Strategic marketing plays a very crucial role in the market success of any organization. It is important therefore for any organization especially business organizations to put in place the right structures to promote strategic marketing in their organizations. Strategic marketing is defined the process of identifying the strategic advantages that a business organization has and allocating the necessary resources to help the organization achieve its objectives. Therefore, business organizations should put a lot of focus on strategic marketing in order to help their organizations achieve high sales volumes and improve their market share (Jan&Marimuthu,2015). This report critically analyzes the Oman Islamic banking paper to identify the strategic marketing plans that are in place to introduce this completely new product in the market. The first section of the report contains an analysis of key marketing issues in the paper. Some of these issues include the consumer behavior of consumers concerning the new Islamic banking model.
The article discusses the strategic issues the new Islamic banking model is going to face in the Oman market. The first part of the paper discusses the sustainability of the Islamic banking model. Interest in Islamic financial products increased around the yaer2010 after the organizations which were involved in Islamic banking were found to be least affected by the global crisis of 2009. The consumer behavior towards this product is positive since there is a lot of uptake of the idea among many Islamic countries especially in the Middle East. The industry is estimated to be worthy over $1,000billion. The future growth potential of the industry is very high according to Wigglesworth (2001). There is increasing expendable income among young consumers in Oman means that the banking sector will have increased demand for loans especially from the youth who are the majority in the country. The Islamic banking system expects to face stiff competition from conventional banks that aim to enter the market through the windows model. These banks already have an established customer base and therefore banks specializing in Islamic products will be at a disadvantage. Branding is expected to be an area of concern especially for conventional banks since they will have a lot of convincing to do especially to customers who understand the working of Islamic banking. The new Islamic banks will position themselves as being unique in their operations and application of Sharia law in the banking system.
This paper will use the articles by Alharbi (2015) about development of Islamic banking and the article by Hussain and Shah (2014) about Islamic banking and Finance in India and Sri Lanka. This section critically analyzes the article on Islamic banking in Oman by comparing and contrasting it with what the two peer reviewed journal s discuss. The marketing of new Islamic banking system in Oman is done after thorough and extensive research has been done on the products and the consumer behavior of customers in the market. According to (Jan&Marimuthu, 2015).when developing an effective marketing strategy for a business enterprise, the needs of the consumers must be given utmost priority. This is because customers are the main reason why the product is being introduced in the first place
One of the major roles of marketing for an organizational is that it helps the organization to identify its competitive advantages (Alharbi, 2015). This is very important because, it helps the organization to know the areas that it is ahead of its competitors in the market. The organization can then use the identified competitive advantages to develop products that are more responsive to the needs of the customers. Identification of the competitive advantages also helps the company to specialize in areas that it uses the minimum amount of resources to maximize output. From the article on introduction of Islamic banking in Oman, the competitive advantage that the new banks are going to enjoy is that of specializing in Islamic banking products only and therefore attract customers who are not satisfied by conventional banking system. The competitive advantage that the new system is expected to enjoy and use to compete with customers may be undermined by the already established conventional banks and therefore making it difficult for new companies entering the industry.
Product positioning is an important factor discussed in the Oman article. The new Islamic banking institution in Oman will face a challenge in positioning themselves in the market. According to (Hussain & Shah, 2014) new Islamic institutions face a lot of challenges in positioning itself in the market. One of the reasons why this institutions find it difficult to position themselves is that there exist many other financial institutions that are offering almost similar products and services as the new Islamic banking institutions. The new Islamic banking institutions in Oman will also find it difficult to differentiate itself on cost. This is due to the fact that Islamic banking system does not allow interest rates in lending and this reduces the revenue of such financial institutions (Alharbi, 2015).
Marketing has a strategic role in that it is the means through which the consumers are informed of the existence of the product, place where its offered, its price as well as the features of the product (Hussain & Shah 2014). The combination of the four Ps of marketing is very important. Unless customers are made aware that a product exists and further information on the product is availed, it is very difficult for the customers to come and buy the product (Greuning & Iqbal, 2008). Customers are made aware of the product using various methods and techniques such as mainstream media advertising such as TV and Radio, outdoor advertising through billboards, social media advertising as well as promotional efforts such as road shows and event sponsorship. The new Islamic banking product has to be made popular to customers by carrying out promotional efforts to inform customers of the need for the product given the religious and cultural factors that influence customer behavior in this country (Hussain and Shah, 2014). The relation with customers and ease of use of the Islamic banking system will be crucial in determining the success of this new system
The availability of highly skilled labor force locally is cited as one of the major factors that will influence the growth of Islamic banking in the Sultanate. This is because, to introduce the system successfully, employees of the financial institution must have the right training and experience to understand the operations of the system. The article by (Ahmed, 2015) also recognizes the role played by educational institutions in producing graduates who are well equipped and trained in Islamic banking operations. The cost of on job training would otherwise be very high for the new entrants in the market.
