AIOU Course Code 5450-1 Solves Assignment Autumn 2021

Course: Islamic Branding and Marketing (5450)

Level: Associate Degree

Semester Autumn 2021

Assignment no 1.

 

Q1 Explain Islamic Trade Discuss the principles of Islamic Trade and Commerce with examples

Answer.

Islamic finance is seen as an alternative approach to lending that is based strongly around morals and religious belief. Islamic trade finance is simply trade finance performed in a way that complies with the laws from the Islamic holy book, the Qu’ran. The idea of a set of rules for Islamic finance was introduced around 1950-70 as a solution and a response to the increasing influence of western economies.

In Islamic trade finance, trade transactions can be financed either on credit or on a participatory basis. Credit involves the delay of the price or delivery of the purchased commodities. Participatory finance involves the participation of the financier in the profits and losses brought in to resell the financed goods or put them into an income-generating production process.

There are a few significant differences when engaging in Islamic finance, a large one is Shari’a. Shari’a is a set of laws that have been derived from the Qu’ran and which forbid the payment of ‘riba’; which translates to interest. This can make trade transactions difficult between different countries as each individual deal has to be approved by a board of scholars and the interest gained from financing a deal can be the main incentive for the financier.

To help standardise international trade with an Islamic economy, different credit techniques have been developed to conform within shari’a. Murabaha is one way to incentivise banks whilst within the laws of shari’a. Murabaha is the mark-up or the bank’s return when an asset is sold to a customer for payment at a later date. By the buyer and seller agreeing on a certain profit margin to be added to the cost, this is not seen as interest; this is called a PLS technique (profit and loss sharing).

Below we have listed a few more relevant terms from Islamic finance:

Sukuk – a form of bond of which is based on the ownership of an approved asset

Salam – sale with advance payment for future delivery. It may be used as an indirect financing of the purchase of raw materials

Ijara-wa-iqtina – the lease of equipment over a certain period of time and the transfer of ownership to the lessee at the end of the period

Istijrar- a sale in which an asset is supplied on a continuous basis at a set price to be paid at a future date

Mudaraba contract – a trustee financing contract. The financier entrusts funds to the entrepreneur for undertaking an activity

Musharaka – capital contributed by the trader and bank

Ju’alah – the price for performing any service

Islamic economics ‎) refers to the knowledge of economics or economic activities and processes in terms of Islamic principles and teachings.[1] Islam has a set of special moral norms and values about individual and social economic behavior. Therefore, it has its own economic system, which is based on its philosophical views and is compatible with the Islamic organization of other aspects of human behavior: social and political systems.

Is a term used to refer to Islamic commercial jurisprudence (Arabic: فقه المعاملات‎, fiqh al-mu’āmalāt), and also to an ideology of economics based on the teachings of Islam that is mostly similar to the labour theory of value, which is “labour-based exchange and exchange-based labour”.

Islamic commercial jurisprudence entails the rules of transacting finance or other economic activity in a Shari’a compliant manner,[5] i.e., a manner conforming to Islamic scripture (Quran and sunnah). Islamic jurisprudence (fiqh) has traditionally dealt with determining what is required, prohibited, encouraged, discouraged, or just permissible,[6] according to the revealed word of God (Quran) and the religious practices established by Muhammad (sunnah). This applied to issues like property, money, employment, taxes, loans, along with everything else. The social science of economics,[6] on the other hand, works to describe, analyse and understand production, distribution, and consumption of goods and services,[7] and studied how to best achieve policy goals, such as full employment, price stability, economic equity and productivity growth.

Early forms of mercantilism and capitalism are thought to have been developed in the Islamic Golden Age  from the 9th century and later became dominant in European Muslim territories like Al-Andalus and the Emirate of Sicily.

The Islamic economic concepts taken and applied by the states Age of the Islamic Gunpowders and various Islamic kingdoms and sultanates led to systemic changes in their economy. Particularly in the Mughal India,  its wealthiest region of Bengal, a major trading nation of the medieval world, signaled the period of proto-industrialization, making direct contribution to the world’s first Industrial Revolution after the British conquests.

