This document discusses marketing strategies for Islamic banking to satisfy customers. It begins by introducing Islamic financing concepts and the importance of marketing. It then notes that customer satisfaction requires total marketing integration at reasonable costs. There is currently a sellers' market for Islamic financing due to lack of competition and expertise, allowing exploitation of customers. Two case studies on housing loans show conventional and Islamic loans resulting in similar total costs to customers. The document recommends adapting weaknesses in non-Islamic banking into strengths for Islamic finance through partnerships using profit/loss sharing concepts. It provides a marketing framework and strategies for Islamic banks to target customer needs and satisfy them in a sustainable manner.

1. Is Islamic Banking Satisfying the Customer?
Marketing Model: E-N-T- G-A-M-I-K-R
By:
Nadeem M. Firoz
B.Com (Hons), M.Com (Univ
of Peshawar); MBA, Ph.D
(USA)
School of Bus (AACSB)
Montclair State University,
New Jersey

2. Introduction
 Experts in Islamic Financing
 Easiest way to understand the Islamic financing concept
 Easiest way to understand the non Islamic financing concept
 Is Interest free is free?
 Importance of Marketing
 Marketing for non Marketing Executives
 Easy lay man model of Marketing: ENTGAMIKR

3. So What?
 Customer satisfaction requires total Marketing
Integration
 Satisfying customer at what cost?

4. Sellers Market of Islamic
Financing
 Lack of competition
 Lack of knowhow
 Analogy to MNC’s Sweat Shop & Child Labor
 Abusing of Orthodox Islamic Believers
 Exploitation of interest free idea and loan
sharking
 Charging more than conventional interest

5. A case of House Building Finance
Corporation (HBFC)- WAPDA Town.
Nov 1, 2010
Islamic Finance
 House value at the time of loan Rs: 60,00,000
 Loan of Rs. 3,10,000
 Life of the loan 17 years
 Paid in last six years Rs. 5,000 a month
5X12X6= Rs 3,60,000
 Principal reduced only Rs. 34,000
 Principal remaining: Rs. 2,76,000
 If paid today loan remaining with interest
Rs.4,73,000
 If paid in 17 years may be equal to 10,00,000

6. A Case of IMF. Conventional Finance
 Interest only loans
 IMF/World Bank on December 21, 2005
– 19 countries loans down to zero
– for countries with per capita income of less than $380/year
– [This was due to the historic Multilateral Debt Relief Initiative (MDRI)]
 Rich nations (G-8) write off $40 BN in debt - Heavily Indebted Poor Countries
(HIPC)
 62 countries were paying $10 BN each year in debt servicing
Example:
Time 30 years
Loan $40 BN
Paid Interest $120 BN
Principal remaining $40 BN – Finally to Zero after making 80 BN

7. So What?
 Making a case for a case
 All the same
 Nothing is F R E E
 No money no Honey
 Lets try to Satisfy the customer (KING)
anyway

8. Environment
SWOT ------ Analysis
strength weaknesses internal micro
opportunity threats external macro

9. Marketing Internal & External

10. So What?
CHANGING THE DISADVANTAGE
TO AN ADVANTAGE
 Change weakness of the non Islamic banking
system to an strength of Islamic finance.
 In a debtor economy there is an opportunity to make
partnerships using profit & Loss concept

11. Needs & Wants
Maslow's hierarchy of needs:
Needs cannot be created
Satisfaction of the needs and wants of the customer
5. Self-actualization
4. Self-esteem
3. Social
2. Safety
1. Physiological

12. So What?
PHYSIOLOGICAL
House, Education, Car, Etc.
 Through Equity loan: Safest loan in
the world
Case of HBFC/WAPDA 3 Lakhs loan
on 60 Lakhs property

13. Targeting
 Bases of Segmentations
 Multiple segments
 Demographic- age income, sex, education
 Behavioristic- Product use- consumer or B2B markets
 Geographic- north east, southwest, east, west, Midwest,
 Psychographic- life style- social class, personality

