IJMMR APRIL 2011

IJMMR Volume 2, Issue 4 (April, 2011) ISSN 2229-6883

Sri Krishna International Research & Educational Consortium http://www.skirec.com

INTERNATIONAL JOURNAL OF MARKETING AND MANAGEMENT RESEARCH

(IJMMR) SR. NO. P A R T I C U L A R PAGE NO.

1

RESOURCES-BASED, MARKETING -BASED, LEARNING-BASED STRATEGIC ALLIANCES AND BUSINESS PERFORMANCE SHING-MEI LEE

1-17

2

CUSTOMER AWARENESS ANALYSIS OF PRIVATE LIFE INSURANCE IN INDIA- LEARNING FROM KERALA RESHMI AUGUSTINE, DR.K.S.CHANDRASEKHAR

18-29

3

A STUDY OF BURNOUT AND ORGANIZATIONAL HEALTH AMONG HVPNL EMPLOYEES DR. NIRMALA KAUSHIK

30-39

4

CUSTOMER RELATIONSHIP MANAGEMENT IN MARUTI UDYOG LTD DR. IQBAL SINGH, PALLAVI WADHWA

40-61

5

TITLE: “UNDERSTANDING THE CONCEPT OF GREEN MARKETING IN CURRENT SCENARIO: A CHALLENGE OR AN OPPORTUNITY” MS. POOJA GUPTA, MS. AARTI SHARMA

62-78

6

A STUDY OF ISSUES AND CHALLENGES OF RETAIL FORMATS AND RETAIL ENTREPRENEURSHIP IN INDIA MS. GARIMA SHARMA, DR. PARUL KHANNA

79-87

7 A STUDY ON BRAND LOYALTY OF MLM BRANDS DR. ISITA LAHIRI, SHRI MRINAL KANTI DAS

88-102

8

A STUDY ON TOURIST’S SATISFACTION LEVEL WITH A REFERENCE TO KERALA, THE GOD’S OWN COUNTRY RAJESH K

103-116

9

THE PERCEPTIONS OF THE INSURANCE BROKERS ABOUT MARINE INSURANCE PRODUCTS AND MARKET- A STUDY DR. BYRAM ANAND, MR. SURAJ THERUVATH

117-132

10

AN EVALUATION OF PROFITABILITY PERFORMANCE OF ESOP INDIAN BANKS DR. RAMESH KUMAR DHIMAN, VIRENDRA SINGH CHAUDHARY

133-144

11 PILGRIMAGE AT MATA VAISHNO DEVI: PROBLEMS AND REMEDIES

PADMINI TOMER, DR. R.S. ARORA

145-164

12 ECONOMICS OF LIVESTOCK MARKETING IN ORISSA ANIRUDHA BISWAL, SANJAY KUMAR

165-174

13

IN-STORES DISPLAY: ONE OF THE EFFECTIVE ELEMENTS TO INCREASE SALES IN RETAIL DR. GEETA NEMA, MS. DHANASHREE NAGAR

175-182

14

WORK-LIFE BALANCE PRACTICES, OPPORTUNITIES & CHALLENGES - ITS IMPACT ON ORGANISATIONAL PERFORMANCE IN INDIAN CONTEXT DR. KIRTI AGARWAL, YOGESH BHARDWAJ

183-191

IJMMR Volume 2, Issue 4 (April, 2011) ISSN 2229-6883


15

CONSUMER PREFERENCES AND COMPARATIVE ANALYSIS OF SELECT PRIVATE LIFE INSURANCE COMPANIES - AN EMPIRICAL STUDY T. SOBHA RANI

192-199

16

SUPPLY CHAIN MANAGEMENT IN FRESH FRUITS AND VEGETABLES SEGMENT: UNORGANIZED V/S ORGANIZED SECTOR LOKESH VIJAYVARGY, AND PRERNA JAIN

200-213

17

YOUNGSTERS PERCEPTION REGARDING READYMADE GARMENTS IN HARYANA DR. MAITHILI R.P. SINGH

214-228

18

LEVEL OF AWARENESS IN RURAL INVESTORS TOWARDS INSTITUTIONAL INVESTMENTS - A CASE STUDY OF BIJAPUR DISTRICT DR. A. S. SHIRALASHETTI

229-243

IJMMR Volume 2, Issue 4 (April, 2011) ISSN 2229‐6883


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The Journal of Sri Krishna Research & Educational Consortium

I N T E R N A T I O N A L J O U R N A L O F M A R K E T I N G A N D

M A N A G E M E N T R E S E A R C H Internat ional ly Indexed & Listed Referred e -Journal

RESOURCES-BASED, MARKETING -BASED, LEARNING-BASED STRATEGIC ALLIANCES AND

BUSINESS PERFORMANCE

SHING-MEI LEE*

*Department of Finance Chaoyang University of Technology

Taichung Taiwan

ABSTRACT This research proposed a framework of strategic alliance analysis for evaluating prospective business performance. The division of the business performance can successfully be used as a diagnostic tool to provide a preliminary insight into Taiwan high technology industries for operators. The results indicate that (1) Complementarity of partners' resource-based contributions will be positively related to strategic alliance performance. (2) Higher levels of cooperation in marketing-based alliance will be positively associated with higher levels of Taiwan high technology firms’ business performance. (3) The evidence indicate that higher levels of organizational learning-based will be positively related to business performance. KEYWORDS: Business Performance; Resources-Based Strategic Alliances, Marketing-Based Strategic Alliances, Learning-Based Strategic Alliances; High-Tech Industry.

INTRODUCTION

This study aims to investigate how the strategic alliance practices related to the business performance in the Taiwan High tech industries. In order to enhance strategic alliance performance, Taiwan high technology firms can adopt various solutions to enhance their alliance capability, which can be defined as a firm's ability to capture, share, disseminate and apply alliance management knowledge. According to the figures provided by the Taiwan Industrial Development Bureau

(IDB), significant growth is expected in several emerging industries including nanotechnology, semiconductor equipment manufacturing, and color image display equipment. Our purpose here, therefore, is to propose an integrated framework that evaluates prospective alliance performance through an analysis of the partner firms and the alliance conditions, drawing upon and integrating the main approaches in the strategy literature—Structure of strategic alliances, which includes comparisons of governance structures in equity-based and



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contract-based alliances and formation of strategic alliances. Investigate whether different Strategic alliances have differential effects on various dimensions of Taiwan’s High-tech Industry business performance. For example, Mosel Vitelic (Taiwan) and Cypress (USA) jointly developed a 0.13-micron process technology to be deployed initially in Cypress's Fab I research and development facility in San Jose in 2000. The concept model we test is illustrated in Figure 1

2. LITERATURE REVIEW

MOTIVATION OF STRATEGIC ALLIANCES

2.1 RESOURCES-BASED STRATEGIC ALLIANCES

Alliances are formed due to both the resource needs and the social opportunities of partnering firms (Ahuja, 2000). Resources-based strategic alliances are maximize firm value through gaining access to other firms’ valuable resources (Ramanathan et al., 1997). The resource-based theory explains that strategic alliances are formed when firms need additional resources that cannot be purchased via market transactions but are available from partners. Shan et al., (1994) argued that complementary resources have been the focus on the formation and management of alliances. Resource-based allows an organization to access complementary capabilities in a situation where there are resource constraints, which include financial, technological, production capability, sales channel. However, Hunt & Morgan (1995) indicated that resource -based theory explains that strategic alliances are formed if organizations to combine resources in unique ways across organizational boundaries to obtain an advantage over their competitors and the associated costs

are minimized amongst other strategic options and also resources and capabilities are considered valuable if they allow an organization to exploit opportunities and counter threats in the business environment. Pfeffer and Salancik (1978) indicared that resource based motives cited as key reasons for allying include (1) access to newly developed technologies, capabilities, or general research resources of the partner firm. Resource constraints may direct an organization towards collaboration in a situation where collaboration is not an efficient response to the exchange conditions ( Kale et al., 2002). (2) improved market valuation of the technology, transferring tacit knowledge (Collins and Hitt, 2006) and additional funding or financial resources (Coombs and Deeds, 2000).

Lambe et al.(2002) indicated that resources-based strategic alliances attempt to find the optimal resource boundary through which the value of their resources is better realized than through other resource combinations. When alliance partners integrate resources, a synergistic effect can occur, empirical research finds that idiosyncratic resources are prominent in alliance success. Resource complementarity indicates a symmetric partnership that underscores important strategic considerations in inter-firm collaboration. Ahuja (2000) indicate that technical, commercial, and social capital influence alliance formation. This research compared existing literature of the resource-based theory as following : (1) The resource -based theory explains technology license as exchange of two resources between firms, which are technological resources (proprietary technologies) and financial resources (monetary compensation) (Yasuda and Iijima, 2004). (2) The resource -based theory explains joint R&D as the pooling of technological resources (including



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intellectual property, research talent, development experience, etc.) and financial resources owned by firms into a unified management of R&D activities ( Mothe and Quelin, 2001). (3) The resource -based theory explains that sourcing agreements are formed if firms are short of manufacturing resources required for their business such as facilities and equipment and need to utilize such resources available from partners. (4) The resource -based theory explains that firms form a joint venture in case that they prefer to combine their respective resources, such as manufacturing resources and distribution resources, to achieve certain mutually agreed business goals (Bulter and Sohod, 1995).

Complementary resources are especially important to alliance success. However, the degree of resource complementarity will be a critical factor in determining an alliance's future course and outcome. Peteraf (1993) indicated that a resource with the potential to create competitive advantage must meet a number of criteria, including value, rarity, imitability and organization a firm must be organized to exploit its resources and capabilities. Therefore, valuable firm resources are usually scarce, imperfectly imitable, and lacking in direct substitutes. Thus, the trading and accumulation of resources becomes a strategic necessity. Kim and Inkpen (2005) argue that a tension exists between the need for diverse resources and a need for similar resources. As to business alliances, resource -based researchers maintain that each partner contributes to an alliance and creates new resources (Das and Teng, 2000, Jap, 1999 and Park et al., 2004). Lei (1997) indicated that an alliance with a partner possessing complementary resources reduces the vulnerability of the alliance participants; Moreover, firms with complementary skills make better partners because of the

reduced potential for direct competition in the end product markets. Therefore, But excessive resource diversity makes it difficult for partners to learn from each other. However, resource-based theorists view the firm as a unique bundle of assets. A careful balance between resource similarity and diversity is at least in theory optimal for a stable relationship and a positive alliance outcome. Therefore, the alliance can be initiated with a low level of control. Hence, we propose:

HYPOTHESIS 1: COMPLEMENTARITY OF PARTNERS' RESOURCE-BASED CONTRIBUTIONS WILL BE POSITIVELY RELATED TO STRATEGIC ALLIANCE PERFORMANCE.

2.2 MARKETING-BASED STRATEGIC ALLIANCES

Marketing-based alliance is marketing activity undertaken by more than one entity, which can include a mix of different levels of governments as well as private sector organizations, jointly to promote and sell a concept, product or service which has benefit to all the stakeholders (Abratt and Motlana, 2002). Bucklin and Sengupta (1993) indicated that alliances with marketing emphases such as joint product development and co-branding have also become increasingly widespread. In practice, long-term alliances evolve to meet new environmental conditions and to respond to internal partnership changes, marketing alliances may create a synergic effect which can amplify and build user awareness of benefits derived from these complementarities.

The creation and sustaining of strategic alliances in Marketing-based alliance must be based on substantial degrees of trust



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and cooperation on the part of all channel members For example, Avon Products and Readers' Digest have wellestablished direct distribution channels with customers. However, Bucklin and Sengupta (1993) indicated that technologically cooperate in developing a new product and involve coordination among the partners in one or more aspects of marketing and may extend into research, product development, and even production. For example, Fuji, Kodak, Canon, Minolta, and Nikon formed a joint research and development project to establish a new standard for photographic film. IBM formed a joint venture with Toshiba and Siemens to develop an advanced line of memory chips. Thoumrungroje and Tansuhaj (2004) indicated that Marketing-based alliance’ complementarity and substitutability are mainly related to use and the marketing alliance is the strategically complementary alliance between two brands. For example, when planning its expansion into Mexico, Wal-Mart formed a joint venture with Mexico’s Cifra, shortening Wal-Mart’s learning curve and providing a firm base in the Mexican market. However, Geylani et al. (2008) indicated that marketing alliances can boost opportunities for product success in local markets for global brand companies and entering an alliance partnership with different industry brands allows firms to reinforce their brands image, and improve chances of commercial success. A marketing alliance that is created by the joint naming and the technical co-operation of two brands of an equal they might perceive two product categories are well paired under co- marketing alliances, which aim at integrating different resources, customers, suppliers, and markets from each partner (Dussauge, Garrette, & Mitchell, 2004).

It is assumed that marketing alliances are focused on implementing alliances to

conduct business activities such as product development, promotion, or distribution; and alliances put their resources on extending alliances to enlarge product lines, cross-selling, brand alliances, market share, and globalization. Co-marketing alliances are lateral relationships between firms at the same level in the value-added chain and represent a form of "symbiotic marketing" (Adler, 1966; Vardarajan and Rajaratnam, 1986).