In the mid-twentieth century, campaigns began promoting the idea of specifically Islamic patterns of economic thought and behavior. ] By the 1970s, “Islamic economics” was introduced as an academic discipline in a number of institutions of higher learning throughout the Muslim world and in the West. The central features of an Islamic economy are often summarized as: (1) the “behavioral norms and moral foundations” derived from the Quran and Sunnah; (2) collection of zakat and other Islamic taxes, (3) prohibition of interest (riba) charged on loans.

Advocates of Islamic economics generally describe it as neither socialist nor capitalist, but as a “third way”, an ideal mean with none of the drawbacks of the other two systems.  Among the claims made for an Islamic economic system by Islamic activists and revivalists are that the gap between the rich and the poor will be reduced and prosperity enhanced by such means as the discouraging of the hoarding of wealth, taxing wealth (through zakat) but not trade, exposing lenders to risk through profit sharing and venture capital, discouraging of hoarding of food for speculation, and other activities that Islam regards as sinful such as unlawful confiscation of land.] However, critics like Timur Kuran have described it as primarily a “vehicle for asserting the primacy of Islam”, with economic reform being a secondary motive.

 

Q2 Explain Islamic Branding Discuss the need of Islamic Branding for competing the market with examples.

Answer..

Islamic branding

The Islamic market is totally Shariah-compliant; means a brand should fulfill all aspects of the brands for the Muslim consumers, because the Muslim consumer consumes those goods/services, which fulfill the Islamic laws and norms. The markets are open and the Muslim brands as Halal must be introduced to capture the Muslim market and can use the Islamic ideology for accruing the market which company wants to do business in the Muslim market must go through the Islamic laws and norms. Few company did that but at some points few companies last there image and went wrong, just as the Mecca Cola was introduced as the Islamic brand and t can be seen from its name as an Islamic name but in

other hand after the use the tin and bottles were through in the garbage’s or at other point

children’s were playing with that tin or bottle as football, at this point the naming as Islamic

is failed this is totally against the Islamic law and norms. Islamic brands can be classified in

three different ways; (a) Islamic brands by Compliance; (b) Islamic Brands by Origin, and (c)

Islamic brands by customer (Baker, 2010).

Islamic brands by compliance: Islamic brands must show and have appeal strictly on shariah-compliant, which implemented in the food sector and finance sector on a small account in the Halal logistics. The Muslim consumers are based and attached to their faith so the brand must follow the Islamic law and strictly appeal as the Muslim norms are (Williams and Sharma, 2005). It is seen that the firms are increasing to attract the Muslim consumer’s example in Dubai most the Islamic hotel are mostly operated by the non-Muslim its ratio is above 60%.

Islamic brands by origin: Many brands do not need to show or promote themselves as shariah-complaints Such as Emirati Etisalat, the Emirates Airlines, Telecoms, Egyptian Orascom, and the industry Saudi SABIC. Because their country origin promotes the brands example Saudi SABIC is Saudi company means belongs to Islamic country. By Rafi-uddin Shikoh cited in (Frost, 2007), he is who distinguish in brands that which are origin of the Muslim countries and that brands shows the Muslim practices. Shikoh said, in most of the first category brands there is nothing religious or theological and full fill the basic needs of consumer including the regular products or services and no affiliation with religions (Frost, 2007).

Islamic brands by customer: This type describes that brands came out from the non-Muslim countries, and there target market is Muslim Consumer. Multinationals such as Nestle, Unilever, L Oreal, McDonalds, KFC and many others these all are above MNC’s owned by the non-Muslims and these MNC’s include the Halal brands to target Muslim Consumers. These MNC’s heavily investing on the Muslim market which are still in need of Halal products. Because of their good and strategic efforts, the non-Muslim MNC’s are dominant in market about 90 percent, category of Islamic food, cosmetics and health markets. The non Muslim MNC’s why they occupied 90 percent of the market, because these companies have great and good skills and they know how to branding and they also know how to target the markets and they showed in their idea that “we are Islamic”. (Baker A.A, 2010).

