de Run*, Lau Wee Ming†ABSTRACTHalal certification plays an important role for Muslims and is much hyped in Malaysia. Thispaper aims to examine whether Muslim consumers are willing to pay more for a fast food relatedproduct with Halal certification as compared to one without. An advertisement of a fast foodproduct is presented with and without Halal certification and findings compared. Two studieswere carried out. The first looked at difference and the second at the relationship between thevariables studied. The results indicate no significant difference in the mean value of the price ofthe product that respondents were willing to pay if the product was advertised with Halal signageor without. The second study showed significant relationship for willingness to pay by variousattitudinal variables, notably attitude towards the brand had a positive impact. Foradvertisements without a Halal logo, advertiser’s sensitivity came in to play. The findings provideimportant managerial and further studies implications.INTRODUCTIONThe Malaysian government is pushing for a variety of Halal based endeavors. These ranges fromthe use of a simple Halal certification label to the complex Halal hubs (Muhammad, 2009). Themove is to enable Muslim entrepreneurs to develop a niche for themselves. This niche could thenbe developed into business opportunities and further capitalized. It is obvious that Halal certification is of importance to Muslims. Halal in itself is aMuslim requirement. Nevertheless, the issue to businesses, as usual, is an issue of profit, with abasic formula of cost versus returns (Sungkar, 2008). Does the possible return from obtaining,displaying and utilizing a Halal certification justify the cost of obtaining and maintaining a Halalcertification? Logic says yes, as the Muslim market is a huge one, and ever growing (Muhammad,2009). Within that group there will always be those that are more religious and thereforerequiring such certification. This paper sets out to determine whether the targeted groups of Halal certification,Muslims in Malaysia, are willing to pay, and perhaps even to pay more for such a certification.This study aims to evaluate the willingness to pay for a product with Halal signage as comparedwith one that doesn’t have such signage, with no other explicit ethnic or religious cues. This isdone by looking at the differences by the advertisement used as well as by trying to understandthe relationship that willingness to pay and purchase intention has on various attitudinalcomponents. The first section of this paper explains the underlying theoretical basis of the study.The next section covers the methodology used in the study. Then the paper states the findings anddiscusses it. The last section summarizes the discussion and focuses on the implication of thestudy’s findings for academics and managers.* Associate Professor at Faculty of Economics and Business, Universiti Malaysia Sarawak (UNIMAS). Email: drernest@feb.unimas.my† Master by Research (Msc) student at Faculty of Economics and Business, Universiti Malaysia Sarawak(UNIMAS). 101
  2. 2. BRIEF LITERATURE REVIEWReligion is important for human being to reflect their value and attitude for an individual to shapetheir behavior. Religion can be defined as the habitual expression of life that deals with ultimateconcerns and values (Cloud, 2000; Fam, 2002). Religious beliefs play an important role inshaping social behavior. Different levels of religious affiliations affect the way people live, thechoices they make, the food they eat, and also the people they joined. Religious identity willinfluence different religious group purchase decision (Schiffman, 1999). Most of the religionsmay influence consumer’s behavior and attitude (Delener, 1994). It may influence foodpurchasing decisions and also eating habits in particular (Mennell, 1992). Malaysia is one of the most religiously diverse nations including Buddhism, Christianity,Islam, and non-religious believers (Fam, Waller, & Erdogan, 2002). However, the majority ofMalaysians practice Islam and it is recognized as the national religion (Means, 1978). In Islamicsocial philosophy, spiritual, social, political, and economic matters are all intermingled and basedon the belief that the spheres of life are religion based (Von der Mehden, 1986). Muslim has acode that governs the morals, duties, and behavior of all Muslims in all