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Opinion pieces on business & economic issues

LEE Dong-Hun

How to Succeed in the Islamic Market

LEE Dong-Hun

Nov. 26, 2010

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A market of 1.6 billion people that has been scarcely tapped, the Muslim world offers enormous potential. Although Muslims are dispersed across the world and do not form a concentrated geographical bloc, they offer a vast market based on religious homogeneity. That uniqueness, with Islamic-based principles and rules embedded into daily activities, makes market entry difficult and calls for cautious consideration, but once a foothold is established, chances of success are high.

Demographics and consumption habits make the Muslim market attractive to companies who are willing to navigate the religious and cultural considerations.

The Muslim market's vast population is fueled by a high birthrate that Islam encourages, creating a huge niche market that can be targeted over a lifetime, from infancy to childhood and adulthood. Western countries are included in the ballooning population. The number of Muslims in Germany is at 4.7 million, France 3.55 million, the US 2.45 million and UK 1.65 million. This has produced the new term "Eurabia," a mix of Europe and Arabia . Another demographic feature is that Muslims heavily populate emerging market economies that have ample resources, including Indonesia , Malaysia , Russia and countries in the Middle East .

Despite the austere image of Islamic living, robust spending is not entirely absent. Muslims who have deep pockets display a high propensity to consume, not only to satisfy their basic needs but also to get premium products such as luxury houses and cars. Robust consumption also can be traced to Muslims place importance on wasta , an Arabic word that loosely translates into "clout" or 'connections," and has connotations of strong group consciousness. These features can facilitate the spread of trends in private spending.

Meanwhile, Ramadan, the Islamic month of fasting, actually is the month of highest consumption throughout the Muslim world. Ramadan requires followers to refrain from eating, drinking and smoking from dawn to dusk. After sunset, families gather for huge meals that will sustain them until sunset the next day, making the holy month a period of vast consumption.

Ramadan makes for an easy target for a marketing campaign, though companies must first be in be position ? and that is not easy, given the unique Islamic restrictions and cultural practices. However, the chances for success are high once companies tap into this market.

One of the potential markets in Islam is clothing and fashion, where religious restrictions need to be considered. Veils are the symbol of religious identity of Muslim women. In the past, veils were uniformly dark and plain. But today the styles and colors of the veils have become fancy. Since eyes are not required to be covered by veils, many Muslim women also are changing their make-up methods. This offers companies to devise strategies in advancing into this market. However, since Islam prohibits worshipping idols, companies must be cautious when designing, packaging and advertising their products.

For product and mannequin displays within the store, companies should be cautious not to violate such prohibited practices. Gala Lab , Korea 's online game company, advanced into the Middle East in 2009, and in the process remade character designs and background music while deleting crosses and stars. It's online game gained good response in the Muslim market and became one of the popular games there.

The second potential market is food and beverage. Here getting certification under halal standards is crucial. In Arabic, the word halal means permitted or lawful. Halal foods refer to meat, seafood, fruit and vegetables properly slaughtered, known as dhabihah, by a Muslim according to Islamic rituals. Haram means prohibited or "forbidden" by Allah for Muslim consumption, including meat, seafood, fruit, vegetables and alcohol. In Islam, coffee and tea are popular due to the ban on alcohol consumption. Therefore, in order to make inroads into the Islam market, raw materials need halal certification.

More recently, restrictions on food and beverages have widened to include pharmaceuticals and cosmetics. Combined with recent green consumption trend, the halal cosmetics are gaining popularity combined by environment-friendly people and vegetarians. Nestle saw the Muslim market's potential early on and made efforts to advance into this market, becoming a global leading firm in halal food. Yakult, a Japanese probiotic yogurt drink firm, acquired halal certification, expanding into 11 Muslim countries.

The third potential market is the financial sector. Islamic banking bans the payment or acceptance of interest on money loans and operates based on real transactions. Against this background, the Islamic financial sector fared well during the global financial crisis in 2008. The HSBC Amanah, a global Islamic financial division under the HSBC Group, was selected best international Islamic Bank by Euromoney magazine. It introduced a unique brand for Muslims to accommodate their religious practices and ensured their convenient use of financial services.

Korean companies have been relatively inactive in making inroads into the Islamic market due to geographic and cultural distances. More aggressive advance strategies are necessary. One strategy is to use the Southeast Asian market, where they have ample experiences, as a springboard in targeting Muslim consumers and then advance into the Middle East and other Muslim communities around the globe. Since leisure and entertainment is relatively immature in the Islam world as Muslims spend substantial time with families and friends, word-of-mouth has much more influence compared with other demographic groups. It would be effective, then, to utilize social media such as twitter, marking young adults, in spreading brand image.

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