Based on the literature a conceptual model has been developed; which reflects a hierarchical

assortment of believers and perceptions and a lower tier attitudes based on perception on

Muslims consumers as classified as (a) Islamic brands by Compliance; (b) Islamic Brands by

Origin, and (c) Islamic brands by customer (Baker, 2010).

The objective of the study is to understand how consumer perceive and understand the Islamic brands and Islamic branding practices in a Muslim country like Pakistan. It starts with explanation of basic believes covers perceptions towards Islamic branding and finally touches three attitudes towards Islamic brands as identified in the literature.

Two facts emphasize the importance of Islamic branding in contemporary literature. Firstly, the Muslims have a very huge concern for “Halal” ingredients and food; it gives a big stimulus in demand for “Halal” foods (Sungakar, 2010). Secondly, global market for halal food in 2010 raised to US$ 500 billion (Dagha, 2011). These figures show the growing concern towards the Halal food among Muslims consumers. This awareness has affected not only the Muslim minority countries but also it has a great influence over the Muslim dominant countries. This growing market segment with bullish trends warrants research on both fronts i.e. academia and corporate.

Muslims are obliged to adhere to five basic principles of Islam (Sahi Bukhari); (a) (b) prayers; (c) Fasting; (d) Almsgiving; and (e) Pilgrimage.

believe;

First one is the Believe (Tauheed) and it require to believe on […those who believe in] hidden thing and on the right path told by Allah (Quran, Al-Baqarah: verse 3). This has been mentioned many times in holy book (Quran) and by illustrative life of the prophet (Mohammad PBUH) such as [… If you have dispute in any matter, then refer it to Allah and his messenger, if you believe in Allah and the last day (The day of judgment) (Quran, An Nisa, Verse 59)] or on another time as […Those who are true believers, in their hearts there is fear, when remembers the Allah, and his verses are recited their faith becomes stronger and The data analyzed in a number of stages. Firstly, separate Confirmatory factor analyses, using the maximum likelihood method of extraction and direct oblimin rotation, were used to determine the factor structure of items related to Belief, Perception, Origin, Customer & Compliance Attitudes. Secondly, the Correlation matrix was prepared to find the correlation between the Belief, Perception, Origin, Customer and Compliance Attitudes.

Using prior knowledge separate factor analyses were conducted for the Belief, Perception, Origin, Customer & Compliance Attitudes scales. With different iterations, final solutions obtained using various criteria for solution refinement. These factor analyses performed by using Principal Component Analysis Extraction Method. KMO for factor analyses ranges from 0.62 to 0.83, which reflects adequate sample size for these analyses. All CFA came out with higher factor loadings resulting reasonable and dependable results. Table 1-5 shows the Eigen value, variance explained, KMO and factor loadings for believes, attitudes, perceptions. Summated scores were computed A correlation Matrix was prepared using Origin

The Crondach alpha revealed relatively high reliability coefficient values, which indicates

that the scales used in this questionnaire are reasonably reliable, as shown in Table 6 the

reliability of the scales measuring Belief, Perception, Origin, Compliance and Customer.

The results of correlation shows clearly that believe have relationship with the perception and the perception have more strong correlation with Origin Customer then with Compliance.

 

Q3 How is The Gallup Coexist Index working in your view? Discuss with example  competitive market? s(

Answer.The Gallup Coexist Index 2009: A Global Study of Interfaith Relations is Gallup’s first report of public perceptions vis-à-vis people of different faiths. This analysis provides the reader with insight into the state of relations between people of different religions spanning four continents. The report also explores attitudes and perceptions among Muslims and the general public in France, Germany, and the United Kingdom about issues of coexistence, integration, values, identity, and radicalization.

A Global Study of Interfaith Relations, asked Muslims about their views on homosexuality-and garnered media interest.

Dalia Mogahed, Executive Director of the Gallup Centre for Muslim Studies and appointee to the White House faith-based advisory council, released the Gallup survey results on May 7 in London. Compiled from six different surveys, the study looks at Muslim attitudes in France, Germany and the United Kingdom. It is Gallup’s first annual report on the state of faith relations and global attitudes among people of faith in different traditions and countries around the world.