aspects of life, known asIslamic law (Coulson, 1964). Previous studies revealed that one religion may form any number ofvalues, beliefs, rituals, prayers, norms, requirements and taboos (Crystal, 1993). In Malaysia,there is little division between religion and social conducts (Fam, Waller, & Erdogan, 2002). Halal certification refers to a third party certification that is widely used in Malaysia.Malaysia’s Department of Islamic Development (JAKIM) has introduced Halal logo that hadgenerated more awareness among the Muslim about the importance of consuming products thatfollow Islamic guidelines and principles. Halal logo is a signal that allows Muslims to frequent afood outlet without fear (Hirschman, 1981). By displaying the Halal logo, restaurants have anopportunity to show to their target consumers that their products are fixed to the Islamic standard(Osman, 2002). In term of food, Halal means it is not made of or contain parts of animal originwhich is prohibit to be consumed by Islamic law (Johnstone, 1975). For example, a food withoutalcohol, pork, and blood is considered as Halal food. It must be prepared, processed, andmanufactured by using that equipment which is clean. As an example, the slaughter process mustbe clean. Willingness to pay is the amount of money that someone is willing to spend on aparticular product or service (Yeong-Sheng, N.D). Previous study has shown that Muslims werewilling to pay more for Halal goat meat (Ibrahim, 2008). This situation has been shown to besimilar with Malaysia, where Malaysian are willing to pay more to obtain Halal meat (Yeong-Sheng, N.D.).METHODOLOGYThis paper is part of a larger study. The study utilises two advertisements that are the same exceptthat one has a Halal sign on it and the other doesn’t (Refer Figure 1). The main study used aquestionnaire that was distributed to 328 students of a government university in SarawakMalaysia. Only 139 respondents were used here as they were Muslims. 102
  3. 3. Figure 1: Advertisement UsedThe questionnaire contained three sections. The first portion consisted of demographics. Thesecond consisted of questions from various scales designed to obtain information of consumer’sreaction to the advertisement they saw. The measurements used here included attitude towards theadvertisement, attitude towards the company, attitude towards the product, attitude towards thebrand, and advertiser’s sensitivity (Bruner and Hensel, 1996). The third section, of which thispaper is based on, looks at the willingness to pay for the product in the advertisement. It consistsof three questions. The first was whether respondents were willing to pay if the price of theproduct was increased. The second was whether they were willing to pay if the price of theproduct was increased by 10 sen. The third was to determine the maximum price they werewilling to pay for the product. The questionnaire was presented in both Bahasa Malaysia andEnglish. A back-translation method was used (Green & White, 1976). This was necessary as mostrespondents were more familiar with Bahasa Malaysia rather than English. Data collected wasthen analyzed by chi square, t-test, correlation and regression.FINDINGSThe findings of the research are depicted here, with respondents profile shown in Table 1. 103
  4. 4. Table 1: Respondent Profile Variable n % Gender Female 102 73.4 Male 37 26.6 Age 20.00 8 5.8 21.00 42 30.2 22.00 39 28.1 23.00 32 23.0 24.00 14 10.1 25.00 4 2.9 Gross RM300 below 104 74.8 Income RM301 and above 35 25.2 Ethnic Malay 123 88.5 Indian 1 .7 Bumi Sabah Sarawak 13 9.4 Others 1 .7 NA 1 .7 Religion Islam 139 100.0 Religiosity Not at all 1 .7 Somewhat 10 7.2 Religious 98 70.5 Very 28 20.1 NA 2 1.4In Table 2, the frequency and means for each question studied is depicted. The Chi Square Testby different advertisement for all above statements was not significant. The first statementindicated a not significant finding (Chi Sq = 1.130, df = 1, Sig. = 0.288). A similar findingoccurred for the second statement (Chi Sq = 2.383, df = 1, Sig. = 0.123). For the third statement,a t-test was conducted. Findings also show that there was no significant difference (t = 0.734, df =124.903, Sig. = 0.464).Table 2: Frequency and Means by Statements With Halal Sign Without Halal Overall Sign Variable n % n % n % If price raised, are Yes 33 23.7 20 27.4 13 19.7 you willing to pay No 104 74.8 52 71.2 52 78.8 NA 2 1.4 1 1.4 1 1.5 If price raised by Yes 33 23.7 22 30.1 11 16.7 10sen, are you No 41 29.5 20 27.4 21 31.8 willing to pay NA 65 46.8 31 42.5 34 51.5 How much in RM Minimum 1 1 1.65 are you willing to Maximum 10.20 10 10.20 pay Mean 6.93 7.05 6.79 SD 1.99 1.96 2.03 104