It is assumed that if consumers can easily imagine that two different category products are used complementary to each other in a certain situation, in which the partners contribute similar resources for the same stage or stages in the value-chain, aiming at producing economies of scale for those activities that businesses carry out in collaboration. These corporations can also achieve link alliances, and independent status is distinct from the conventional practice of brand extension or alliance (Abratt and Motlana, 2002). Therefore, business alliance is an important issue for businesses on both strategic and tactic considerations in which how to evaluate and select their partners in order to achieve alliance objectives and benefits. For example, Apple Computer and Adobe Systems worked together in 1984 to create the tools of desktop publishing, a major market whose evolution was greatly accelerated by this partnership. In co- marketing alliances, complementarity and substitutability are mainly related to use. For example, Microsoft used its alliance with IBM for the MS DOS operating system in the early 1980s to catapult itself into the position of the dominant PC software firm (Brandt, 1989). Thus, the following hypotheses were investigated:

HYPOTHESIS 2: HIGHER LEVELS OF COOPERATION IN MARKETING-BASED ALLIANCE



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WILL BE POSITIVELY ASSOCIATED WITH HIGHER LEVELS OF BUSINESS PERFORMANCE.

TABLE 1 HERE 2.3 LEARNING-BASED STRATEGIC ALLIANCES

In an alliance setting, organizational learning performs a dual role of both acquiring existing knowledge that other partners already possess and generating new knowledge. Muthusamy and White (2005) indicated that effective organizational learning will enhance firm’s alliance capability. A firm with strong alliance capability can conduct organizational learning more effectively and at the same time deal with relationship with alliance partner better. This knowledge can be converted into new products, processes, and services, which contribute directly to the firms’ final financial results (Cohen and Levinthal, 1990). In the context of a network of firms, learning has been defined as the process of acquisition and exploitation of new knowledge, skills, and competencies by the organization (Argyris and Schön, 1978). Muthusamy and White (2005) indicated that while the level of learning within strategic alliances depends upon the absorptive capacity of partners, the success of the collective learning effort is determined by the cooperative learning among partners. Often alliances are formed for the purpose of learning and enhancing core competencies through a partner's complementary knowledge (Anand and Khanna, 2000 and Grant and Baden-Fuller, 2004). In the context of a network of firms, learning-based strategic alliances has been defined as the process of acquisition and exploitation of new knowledge, skills, and competencies by the organization (Argyris and Schön,

1978; Cohen and Levinthal, 1990; Muthusamy and White, 2005). While the level of learning within an alliance depends upon the absorptive capacity of partners, the success of the collective learning effort is determined by the cooperative learning among partners (Muthusamy and White, 2005).

Slater and Narver (1995) argue that a firm which is continuously engaged in learning-based strategic alliances tends to stand a better chance of tracking and responding to customer needs, sensing and seizing on market opportunities, and offering appropriate and finely targeted products, results which lead to superior levels of profitability, sales growth, and customer retention.

TABLE 2 HERE

Inkpen and Tsang (2005) indicated that the outcome of learning-based strategic alliances stems from learning processes synergies of knowledge, as alliances companies involve a simultaneous focus on internal, firm-specific competencies and external, collaborative synergies, which plays an important role in creating new knowledge-related capabilities and thereby enhancing competitive performance.

However, Porter and Fuller (1986) indicate that learning-based strategic alliances associated with R&D capabilities is especially critical in global industries such as high technology industries where a firm's competitive position in one national market is significantly affected by its position in other markets. Inkpen and Tsang (2005) indicate that the increasing global harmonization of high technology research procedures and learning-based strategic alliances, Partners can learn together in the course of collaboration, and jointly develop new capabilities and skills,



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useful knowledge and information for discovery have become more codified, divisible and transferable. This provides greater opportunity for high technology MNEs to ally with, and learn from, technology start-up firms and even global competitors with complementary R&D strengths and strategies. For example, in recent years, corporations as varied as GE, Ford, Apple, Time-Warner, AT&T and Toyota have actively formed alliances with global partners. Therefore, The importance of organizational learning for performance improvement has long been recognized in research. Hence, this study proposes:

HYPOTHESIS 3: HIGHER LEVELS OF ORGANIZATIONAL LEARNING-BASED WILL BE POSITIVELY RELATED TO BUSINESS PERFORMANCE.

3. RESEARCH METHODOLOGY

3.1 SAMPLE AND DATA SOURCES

Data have been collected from 152 high technology firms in Taiwan. The industry and involves large and well-known high technology companies in industries such as Integrated circuits, PC/Peripherals, Optoelectronics , Telecommunication, Precision machinery, and Biotechnology . After that a large-scale questionnaires survey was administered to secure more information from either CEO , top managers or HR professionals. Given that a comprehensive questionnaire such as this one requires much time to answer, most of the samples were approached through acquaintants.

The sample of firms for this study was drawn from the Taiwan CommonWealth Magazine Top 1000 Enterprises list of largest Taiwan high technology companies. In-depth interviews were performed on Taiwanese high technology companies to develop the research

instruments. After that a large-scale questionnaires survey was administered to secure more information from CEO or top managers. Given that a comprehensive questionnaire such as this one requires much time to answer, most of the samples were approached through acquaintants. There are more than 500 Taiwan high technology companies in the database. After removing some companies with some missing financial numbers, the remaining number of samples in the final data set for analysis is 152, across 6 different high technology industries (Integrated Circuits, Computers and Peripherals, Telecommunications, Optoelectronics, Precision Machinery and Biotechnology).

TABLE 3 HERE

3.2 VARIABLES AND MEASURES

DEPENDENT VARIABLE: FINANCIAL PERFORMANCE In this research, the financial

performance measures of business performance include (1) financial structure, (2) solvency, (3) operating capability, (4) profitability capability, and (5) cash flow.

TABLE 4 HERE

FIGURE 2 HERE

The structural equations of the model take the following form:

where,

Y1=λ11η1+ε1

Y2=λ21η1+ε2

Y3=λ32η2+ε3

Y6=λ63η3+ε6

Y7=λ73η3+ε7

Y8=λ83η3+ε8

Y11=λ113η3+ε11

Y12=λ124η4+ε12

Y13=λ134η4+ε13

Y16=λ164η4+ε16

Y17=λ174η4+ε17

Y18=λ185η5+ε18



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Y4=λ42η2+ε4

Y5=λ52η2+ε5

Y9=λ93η3+ε9

Y10=λ103η3+ε10

Y14=λ144η4+ε14

Y15=λ154η4+ε15

Y19=λ195η5+ε19

Y20=λ205η5+ε20

Financial performance= f (financial structure, solvency, operating capability, profitability capability, cash flow)

INDEPENDENT VARIABLES: MEASURES OF STRATEGIC ALLIANCE MOTIVATION

The Strategic alliance motivation factors view constructs use reflective scales developed by Morgan and Hunt (1994), having three indicates including (1)marketing -based motivation (2)resource-based motivation (3)learning-based motivation. Marketing based motivation refers to share market operation risk, open new market, increase market share and develop new product. Resource based motivation refers to build economic scale, ensure the resource of raw material, cost reduction and competitive edge improvement and investment portfolio and risk-avoidance orientation. Learning based motivation refers to reduce R&D cost, accelerate technology transfer and improve learning curve effect. Measures are explained as Table 5.

TABLE 5 HERE

4. Results

4.1 THE SEM RESULTS FOR FINANCIAL PERFORMANCE

FIGURE3 HERE

In Figure3, the SEM results for financial performance, all of the path coefficients are statistically significant. The following

path model output reports the overall model coefficients for the major financial performance model.

4.2 THE INFLUENCE OF MOTIVATION OF STRATEGIC ALLIANCES ON BUSINESS PERFORMANCE

FIGURE 4 HERE

TABLE 6 HERE

Table 6 shows the standardized regression weights and p-value. It is evident that complementarity of partners' resource-based contributions will be positively related to business performance (Hypothesis 1).The resource-based motivation regresses significantly positive toward business performance (standardized regression weight 0.148, p = 0.005) . Strategic alliances “is about creating the most value out of one's existing resources and by combining these with others' resources ” (Das & Teng, 2000). The resource -based motivation explains that firms form an alliance that they prefer to combine their respective resources, such as manufacturing resources and distribution resources, to achieve certain mutually agreed business goals (Bulter and Sohod, 1995).However, the degree of resource complementarity will be a critical factor in determining an alliance's future course and outcome.Therefore, the result of SEM Model supports Hypothesis 1.

It is evident that the higher levels of cooperation in marketing-based alliance will be positively associated with higher levels of business performance (Hypothesis 2). The marketing-based motivation regresses significantly positive toward business performance (standardized regression weight 0.319, p = 0.007). The results also indicate that



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alliance motivation (standardized regression weight 0.226, p = 0.002) and alliance experience (standardized regression weight 0.449, p = 0.000) will be positively associated with the alliance relationship management of the firm marketing alliances create a synergic effect which can amplify and build user awareness of benefits derived from these complementarities (Bucklin and Sengupta, 1993) and allow firms to reinforce their brands image, augment brand awareness, and improve chances of commercial success (Geylani et al., 2008; Gammoh et al., 2006). Therefore, the result of SEM Model supports Hypothesis 2.

It is evident that the higher levels of organizational learning-based will be positively related to business performance (Hypothesis 3). The learning-based motivation regresses significantly positive toward business performance (standardized regression weight 0.507, p = 0.003). Slater and Narver (1995) indicate that a firm which is continuously engaged in learning tends to stand a better chance of tracking and responding to customer needs, sensing and seizing on market opportunities, and offering appropriate and finely targeted products, results which lead to superior levels of profitability, sales growth, and customer retention Therefore, the result of SEM Model supports Hypothesis 3.

5. CONCLUSIONS

MARKETING- BASED STRATEGIC ALLIANCE

Complementarity of partners' resource-based contributions will be positively related to strategic alliance performance. Resource based motives cited as key reasons for Taiwan high technology firms allying include access to newly developed technologies, capabilities, or general

research resources of the partner firm, transferring tacit knowledge, improved market valuation of the biotechnology technology. The resource -based motivation explains that Taiwan high technology firms form an alliance that they prefer to combine their respective resources, such as manufacturing resources and distribution resources, to achieve certain mutually agreed business goals.

RESOURCE- BASED STRATEGIC ALLIANCE

Higher levels of cooperation in marketing-based alliance will be positively associated with higher levels of Taiwan high technology firms’ business performance. Marketing alliances create a synergic effect which can amplify and build user awareness of benefits derived from these complementarities and allow Taiwan high technology firms to reinforce their brands image, augment brand awareness, and improve chances of commercial success.

LEARNING- BASED STRATEGIC ALLIANCE

The evidence indicate that higher levels of organizational learning-based will be positively related to business performance. Taiwan high technology firms which are continuously engaged in learning tends to stand a better chance of tracking and responding to customer needs, sensing and seizing on market opportunities, and offering appropriate and finely targeted products, results which lead to superior levels of profitability, sales growth, and customer retention.

The altemative explanations discussed in the previous section a1so provide potential avenues for future reseach. However, this study highlighted alliance type and alliance experience in impacting alliance management capability in the



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entrepreneurial context. (1) The further study should investigate what other factors, besides alliance type, alliance experience and the establishment of a dedicated alliance functions are critical in developing and enhancing a firm's alliance strategies. (2) In future research, if it is possible to obtain data from the other country sample, a better insight about understanding the significant re1ationships between strategic alliance success factors and business performances.(3) A limitation of this study, of course, is that it deals only with Taiwan high technology firms perceptions about their alliance strategies and business performance. Future research that focuses on manufacturers in other countries of origin might produce results different from the findings of this study. (4) Future research should investigate how different alliance types interact with one another, and thus this study was not able to discuss the differential impact of portfolios made up of different mixtures of upstream, horizontal and downstream alliances on a firm's alliance management capability.

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Venkatraman, N. and Ramanunjam, V. (1986), “Measurement of business performance in strategy research: A comparison of approaches”, Academy of Management Review, Vol. 11, No. 4, pp. 801-814.

