The marketing of financial products, therefore, becomes challenging because your team has to be well versed in the field of finance as well as in marketing. In the case of Islamic financial products the skillset increases, as it also requires grounding in Shariah principles. It is difficult to find people who possess knowledge in all three fields, which is an essential combination for a successful and articulate marketing strategy.
Another challenge is to liaise with ad agencies that have people willing to distinguish between conventional and Islamic financial products. Agencies also have to work with constraints when it comes to Islamic financial institutions: such as not using human faces in any marketing collateral, as it is against Shariah. Agencies fall into trap of ‘Islamicizing’ marketing campaigns to a greater extent than is necessary. It becomes the responsibility of marketing departments to ensure that they are selling products/services, and not Islam itself.
Islamic versus conventional
A stark difference between the marketing of Islamic and conventional financial products is that in the case of conventional products, consumers are not interested in knowing the back-end functionality. However, many Islamic financial institutions’ clients want to know how things work — for example, showing interest in the details of legal contracts involved in financial products.
Conventional financial institutions do not have to promote anything beyond their products or services. However in Islamic financial products, the added unique selling point of Shariah compliance needs to be communicated.
Marketing efforts
Considering the effects of the recession the present situation seems bleak. The first thing that gets affected in an economic recession is marketing. The budget allocated for marketing activities and services is the first to be slashed in the case of any adverse conditions.
However, the problem goes deeper. It is not recession that affects marketing activities but the general attitude towards marketing in the insurance industry. Insurance is considered a sales-based industry, as opposed to a marketing-based industry, in countries like Pakistan, India and Bangladesh.
Business strategies of insurance companies include massive sales teams spread nationwide, with a limited role for marketing. Marketing departments have been restricted to the production of brochures and fliers, with no role in the company’s direction or business strategies.
However, a shift has been seen in India, where private companies have taken the lead to convert the industry into a more marketing-driven one. Private companies in India, in order to compete with giant companies like Life Insurance Corporation of India, have initiated a series of aggressive marketing and promotional activities.
Marketing strategies
With a traditional mindset towards insurance or Takaful, it is not possible to increase penetration without a change in strategy. A field sales force, even one with few thousand agents, will remain limited, whereas effective marketing strategies have the potential to reach out to millions.
Some Takaful companies, such as Pak-Qatar Family and General Takaful, have taken the lead in this paradigm shift; whereby the companies have developed their marketing and corporate communications departments and populated them with seasoned marketers.
There are also efforts being carried out under the umbrella of the Takaful Association of Pakistan to promote Takaful as a brand. Such measures will help promote Islamic financial institutions as separate entities with their own brand identity and niche market. A similar project could be initiated on a global level, where marketing experts from the Takaful industry sit together and devise a plan for future growth and awareness. It could be named the World Takaful Association.
Challenges
There are quite a few challenges, including poor customer service and bad claim handling experiences. Moreover, many people do not know about the importance of insurance and there is a misconception among many that insurance is haram.
However sometimes what is a strength can actually become a weakness, and vice versa. The fact that people are not educated about Takaful means that it has to be branded as an entirely new category. Furthermore, there is still skepticism about the authenticity of the industry. Opinions are divided among religious scholars as well. The profound understanding of Takaful requires a serious investment of time and effort. It cannot be explained in just a few words.
Target audience
In marketing, the target audience is important. The success of every marketing campaign is dependent on whether the target audience was correctly identified and the message was effectively communicated. Unfortunately, from a personal point of view, I think that Islamic banks in general have not done very well in identifying their target audience. Sometimes your target audience may not necessarily be potential consumers.
There is a unique industry around being Shariah compliant. Shariah compliance is a sensitive issue which resonates with 97% of the population, and this can be both an advantage and a disadvantage. It is an advantage if you meet their expectations. Next, we must identify the people who influence their opinions. And finally, develop effective communication materials which can deliver the message.
Insurance basics in Pakistan are still not right because of the fatwas which are occasionally published against its practice, which in turn means that confusion still remains. This stems from various reasons: industry nationalization in the 1970s, Shariah objections, low market capitalization, poor industry reputation due to claims of mishandling, sales fraud and inefficient customer services. A lack of players also gives rise to monopolistic behavior, which is always detrimental to the growth of any industry.
We must understand that the Pakistanis are very sensitive about Islam and they generally do not like products or services which run contrary to their beliefs. The banking industry is in fact very much under-developed compared to other countries. Only a handful of the population in Pakistan is banked. The insurance industry has fared even worse and this is contributed to by the faith factor. There is no denying that the two existing conventional financial institutions are not offering products in compliance with Shariah.
Awareness
Raising awareness about the benefits of Takaful is a priority. Nothing constructive can be achieved unless people know and understand Takaful. As with anything else, an idea is spread through individual interaction.
We need to interact with people on a one-to-one basis. For this we have in place a well-trained sales force of 800 people. Furthermore, we take every opportunity to conduct seminars and workshops on Takaful and deliver presentations on different platforms nationwide.
Conclusion
If you really want to increase the market share of insurance or Takaful, then you need spend money on advertising: not only press or electronic, but serious investment in areas such as organizing events on a mega scale across Pakistan.
Syed Adnan Hasan is the marketing head for Pak-Qatar Takaful Group. He can be contacted at
[email protected]
.