  5. 5. The second stage of the study looked at relationship. This was initially measured using acorrelation followed by a simple regression. Table 3 shows the correlation of the variables forthose who saw the advertisement with the Halal sign while Table 4 shows the same for those whosaw the advertisement without the Halal signTable 3: Pearson Correlation (Ad with Halal Sign) Variable AD ACO APROD ABRD ADSEN PI ** ACO .385 APROD .490** .549** ABRD .460** .675** .711** ADSEN .421** .200 .438** .362** PI .451** .505** .419** .581** .345** WTP -.145 .058 -.145 .079 -.039 .033**. Correlation is significant at the 0.01 level (2-tailed).*. Correlation is significant at the 0.05 level (2-tailed).Table 4: Pearson Correlation (Ad without Halal Sign) Variable AD ACO APROD ABRD ADSEN PI ** ACO .535 APROD .509** .619** ABRD .529** .697** .648** ADSEN .468** .412** .460** .565** PI .543** .558** .568** .738** .570** WTP -.178 -.112 -.157 -.111 -.043 -.032**. Correlation is significant at the 0.01 level (2-tailed).*. Correlation is significant at the 0.05 level (2-tailed).Table 5 depicts the simple linear regression where Willingness to Pay was the dependent variableand attitude towards the advertisement, attitude towards the company, attitude towards theproduct, attitude towards the brand, and advertiser’s sensitivity were the independent variables.The findings here indicate that there is significant relationship between willingness to pay andattitude toward brand (β = .417, P < 0.046) for advertisement with Halal signage. 105
  6. 6. Table 5: Linear Regression on Willingness to Pay Ad with Halal Sign Ad without Halal Variables Sign Beta BetaAD -.206 -.178ACO .066 .043APROD -.358 -.103ABRD .417** -.010ADSEN .036 .057R2 .125 .041Adjusted R2 .052 -.046R2 Change .125 .041F-Value 1.709 .475Durbin Watson 2.346 1.616Table 6 depicts the simple linear regression where Purchase Intention was the dependent variableand attitude towards the advertisement, attitude towards the company, attitude towards theproduct, attitude towards the brand, and advertiser’s sensitivity were the independent variables.The findings here indicate that purchase intention have significant relation with attitude towardbrand (β = .376, P < 0.031) for advertisement with Halal signage. For advertisementwithout Halal signage, purchase intention has significant relationship with attitude towardbrand (β = .568, P < 0.000) and advertiser sensitivity (β = .215, P < 0.038). .Table 6: Linear Regression on Purchase Intention Ad with Halal Sign Ad without Halal Variables Sign Beta BetaAD .197 .128ACO .199 -.052APROD -.114 .067ABRD .376 ** .568 **ADSEN .123 .215**R2 .391 .649Adjusted R2 .341 .618R2 Change .391 .649F-Value 7.719 20.738Durbin Watson 2.224 1.737DISCUSSION AND CONCLUSIONThis paper examines willingness to pay on a food related product that is with and without Halalsignage among young Muslim in Malaysia. The study shows there are no significant different onthe mean price those respondents were willing to pay. This contradicts previous studies thatshowed that Muslims were willing to pay for Halal meat (Ibrahim, 2008; Yeong-Sheng, N.D).This may be because the past studies did not look at Halal signage but willingness to pay forHalal meat and not the impact of using a Halal sign. It is apparent that just by having a Halal signis not sufficient reason to raise prices. It is also not enough to differentiate a product by. This may 106
  7. 7. be because in Malaysia, any fast food restaurant is expected to be Halal compliant. Nevertheless,this may not be true as many restaurants that are supposedly run by Indian Muslims do not haveHalal certification (Chok, 2005). Also as shown in the current controversy on the issue of a butterthat was use in cake making in Sarawak was deemed as not Halal (Anonymous, 2011).The findings from the second study further support the above findings. Willingness to pay isaffected by attitude towards the brand for the advertisement with Halal signage. This indicatesthat just by having a sign stating the product is Halal is insufficient. Companies must build theirbrand if they wish to increase