Islamic Economics Project

Advertising in Presence of Product Differentiation: Outlining Islamic Etiquette

Salman Ahmed Shaikh

In the real world, we find many producers for most goods and services. Often, these producers offer differentiated products which means that products differ from each other in some characteristics. Each producer can create demand for its products by focusing on specific features like some could focus on producing an economical product while someone else could focus on quality and still others could focus on catering to different taste preferences of different sections of the market. In industries like cell phones, restaurant meals and automobiles, we see many producers supplying differentiated products.

In economics, such a market in which there are many producers serving differentiable products is known as monopolistic competition. In this market type, often producers adopt certain marketing strategies and execute marketing plans to increase their product’s appeal, demand and hence increase the sales and thereby profits. It also helps them to create brand loyalty for their products.

Key parts of the marketing strategy include creating awareness about the product, publicizing its main features and presenting it as more compelling than the other products offered by competitors. From an Islamic perspective, there are certain principles and broad guidelines that must be followed and taken care of while advertising the products. Below, we explain some of these.

1)      First of all, Islam through its divine principles has a filter that disallows production and consumption of certain goods and services such as liquor and obscene content offered through various media and in various forms.

2)      False information must be avoided. ‘Kazb’ (lie) is condemned in Islam.

3)      Persuasive advertising that commits attributes which cannot be provided as promised is deemed immoral. Not acting upon the promise made is a serious sin in Islam.

4)      While physiological and aesthetic needs and wants can be targeted through effective presentation, it must not overly promote consumerism, which is inconsistent with the modesty cherished in Islamic value system.

5)      Even in halal goods, ‘Israaf’ (excessive spending) is disallowed. Islamic principles would encourage not to use the economy’s given physical capital stock, labor force and other resources on the production of goods and services that represent and encourage excessive spending.

6)      Islamic principles do not disallow market forces to work, but, Islamic principles encourage observing Adl (justice) and Ihsaan (acting on something in the most appropriate manner). They encourage cooperation, empathy and social responsibility. Hence, using price power to make essential goods more expensive and using quantity restrictions to raise prices are forbidden acts.

8)      Islamic tradition also does not approve creating appeal for products by representing culture that does not signify or match with Islamic social etiquette. For instance, advertising for perfume by showing how it can create positive image before opposite gender is neither necessary nor in line with Islamic social etiquette. Likewise, showing how one can stand out and be envied by others if one buys a particular brand of perfume, car or suit is neither necessary nor in line with Islamic etiquette.

9)      Disclosures about products must not be presented in a way to just bypass legal formalities. Rather, the disclosures must be explicit, readable, visible and presented with the belief that if same cannot be put against one’s actions in this world by someone in a court of law, then, it will nevertheless be one day put forward before Allah.

10) By not using sex appeal, status appeal, and envy in human’s nature to market products, consumer protection could be effectively ensured. Moreover, if over-commitment is avoided, then there will be much lesser need to expend huge sums on advertising.