Yasuda, H. and Iijima, J.(2005). Linkage between strategic alliances and firms' business strategy: The case of semiconductor industry. Technovation 25: 513-521



‐ 12 ‐

FIGURE 1 THE CONCEPT MODEL

Strategic Alliance Motivation

Marketing‐ Based Strategic Alliance H1

Financial Performance

γ

H2

Resource‐ Based Strategic Alliance

Learning‐ Based Strategic Alliance

H3



‐ 13 ‐

FIGURE 2. FINANCIAL PERFORMANCE

ε13

ε10

ε11

ε12

λ 205111

λ 195111

λ 185111

λ 174111

λ 164111

λ 154111

λ 144111

λ 134111

λ 124 111

λ 113111

λ 103111

λ 93111

λ83 83

λ63111

λ 73111

λ 52111

λ42

λ 32111

λ 21

λ 11111

ε1

ε2

ε3

ε4

ε5

ε6

ε 14

ε15

ε16

ε17

ε18

ε19

ε9

ε20

ε7

ε8

γ11

γ21

γ51

γ41

γ31

Liabilities/assets ratioY1

Current ratioY3

Long term cash/fixed assets ratioY2

Quick ratioY4

Average collection turnoverY6

Times Interest Earned RatioY5

Average collection daysY7

Average inventory turnoverY8

Average inventory daysY9

Fixed assets turnoverY10

Total assets turnoverY11

ROSY12ROEY13

Operating income to paid-in capitalY14

Profit before tax to paid-in capitalY15

Net profit to salesY16

Earnings per shareY17

Cash flow ratioY18

Cash flow adequacy ratioY19

Cash flow reinvestment ratioY20

�Financial structureη1

�Operating performanceη3

�Cash flow:η5

�Solvency:η2

�Profitability:capabilityη4

Financial performanceξ1



‐ 14 ‐

FIGURE 3 THE SEM RESULTS FOR FINANCIAL PERFORMANCE

0.82

0.84

0.97

0.96

0.96

0.97

0.95

0.14

0.11

0.20

0.14

0.11

0.07

0.18

0.16

0.22

0.16

0.08

0.07

0.05

0.08

0.33

0.29

0.05

0.07

0.08

0.28 0.85

0.9211

0.95

0.96

0.88

0.90

0.93

0.95

0.89

0.94

0.93

0.92

0.94

Liabilities/assets ratioY1

Current ratioY3

Long term cash/fixed assets ratioY2

Quick ratioY4

Average collection turnoverY6

Times Interest Earned RatioY5

Average collection daysY7

Average inventory turnoverY8

Average inventory daysY9

Fixed assets turnoverY10

Total assets turnoverY11

ROSY12ROEY13

Operating income to paid-in capitalY14

Profit before tax to paid-in capitalY15

Net profit to salesY16

Earnings per shareY17

Cash flow ratioY18

Cash flow adequacy ratioY19

Cash flow reinvestment ratioY20

�Financial structureη1

�Operating performanceη3

�Cash flow:η5

�Solvency:η2

�Profitability:capabilityη4

Financial performanceξ1



‐ 15 ‐

FIGURE 4 SEM OF STRATEGIC ALLIANCE MOTIVATION

TABLE 1. CHALLENGES AND CONCEPTUALIZATIONS OF MARKETING BASED STRATEGIC ALLIANCES

Marketing Based Strategic Alliances Challenges (1) determining the relative levels of partner funding contributions

(2) balancing power and decision-making authority among partners (3) budgeting for marketing versus other tourism activities such as research and evaluation (4) balancing political imperatives with market forces in a more holistic policy context of government–industry interaction(UNWTOBC, 2003).

Conceptualizations (1) cooperation requires interrelated behavior by two or more parties (2) such behavior is voluntary (3) cooperation is motivated by the desire to achieve both individual and joint objectives (Casson and Buckley, 1988).

TABLE 2. ADVANTAGES OF LEARNING BASED STRATEGIC ALLIANCES

Learning Based Strategic Alliances Advantages 1. Through learning from each other, partners may accumulate substantial

experience and lessons on how to avoid repetitious mistakes, how to reduce production costs and transaction costs, and how to enhance the capacity of mutual understanding, coordination, and problem solving (Lei, Slocum, & Pitts, 1997).

2. Partners can learn together in the course of collaboration, and jointly develop new capabilities and skills (Inkpen and Tsang, 2005 and Tiemessen et al., 1997).

3. Each of the partners can bring such knowledge into the collaboration, thus giving the other an opportunity to access competencies and skills developed and acquired prior to entering into the focal collaboration (Inkpen and Tsang, 2005 and Kogut, 1988).

Financial Performance

Motivation

resource based

learning based

marketing based 0.319

0.148

0. 507

0.226



‐ 16 ‐

TABLE 3. SAMPLE DISTRIBUTION OF TAIWAN’S HIGH-TECH COMPANIES

Industry Samples of Companies

Integrated circuits 42

PC/Peripherals 52

Telecommunication 34

Optoelectronics 7

Precision machinery 12

Biotechnology 5

Total Samples 152

TABLE 4. MEASURES OF BUSINESS PERFORMANCE

TABLE 5. MEASURES OF STRATEGIC ALLIANCE MOTIVATION

variables Indicator Measures Scale

Motivation of strategic alliance

Marketing based motivation

(1)share market operation risk

(2)open new market

(3)increase market share

(4)develop new product

7 point Likert

scale

Resource based motivation

(1)build economic scale

(2)ensure the resource of raw material (3)cost reduction and competitive edge

variables Indicator Measures Scale

Business performance

Financial performance

(1) financial structure. Financial ratio

(2) solvency

(3) operating capability

(4) profitability capability

(5) cash flow



‐ 17 ‐

improvement

(4)investment portfolio and risk-avoidance orientation

Learning based

motivation

(1)reduce R&D cost

(2)accelerate technology transfer

(3)improve learning curve effect

TABLE 6. STANDARDIZED REGRESSION WEIGHTS AND P-VALUE OF THE STRATEGIC ALLIANCE SEM MODEL.

Path Standardized Regression Weight p

Marketing-Based Alliance Motivation

→Business Performance

0.319** 0.007

Resource-Based Alliance Motivation


0.148** 0.005

Learning-Based Alliance Motivation


0.507** 0.003

Alliance Motivation

→Alliance Relationship Management

0.226** 0.002

* p < 0.05 ; ** p < 0.01 ; *** p < 0.001



‐ 18 ‐




CUSTOMER AWARENESS ANALYSIS OF PRIVATE LIFE INSURANCE IN INDIA- LEARNING FROM KERALA

RESHMI AUGUSTINE*; DR.K.S.CHANDRASEKHAR**

*Sathyabama University Chennai India **Insitute of Management in Kerala

University of Kerala Thiruvananathapuram India

ABSTRACT Life Insurance market in India is growing rapidly through the liberal approach from the Government of India. The growing upward trends in Indian economy and share market increased boom of life insurance sector. Different banks and financial groups through tie ups with global players are trying to capture the Indian Life Insurance Market through their aggressive marketing techniques, product innovations and unbeatable customer service tactics comparing to the market giant Life Insurance Corporation of India. Since the foreign private players are using an effective strategy of fostering tie up with prominent Indian companies with immense good will and popularity that makes their entry smooth and promising. The Republic of India is the eleventh biggest market in the world and fifth-largest in Asia. In the financial year 2007, total life insurance premium volume of India was USD 34.59 billion, which is 1.6% of the total world life premium. This paper is based on a questionnaire based survey undertaken at the state of Kerala- ‘the God’s own country’ in the Indian sub continent. It sheds light into the customer perspectives on the level of awareness of private life insurance companies; their processing and key factors considered while buying life insurance policies by the population of Kerala. The findings of the study open doors into the impressive customer orientation of private players and security as the major driving factor for buying life insurance policies so that players can frame their own strategies to make their role effective in the market.. KEYWORDS: liberalization, life insurance companies, processing.

INTRODUCTION

Insurance is the indispensable part of economy and one of the strongest pillars of Indian financial market.The tides of globalisation and the global meltdown has

a deep influence in the insurance market all over the world. Financial market globalisation has supported parallel by the globalisation of Insurance sector. There is tremendous increase in Trade, Direct Investment and Portfolio Investment,



‐ 19 ‐

whilst there was a clear demand for insurance services particularly in the emerging economies as India. Globalisation of insurance market in India has enabled the foreign life insurance players to enter in the Indian market and there were reciprocal benefits. According to a report by Swiss Re (Sigma No.4/2000), the major driving forces of globalization in insurance market were identified to ‘push’ and ‘pull’ factors. The push factors are the motives of insurance companies to move out to the markets that are emerging as India due to the potential growth of the market, direct investments and increase in global trade. The other key factor for pushing is mainly due to the saturated markets of developed countries like United Kingdom, Japan, United States etc. The pull factors are characterized by the key motives behind foreign players to operate in local market due to the economic growth, trade and considerable capital requirements to cover risks.

For a long time in India, life insurance has been considered as a main tax saving option. Nowadays this mindset is changing slowly. Apart from the tax benefits, insurance is being taken by many. All the players irrespective of private and public aspects are offering now life products that suit the specific requirements of people and various demographic characteristics. The most popular and common products offered by various life insurers are money back, term assurance, whole life, endowment policies and unit linked insurance plans. One of the latest

innovations in life insurance market which has been popularised by private players is Unit Link products ULIPs) which allows wide range of flexibility for the customers. Moreover, IRDA has provided guidelines for Unit Linked products that allow the minimum level of sum assured, minimum period of premium payment and other requirements, including NAV computation methodology. Additionally, life insurance companies were keen to understand and capitalize the need for structured retirement plans; as long-term pension and fund management.

The traditional bondage of LIC in Indian life insurance market has been released with private players’ entry. Almost 99% of the total life insurance premium has grabbed by Life Insurance Corporation of India, till the year 2002; however, liberalisation increased private players’ participation in the life insurance market. Private players have adopted impressive growth strategies, through innovative products that were tailor made to the requirements of the clients and developed effective distribution channels. Further, the premium of private players increased at a CAGR of 153% during 2002-2007, whilst the total premium of LIC increased by 21%. During the year 2002-2007, the first year premium (including single) of LIC increased at a CAGR of 23% to Rs 562.23 billion from Rs 195.89 billion in 2002. At the same time the premium level of private players increased tremendously at a CAGR of 135% to Rs 193.94 billion in 2007 from Rs 2.69 billion in 2002.

TABLE NO: 1



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The increasing prominence of private players were behind flourished through the remarkable growth was popularity of unit linked products. LIC tried to present many

unit linked products to acquire its lost market share; thereby gained its share in the total unit link from 37% in 2005 to 54% in 2007.

TABLE NO: 2

An Article by Sanjay Chakraborthy (2005), it is mentioned that India has about 300 million people who can afford to buy life , health and pension plan products. Out of this only 20 percent have insurance and that too covers only 25 percent of their needs and financial capacity. The remaining 80 percentage have no insurance cover. The life insurance market of India, therefore has tremendous growth potential.

Insurance Regulatory and Development Authority (IRDA) Act, 1999 – Based on the recommendations of the Malhotra committee, , the insurance bill has passed in the parliament by the Government of India. Hence the insurance sector opened for private insurance companies with the execution of IRDA Act, 1999. The insurance industry saw a tremendous changes from liberalization to nationalization and back again to liberalization in early 2000 (quoted by



‐ 21 ‐

Mohit Anand from India 2010 - A Lloyd’s report 2007), through a fragmentary de-regulation of insurance sector and there by fostering the initial steps of of private and foreign companies into the insurance market of India. This has considerably

affected the Kerala’s insurance market. Moreover, foreign investment was also sanctioned and surpassed at 26% holding in the Indian insurance companies. (IRDA Act, 1999).

DISTINGUISHED AND REMARKABLE EVENTS IN THE INDIAN INSURANCE MARKET

TABLE NO: 3 HISTORY OF INDIAN INSURANCE MARKET (1850-2007)

Source: India 2010 A Lloyd’s View (2007)

Sanjay Chakraborthy (2005), also quoted that an estimated existing insurance market in India in terms of ‘premium’ and ‘income’, reveals that, out of an insurable population of 300 million, 50 million have the capacity to pay a premium of Rs. 10,000 per year, 100 million have the capacity to pay Rs. 7,000 per year and 150 million can pay Rs. 3,500 per year. On this basis the total annual insurance premium would be Rs. 1750 billion. The NCAER has also estimated an insurable population of 240 million.

According to Deepti Bhaskaran (2007) in her article “Insurance umbrella size to double, says industry”, expansion, product innovations and reforms are three themes that will dominate the life

insurance business in 2007. Life insurance companies are expected to record a 100 per cent increase in new business in financial year 2007, and that growth is not going to taper off. The industry is confident of maintaining the rate, typical of a flourishing industry. Says N.S. Kannan, executive director, ICICI Prudential Life Insurance: "First-year premiums increased by 17 per cent in 2004-05 and 34 per cent in 2005-06. This year, it has been 100 per cent. The fundamentals of the economy are good and the life insurance industry is riding this boom." The rise in disposable income of individuals has increased the need for investment options. With aggressive sales and the two-in-one proposition of unit-linked insurance plans (ULIPs), insurers



‐ 22 ‐

swooped in on this opportunity, especially during the period preceding policy changes in ULIPs that strengthened their insurance orientation

RESEARCH METHODOLOGY

The research has passed through secondary and primary research perspectives. Secondary research has conducted by collecting data mainly from the annual reports of IRDA, different insurance companies’ annual reports and other publications through which the boarder aspects of industry and markets available. Further, the primary research has conducted through a field survey using questionnaire among the clients of seven prominent life insurance players based on the consistency of their market share ranking for the last two years. As far as the research design is considered, a probabilistic area sampling had been used to increase the sampling efficiency. The data was collected through a random selection from the sample frame and was provisioned for non response errors.

DATA ANALYSIS AND TOOLS USED

Analyses of various statistical data were collected for the secondary sources. The collected primary data has analysed using

‘Statistical Packages for Social Sciences (SPSS), an IBM company software and Microsoft Excel. For documentation Microsoft word 2007 and “Adobe Page Maker 9.0’ were used.

ANALYSIS & INFERENCE

From a sample of 481 clients a survey was conducted from different districts of Kerala state to:

• Ranking of the product servicing quickness of LIC and private players

• Rank the level of awareness of private life insurance players

• A comparison of customer service effectiveness of both public and private sector players

COMPARISON OF PRODUCT SERVICING TIME BETWEEN LIC & PRIVATE PLAYERS

A paired sample test was applied to the groups (LIC & Private players) to determine the quickness of product servicing using a 4 point scale (1-delayed to 4 – very quick) and the results are as under

TABLE NO: 4 PAIRED SAMPLES STATISTICS

Mean N Std. Deviation Std. Error Mean Life insurance corporation (LIC) 1.73 481 .674 .031

Private Insurance Companies 3.55 481 .511 .023 The above table shows the descriptive statistic used to compare the product servicing quickness and the mean and

standard deviation are given in the table for n = 481



‐ 23 ‐

TABLE NO: 5 PAIRED SAMPLES CORRELATIONS

N Correlation Sig. LIC & Private Players 481 .000 .999 The previous table provides the paired sample correlations between the two paired scores. It can be seen that there is

no correlation between both the insurance players.

