Pricing in which to charge higher prices as

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Pricing policies are, formulated to
exploit and manipulate human psychology as witnessed by common practice whereby
the recommended retail price printed on a product is often substantially higher
than what retailers actually charge. The aim of such pricing policies is to
give customers a false impression that they are in fact getting a bargain. This
type of practice is banned under Islamic law. Islam prohibits getting something
too easily without the proper work effort for it, or receiving a profit without
working for it.

            Furthermore, it is not allowed to change a price without
altering the quality or quantity of the product because this is cheating the
customer for illicit. Islam also prohibits false propaganda or publicity on the
part of marketers regarding the position of demand and supply through the
media. It should be pointed out that Islam does not prohibit price controls and
manipulations to meet the needs of the market. It means that the Islamic ethics
allows sometime in which to charge higher prices as a result of natural
scarcity of supply of a given commodity or setting price ceilings to curb
opportunistic tendencies among merchants.

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 In accordance to Islamic View, self-operating
mechanism of price adjustments and healthy competition are to be encouraged
(al-Qur’an, 83:26). However, the essential conditions for the successful
operation of such a mechanism dictate that there should be no corner market, no
hoarding, noun justified price manipulation, and no restriction on trade. Once
the second Caliph Umar Ibnal-Khattab passed by Hatib ibn Abi Balta’ah and found
him selling raisins at a much lower price with the intention of putting his
competitors to loss. Caliph Umar Ibn al-Khattab told him: “Either enhance your
rate or get away from our market”. The hoarding of any product is strictly
prohibited in Islam. But the system offers flexibility if competing marketers
sell at one price amounts to coercion and distortion of the free market.


If it is indulged in high prices of
product, under these circumstances, officials of the Islamic government can
bring together market leaders representing a particular region or a particular
commodity, in the presence of others. The purpose is to reach a consensus on
price level that would not be unjust to the consumer and at the same time reap
reasonable profits to the marketers. The key impetus to intervene on such an
ad-hoc basis is to prevent “black-marketing” and “concealment of essential food
stuffs”.Ibn al-Ukhuwwah (1938) discusses many types of contemporary “ethical
lapses” in pricing.Examples given by him include when real owners of the
products pretend that they are not the owners in order to hike up the price by
making consumers believe that an even higher 
price would be charged by the real traders, or when there are collusive

 He, therefore, emphasizes the role of a public
welfare official to ensure that prices remain fair and just by curbing any
ethical lapses in price setting. He observes that “the public welfare official
must see that a broker receives his commission only from the seller and must
not cause the price to be abated in collusion with the buyer’ (Ibn al-Ukhuwwah,
1938:4). Allunethical lapses in pricing are tantamount to ‘injustice’ and are
sinful. Hence, all profits earned through such unjustified prices are not only
unethical, but they infringe upon the unique status of man/woman and his/her
role and responsibilities as viewed under the Islamic framework. The Prophet
Muhammad (Peace be upon him) remarked, “Do not raise prices in competition”
(al-Nawawi, 2:270). In order to eliminate this type of ‘injustice’, the
marketer and customer must acknowledge that they have higher moral
responsibilities on earth rather than be preoccupied with profit maximization


2.0       Product

The Islamic perspective incorporates
moral and transcendental elements within the production decision-making process
in product development and is guided by the principles of Islamic business
ethics. These principles dictate, as Ibn al-Ukhuwwah (1938) remarked, that
firstly, the product should be lawful and not to cause dullness of mind in any
form. Secondly, the product must be asset backed. Thirdly, the product must be
deliverable since the sale of a product is not valid if it cannot be delivered.
Fourthly, there is a need of identification of extra cost-added features that
might materially change the product or impact on the buyer’s purchase
decisions. Fifthly, all parties intend to discharge their obligations,
financial and otherwise, in good faith; and should be based on principle of the
justice, fairness and equity.

Under the Islamic approach, the
production process has to be guided by the criteria of the value and the impact
of the product upon the whole society. This is due to the highest importance given
to the actualization of the optimum welfare of a human being and society. The
primary objective of the development of suitable product is to deliver, elevate
and satisfy basic human needs. Miller (1996) suggest that the main thrust
behind unethical decision-making on the part of business persons to produce
sub-optimal products is usually some form of cost-conscious strategy. The
Islamic perspective, on the other hand, encourages a societal and welfare
approach rather than decisions based on the profit maximization.









Categories: Marketing


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