competition market would mean that there would be
no room for each seller to earn abnormal amounts of
profit, and instead it entitles each company to get a
normal or equal profit only. Whether they like it or
not, companies have to set their price equal to
market price. If it is more than market price, the
consumers would not buy from them and find other
sellers instead. Meanwhile, if it is less than market
price, the company would receive many demands
and would not be able to meet this expectation as
their stocks would be limited. The other feature of
perfect competition market is that there would be no
product differentiation, as all sellers would supply
the generic, or perfect substitutions of, goods.
According to Kotler and Armstrong (2004), price
is one important element of marketing mix. In
determining price, firms should consider other
marketing mix elements, due to any decision made
pertaining to those elements would affect the price
too. Thus, firms have to think comprehensively with
regards to the marketing mix strategy, especially
when considering the price. In the product
development stage, instead of analysing the product
features first, firms can set the ideal selling price
first for particular customers, then develop the
product to suit that price. This technique is called
‘target costing’ (Kotler and Armstrong, 2004).
3.2.1 Pricing in Islamic Marketing
Islam is a complete and comprehensive way of life.
It covers all aspects of human activities including
society, politics, economy, education, spirituality
etc. and does not tolerate any attempts to secularise
human activities (Abdullah and Ahmad, 2010).
Moreover, Islam puts more emphasis on the life
in the hereafter. In other words, any human activities
in this current life would determine a person’s status
in the hereafter, and whether they would end up in
paradise or hell. Given the totality of Islam, it can be
applied in all areas including, but not limited to, the
social sciences, physics, biology, law, and, notably,
marketing (Saeed et al., 2001). Moreover, Saeed et
al. also propose using Islamic marketing ethics as an
alternative to secular approaches, for three reasons
which include: (1) the absoluteness of Islamic
teachings, (2) the transcendental aspect of
absoluteness and non-malleable nature, and (3) the
emphasis on value-maximisation instead of profit-
maximisation.
With regard to the value-maximisation, Saeed et
al., (2001) explain that it is based on the concept of
justice. In the holyur’an, Allah orders the believers
to do justice.
O ye who believe! Stand out firmly for
justice, as witnesses to Allah, even as
against yourselves, or your ... lusts (of your
hearts), lest ye swerve, and if ye distort
(justice) or decline to do justice, verily
Allah is well-acquainted with all that ye do.
(Annisa, 4:29)
Based on the above verse, Muslims should
practice justice under any condition, even if it may
be against their own self, family or group interests.
Moreover, Muslims should avoid bias when judging
or dealing with others. Finally, in the business and
marketing context, justice relates to “fair play” and
“just dealing” (Saeed et al., 2001).
The application of justice can be found in many
business examples. In trade, sellers must inform
customers of the features of the products, including
the defects if any to ensure that the price paid is
equal to the quality and value perceived by
customers. In the service sector, restaurants have to
be transparent by informing customers the prices of
foods and beverages. In Surah Annisa verse 49,
Allah orders the believers to practice justice, fair
play, and just dealings:
O you who believe! Eat not up your
property among yourselves unjustly
except it be a trade amongst you, by
mutual consent. And do not kill
yourselves (nor kill one another). Surely,
Allah is Most Merciful to you.
To assure that just dealings and fair play exist in
a trade contract, the features of the goods (subject
matter) must be precisely defined by both
contracting parties (seller and buyer). Prophet
Muhammad SAW encourages the parties to a
contract to mention all aspects of the agreement to
avoid misunderstanding which can lead to legal
dispute as mentioned in the hadith narrated by Ibn
Abbas below:
“Allah’s Apostle came to Medina and
the people used to pay in advance the
price of fruits to be delivered within one
or two years. (The sub-narrator is in
doubt whether it was one to two years or
two to three years.) The Prophet said,
"Whoever pays money in advance for
dates (to be delivered later) should pay it
for known specified weight and measure
(of the dates).” (Book #35, Hadith #441,
Sahih Bukhari)
Islam does not view pricing solely from the
business perspective but also from the interest of
society. According to Abdullah and Ahmad (2010),
all parties’ (buyers, sellers, society, etc.) interests are