TABLE NO: 6 PAIRED SAMPLES TEST

Paired Differences

Mean Std.

Deviation

Std. Error Mean

95% Confidence Interval of the

Difference t df

Sig. (2-tailed) Lower Upper

LIC & Private Players

-1.813 .846 .039 -1.889 -1.737 -

47.024 480 .000

The above table shows the paired sample t test. The significance for the comparison of the insurance players was p < 0.5. Thus the difference in service quickness is statistically significant and we can infer from the mean in the first table that quickness of product servicing by private players is higher compared to LIC.

COMPARISON OF CUSTOMER CARE BY DIFFERENT INTERFACES

OF THE LIFE INSURANCE COMPANIES

A paired sample test was applied to the groups (LIC & Private players) to determine the customer care using a 5 point scale (1-extremely poor to 5 – extremely good) and the results are as under

TABLE NO: 7 PAIRED SAMPLES STATISTICS

Mean N Std. Deviation Std. Error MeanPair 1 LIC Agents 3.52 481 .512 .023

Private Player Agents 3.79 481 .764 .035Pair 2 LIC Employees 3.46 481 .499 .023

Private Player Employees 4.00 481 .815 .037Pair 3 LIC Higher Officials 2.76 481 1.103 .050

Private Player Higher Officials 4.00 481 .824 .038



‐ 24 ‐

The above table shows the descriptive statistic used to compare the customer service effectiveness and the mean and



N Correlation Sig. Pair 1 LIC & Private Player Agents 481 .053 .244Pair 2 LIC & Private Player Employees 481 .013 .783Pair 3 LIC & Private Player higher

officials 481 -.031 .499

The above table provides the paired sample correlations between the two paired scores for three stakeholders. It can

be seen that there is no correlation between both the insurance players.


Paired Differences

Mean Std.

Deviation

Std. Error Mean


Difference t df


LIC & Private Player Agents -.268 .897 .041 -.349 -.188 -6.556 480 .000

LIC & Private Player Employees -.536 .950 .043 -.622 -.451 -

12.377 480 .000

LIC & Private Player higher officials

-1.237 1.397 .064 -1.362 -1.112 -

19.418 480 .000

The above table shows the paired sample t test. The significance for the comparison of the insurance players was p < 0.5. Thus the difference in customer service is statistically significant and we can infer from the mean in the first table that customer service by the stakeholders of private players is higher compared to LIC.

BEHAVIOURAL COMPARISON OF LIC & PRIVATE PLAYERS TOWARDS CUSTOMERS

A paired sample test was applied to the groups (LIC & Private players) to determine the behavior towards customers using a 5 point scale (1-very poor to 5 – very good) and the results are as follows.



‐ 25 ‐

TABLE NO: 10 PAIRED SAMPLES STATISTICS Mean N Std. Deviation Std. Error Mean Behaviour of LIC

employees 2.37 481 .544 .025

Behaviour of Private player employees 3.91 481 .836 .038

The above table shows the descriptive statistic used to compare the customer service effectiveness and the mean and



N Correlation Sig. Behaviour of LIC & Private player

employees 481 .019 .676

The above table provides the paired sample correlations between the two paired scores for three stakeholders. It can

be seen that there is no correlation between both the insurance players.


Paired Differences

Mean Std.

Deviation

Std. Error Mean


Difference t df


Behaviour of LIC & Private player employees

-1.545 .989 .045 -1.633 -1.456 -34.262 480 .000

The above table shows the paired sample t test. The significance for the comparison of the insurance players was p < 0.5. Thus the difference in behavior towards customers is statistically significant and we can infer from the mean in the first table that behavior of private players towards customers is warm and good when compared to LIC employees.

AWARENESS ON PRIVATE INSURERS

A one sample test was applied to compare the mean of Private players group to determine the awareness using a 4 point scale (1-not at all aware to 4 – fully aware) against the hypothesized mean of 3 and the results are the following.



‐ 26 ‐

TABLE NO: 13 ONE-SAMPLE STATISTICS N Mean Std. Deviation Std. Error MeanBajaj 481 3.52 .512 .023Metlife 481 3.46 .499 .023Brila Sunlife 481 2.76 1.103 .050ING Vysya 481 1.97 .968 .044Max Newyork 481 1.94 .906 .041HDFC Standard 481 3.46 .499 .023ICICI prudential 481 2.76 1.106 .050SBI Life 481 1.97 .973 .044Tata AIG 481 2.07 .992 .045Dabur CGU 481 2.10 1.000 .046Bharati AXA 481 2.09 .998 .045Reliance 481 3.53 .512 .023 The previous table shows the descriptive statistic used to understand the awareness of private players and the mean and


TABLE NO: 14 ONE-SAMPLE TEST

Test Value = 3

t df Sig. (2-tailed)

Mean Difference


Difference Lower Upper Bajaj 22.243 480 .000 .520 .47 .57Metlife 20.284 480 .000 .462 .42 .51Brila Sunlife -4.795 480 .000 -.241 -.34 -.14ING Vysya -23.321 480 .000 -1.029 -1.12 -.94Max New york -25.604 480 .000 -1.058 -1.14 -.98HDFC Standard 20.199 480 .000 .459 .41 .50ICICI prudential -4.740 480 .000 -.239 -.34 -.14SBI Life -23.241 480 .000 -1.031 -1.12 -.94Tata AIG -20.583 480 .000 -.931 -1.02 -.84Dabur CGU -19.697 480 .000 -.898 -.99 -.81Bharati AXA -19.968 480 .000 -.909 -1.00 -.82Reliance 22.522 480 .000 .526 .48 .57



‐ 27 ‐

From the above table, the ‘t’ value of each private player and the degree of freedom and the two tailed significance is given. About 5 private life insurance players are mostly recalled and the awareness of these players is high.

FACTORS RANKED IN AVAILING LIFE INSURANCE POLICES

The independent variable availing insurance policy were ranked by the clients on various factors like Bonus, tax saving, risk, family protection, housing loan, high security and the descriptive are as under.

TABLE NO: 15 DESCRIPTIVE STATISTICS

N Mean Std. Deviation Minimum MaximumBonus 481 4.02 1.503 1 7Tax Saving 481 4.36 1.749 1 7Risk 481 3.74 1.767 1 7Family Protection 481 4.35 2.107 1 7Housing Loan 481 4.57 2.256 1 7High Security 481 3.41 2.131 1 7 The descriptive statistics table provides familiar statistics that were useful for interpreting the mean rank of the ratings

among the availing of insurance policy and the means of these ranks are used in the Friedman.

TABLE NO: 16 RANKS

Mean Rank Bonus 3.39Tax Saving 3.83Risk 3.22Family Protection 3.67Housing Loan 3.93High Security 2.96 The Ranks table shows the mean rank for each of the factors of availing insurance policy. From the above mean, it can be seen that the security was ranked as the most important factor in availing insurance policy.

TABLE NO: 17 TEST STATISTICS

N 481.000Chi-Square 97.645df 5.000Asymp. Sig. .000



‐ 28 ‐

FRIEDMAN TEST The Friedman test statistic table tests the null hypothesis that the six related variables come from the same population. For each case, the six variables are ranked. The test statistic is based on these ranks. The Asymp. Sig (asymptotic significance, which means this is not an exact significance level) of p< 0.05 indicates that there is a significant overall difference among the mean ranks.

FINDINGS

• Based on ‘t’ test it is found that there is significant difference in product service quickness of private players as it is higher compared to LIC. Using a paired sample ‘t’ test it is found that there is difference in behavior towards customers. It is evident from the test that the behavior of employees of private players towards customers is more warm and friendly when compared to LIC.

• About 5 private life insurance players are mostly recalled and the awareness of these players is high. Reliance, Bajaj, Metlife, Birla Sunlife & ICICI Prudential has been ranked higher as far as customer awareness is considered.

• Using Friedman test that the independent variable availing insurance policy were ranked by the clients on various factors like Bonus, tax saving, risk, family protection, housing loan, high security. It has found that security has ranked as the highest dependent variable in availing life insurance policies.

SUGGESTIONS

LIC has to concentrate more on developing strategies to minimise their product servicing time by working on strategies as providing agents and other officials training and development programmes to improve the effectiveness of customer service. Moreover, in this fast moving Kerala market it is always advisable to register in mind the fact that ‘time is money’. From the secondary statistics, it is found that LIC is the market leader; however it is advisable not to deny the fact that LIC’s market share is diminishing every year and private players are trying to penetrate more in Kerala market through their effective customer oriented strategies. Further, private players could raise the level of awareness among the customers through effective positioning strategies and promotional aspects so that they will be popular in the Kerala market and that way they can improve the market share.

CONCLUSION

The life insurance scenario of Kerala has been changing day by day and witnessing tremendous development in the field if we count from the liberalization period. This paper highlights the fact that life insurance policies were availed due to the highly security aspects. Moreover the four private players were ranked higher for the awareness factor and the customer satisfaction of service of private players was ranked high. However the research suggests a propensity to focus more corporate social responsibility and philanthropic activities to increasing the company awareness among people of Kerala.

BIBLIOGRAPHY

Chakrabothy (2005, p.82) “Making Sales Promos work Better”, Indian Management, Vol: 44, Issue 4.



‐ 29 ‐

Deepthi Bhaskaran (2007), “Insurance umbrella size to double, says industry”, The Hindu Business Line, March edn. India

Dharmendra Kumar, Rahul Singh (2005), India Insurance Report, Brila Institute of Management Technology

Kotler and Bloom (1985), Marketing Professional Services, New Jersey, Prentice Hall.

Insurance Regulatory and Development Authority of India, Annual Report 2009-2010

Morgan et.al(2004), “SPSS For Introductory Statistics”, Lawrence Erlbaum Associates

Naresh Malhotra et.al (2011), “Marketing Research - An applied orientation”, 6th Edition, Pearson.

Palande, et al. (2003) “Insurance in India – Changing policies and emerging opportunities” Sage publications.

Samant S., 2007, “India 2010 - A Lloyd’s View”; Lloyd’s

Vijayakumar (2009) , “Indian Insurance Sector in 21st Century: an Outlook”, Kalpaz Publications

Anand, “ Impact Of Joint Venture Companies On Innovation And Growth In Indian Insurance Industry”; http://www.wbiconpro.com/london%20banking/Anand%28105%29.pdf [Accessed on 30th January 2011]

Nitin (2006), “Growth and survival strategy for Indian Insurance companies in the era of emerging global competition”, Article No: 349, May 17,2006, www.indianmba.com [Accessed on 28th December 2011].

http://www.dnb.co.in/BFSI/Insurance%20overview.asp [Accessed on 1st February 2011]

http://www.niapune.com/pdfs/Bimaquest/sadhak-global.pdf [Accessed on 1st February 2011]



‐ 30 ‐




A STUDY OF BURNOUT AND ORGANIZATIONAL HEALTH AMONG HVPNL EMPLOYEES

DR. NIRMALA KAUSHIK*

*Deptt. of Applied Psychology G.J.U.S.&T. Hisar Haryana

ABSTRACT Health is a multidimensional concept. All aspects of living biological, psychological and social world must be considered in it. Mental health is a fundamental component of health through which one realizes one’s own cognitive, affective and relational abilities. A healthy mental disposition allows coping well with life’s challenges, to work productively and to make a positive contribution to one’s community. Many health related problems are increasing day by day in industrial organizations due to burnout. By keeping all these views in mind, the present study was carried out in Dhakshin Haryana Bijli Vitran Nigam Ltd., Hisar, and Haryana. The present study was conducted on 200 employees (100 males and 100 females). The main objective of the study was to know the relationship between Organizational health and Burnout among the employees. The results explained significant and negative correlation between Organizational health and Burnout. The results of present study also explained the significance of difference between male and female employees for Organizational health and Burnout. KEYWORDS: Organizational Health, Burnout, Dhakshin Haryana Bijli Vitran Nigam, employees.

INTRODUCTION

BURNOUT

Burnout is a process that begins with excessive and prolonged levels of job stress. The stress produces strain in the worker (feelings of tension, irritability and fatigue). The process is completed when the worker defensively copes with the job and becomes apathetic, cynical or rigid. Burnout is a syndrome of emotional exhaustion, depersonalization, and reduced

personal accomplishment that can occur among individuals who do “people work” of some kind. Burnout is a state of physical, emotional, and mental exhaustion caused by long term involvement in emotionally demanding situations.

Three things are associated with burnout:

Role conflict: A person who has conflicting responsibilities will begin to feel pulled in many directions and will try to do everything equally well without



‐ 31 ‐

setting priorities. The result will be the feelings of fatigue or exhaustion associated with burnout.

Role ambiguity: The individual does not know what is expected of her. She knows she is expected to be a good career person but is not quite sure how to accomplish this because she has no role model or guidelines to follow. This result is that she never feels that she has accomplished anything worthwhile.