According to the survey, the French are more accepting than any other population polled. 78% of non-Muslims and 35% of Muslims viewed homosexuality as morally acceptable. Ms. Mogahed said, “This research shows that many of the assumptions about Muslims and integration are wide of the mark.”  Germany came in second with 68% of non-Muslims and 19% of Muslims demonstrating acceptance towards homosexual acts.

Gallup Survey

Out of the 500 Muslims in Britain interviewed, all responded negatively but gay Muslims in the UK are becoming increasingly visible and raising awareness. Groups like Al-Fatiha and Imaan are working hard to give a voice to gay Muslims in the UK. Al- Fatiha is in the process of conducting their own survey in order to better understand the experiences and concerns of the British LGBT Muslim community. Meanwhile, Imaan sponsors an annual LGBT Muslim conference in order to reconcile Islam with sexuality and educate people that Islam is not a homophobic faith and one that all LGBT can practice. LGBT Muslims are slowly emerging into the spotlight and changing hearts and minds. As expressed by gay UK journalist Omar Hassan in his recent commentary of the Gallup polls findings in The Advocate, there is no reason not to be optimistic: “I’m still hopeful. Together, we can build new families and communities. It won’t be easy, but that shouldn’t stop us from trying. After all, we owe it to each other — we deserve it.”

 

Q.4Explainbrandstrategy.HowcouldbrandstrategybeeffectiveintheDiscuss with examples.

Answer.

A brand strategy is a formal plan used by a business to create a particular image of itself in the minds of current and potential customers. When a company has created and executed a successful brand strategy, people know without being told who the company is and what they do. Companies as large and established as Coca-Cola, as well as small brands and even businesses that sell services to other companies, all benefit from a carefully created brand strategy. As a result of brand strategy, people develop a particular feeling or opinion about a company—a feeling that drives their buying decisions. This feeling equates to brand equity. The stronger people feel about a brand, the stronger the brand equity.

The Coca-Cola Example

Coca-Cola, or Coke as it’s best known, provides a comprehensive example of an effective brand strategy. What began in 1886 as a syrup mixed with carbonated water and sold at soda-fountains in the American South is now a global, multi billion-dollar brand. It achieved this success through a carefully planned and consistently executed strategy aimed at making Coke popular, trusted, sought-after, and successful.

Shortly after the Coke formula was invented, one of the original Coke business partners suggested the name and designed the Coca-Cola logo still used today, including its distinctive font. Now that the product had a formula and a name, it needed customers. That’s where the next step of the Coke brand strategy came into play—building relationships with potential new customers by handing out coupons for a free sample of Coke. This goodwill gesture of a give-away became the first Coke marketing campaign.

The next sign of success for Coke came in the form of competition. Other soft-drink makers began to try to imitate the Coke formula. It was easy to fool people in the days when sodas were sold primarily in glasses at soda fountains, with no ability to identify the product with a familiar bottle or aluminum can to ensure authenticity.

To counter the competition, Coke began its own bottling operation. At the same time, it began to build a distribution network so that Coke could be sold far outside the bounds of its native Atlanta, Georgia. But bottling operations in far-away cities used whatever bottles they had on hand, which meant that Coke was being sold in bottles of all different shapes and sizes. This inconsistency threatened the brand integrity of Coke—in other words, the expectations its customers had of the brand. Without a consistent appearance, a brand’s ability to build loyalty is diminished. So, Coke designed its own unique bottle in 1916.

Throughout the 20th century, the evolution of the Coke brand followed a series of logical steps that, taken together, comprise a brand strategy. Not coincidentally, these steps share a lot in common with the components of a brand strategy for any product or company.

Common Components of a Brand Strategy

The answers to the following questions provide the framework for creating a brand strategy for virtually any brand. Thinking them over carefully and writing down the answers is an important exercise in creating a brand strategy.

What does your product or service do? In the case of Coke, their famous slogan explains what Coke does: ‘The Pause That Refreshes.’ So, Coke provides refreshment. An office supplies store might answer this question with ‘we provide convenience and cost-effectiveness.’

