INTRODUCTION

Takaful as manifested in its present form is something of a recent phenomenon. Despite the thriving rate of growth as witnessed in Malaysia over recent times, the concept of takaful is still alien to some and vague to many. After thirteen years of existence, there are still many in Malaysia asking the question, "what is the difference between takaful and insurance?"

In Malaysia, the Takaful Act was gazetted in 1984 and up the end of 1997 the takaful industry managed to accumulate a total asset of RM441 million. Compared to the insurance fund asset, it is only 1.5 percent. Worldwide in 1997 takaful accounts for about US$375 million in premiums per year but predictions for growth are impressive. For instance, the Bahrain - based Arab Insurance Group (ARIG) forecasted that the takaful market will be worth US$2.1 billion by the year 2010.

Especially over the last few year the takaful industry in Malaysia have grown quite substantially. In terms of new business it had grown from 3,638 new policies in 1993 to 50,005 in 1997 at an average annual rate of 318.6%. Over the same period, the in force business has grown from 18,345 policies to 112,605 at an average annual rate of 128.4%.

As mentioned earlier, even though the growth of the takaful business had been somewhat dramatic, the concept of takaful is still hazy to many people. Why is this so? Is the target segmentation of takaful products skewed towards a certain sector of the market or being Islamic, takaful is only accepted by the Muslims? Is the marketing strategies adopted presently open enough to the general public? Are there constraints prohibited other than Muslims to participate? Does takaful entail universal features? These questions and others will be discussed in the ensuing pages.

PREREQUISITES

Takaful being a relatively new concept is knowledge-based and ought to be explained to the public as widely as possible. This could be done quite extensively through the mass media. Presently, there is a dearth of literature on takaful. The public ought to be informed and educated about: [a] what takaful is? [b] how is it different from insurance? [c] what are the philosophies that underlies it? [d] how is it being operationalized and [e] what are the products available?

These information can be disseminated through many channels of the media, radio, television, newspapers and others. To this end I must commend Ybhg. Dato’ Fadzli, CEO of Syarikat Takaful Malaysia Berhad who have over the years taken time to write weekly columns in the local press about takaful. Other avenues can also be used such as through public gatherings, conferences and seminars and also through courses offered in schools and institute of higher learning. In a multiracial country like Malaysia it would be most useful if these information are also being disseminated through other languages. By spreading information this way, it would create greater awareness among the public.

Other prerequisite that operators ought to understand is that takaful being a service product inherit unique service features such as :

[a] intangibility - takaful being a service product is intangible that cannot be held, touched or seen before the purchase; on the other hand they are rich in so-called credence attributes.

[b] inseparability - consumer cannot separate the service from the deliverer of the service or the setting in which the services occur.

[c] inconsistency - marketing services is challenging because the quality of service is often inconsistent. Services depend on the people who provide them, their quality varies because people have different capabilities and also vary in their job performance from day to day.

[d] inventory - Inventory of services is different from that of goods. Inventory carrying cost are more subjective and are related to idle product capacity which is when the service provider is available but there is no demand.

As providers of takaful services one ought to be aware of the above-said features when faced with problems often encountered by service-related products.

Apart from the above, another essential prerequisite that is most wanting in today’s management arena is to be equipped with a reliable, tested computer system. In this day and age, takaful business have to be computer-assisted in almost every facet of its operations, be it in underwriting, claims management, accounting, retakaful and also marketing.

Together with a well-oiled system there should be also a dedicated and knowledgeable pool of staff to brace and withstand the rigorous and daunting effort not only to spread the message of takaful but also to perform dakwah to the ummah at large.

DEVELOPING MARKETING STRATEGIES

Just like other tangible good marketers, a takaful marketer must strive to provide a bundle of benefits that satisfies the needs of consumers. In other words an operator have to make sure that consumers are satisfied right from the point prospecting up to the processing and delivery of claims.

Now, the development phase, including defining target markets and finalizing a marketing mix, is a basic requirement of any marketing strategy. The following are areas to consider when developing a service marketing strategy such as that of takaful:

[a] Marketing should occur at all levels, from the marketing department right to the point where the service is provided.

[b] Allow flexibility in providing the service - when there is direct interaction with the customers, customise the service to their wants and needs and this is especially so in case of a group or corporate clients.

[c] Hire and maintain high-quality personnel; often it is the people in service organization who differentiate one organization from another.

[d] Consider marketing to existing customers to increase their usage of the service or create loyalty to the service provider i.e. an example of cross selling.

[e] Any problems in providing the service should quickly be resolved to avoid damaging a business’s quality reputation.

[f] Operators should adopt high technology to provide improved services at a lower cost. Continual evaluation how to customise the service should be done.

[g] Service providers should brand your service to distinguish it from that of the competition.

THE MARKETING MIX

Developing a marketing mix for services such as takaful requires that many questions to be answered. These questions are pertaining to the services to be offered, the attributes of the services that should be stressed, the prices that should be charged and how should the service be distributed and promoted.