Role overload: The individual can’t say no and keeps on taking on more responsibility than he can handle until he finally burns out.

SYMPTOMS OF BURNOUT

Given what burnout is, the symptoms of burnout are much as you would expect them to be. Physical symptoms can include physical fatigue, frequent illness and sleep problems.

Emotional symptoms include disillusionment with the job; the loss of a sense of meaning and cynicism towards our organizations or clients; feelings of helplessness; frustration of efforts and a lack of power to change events; strong feelings of anger against the people we hold responsible for the situation; and feelings of depression and isolation.

Behavioral symptoms can include increasing detachment from co-workers, increased absenteeism, and increased harshness in dealing with our teams, marked reduction in our commitment to our work, and increased alcohol consumption. These symptoms reflect exhaustion and a loss of satisfaction with work.

DIMENSIONS OF BURNOUT

Exhaustion is the central quality of burnout and the most obvious manifestation of this complex syndrome. When people describe themselves or others as experiencing burnout, they are

most often referring to the experience of exhaustion.

Of the three aspects of burnout, exhaustion is the most widely reported and the most thoroughly analyzed. The strong identification of exhaustion with burnout has led some to argue that the other two aspects of the syndrome are incidental or unnecessary (Shirom 1989). However, the fact that exhaustion is a necessary criterion for burnout does not mean it is sufficient. If one were to look at burnout out of context, and simply focus on the individual exhaustion component, one would lose sight of the phenomenon entirely.

Although exhaustion reflects the stress dimension of burnout, it fails to capture the critical aspects of the relationship people have with their work. Exhaustion is not something that is simply experienced—rather, it prompts actions to distance oneself emotionally and cognitively from one’s work, presumably as a way to cope with the work overload. Within the human services, the emotional demands of the work can exhaust a service provider’s capacity to be involved with, and responsive to, the needs of service recipients. Depersonalization is an attempt to put distance between oneself and service recipients by actively ignoring the qualities that make them unique and engaging people. Their demands are more manageable when they are considered impersonal objects of one’s work. Outside of the human services, people use cognitive distancing by developing an indifference or cynical attitude when they are exhausted and discouraged. Distancing is such an immediate reaction to exhaustion that a strong relationship from exhaustion to cynicism (depersonalization) is found consistently in burnout research, across a wide range of organizational and occupational settings.

The relationship of inefficacy (reduced personal accomplishment) to the other two



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aspects of burnout is somewhat more complex. In some instances it appears to be a function, to some degree, of either exhaustion, cynicism, or a combination of the two (Byrne 1994, Lee & Ashforth 1996). A work situation with chronic, overwhelming demands that contribute to exhaustion or cynicism is likely to erode one’s sense of effectiveness. Further, exhaustion or depersonalization interfere with effectiveness: It is difficult to gain a sense of accomplishment when feeling exhausted or when helping people toward whom one is indifferent. However, in other job contexts, inefficacy appears to develop in parallel with the other two burnout aspects, rather than sequentially (Leiter 1993). The lack of efficacy seems to arise more clearly from a lack of relevant resources, whereas exhaustion and cynicism emerge from the presence of work overload and social conflict.

OUTCOMES

The significance of burnout, both for the individual and the workplace, lies in its links to important outcomes. Most of the outcomes that have been studied have been ones related to job performance. There has also been some attention paid to health outcomes, given that burnout is considered a stress phenomenon. However, the research findings have to be interpreted with some caution because of the reliance on self-report measures (rather than other indices of performance or health) and the relative absence of methodological designs that permit causal inferences.

JOB PERFORMANCE

Burnout has been associated with various forms of job withdrawal—absenteeism, intention to leave the job, and actual turnover. However, for people who stay on the job, burnout leads to lower productivity and effectiveness at work. Consequently, it is associated with decreased job satisfaction and a reduced commitment to the job or the organization.

People who are experiencing burnout can have a negative impact on their colleagues, both by causing greater personal conflict and by disrupting job tasks.

Thus, burnout can be “contagious” and perpetuate itself through informal interactions on the job. There is also some evidence that burnout has a negative “spillover” effect on people’s home life (Burke & Greenglass 2001).

WHERE DOES BURNOUT OCCUR?

Burnout is an individual experience that is specific to the work context. Thus, the research over the past 25 years has maintained a consistent focus on the situational factors that are the prime correlates of this phenomenon.

JOB CHARACTERSTICS

Quantitative job demands (e.g. too much work for the available time) have been studied by many burnout researchers, and the findings support the general notion that burnout is a response to overload. Experienced workload and time pressure are strongly and consistently related to burnout, particularly the exhaustion dimension.

This pattern is found with both self-reports of experienced strain and more objective measures of demands (such as number of hours worked and number of clients). Studies of qualitative job demands have focused primarily on role conflict and role ambiguity, both of which consistently show a moderate to high correlation with burnout. Role conflict occurs when conflicting demands at the job have to be met, whereas role ambiguity occurs when there is a lack of adequate information to do the job well. Other qualitative job demands (such as the severity of clients’ problems) have only been studied occasionally, but the correlations are in the same direction.



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In addition to studying the presence of job demands, burnout researchers have investigated the absence of job resources. The resource that has been studied most extensively has been social support, and there is now a consistent and strong body of evidence that a lack of social support is linked to burnout. Lack of support from supervisors is especially important, even more so than support from coworkers. Within the social support literature, there is also a “buffering” hypothesis that suggests that social support should moderate the relationship between job stressors and burnout (i.e. the relationship will be strong when social support is low, but weak when support is high). However, studies of this hypothesis have met with mixed success, and it is not clear whether this outcome is due to methodological or theoretical issues.

Another set of job resources has to do with information and control. A lack of feedback is consistently related to all three dimensions of burnout. Burnout is also higher for people who have little participation in decision making. Similarly, a lack of autonomy is correlated with burnout, although the strength of the relationship is weaker.

OCCUPATIONAL CHARACTERISTICS

The initial work on burnout developed out of the occupational sector of human services and education (which continues to be the primary focus of burnout studies). Of particular concern in these occupations were the emotional challenges of working intensively with other people in either a care giving or teaching role. Later research expanded the focus to occupations that included contact with people, but for which the contact fell short of the demands of this more extensive relationship (e.g. managers), and eventually some studies utilized occupations for which contact with people was a lesser consideration (e.g.

computer programmers). Although the burnout concept seems to pertain to this wider range of occupations, there was still the hypothesis that the emotional stressors of people-work were something uniquely related to burnout. Earlier research did not find much evidence to support such a hypothesis; instead, common job-related stressors (such as workload, time pressure, or role conflicts) correlated more highly with burnout than client-related stressors (such as problems in interacting with clients, frequency of contact with chronically or terminally ill patients, or confrontation with death and dying). However, new research has focused explicitly on emotion-work variables (e.g. requirement to display or suppress emotions on the job, requirement to be emotionally empathic) and has found that these emotion factors do account for additional variance in burnout scores over and above job stressors (Zapf et. al 2001).

ORGANIZATIONAL CHARACTERISTICS

The increasing breadth of occupational sectors has required a rethinking of the situational context for burnout. Prior research has tended to focus on the immediate context in which work occurs, whether that is a nurse’s work with patients in a hospital or a teacher’s work with students in a school. However, this work often takes place within a larger organization that includes hierarchies, operating rules, resources, and space distribution. All of these factors can have a far-reaching and persistent influence, particularly when they violate basic expectations of fairness and equity. Consequently, the contextual focus has been broadened to include the organizational and management environment in which work occurs. This focus has highlighted the importance of the values implicit in organizational processes and structures, and how these



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values shape the emotional and cognitive relationship that people develop with their work. This research has important implications for burnout, but because it is still fairly new, a summary of major patterns in the data is not yet warranted.

The organizational context is also shaped by larger social, cultural, and economic forces. Recently, this has meant that organizations have undergone a lot of changes, such as downsizing and mergers that have had significant effects on the lives of their employees. This is perhaps most evident in changes in the psychological contract—i.e. the belief in what the employer is obliged to provide based on perceived promises of reciprocal exchange (Rousseau 1995). Now employees are expected to give more in terms of time, effort, skills, and flexibility, whereas they receive less in terms of career opportunities, lifetime employment, job security, and so on. Violation of the psychological contract is likely to produce burnout because it erodes the notion of reciprocity, which is crucial in maintaining well-being.

INDIVIDAUL FACTORS

People do not simply respond to the work setting; rather, they bring unique qualities to the relationship. These personal factors include demographic variables (such as age or formal education), enduring personality characteristics, and work-related attitudes. Several of these individual characteristics have been found to be related to burnout. However, these relationships are not as great in size as those for burnout and situational factors, which suggests that burnout is more of a social phenomenon than an individual one.

DEMOGRAPHIC CHARACTERSTICS

Of all the demographic variables that have been studied, age is the one that has been most consistently related to burnout.

Among younger employees the level of burnout is reported to be higher than it is among those over 30 or 40 years old

Age is confounded with work experience, so burnout appears to be more of a risk earlier in one’s career. The reasons for such an interpretation have not been studied very thoroughly. However, these findings should be viewed with caution because of the problem of survival bias—i.e. those who burn out early in their careers are likely to quit their jobs, leaving behind the survivors who consequently exhibit lower levels of burnout.

The demographic variable of sex has not been a strong predictor of burnout (despite some arguments that burnout is more of a female experience). Some studies show higher burnout for women, some show higher scores for men, and others find no overall differences. The one small but consistent sex difference is that males often score higher on cynicism. There is also a tendency in some studies for women to score slightly higher on exhaustion. These results could be related to gender role stereotypes, but they may also reflect the confounding of sex with occupation (e.g. police officers are more likely to be male, nurses are more likely to be female).

With regard to marital status, those who are unmarried (especially men) seem to be more prone to burnout compared with those who are married. Singles seem to experience even higher burnout levels than those who are divorced. As for ethnicity, very few studies have assessed this demographic variable, so it is not possible to summarize any empirical trends. Some studies have found that those with a higher level of education report higher levels of burnout than less educated employees. It is not clear how to interpret this finding, given that education is confounded with other variables, such as occupation and status. It is possible that people with higher education have jobs with greater



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responsibilities and higher stress. Or it may be that more highly educated people have higher expectations for their jobs, and are thus more distressed if these expectations are not realized.

JOB ATTITUDE

People vary in the expectations they bring to their job. In some cases these expectations are very high, both in terms of the nature of the work (e.g. exciting, challenging, fun) and the likelihood of achieving success (e.g. curing patients, getting promoted). Whether such high expectations are considered to be idealistic or unrealistic, one hypothesis has been that they are a risk factor for burnout. Presumably, high expectations lead people to work too hard and do too much, thus leading to exhaustion and eventual cynicism when the high effort does not yield the expected results. This hypothesis has received mixed empirical support—about half of the studies find the hypothesized correlation, whereas the rest do not. Once again, however, this is an instance where a correlation does not actually test the causal relationship inherent in the hypothesis. Longitudinal studies with repeated measures will be necessary to shed light on this issue. The people who were psychologically healthier in adolescence and early adulthood were more likely to enter, and remain in, such jobs, and they showed greater involvement and satisfaction with their work (Jenkins & Maslach 1994).

ORGANIZATIONAL HEALTH

Organization exists in relation with the environment and it has to cope with the environment. It is the responsibility of the management to improve the quality of life in an organization to make it healthier. A healthy organization is one that has a srtong sense of its own identity and vision and yet has the capacity to readily change life, growth and vitality which are the main factors and for the concept of health.

Miles (1973) gave a clear concept of organizational health as organizational health is a set of fairly durable and secondary system properties which send to transcend short term effectiveness. A healthy organization in a sense not only survive in its environment but continues to cope adequately over the long run and continously develops and extends its surviving and coping abilities. Organizational health includes goal focus, communication adequacy, optional power equalization, resource utilisation, cohesiveness, morale, Innovativeness, autonomy, adaption and problem solving adequacy.

OBJECTIVES

i) To study the degree of relationship between Burnout and Organizational Health.

ii) To find out the significant difference between Male and Female Employees for Burnout.

iii) To find out the significant difference between Male and Female Employees for Organizational Health

SAMPLE

The samples included in the study were randomly drawn from Dhakshin Haryana Bijli Vitran Nigam Ltd., Hisar, and Haryana. The sample size of the research consisted of 200 employees (including 100 Male and 100 Female employees). Efforts have been made to make the sample more representative, more purposeful and in accordance with the objectives of the study.

TOOLS USED

i) MASLACH BURNOUT INVENTORY SCALE

This Scale is prepared by Christina Maslach, Susan E. Jackson and



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Michael P. Leiter. There are totally 16 items in this scale which are divided into 3 subscales namely Emotional Exhaustion (EE), Depersonalization (D) and Professional Efficacy (PE). The Reliability and Validity of this scale are 0.82 and 0.68 respectively.

ii) ORGANIZATIONAL HEALTH SCALE

This Scale is prepared by Dr. Haseen Taj (Senior Lecturer) Bangalore University. There are totally 40 items which are categorized into three Dimensions namely 1.Task Conferred Dimensions (A. Goal Focus B. Communication Adequacy C. Optional Power Equalization) 2. Maintenance

Need Dimensions (D. Resource Utilization E. Cohesiveness F. Morale) 3. Growth and changefulness Dimensions (G. Innovativeness H. Autonomy I. Adaptation J. Problem Solving Adequacy) Rated on a 5 Point Scale. The Reliability and Validity of this scale are 0.94 and 0.85 respectively.