Competition in the industry in Oman is seen to be very stiff. The introduction of Islamic banking in Oman is expected to face very stiff competition from established financial institutions which may use the Window strategy to venture into the Islamic banking market. This is expected to be a disadvantage to the company since the banks have an already established customer base. This therefore means that once the conventional banks start offering the same products and services as Islamic banks, the new Islamic finance institutions will be at a disadvantage. Alharbi 2015 also argues that it is common for banks offering specialized Islamic banking to face competition from established conventional banks. Competition will not be as stiff as imagined since it will be a bit difficult for the existing conventional banks to position themselves again in the market.
The new Islamic banking product in Oman will definitely face challenges in its implementation but there is huge possibility of the product becoming successful in the market (Jan and Marimuthu, 2015). The market share of the Islamic banking product cannot be accurately predicted because the product is completely new. Information gathered on demand of Islamic banking products that are in line with the Sharia Laws is very important in marketing of the product. This is because the marketers already know what the consumer needs and therefore, the marketing of the product will be consumer focused. When it comes to practical marketing of this product after its implementation has begun. It might be found that the demand was not as high as was predicted. This may be majorly due to religious and culture influence which may make potential customers to be reluctant in taking up the new idea. This section of the report compares both the findings and discussions in the two journal articles discussed above with the Oman market.
On competition, the article by Alharbi (2015) says that the level of competition is high for financial institutions that are entering the Islamic banking industry. The level of competition is particularly high especially in countries where the conventional banking system already exists. Alharbi argues that the conventional banks tend to react to the entry of new firms in the market and start offering the same products and services hence locking out the new firms. However, in Alharbi (2015) argues that competition is less intense in countries that are very conservative religiously since conventional banking system does not work in this country. Compared to the environment in the Oman market, it is found out that the competitive environment in most countries is almost the same.
In both the Oman article and the articles by Alharbi (2015) and Hussain and Shah (2014), the consumers are seen to be very rationale. Consumers are rationale when making decisions on what to buy. The customers are very sensitive to prices and the quality of products and services offered by firms in the market. Another important consumer behavior found in this analysis is that consumers are not loyal to the brands or products they consume. This therefore means it is easy for new firms to attract new customers from the existing financial institutions.
Branding and positioning by new Islamic banking financial institution is difficult even in countries like India, Pakistan, and Indonesia. This is mainly because, the existing industry player have diverse products that are almost similar to those offered by institutions using the Islamic banking model. The existing financial institutions enjoy economies of scale since they already have a huge customer base and therefore it is easy for the companies to offer products and services at a lower cost. The branding of the institutions under the new model will also be difficult since it will depend mostly on religious factors and consideration. This may not be so appealing to people who are not Muslims or Muslims who are not so much into Sharia law. However, it is possible to brand the institutions based on other factors such as good customer relations and use of advanced and unique technology in banking.
The article on Islamic banking in Oman has various strengths. One of the strengths of the article is that it has clearly identified the market demand of the product through a comprehensive market research of the target market. This will help in coming up with a concrete plan for the new business while possessing all the necessary information concerning the market. The other strength of the paper is that it has analyzed the external environment that the business is expected to be subjected to. This information includes political environment, cultural environment, economic and technological environment
The weakness of the paper is the fact that it has not analyzed the challenges that the introduction of the new Islamic banking product is going to face in the market except the religious factor that is very crucial in this market. The paper should have evaluated and analyzed all the potential challenges that the new form of banking in Oman was likely to face including operational challenges, infrastructural, logistical, competition and many more (Jan and Marimuthu, 2015).
Strategies are very important when introducing a new product into a new market. Therefore an organization needs to put a lot of emphasis on marketing especially for a new product. Marketing helps to inform customers of the existence of the product and how these products help in fulfilling the needs of the customers. The critically analysis of the role of strategic marketing in helping to introduce Islamic banking in Oman has provided an insight on what is needed to introduce a product in such a market successfully. This paper analyzes and discusses journal articles which relate to the article on Islamic banking system in Oman. Differences and similarities are identified on the challenges and the environmental factors affecting the industry. The third section contains a comparison of the articles discussed and the case of the Oman market .Despite the fact that it is a relatively new product, a case study of the performance of the product in other markets is important in providing insight into what is needed to succeed in this industry. The paper has various strengths and weaknesses with its main strength being the fact that it has done adequate market research on the industry in which the business is going to operate.
Akgu?Ndu?Z, A. (2009). Studies in Islamic economics: (Islamic banking and development). Rotterdam, Islamitische Universiteit Rotterdam
Schoon, N. (2009). Islamic banking and finance. London, Spiramus Press.
Application of the articles to Omani marketAlharbi, A. (2015). Development of the Islamic Banking System. Journal of Islamic Banking and Finance, 3(1)
Greuning, H. V., & Iqbal, Z. (2008). Risk analysis for Islamic banks. Washington, D.C., World Bank
Hussain, S. and Shah, I. (2014). Islamic Banking and Finance in India and Sri Lanka. Journal of Islamic Economics Banking and Finance, 10(1), pp.181-196
Jan, A. and Marimuthu, M. (2015). Sustainability Profile of Islamic Banking Industry: Evidence from World Top Five Islamic Banking Countries. International Journal of Economics and Finance, 7(5)
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