[a] Service Attributes - Service attributes such as security, consistency, attitude, completeness, condition, availability and timing may be important factors in the purchase decision. If it is correctly identified attributes can become the foundation for a customer - oriented service ethic throughout the company. The attributes can be advertised, promoted and marketed to customers and more importantly to be understood and internalised by the employees.

[b] Service Mix - Service mix is a listing of all services a supplier has to offer. Service organisations especially the smaller ones often overlook mix considerations. Since no inventory exists, the request for a service slightly different from existing services often lead to an attempt to provide the requested service. Therefore, companies or organizations should develop a clear definition of what they offer.

[c] Pricing - In Malaysia and in may other countries the insurance industry is subjected to both tariff and non-tariff rating. On the other hand takaful is not subjected to either of them. However, in this instance prudence should prevail in managing long term liabilities. Offering reduced prices can be attractive to customers but can pose a problem too. Since it is difficult for customers to evaluate a service, they may use price as a surrogate for quality. Thus they may equate low or discounted prices with poor quality.

[d] Distribution - Distribution is a major factor in developing service marketing strategy because of the inseparability of services from the producer. In view of the relatively low exposure of takaful to the public, the role and number of the different channels that is to be made available is vital. The dissimination of information can make use of the various distribution networks be it through the agents, brokers, banks, government agencies, cooperatives and others.

[e] Promotion - As intangible - dominant products, services are not easily promoted. The intangible is difficult to depict in advertising, whether the medium is print, television or radio. Service advertising should thus emphasise tangible cues that will help consumers understand and evaluate the service. The cues may be the physical facilities in which the service is performed or some relevant tangible object that symbolises the service itself. Personal selling and contact with the customer are very important parts of the promotional program for service firms. Courtesy, diplomacy and the resolution of customer problems by employees usually are desired features of service-oriented organizations.

Publicity also occupies an important role in promotional strategy for service companies. Contribution of time and money to charitable organisations, sponsorship of public events increase favourable public awareness if properly publicised.

POSITIONING

Another important aspect a takaful operator have to develop in facing the insurance market that is congested with the various insurance companies is the art of positioning. Positioning starts with a product. The process of positioning is not that what you do to a product but rather what you do to the mind of the prospect. In short, it is a process of shaping the way customers perceive the product.

The religious compatibility that is directly linked to takaful products is dear to the heart of many Muslims. Coupled with a quality service and a competitive price a takaful should not face any resistance from the Muslim Ummah which comprises of half of the world’s population. In this form of niche marketing, Islamic values can positively be used to position oneself in facing the Muslim markets. On the other hand the excellent service and competitive price plus the Mudharabah or profit-sharing can also attract non-Muslims to participate in the takaful ventures.

In positioning your business, one have to be mindful of many questions and situations. Such as, what position do we own and what position do you want to own? Whom must you outgun? Do you have the resources to do it? In positioning, one must understand the role of words (especially in advertising); how words affect people and subsequently create change. To uphold positioning we need vision, courage, objectivity, simplicity, subtlety, patience and willingness to sacrifice. Finally in this day and age we also need a global outlook.

MARKET SEGMENTATION

Takaful coverage even though considered as a niche product, it can be marketed both through the mass market approach as well as the segment market method. However, in launching a takaful business a segmented market approach would be preferred. As a product that is Syariah - based it would caught the attention and imagination of the Muslims more than the others. As such, a segmented market approach is more appropriate.

Segmentation which involves dividing a market into distinct groups can be of necessity, because a diverse and changing market can be better satisfied, and communication and distribution within a market segment can be more focused. The search for competitive advantage may also called for segmentation. Improved assessment of competitors in a market segment is possible, as is more precise knowledge of the market segment. In short, the advantages of segmentation come from that of specialisation.

Segmenting process involves several steps that culminate in the selection of the appropriate market segments. The steps are:

[1] Identify the total market

[2] Select segmentation bases

[3] Determine specific variables within selected basis.

[4] Assess potential of each segment

[5] Select the market segments.

In Malaysia for instance where the society is multiracial in nature it would be most appropriate to segment the market in accordance to groups that could easily assimilate and rationalise the philosophy underlying takaful i.e. the Malays which are Muslims and also the government agencies which are supportive of the cause. By so doing, we find a niche in the market and as time progressed the segment can be widened further to cater for non-Muslims as well. Presently, the takaful concept are being accepted both by the Muslim and non-Muslim alike.

CONCLUSION

Even though the concept of takaful existed since the days of the Prophet (s.a.w.), its present day form only appeared quite recently. Nevertheless, with its universal appeal takaful managed to grab some piece of the action in countries like Malaysia, Indonesia, Brunei, Saudi Arabia, Luxemburg and many others. With a proper strategy and approach, I sincerely believe the takaful concept which is based on solidarity and mutual understanding will prosper and thrive in the years to come, Insyaallah.