the price of the product. Interestingly, when looking at purchaseintention, the same variable is again positively significant.What the findings here hint, as seen in the findings in Table 6 for the advertisement without Halalsign, is that companies have to show advertiser’s sensitivity to the consumer (positivelycorrelated with purchase intention). If there is a Halal sign, this is not a significant variable. Thisindicates that the Halal sign can be used as a proxy of the advertiser’s sensitivity to Muslims andthis has a positive relationship with purchase intention. Therefore the value of a Halal sign, byitself, is not to act as justification for price increase, but to act as an indicator of the advertiser’ssensitivity to Muslim consumers.LIMITATION AND FUTURE RESEARCHThis paper shows that just by having a Halal sign is not a sufficient reason for increasing price.The findings indicate that companies must develop consumer’s attitude towards their brandbefore considering any price increase. What a Halal sign does is to indicate that the company issensitive to the needs of a Muslim populace and this has a positive effect on purchase intention(but not for a price hike).Nevertheless, this study only targets young consumers (21 to 25) years old with low grossincome. This may influence their purchase decision on food related product that displays ordoesn’t display the Halal sign. Moreover, it also may be interesting to note by manipulating ageand income groups to see if such findings are replicated. Reactions from other religion group suchas Buddhist, Christian, and Hindu can also be looked into.REFERENCEAnonymous (2011). Golden Vhurn butter not Halal. Retrieved on 18 August 2011 from http://www.theborneopost.com/2011/08/16/golden-churn-butter-not-halal/.Bruner II., G. C. and Hensel, P. J. (1996). Marketing Scales Handbook. Vol. 11. AMA. Chicago, USA.Chok, S. L (2005). Call to check “mamak” eateries. Retrieved on 18 August 2011 from http://findarticles.com/p/news-articles/new-straits- times/mi_8016/is_20051027/call-check-mamak-eateries/ai_n44310309/Cloud, J. (2000). Defining religion. Retrieved from www.multifaith.net/public/library/religion definition.htmlCoulson, N. (1964). A History of Islamic Law. Edinburgh: Edinburgh University Press.Crystal, D. (1993). The Cambridge Encyclopaedia (3 ed.). Cambridge: Cambridge University Press. 107
  8. 8. Delener, N. (1994). Religious contrasts in consumer decision behaviour patterns: their dimensions and marketing implications. European Journal of Marketing, 28(5), 36-53.Fam, K. S., Waller, D. S., & Erdogan, B. Z. (2002). The influence of religion on attitudes towards the advertising of controversial products. European Journal of Marketing, 38(5/6), 537- 555.Hirschman, & Elizabeth, C. (1981). American jewish ethnicity: Its relationship to some selected aspects of consumer behavior. Journal of marketing, 45 summer, 102-110.Ibrahim, M., Liu, X., & Nelson, M. (2008). A Pilot Study of Halal Goat-Meat Consumption in Atlanta, Georgia. Journal of Food Distribution Research, 39(1), 84-91.Johnstone, R. L. (1975). Religion and Society in Interaction: Sociology of Religion. USA: Prentice-Hall.Means, G. P. (1978). Public Policy Toward Religion in Malaysia. Pacific Affair, 51(3), 384-405.Mennell, S., Murcott, A., & Van Ootterloo, A. H. (1992). The Sociology of Food: Eating, Diet and Culture. London: Sage.Muhammad, N. M. N., Isa, F. M., & Kifli, B. C. (2009). Positioning Malaysia as Halal-Hub: Integration Role of Supply Chain Strategy and Halal Assurance System. Asian Social Science, 5(7), 44-52.Osman, M., & Sahidan.S (2002). “HALAL”- The Case of Malaysia_Muslim Consumer Quest For Peace of Mind. American Marketing Association, Winter 2002.Schiffman, G. L., & Kanuk, L. L. (1999). Consumer Behaviour (7 ed.): Prentice Hall.Sungkar, I., Othman, P., & Hussin, W. S. W. (2008). Potentials of global Halal Food market: implication for Vietnamese SMEsPaper presented at the The 33rd Annual Conference of THE FEDERATION OF ASEANS ECONOMIC ASSOCIATIONS, Hanoi.Von der Mehden, F. (1986). Religion and Modernization in South East Asia. New York: Syracuse University Press.Yeong-Sheng, T. J., Arshad, F. M., Shamsudin, M. N., Mohamed, Z., & Radam, A. (N.D). Demand for Meat Quantity and Quality in Malaysia: Implication to Australia. Retrieved from mpra.ub.uni-muenchen.de 108

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