Who is your product’s target audience? It’s important to narrow this down from everyone to the key groups of people who are likely to be interested in your product or service.

What is your brand’s image? This question goes beyond logo and incorporates font styles,colors, types of imagery, style of language—everything perceived by the five senses that represents your brand.

How do you want your brand to make people feel? Coke might answer, ‘Relaxed, happy.’ An auto repair shop might answer, ‘Relieved, treated fairly.’ A clothing store that serves business women might answer, ‘Sophisticated, confident.’

Bynder icon.                                                                   Products

DAM icoN.                                                                 Brand Guidelines icon

Creative Workflow icon.                                         Video Brand Studio icon

Digital Brand Templates icon.                              Print Brand Templates icon

Bynder Analytics icon.                                                 Integrations icon

Solutions.                                                                           Pricing

Customers.                             Resources.                                           Partner

A branding strategy (a.k.a. brand development strategy) is the long-term plan to achieve a series of long-term goals that ultimately result in the identification and preference of your brand by consumers. A successful branding strategy encompasses the brand’s mission, its promises to its customers, and how these are communicated.

Often misconceived, a branding strategy is not the sum of your logo, color palette, or website; though these creative elements are integral to a successful branding strategy. A branding strategy revolves around all the intangible elements that over time drive brand awareness, brand equity, and brand sentiment.

Drafting a successful brand development strategy begins by asking yourself the right questions. Find them in our handy Brand growth workbook.

 successful brand strategy

The main goal of a successful branding strategy is to let the world know that your brand exists, what purpose it has, and what defines it. A branding strategy is a fluid, long-term strategy that often requires being revisited over time based on its success (or lack thereof).

The success of a brand development strategy is not always easy to measure. Branding strategies often involve intangible, not-easily-quantified elements and–when planning this kind of strategy–it is important to decide from the onset how success will be measured.

 

Q5 Discuss the brand opportunities for Islamic foods and beverages in the market in the current circumstances with examples.

Answer..

The global halal industry is estimated to be worth around USD2.3 trillion (excluding Islamic finance). Growing at an estimated annual rate of 20%, the industry is valued at about USD560 billion a year. Thus, making it one of the fastest growing consumer segments in the world. The global halal market of 1.8 billion Muslims is no longer confined to food and food related products. The halal industry has now expanded beyond the food sector to include pharmaceuticals, cosmetics, health products, toiletries and medical devices as well as service sector components such as logistics, marketing, print and electronic media, packaging, branding, and financing (Fleishman Hillard Majlis 2011, Dar, Azmi et al. 2013)

In recent years, with the increase in the number of affluent Muslims, the halal industry has expanded further into lifestyle offerings including halal travel and hospitality services as well as fashion. This development has been triggered by the change in the mind set of Muslim consumers as well as ethical consumer trends worldwide.

The halal market is non-exclusive to Muslims, and has gained increasing acceptance among non-Muslim consumers who associate halal with ethical consumerism. As such, the values promoted by halal-social responsibility, stewardship of the earth, economic and social justice, animal welfare and ethical investment-have gathered interest beyond its religious compliance. The popularity of, and demand for, halal certified products among non-Muslim consumers have been on the rise as more consumers are looking for high quality, safe and ethical products.

No longer a mere religious obligation or observance for Muslims, halal (which means “lawful” or “allowable”) has become a powerful market force, becoming increasingly a world-wide market phenomenon for both Muslims and non-Muslims alike. The appendage of “Halal” to a product is not just a guarantee that the product is permitted for Muslims, but it has also become a global symbol for quality assurance and lifestyle choice. This is evident by the participation and involvement of non-Muslim countries and organisations where halal is fast emerging as the standard of choice. Many Western countries have recognised the emerging global trend in consumerism towards halal products and services, and are now racing to gain a footing in the halal industry.(Dar, Azmi et al. 2013)

