TAKAFUL: TOWARDS MARKETING-DRIVEN APPROACH
SYED ADNAN HASAN
Sep 19 - 25, 2011
The importance of marketing increases, all the more, when your product is new and unprecedented. Similar is the case with Islamic financial institutions. It's a conceptual product, with an ideology behind it.
Every time a financial institution introduces a new product or service it becomes the responsibility of its marketing department to explain the product to the masses.
Marketing of financial products, thus, becomes challenging because your team has to be well versed in the field of finance as well as in marketing; additionally, in the case of Islamic financial products marketer has to also be savvy of Shariah-compliant principles.
It is difficult to find such people who possess knowledge in all three fields: 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 pitfall of "Islamicizing" marketing campaigns to an extent, which is more than necessary. Their concepts begin from using mosques in collateral and end on Quranic Ayahs. It becomes a responsibility that marketing departments have to ensure that they are selling products/services and not Islam.
A stark difference between marketing of Islamic and conventional financial products is that in the case of conventional products consumers are not interested in knowing backend functionality. However, many Islamic financial institution's clients want to know how things work showing interest in the details of legal contracts involved in financial products.
Conventional financial institutions do not have to promote anything beyond their product or service. Consider the case of McDonald's or KFC: a simple logo reading "halal" on its packaging and billboards will suffice. However, in the case of financial products a simple logo, often, does not suffice. It requires a much more comprehensive effort.
Considering the effects of the recession, the present situation seems bleak. The first thing that gets affected due to economic recession is marketing. The budget allocated for marketing activities and services is the first to be slashed in case of any calamity. Companies generally do not consider marketing as their core operations. They overlook the potential and capacity for growth that marketing offers in the times of recession.
However, the problem is even deeper. It is not recession that affects marketing activities but it is a general attitude towards marketing in insurance industry.
Throughout this region (Pakistan, India, and Bangladesh), insurance has been considered a sales-based industry as opposed to marketing-based industry.
Business strategy of insurance companies includes massive sales team spread nationwide with very limited role of marketing. Marketing departments have been restricted to produce brochures and flyers, having no role in company direction and business strategy.
A shift has been seen in India though, where private companies have taken lead to convert the industry into marketing-driven. Private companies, in India, in order to compete with giant such as LIC, initiated a series of aggressive marketing and promotional activities.
A similar need exists in Pakistan where insurance industry is heavily relying on sales and completely sidelining marketing activities. This gives an ample opportunity to Takaful companies. They have the option to take lead in the industry with aggressive marketing targeted towards product penetration. Current life insurance penetration in Pakistan is 0.3 per cent, leaving a massive untapped market for Takaful companies.
With traditional mindset towards insurance or Takaful, it is not possible to increase penetration without a change in strategy. A field sales force, as big as with few thousand agents, will remain limited, whereas effective marketing strategies have potential to reach out to millions.
Pak-Qatar Family and General Takaful have taken lead in this paradigm shift. Even in its nascent stage, the company developed its marketing and corporate communications department with seasoned marketers.
It has received brand of the year award in 2009 in recognition of its aggressive campaign and was able to grow itself as an international brand, where consumer and corporate can invest their trust.
The insurer's another achievement is its nomination in 2010 CPI Financials best Islamic branding award. It shows how a change is in process where a company from Pakistan has managed to bring the marketing standards to the level where they can compete with the international brands.
Efforts are being carried out under the umbrella of Takaful Association of Pakistan to promote Takaful as brand. A unified effort towards a comprehensive marketing strategy to promote Takaful is underway. Such measures will help promote Islamic financial institutions as a separate entity with its own brand identity and niche market.
A similar project can be initiated on a global level where Marketing experts from Takaful industry can sit together and devise a plan for future growth and awareness. It can be named World Takaful Association.
The writer is head of marketing & communication, Pak-Qatar Family & General Takaful.