STATISTICAL ANALYSIS

The data obtained were analyzed by using the following Statistical Tools.

Mean, Standard Deviation, Pearson product moment method of correlation and t-test

RESULTS AND DISCUSSION

TABLE: 1 COEFFICIENT OF CORRELATION BETWEEN BURNOUT AND ORGANIZATIONAL HEALTH

Burnout Variables

Organizational Health Dimensions

T.C.D M.N.D G.C.D

Emotional Exhaustion -0.271** -0.416** -0.394**

Depersonalization 0.123 -0.201* 0.137

Professional Efficacy -0.441** -0.391** -0.314**

**P<0.01 *P<0.05 Note: T.C.D- Task Conferred Dimensions, M.N.D- Maintenance Need Dimensions, G.C.D- Growth and Changefulness Dimensions.

In Table no. 1 the results revealed that Task Conferred Dimensions and Emotional Exhaustion are negatively correlated with each. It means increase in good organizational health like goal focus, communication adequacy and optional power equalization the exhaustion among employees decreases. Mental fatigue decreases if the score of task conferred dimensions increases. It can help the

employees to reduce the burnout. As the employee turnover is very less and almost negligible the employees work more cohesively and same is the reason for high morale for the employee.

Emotional Exhaustion and Maintenance Need Dimensions are also negatively correlated with each other. Emotional Exhaustion is also decrease with Maintenance Need Dimensions like



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Recourse Utilization, Cohesiveness and Morale. If the resource utilization is proper in the organization then it can help to reduce the vulnerability to exhaustion among the employees. Cohesiveness in the organization and morale are also help to decrease the sensitivity to exhaustion. In the same way, Growth and changefulness dimensions are also negatively correlated with the exhaustion. Growth and changefulness dimension includes Innovativeness, Autonomy and problem solving Adequacy. Being a Government Organization, autonomy is defined by rules and the extent to which the autonomy has to be used. Hence there is least exhaustion.

Exhaustion and Maintenance Need are negatively correlated with Depersonalization in the employees. It means proper utilization of the resources on the workplace decreases the feeling of distance attitude towards work. If the employees feel attracted to the organization means feeling of

cohesiveness helps to reduce depersonalization. Good morale level of the organization also decreases the feeling of distance towards work.

The results explored that Professional efficacy is positively and significantly correlated with all three dimensions of organizational health. It means good organizational health increases the professional efficacy of the employees. If the goals of the system are clear and focused and communication is adequate then professional efficacy of the employees increases. Maintenance needs like resource utilization, cohesiveness and morale are also positively correlated with professional efficacy. Growth and changefulness dimensions like Innovativeness, autonomy and problem solving adequacy increases the professional efficacy of the employees. It is concluded that positive organizational health increases the professional efficacy of the employees working in that organization.

TABLE: 2 SIGNIFICANCE OF DIFFERENCE BETWEEN MALE AND FEMALE EMPLOYEES FOR BURNOUT

Burnout Variable Sex Mean S.D. t- value

Emotional Exhaustion

Male 9.07 5.94

3.456** Female 5.16 3.09

Depersonalization Male 29.08 5.23

-1.813* Female 30.9 3.27

Professional Efficacy

Male 7.34 4.36

0.653 Female 6.74 4.05

**P<0.01 *P<0.05 From the above table2, it may be inferred that there is a significant difference between male and female employees for Emotional Exhaustion. The mean scores of male employees are higher than female

employees. They have more feeling of burnout than females. On the basis of assumption, it can be concluded that female employees have more patience than female employees. On depersonalization,



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there is significant difference between Male and Female Employees at 0.05 level. The mean score of female employees are more than the male employees. The female employees have more feelings of

reduced personal accomplishment because of their multiple roles. On professional efficacy there was no significant difference between male and female employees.

TABLE: 3 SIGNIFICANT DIFFERENCE BETWEEN MALE AND FEMALE EMPLOYEES FOR ORGANIZATIONAL HEALTH

Organizational Health Variables Sex Mean S.D t-value

Task Conferred Dimensions

Male 43.14 7.67

0.764 Female 41.9 6.45

Maintenance Need Dimensions

Male 41.27 8.97

-1.110 Female 43.19 5.22

Growth and Changefulness Dimensions

Male 55.64 11.78

0.827 Female 53.77 6.54

**P<0.01 *P<0.05 Table 3 shows that there was no significant difference between Male and Female Employees for different variables of Organizational Health such as Task Conferred Dimensions, Maintenance Need Dimensions and Growth and Changefulness Dimensions.

CONCLUSION

In conclusion, it is concluded that Organizational health and Burnout are negatively and significantly correlated with each other. The mean score of female employees are more than the male employees. On professional efficacy there was no significant difference between male and female employees. Organizational Health like Task Conferred Dimensions, Maintenance Need Dimensions and Growth and Changefulness Dimensions are significantly different among Male and Female Employees.

REFERENCES

Burke, RJ, Greenglass ER.(2001). Hospital restructuring, work- family conflict and psychological burnout among nursing staff. Psychology Health. In press.

Byrne, B.M. (1994). Burnout: testing for the validity, replication, and invariance of causal structure across elementary, intermediate, and secondary teachers. American Education Research Journal, 31:645-73.

Greenglass ER, Burke RJ. (2001). Hospital restructuring and burnout. Journal of health and human services administration, 25(1):89–114.

Handy, J. A. (1988). Theoretical and methodological problems within occupations stress and burnout research, Human Relations, 41, 351- 369.

Jenkins, S.R, Maslach, C. (1994) .Psychological health and involvement in



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interpersonally demanding occupations: A longitudinal perspective. Journal of Organization Behaviour. 15:101-27.

Kobasa, S. C. (1982). Commitment and coping in stress resistance among lawyers. Journal of Personality and Social Psychology, 42, 707-717.

Koslowksy, M. Caspy, T. & Lazar, M. (1990). Cause and effect explanations of job satisfaction and commitment: The case of exchange commitment. The Journal of Psychology, 125 (2), 153-162.

Lee, R.T., Ashforth, B.E. (1996). A meta-analytic examination of the correlates of the three dimensions of job burnout. Journal of Applied Psychogy.81:123-33.

Leiter, M.P. (1993). Burnout as a developmental process: Consideration of models, pp.237-50.

Lim, S.Y. & Murphy, L.R. (1999). The relationship of organizational factors to employee health and overall effectiveness. American Journal of Industrial Medicine Supplement. 64.

Lowe, G. (2003). Healthy Workplaces and Productivity. Report prepared for the Economic Analysis and Evaluation Division, Health Canada.

Lowe, G.S., Shannon, H.S. & Schellenberg, G. (2003). Correlates of employees’ perceptions of a healthy work environment. American Journal of Health Promotion; 17(6):390-399. Maslach, C. Schaufeli W.B.& Leiter, MP. (2001). Job burnout. Annual review of psychology, , 52:397–422.

Mathieu, J. E. & Zajac, D. M. (1990). A review and meta-analysis of the antecedents, correlates, and consequences of organisational commitment. Psychological Bulletin, 108, 171-194.

Miles (1973). Organizational Health of Training Institution in Lynton R.P. and Pareek, V. (Eds.) V.S. Training for Development, Bombay: Taraporewala.

Mowday, R., Porter, L., & Steers, R. (1982). Employee-organizational linkages, New York: Academic Press.

Rouseau, D,M, (1995). Psychological contracts in organizations: Understanding written and unwritten agreement. Thousand Oaks CA: Sage publications.

Shirom, A. (1989). Burnout in work organizations. In International Review of Industrial and Organizational Psychology, (Ed.CL Cooper. I Robertson), 25-48. New York: Wiley.

Zapf, D. Seifert, C. Schmutte, & Mertini, B.H. (2001). Emotion work and job stressors and their effects on burnout. Psychology of Health. In press.



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CUSTOMER RELATIONSHIP MANAGEMENT IN MARUTI UDYOG LTD

DR. IQBAL SINGH*; PALLAVI WADHWA**

*G. N. Khalsa College YNR (Haryana) **MBA, NIT - Kurukshetra

ABSTRACT Maruti Udyog Limited, a subsidiary of Suzuki Motor Corporation of Japan, has been the leader of the Indian car market for about two decades. The company has a portfolio of 11 brands, including Maruti 800, Omni, premium small car Zen, international brands Alto and WagonR, off-roader Gypsy, mid size Esteem, luxury car Baleno, the MPV, Versa, Swift and Luxury SUV Grand Vitara XL7. Maruti tops customer satisfaction again for sixth year in a row according to the J.D. Power Asia Pacific 2005 India Customer Satisfaction Index (CSI) Study. As MUL is ranked No.1 consecutively for over six years for Customer Satisfaction, so this company will be best suitable to study its Customer Relationship Programs or Customer Relationship Management (CRM). The purpose of this project is to:

Relating the theoretical concepts of CRM to the policies that are followed in Maruti Udyog Ltd.

Study the CRM policies followed by its competitors.

Study the CRM policies followed by global players.

Finding out some more policies that can be followed to increase customer satisfaction.

METHODOLOGY The case study method was selected to meet the purpose of this study for two reasons:



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i. It offers in-depth “real-time” insights into activities and outcomes of CRM practice as well as retrospective information on antecedents of CRM implementation.

ii. It facilitates the collection of rich data from multiple sources of evidence, which is necessary for describing and understanding the complex and cross-functional nature of CRM.

INTRODUCTION

Customer relationship management (CRM) is no longer a buzzword, but a necessity for business in the knowledge age we live in

Customer Relationship Management or CRM is a web enabled marketing, sales and service application integrated across all customer contact points. It is a tool that seamlessly integrates into the enterprise information system. The Internet has revolutionized the way business is done and has virtually taken the enterprise information system within the reach of the customer. It can be accessed through the call centres, through the Internet and increasingly through mobile devices.

CRM can be described as Web-enabled sales and marketing tool that synergistically combines the functionalities of database marketing, one-to-one marketing, and sales force automation (SFA). CRM enables companies to provide excellent real-time customer service by developing a relationship with each valued customer

through the effective use of individual account information. CRM holds that a major driver of company profitability is the aggregate lifetime value of the company’s customer base.

1.1.1 MARKET SIZE AND KEY PLAYERS

The worldwide CRM market consists of two broad segments: The CRM products and the CRM services. Both the segments have shown astronomical growth during the past couple of years.

US and Worldwide CRM Services Revenue, 1999 and 2004 ($M)

Country 1999 2004 United States 18,845 63,854

World Wide 34,420 125,205

Source: IDC, 2004

Listed below are the key Customer Relationship Management (CRM) application providers.

CRM SOLUTIONS FOR MEDIUM TO LARGE COMPANIES

Applix Icrm Chordiant Chordiant 5 Amdocs amdocs CRM

Siebel Siebel CRM



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eGain E3Epicor eFrontOfiice Firstwave eCRM 7.0 J.D.Edwards (Oracle) EnterpriseOne Kana Kana CRM Onyx Onyx Enterprise Oracle Oracle CRM Optima ExSellence PeopleSoft (Oracle) PeopleSoft CRM Pivotal eBusiness & CRM Suite Edify Edify Point RightNow eService Centre SAP mySAP Siebel Siebel 7 Talisma Talisma CRM Contactual CRM Contact Centre

CRM SOLUTIONS FOR SMALL TO MEDIUM COMPANIES

Front Range Goldmine Maximizer Maximizer CRM

ProspectSoft ProspectSoft CRM

Super Office Super Office CRM update Update CRM

Netsuite Netsuite CRM

Salesforce.com Salesforce

Sage Sage CRM

Microsoft Microsoft CRM

1.1.2 HOW CRM WORKS

The basics of traditional CRM solutions were founded in the management of sales

and service through call centres and the automation of sales force functions. These provided the technologies for managing telephone systems, routing calls to the



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required agents, script management and fulfilment. These functions were based upon a database of contact information that could be synchronised with mobile sales executives.

These fundamentals are still an important part of the CRM picture but now the view needs to be considerably wider to take into account all of the different customer touch points that exist. In particular, the use of the world-wide web (WWW) as a medium for customer contact is increasing all the time. Providing customers with what they want at the time that they want it is a large part of online CRM (eCRM) solutions as well as being able to handle the large volumes of e-mail that can be created. The centralised customer database is at the heart of the solution and needs to construct a complete picture of all customer interactions. At the same time, the outcome of each interaction needs to be handled consistently according to the rules and policies defined within the business.

SOME AUTOMOBILE CRM SOFTWARE

1.2 SIEBEL AUTOMOTIVE SOLUTION

Siebel Automotive is a comprehensive suite of business applications that allows automotive organizations to manage, synchronize, and coordinate all customer touch points including the Web, call centre, field organization, and retailer networks. Siebel Automotive is designed to meet the most demanding sales, marketing, service, and Web interaction requirements of car companies, importers, distributors, and dealers. Siebel Systems 'easy- to-use solution offers unprecedented functionality for the car company or dealer seeking to leverage customer knowledge to manage leads; develop targeted marketing campaigns; deploy outbound or

inbound call centres; and facilitate sales and service activities directly, over the Internet, or through dealer channels.