Based on a report from the United Nations, islam is the 2nd largest religion after Christianity. UN statistics recorded yearly growth of Muslims at arolllid 6.4 % compared to 1.46% for Christianity. According to the same statistics, 1 in 5 persons in this world is a Muslim by birth or geography. Based on the statistics earlier, Muslims presents a huge global market for halal products and services and since Muslims in general adhere strongly to religious principles and are increasingly particular and sensitive over the halainess of their life style, especially food, the prospect for halal market is enormous. Therefore, to tap into the vast opportunity which the halal industry presents, several aspects concerning the halal concept must be taken into accollit by all, including. non-Muslim businessmen. The following measures present a winning approach for the halal business industry to gain competitive advantage in this promising and lucrative market. (Awang, Abdul-Rahim et al. 2014)

Muslims represent an estimated 23% of the global population or about 1.8 billion consumers with an average growth rate of 3% per annum.(Dar, Azmi et al. 2013)

This market provides huge potential for companies, organizations and others, from the west and from Muslim countries, and is on a steep growth path. The global Muslim population is expected to grow by about 35 percent over the next 20 years, rising from 1.6 billion in 2010 to 2.2 billion by 2030, or 26.4 percent of the world’s total projected population of 8.3 billion. By 2050, the Muslim population could grow to 2.6 billion and represent nearly 30 percent of the global projected population.(Fleishman Hillard Majlis 2011)

Also by 2030, 79 countries are expected to hold a million or more Muslim residents, as opposed to the current 72 countries. Although many western business executives may not realize it, a majority of the world’s Muslims (more than 60 percent) will continue to live in the Asia Pacific region, while about 20 percent will live in the Middle East and North Africa. Muslims will remain relatively small minorities in Europe and the Americas, but will constitute a growing share of the total population in these regions. To be successful in Asia, as well as the Middle East and North Africa, western companies must learn to understand and address the Muslim market on a large scale.(Fleishman Hillard Majlis 2011)

Food

Driven by growing demand, the Halal food market continues to build its momentum across the global food supply chain. The State of the Global Islamic Economy Report 2015/16 estimates that Market size and profile – Global Muslim consumer spending on food & beverage at $1,128 billion (17% of global expenditure):

The Report estimates global Muslim spending on food and beverages (F&B) to be $1,128 billion in 2014. The total global F&B spending during the same period is estimated to be $6,755 billion in 2014, making the Muslim food market 16.7% of global expenditure. Comparatively, this is a 4.3 % increase from 2013 Muslim F&B expenditure that was $1,081 billion (reflecting the adjusted projections methodology). The Muslim Food expenditure is expected to grow to $1,585 billion market by 2020 and will account for 16.9% of global expenditure. This equates to a 2014-20 CAGR growth of 5.8%.

Based on total food consumption, the top countries with Muslim food consumption are indonesia ($158 billion), Turkey ($110 billion), Pakistan ($100.5 billion), and Iran ($59 billion) based on 2014 estimates. Comparatively, the collective global Muslim F&B market is larger than the F&B consumption of the top geographical markets in 2014, such as China ($797.8 billion), United States ($741.2 billion), Japan ($367.3 billion) and India ($335.7 billion). Geographically 16% of Muslim food consumption is in non-OIC member countries. A testament to this sector’s strength is that the success of the Halal food market remains constant across different cultures and continents. In Malaysia, Nestle Malaysia and its Halal Centre of Excellence have become the biggest producers of Halal products in the world. In the United States of America, Saffron Road with its Halal and organic produce has become the model of success for both Muslim and non Muslim aspiring entrepreneurs. From Asia to America, the Halal food sector is becoming a major source of growth in both the Islamic and wider global economy. Of course, there are challenges as well. There is a continuing struggle for Halal food standards and accreditation, with more education required of such topics in OIC countries. The recent ban on Halal and Kosher slaughter in Denmark along with scare stories about Halal food in the media reflect a current attitude prevalent in Europe and increasingly in the United States that is suspicious of Muslim and Islamic customs and rituals in the public square. Engaging and overcoming these challenges will be pivotal to the future success of the Halal food sector.(Thomson Reuters and Dinar Standard 2016)

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