Strategic marketing management: the case of Islamic banks

Abstract

Banks set up to operate in accordance with the Islamic Sharia’h principles have mushroomed in the last two decades. The basic difference between Islamic and non‐Islamic banks lies in the fact that the former operate on an equity‐participation system in which a predetermined rate of return is not guaranteed, whereas the latter’s operation is based on both equity and debt systems that are driven by interest. This essential difference resulting from the implementation of the Islamic Sharia’h principles, provides the incentive for Islamic bankers to search for different products/services to offer. Now the Islamic banking system is facing stiff competition not only from similar Islamic banks but also from Western banks disposed to modify their activities in accordance with Islamic Sharia’h principles, and is confronted with progressive forces pushing towards change. Change can be achieved by employing an effective marketing strategy. Assesses the effectiveness of marketing strategies by drawing on quantitative characteristics derived from a sample of Islamic banks from among a list of the top 100 Arab banks. Provides recommendations as to the measures to be adopted in order to improve the marketing effectiveness of the Islamic banks.