Siebel Automotive leverages the core Siebel CRM functionality (Siebel Sales, Siebel Service, Siebel Call Centre, and related products) and builds upon it specific functionality that car companies require. This industry-specific "verticalization" allows organizations to deploy strategic initiatives at a lower total cost of ownership. By providing a base industry- specific multichannel eBusiness solution with significant out-of-the-box functionality, Siebel Automotive allows organizations to lower customization costs, shorten implementation timeframes, reduce maintenance costs, and lower implementation risk. Siebel Automotive shares the same flexible architecture of the core Siebel products and adds the functionality required to best support the automotive and related vehicle industries 'specific functionality needs.

By using Siebel Automotive, organizations can ensure that customers can choose the channel of interaction that best fits their needs while ensuring that follow-up activities and information obtained are seamlessly shared across the enterprise. The result is an enhanced ability to satisfy customers virtually anytime, anywhere, through any sales or service channel.

The following products are available from the Siebel Automotive suite:

• Siebel Automotive Call Centre

• Siebel Automotive Sales

• Siebel Automotive Service

• Siebel Marketing

• Siebel Automotive Analytics



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• Siebel Automotive Partner Manager

• Siebel eDealer

• Siebel Customer Order Management

• Siebel eService

• Siebel Employee Relationship Management (ERM)

• Siebel eMail Response

• Siebel Self-Service & eBilling

1.3 CRM IMPLEMENTATIONS IN AUTOMOBILE COMPANIES

1.3.1 CRM IN MERCEDES-BENZ

When it comes to the automotive industry, there has typically been one type of CRM solution for the automakers and another for auto dealers--and the two solutions were rarely linked to each other in any meaningful way.

Mercedes-Benz Canada was not satisfied with that method of doing business, and was looking to have a national CRM system at the wholesale level to help the high-end vehicle maker get closer to its customers. "We lost sight of the customer quickly in terms of accurate information," says John Westcott, chief information officer and director of information technology. "The closer you can get to the customer, the more likely data is to be accurate."

Mercedes began looking for a solution in early 2002.

Mercedes was looking for a solution that would help increase loyalty through personalized service and targeted

marketing campaigns. Although the company historically enjoyed a high loyalty rate, the landscape was continuing to get more competitive. "You can't just rely on customer loyalty. You have to make sure to reach out to those customers," he says.

For example, using the information gathered from its network of 55 dealers Mercedes Canada is able to determine which customers purchased earlier diesel vehicles and send those buyers information about the new E Class diesel vehicle the automaker is about to introduce. "Diesel is an acquired taste, and it makes sense to market directly to those people," Westcott notes.

Prior to implementing its new system dealers provided data to the automaker on an ad hoc basis. Despite a standing mandate to provide basic data, Mercedes rarely enforced that rule and the process of tracking which dealers reported information was cumbersome, Westcott says. "That really limited our ability to keep accurate data. There were no real checks and balances. And there was no real incentive for dealers to share information with us," he says.

Now the incentive is that Mercedes' marketing muscle is behind campaigns that drive potential customers into dealerships, thus increasing dealer sales.

In addition, salespeople at the dealerships can help customers create personalized brochures of vehicles. So if the customer does not purchase on her first visit, she can walk away with the leasing, finance, and product specifications of the car she's interested in. That information is then stored and available on Mercedes' Web site for the prospective customers to refer to. Also, the system uses alarms that can be set to remind a salesperson to follow up



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with a potential customer in a set number of days or weeks.

Westcott says that the system is still too new to have hard ROI numbers, but that anecdotal evidence and feedback from the dealers suggests the chance of closing a sale increases dramatically when a customer is given a follow-up call, email, or letter.

"It's hard to convince a salesperson that this system will help them in a year's time; they want to sell a car in the next hour," Westcott says. "But if you can show them that they can eliminate many of the tedious administrative functions, they will use the tools."

Other geographic areas of Mercedes-Benz have contacted Westcott and expressed interest in the system.

1.3.2 CRM IN SAAB CARS USA

Saab Cars USA Drives Customer Satisfaction with Data Quality Initiative

Saab Cars USA, Inc., a wholly owned subsidiary of Saab Automobile AB, is the importer and distributor of Saab 9-3 and 9-5 automobiles and is headquartered in Norcross, GA. Saab Automobile AB, owned by General Motors, is in more than 50 countries worldwide.

Saab car owners are considered some of the most loyal in the industry. To partially thank them for that loyalty, the company holds an annual Saab Owner’s Convention where hundreds of Saab enthusiasts participate in a scenic road rally and attend a show of Classic Saabs, informational seminars and outdoor family concerts.

ENTERPRISE-WIDE CRM SYSTEM

To further service and support its customers, as well as its more than 200 U.S. based dealers, Saab Cars USA rolled out TouchPoint, an enterprise-wide CRM solution and strategy. When you call 1-800-SAAB-USA — whether requesting brochures, vehicle information or a dealer referral — Saab customer sales representatives use TouchPoint, a Siebel-based CRM system, to answer questions or forward prospect information to individual dealers.

TouchPoint manages all leads generated by Saab Cars USA, via its Web site, advertisements, auto shows, as well as special marketing events such as the company’s highly successful “Real-Life Road Tests,” where Saab Cars USA partners in major cities with local companies to promote the Saab name. Saab Cars USA sold nearly 38,000 cars in 2002 — up from 28,000 in 1997 — and hopes to exceed 45,000 cars in 2003. “We are looking to grow that number to 50,000 and beyond, and our CRM initiatives will play a big role in helping us get there,” said Robert Henry, manager, ecommerce and CRM Solutions for Saab Cars USA.

DATA QUALITY PLAYS A KEY ROLE

In phase one of TouchPoint, deployed in early 2002; the company rolled-out its Customer Interaction Centre — consisting of a customer assistance centre and a lead management centre. In phase two, deployed late last year, Saab Cars USA integrated Siebel Automotive Marketing into the mix. In both rollouts, Saab Cars USA incorporated Firstlogic’s data quality software — Information Quality Suite — to cleanse and standardize customer and prospect data, as well as match and consolidate it.



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“All leads that are generated by Saab Cars USA are funnelled through Firstlogic — either electronically via our data integration model — or keyed into the front-end by our lead management team,” Henry continued. “Consumers, prospects and customers who call in to our Customer Interaction Centre are interactively validated and standardized against the addresses in real-time so we actually know if we are being given a valid address.”

He added his group has been able to easily customize the Firstlogic software to configure matching criteria using weighted values in specified fields. The result: Saab Cars USA was able to reduce its database size by 50,000 records.

SOPHISTICATED DATA INTEGRATION MODEL

Saab Cars USA’s OLTP environment consists of nine multiprocessor Compaq Windows NT servers running Oracle 8i and Siebel Automotive 6.3. The company currently has 300,000 customer records in its database, with another 500,000 prospect names contained in the system. An Oracle 8i-based data warehouse, which exchanges and shares data with the Siebel CRM system directly supports Saab Cars USA’s direct marketing group.

Saab Cars USA has a sophisticated data integration model for incorporating legacy system data — primarily from IBM AS/400 systems — that store vehicle and warranty information. In addition, the company has a number of data sources outside of its environment that send it data, such as lead information from the Web site, as well as lists the company purchases for specific marketing campaigns.

With its newly cleansed and consolidated data, the company distributes leads to its

dealers. “We share as much information as we know about our customers with our dealers so they can follow-up in a timely manner,” Henry said. “The success of our CRM initiative is greatly dependent on feedback his group receives from the dealers in terms of the quality and disposition of each lead.” This feedback enables Saab Cars USA to further refine its marketing campaigns based on what is learned.

“We do a lot of ‘what-if’ scenarios that we were unable to do previously, which enable us to fine tune our marketing campaigns,” said Al Fontova, Saab Cars USA direct marketing manager. The marketing group uses the consolidated data in conjunction with Siebel Automotive Marketing to automate and run highly targeted lease loyalty, customer and prospect marketing campaigns, either with direct marketing materials or an outbound marketing campaign. “We are much more confident with the marketing decisions we are making, due in great part to the enriched data we are working with,” Fontova said.

RETURN ON INVESTMENT

Before integrating Firstlogic’s Information Quality Suite into its enterprise CRM environment, Saab Cars USA outsourced its data cleansing and preparation to a third party, which also ran its marketing campaigns? “Firstlogic has enabled us to bring those capabilities in-house as well as the ability to run our own campaigns, so we have saved significant dollars in terms of overhead associated with the outside agency previously employed by Saab Cars USA, as well as the associated reporting costs,” Henry said. “The Firstlogic solution has more than paid for itself.”

Henry concluded that integrating an ongoing data quality process — both



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inside and outside the company’s Siebel-based CRM system — has paid big dividends. “Since incorporating Firstlogic’s data quality solution into our CRM environment, we have been able to create a powerful, unique view of each customer, providing us powerful new insights,” Henry said. The end result: Saab Cars USA is able to provide even better, more personalized customer service and perform more highly focused marketing campaigns.

1.3.3 CRM IN GENERAL MOTORS

General Motors Corp. is using the Web to build relationships with car buyers and increase consumer conversation about its vehicles.

General Director of CRM Jack Bowen said that although GM is a market leader, its market share has declined. This, he said, is partly due to a history of focusing on mass media advertising and a perception that its products are of poor quality.

GM knew it needed to play to the emotional investment drivers have in their vehicles. Cars are a unique category, he said at the MIT Sloan CMO Summit in Cambridge, MA, last month. Unlike other appliances or mechanical devices, people are so attached to their cars they'll photograph them and display the pictures in their offices. "You don't photograph your toaster," Bowen said.

Seventy percent of auto buyers now go to the Web for auto information, said Glen L. Urban, professor of management and director of the MIT eBusiness Centre, MIT Sloan School of Management.

Those who traditionally are the least effective auto purchase negotiators -

women and minorities - gain the most from this information, he said, noting that on average, buyers who do research online end up saving an average of $450 on their vehicle.

GM CUSTOMER & RELATIONSHIP SERVICES

As one of the world’s largest vehicle manufacturers, General Motors maintains a global infrastructure of extraordinary breadth. The company sells automobiles in 200 countries and, until recently, supported over 60 contact centres devoted to various marketing, sales and service functions. While each centre was effective in its own right, as a group they lacked built-in coordination. In addition, there was no technological redundancy; if a centre shut down, that portion of GM’s service structure was essentially out of business. Fifty percent of people who purchased a vehicle at a GM dealership had no subsequent relationship with that dealer, says Karen Ebben, General Motors Corp.'s vice president of customer enterprise management.

With this in mind, GM established a Customer and Relationship Services (CARS) group—charged with improving customer satisfaction, creating remote service centres with redundant environments, and selecting service providers. In answer to this call, GM has teamed with IBM and Sitel Corporation to implement this vision. IBM was selected to help deliver an end-to-end CRM solution to General Motors.

THE FOUNDATION FOR CHANGE

To develop the solution, IBM systems integrators worked to align technologies with GM’s business processes, and to configure and deploy a CRM packaged application across selected contact centres



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and business functions. Leveraging its experience in the automotive environment, IBM was also able to provide industry based intellectual capital. Today, GM has consolidated 15 contact centres into three coordinated centres. Each new hub encompasses multiple and redundant operations and the locations are transparent to the customer, just as the CARS group intended. IBM provides, maintains and supports the CRM applications and technology in the new centres. This includes an AIX®-based infrastructure housing the database, application servers and related systems. IBM supports the hardware and software; provides backup and recovery, performance monitoring and database administration; manages WAN and LAN networks; delivers desk side support and change management, and more. “IBM has tapped into its resources to solve problems with the best technologies possible,” says Julie Heisel, General Manager of the GM CARS Group. Indeed, the centres have weathered a West Coast earthquake, upheavals due to the September 11th attacks, and a Florida hurricane—all without visible disruption.

GM has seen improved customer satisfaction across business functions and a reduction in overall IT costs.

1.3.4 CRM IN ASBURY AUTOMOTIVE GROUP

Asbury Automotive Group is one of the largest automotive retail and service companies in the U.S. Built through a combination of organic growth and strategic acquisitions, Asbury currently operates 94 retail auto stores encompassing 129 franchises for the sale and servicing of 33 different brands of American, European and Asian automobiles. The Company offers customers an extensive range of

automotive products and services, including new and used vehicle sales and related financing and insurance, vehicle maintenance and repair services, replacement parts and service contracts.

The Asbury Automotive Group is testing the waters as it prepares to use modern customer relationship management (CRM) in their stores. The dealership group is moving cautiously to avoid drowning in the hype.

There's a lot of hype surrounding CRM, says Allen Levenson, chief marketing officer for the 89-store group based in Stamford, CT. He calls CRM "one of the most overused terms in business America"

But is there any truth to it? No one can fault dealers if they're sceptical. The industry previously heard the hype of how the Internet would revolutionize the automotive industry and put car dealers out of business.

Now it's time to separate fact from fiction as far as all that's coming from the CRM companies and the industry experts.

CRM software tools and services allow dealers to track customers and their buying habits, and market to them accordingly.

To do that, dealers need to know more about their customers. It takes technology to do that effectively today. Technology advances and improved CRM tools allow dealers to access more customer data and share it with their various departments so they can target the customer more effectively.

In theory, CRM will increase retention rates, sales and market share. But is the industry expecting too much?