14. Strategies
1. Mass marketing 4. Undifferentiated
Marketing
3. Product
differentiated
marketing-
5. Market
differentiated
Marketing
5. Target marketing
One defined markt
6. Target marketing -
Concentrated
markt

15. So What?
1. Mass
Marketing
4.
Undifferen
tiated
Marketing

16. Goods - Products
 Goods
 Services - intangible
 Products – tangible

 4 -- Problems/Nature/Issues/Concerns of Services
 1. Intangibility
 2. Variability
 3. Perishability
 4. Inseparability

17. So What? Intangibles
Converting Intangibility to
Tangibility
 Build on a relationship

18. So What? Tangibles
Tangibles: No problem
here
oGetting into a house
oGetting a car
oGetting education

19. Customer & Financing fit
Seeking Customer Satisfaction

20. So what?
 Conduct Market Research
– Study consumer behavior to identify consumer’s wants and needs
– Target and segment the Muslim market by demographics and geography. Find
communities with devout Muslims who are most likely to purchase Islamic financing
products
– Align consumers’ wants and needs with the organizations objectives
– Materialize wants and needs into differentiated Islamic financing products
 Create Consumer Oriented Marketing Program
– Engage in a grassroots marketing program where banks reach out directly to local
Muslim residents in the surrounding community.
– Develop a comprehensive website which details all aspects of your bank’s Islamic
financing products, BUT focus on direct sales, as a Majority of mortgage products are
purchased face-to-face
 Offer Promotional Discounts
– To encourage Word-of-Mouth advertising offer “refer a friend” discounts on your next
mortgage payments

21. ?
 Integrating Islamic financing into your business
– product design, training, processing, business structure, human resources policy and
employee relations management, and FDIC compliance - County specific
 Obtaining approval from Shariah boards
– body must have oversight of all significant business decisions
– interpretations of Islamic law are constantly being debated among Islamic scholars,
not all Shariah boards are created equal
 Cost of launching Islamic products
– extensive MIS required to develop a product with little precedent in the United States
– design and printing of new financial documents to support the new products, counsel
from Muslim and regulatory experts, and the training and hiring of staff members to
support the new products
 Stereotypes
– United States - felt to be hostile towards the concept after the 9/11 terrorist attacks
– Muslim - wary of western institutions as the recent “War on Terror” policies

22. ?
 Regional banks are in best position
-focus on local Muslim community, conduct MIS, build up trust, focus on word
of mouth advertising
 Control start-up costs
-dedicate only a few staff members to develop business
-service Muslim’s on an “as-needed” basis until business grows
-use simple proven Islamic financing products (quick approval by Shariah
boards)
 Continue MIS
– to determine consumer’s evolving wants and needs

23. ?
 Market to non believers to expand the
marketing pool:
Market Share
to
Market Size
 Micro lending

24. Amount - Price
 Profit & Loss
 Cost of Capital

25. So What?
 Partnership
Keep profit down to less than conventional
interest rates to attract customers form all
markets (believers and non believers)

26. Information - Promotion
Strategy
Media Tactics
 Print: Magazines - Newspapers
 Out of home: Billboards - Transit - Flyers
 Broadcast: Radio - TV
 Word of Mouth:

27. So What?
Maximum information

28. Knowhow
Marketing Consultant
Integration
Matrix structure

29. So What? Matrix

30. So What?
Existing Products New products
Existing markets 1.Marketi
penetration
2. Product
development
Existing Markets 3. Market
development
4. Diversification

31. So What?
H Star ?
L Cash Cow Dog
MGR H L
RMS

32. Recommendations
1. Research your area
2. Advertise
3. Follow examples
4. Hire Consultants
5. Offer Alternatives to Mainstream Banking
6. Similar but Different
7. Major Markets
8. Market Potential
9. Multiple Designs
10. Medium of Exchange
11. Sharing the Risk
12. Based on Honesty
13. Belief that God is Watching out for you
14. Investing in Ethical Products or Markets

33. So What?
M-A-R-K-E-T-I-N-G
E-N-T- G-A-M-I-K-R ©2010 Firoz

34. Questions/ Comments