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Mark Dixon Bunger, a senior analyst with the Forrester Research Group, wonders what the true value of CRM is.

The industry has become enamoured with the big enterprise solutions, he says. He adds, "Customer acquisition and selling more to existing customers are the sexier subjects, but the reality of that is uncertain. The true value may be in lowering advertising costs. CRM will bring accountability to advertising expenses."

Dealers today can have a much better idea of which products to market to specific customers and thus, reduce those mass-marketing expenses.

Levenson, while recognizing some of the hype, says he is "an absolute believer" in CRM. "If there is ever an industry where CRM makes sense, it's the auto industry. The potential profit CRM brings to this industry makes CRM necessary."

Asbury began its study by pulling customer data from the dealer management systems in its North Carolina dealerships. Going back five years, Asbury evaluated every customer transaction. Asbury learned 31% of its customers contribute to 75% of its profit margin. The goal, explains Levenson, is to identify who the best customers are - "something we're still trying to get a handle on."

Asbury is evaluating that data and attempting to identify potential customer segments.

Says Levenson, "We want to determine which categories our customers fall into and train our salespeople to push those customers into higher categories." He says Asbury's approach is to go slow and test. "Our process is what matters."

Process includes deciding what customer data to collect and how to collect it, determining when and how to follow up with customers and training salespeople to properly sell each product.

Dealers should make sure they are measuring the right results, cautions Ted Rubin, the president of Dealer Ups, a company that provides CRM tools.

He explains, "Some dealers believe closing ratios indicate the success of CRM in their stores. Actually, CRM will probably drive closing ratios down, but will increase sales.

"CRM should bring significantly more traffic into the store. But not all of those people are going to buy. The sales should increase though, because the marketing is more targeted."

Bunger believes dealers can do several small and "scrappy" things to improve customer retention - like sending oil change reminders.

Many of those "scrappy" initiatives that don't require much technology or data are already a big part of Asbury's strategy.

The dealership group has programs in place to retain the customers whose leases are reaching end of term.

Asbury is also instituting and marketing a quick drop-off and pick-up program for service customers as well as express oil change. Small things. But they can make a difference.

Despite all of its promise, customer relationship management (CRM) is doomed to fail if attitudes in the dealership don't change, say experts in the field.



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"Right now, the philosophy is short term and transactional," Says Allen Levenson, Asbury Automotive Group's chief marketing officer. "We need to change that to long-term profitability. CRM is not the program of the month; it's a way of life."

Changing the behaviour of front-line employees - the people who touch the customer - is the toughest part, Levinson admits.

The attitude change has to start at the top with the dealer principal, the general manager and the sales manager, says Buzz Waterhouse, CEO for the Reynolds & Reynolds Co. Then employees start to get the picture.

Training is also important, notes Waterhouse. "Without training, the tools are no good. And the training needs to be continuous."

1.3.5 CRM IN CHINA’S AUTOMOBILE MARKET

Currently, many businesses in mainland China are keen to implement CRM as a management system. Analysis of Current Consumption Patterns in China's Automobile Market is given below.

COMPETITION

China’s automobile industry is experiencing extremely robust growth. Since 2002, it has seen domestic demand for vehicles skyrocket. Sales of vehicles grew 53% to 1.165 million vehicles. Demand intensified further in 2003 and total sales reached 1.97 million. However, it is a tough as competition is becoming more and fiercer.

There are constantly new models on offer. In 2003, among 70

models (excluding direct import) sold in China’s vehicle market, 30 of them were new models. In 2004, there are up to 40 new models on the production line. Consumers have a large variety of choices.

The mismatch of demand and supply is becoming more apparent. In 2003, total vehicle sales were 1.97 million while inventory nearly doubled to 160,000. It is estimated that vehicle sales in 2004 will increase 25% to 2.45 million while corresponding inventory will increase to 550,000, a rise of almost 250% and the equivalent of 22.4% of the expected sales in 2004.

Tariffs have been lowered and quotas lifted. Imported vehicles in the medium-to-high class range will see increased competition. From Toyota’s Camry, Nissan’s Cefiro, Volvo’s S60 and S80 to the less known MG-Rover series, the market in China has got all sorts of models.

Consumer Psychology

Consumers in China’s automobile market have never been had to be more rational about their vehicle choices. Facing numerous new makes and models, they are no longer unable to recognize or differentiate. Make quality, functions, price and after-sales services have all become important factors to consider.

Consumers need to rationalize their consumption while manufacturers need emotional promotion to sell their cars, how can a consensus be reached? Unlike shampoo, consumers cannot simply stop using the vehicle or simply swap out the product when they do not feel good. A



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vehicle is a high-end consumer product in which users demand the realization of brand value as well as nice practical functions, including power, fuel-economic design, wide-range of accessories, personalized design and price.

With the sales of EXCELLE exceeding 10,000 immediately after its launch, Shanghai GM has created a miracle in China’s automobile market. This is not an accidental success. GM put lots of effort in studying consumer psychology. As mentioned above, Chinese people are after a perfect vehicle. They want an attractive exterior, pretty interior, comfortable driving feel and relatively low price. GM made a success by meeting all these criteria through its EXCELLE.

APPLYING CRM TO VEHICLE SALES

As an internationally recognized and the most authoritative independent provider of automobile news, J.D.POWER has drawn attention to China’s automobile manufacturing industry and consumer market since 2000. IQS and SSI was introduced to the mainland China in 2000, followed by CSI in 2001 and APEAL in 2003.

THE INTRODUCTION OF "3C" THEORY

3C is a kind of CRM methodology jointly developed by Holland’s CMI and Greater China CRM. As a methodology focused on the Chinese market, it manages and improves customer performance and customer care by adopting the technical theory of flow control. By doing so, the objective of maintaining and maximizing the value of customer life cycle can be achieved. With the customer pyramid and simple action plans serving as the core, this CRM method has proved effective as

seen by the current implementations in over a hundred of businesses, including big names such as Xerox, DHL, IBM, Volkswagen and Philips, etc.

1.4 CRM IMPLEMENTATIONS IN INDIAN AUTOMOBILE COMPANIES

What Indian car market is witnessing today is also a new phase after five most eventful years in the history of Indian automobile industry, the car segment in particular. These five years have changed the way we looked at car business: ‘We the Industry Wallahs’ and ‘We the Customers.’

These years brought in new products, new brands, new campaigns and a lot of noise at the marketplace. But behind all these hullabaloo the biggest challenge in front of carmakers was the creation of a robust sales and service network across the country to service lakhs of new and would-be customers.

Due to the image of the car dealership business created by the good old shortage days, many local businessmen flocked in to open up car dealerships. Many entrepreneurs came in, apart from the ones who were already in the automobile dealership business. Even manufacturers encouraged these fresher for their bad experiences with old dealerships and the aggressive, market-savvy approach of these entrepreneurs. Then began the number game and the race to become the market leader, the segment leader, and so on. The results, we all know.

Now, after the dust has started settling and the segmental growth has flattened — due to a sluggish consumer sentiment — the task ahead of carmakers is to differentiate themselves. The difficult part here is that the products still are halfway on their



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lifecycles and, hence, do not leave much scope for completely new offerings.

Fortunately in the automobile business, the differentiation does not happen at the product layer alone. It does through the complete experience of the customers, the experience at the time of purchase, the experience with the product and the experience in after-sales service or other interactions with the manufacturers or their dealers.

So, as a key differentiation initiative, carmakers now need to look at the retail processes or the processes at the customer interface that shape up the quality of customer experience. Unfortunately, there is nothing great to write home about as far as this wholesome performance of carmakers is concerned.

Agencies like JD Power, which track the customer satisfaction indices of various car brands and carmakers, are here for quite some time rating all of them. These ratings, though are not the exact representation of the customer satisfaction levels, give a fair idea of the same in terms of relative performance trends both on the time and competition scales.

Though the industry average on the JD Power CSI (customer satisfaction index), which represents the levels of customer satisfaction measured at the after-sales service layer, has gone up from 109 to 113 in the last three years, the top score has actually gone down from 121 to 119. JD Power SSI (sales satisfaction index), which represents satisfaction at the sales layer, has industry average stagnant at 103 for two years with marginal improvement in top score from 109 to 112.

While a surge in customer expectations is to an extent responsible for this, the carmakers have not been able to take

focussed retail process-oriented initiatives either. This gets reflected in the fact that today most of the carmakers either have implemented, or are in the process of implementing, the integrated dealer management systems in order to automate the processes at the dealerships, but the actual usage of the same is nowhere close to satisfactory.

Globally, one of the key focus areas for carmakers today is CRM and retail process improvement as they find it to be in their strategic interests. This becomes more important looking at the fact that despite being big-size businesses, auto dealerships do not attract a very high quality of manpower and the general motivation levels among these people are low as compared to their counterparts in other service-oriented businesses such as telecom or credit cards. The better systems and processes here have to compensate for the lacunae on the people front.

While the achievement of Tata Engineering and Hyundai in creating a network of over 200 dealerships and 250 authorised service points each is commendable, the real challenge that lies ahead in front of the carmakers as a whole is putting up well-built systems and efficient, customer-friendly processes at the dealerships. This definitely is an uphill task looking at the viability crisis that dealerships are facing because of high operating costs, over-competition and erosion in retail margins.

This kind of initiative has the potential of becoming the visible differentiator, thereby rendering competitive advantage to a carmaker. This would help carmakers lure new customers and retain the existing ones. The start may be difficult: it would require some expenditure too, but we do not have a choice.



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Customers are very demanding — they cannot be lured by ‘More Car’ anymore; we have to give them ‘More Pyaar per Car’ also.

1.4.1 TATA MOTORS DEPLOYS SIEBEL CRM

Tata Motors, India's largest and only fully integrated auto maker, and Siebel Systems, Inc., a leading provider of business applications software, announced that Tata has deployed Siebel Automotive, a customer relationship management (CRM) solution, to enhance customer service, strengthen dealer relationships, and improve operational efficiency and effectiveness.

The Siebel CRM solution is expected to be deployed to Tata Motors' entire network of 250 dealer organisations in India by the end of 2005, with more than 1,600 locations and 10,000 sales and service executives expected to use Siebel Automotive.

According to K. R. Sreenivasan, head, CRM and dealer management system, Tata Motors, "Within the first year of implementing the Siebel's solutions, we have seen improvements in customer satisfaction, revenue and operating cost reductions through productivity improvements, and these benefits are expected to increase further over time. This is helping us become truly customer-centric, since we can draw upon real-time, centralised customer and vehicle data and respond better to our customer and dealer needs."

Tata Motors, a flagship company of the Tata Group, is the world's fifth-largest medium and heavy commercial vehicle manufacturer and produces more than 150 commercial vehicle models with a range of light, medium, to heavy-duty trucks,

buses, and tractor-trailers with revenues exceeding $3.5 billion (FY 2003-04) and is the second-largest player in the domestic passenger car market in India The company works through a network of dealers located across the country to sell its vehicles. In recent years, this number has expanded by 50 per cent to its current pool of 250 dealer organisations.

The Siebel CRM solution will enable Tata Motors to gather feedback on products to improve design or manufacturing quality as well as measure the effectiveness of marketing campaigns and programmes. The automaker selected Siebel Automotive because of its partner management capabilities to handle its large dealer network, the solution's zero-footprint web-based architecture and user-friendly interface-critical to support thousands of salespeople with various skill levels.

Tata Motors is currently in the first part of a three-phase deployment. Once the current phase is completed, the company plans to deploy marketing, call centre, business analytics, and captive finance modules. This will allow Tata Motors to better understand customer needs and requirements, improve its responsiveness to service requests and problem resolution, initiate more proactive contacts with customers, add support for new products and services, and streamline dealer financing processes.

The ease of integration between CRM solution and Tata Motors' dealer management and ERP systems was also a critical factor in the company's decision process. The company says that Tata Motors has already seen improvements in a number of areas, including:



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Improved demand forecasting, planning, logistics management, and inventory management

Overall reduction in quality-related costs due to faster product performance feedback

Improved workflow and escalation of customer grievances for faster resolution

Increased revenue growth from both higher vehicle sales and a rise in the company's after-sales parts business

Ultimately, Tata Motors intends to create an open portal for customer self-service, enabling car buyers to manage product configuration and place orders online.

"The cyclical nature of automotive demand, together with competition from new entrants in the market, has made it difficult for automotive companies to achieve their growth and globalisation goals," says John Gray, general manager, Automotive, Siebel Systems. "By enabling Tata Motors to manage, synchronise, and coordinate interactions with its dealers and customers, Siebel Automotive provides the company with an ideal platform for getting closer to its customers while strengthening its position as a world-class automotive brand," adds.

Siebel Automotive, a comprehensive suite of business applications, provides a single, 360-degree view of the customer to all who need it; facilitates coordination between Tata and its dealers; and enables Tata to track each vehicle throughout its life cycle. Siebel Automotive has been closely integrated with a wide array of back-office applications, including applications for inventory management, fulfilment, and parts location. Pricing and tax calculations can be adjusted for each

dealer's requirements. In addition, comprehensive sales and reporting functionality built into Siebel Automotive enables Tata to distribute sales targets to its dealers and roll up sales numbers across the country. Siebel, incidentally, pioneered the industry-specific application model and today delivers 23 industry applications and more than 100 industry-specific solution sets. These solutions, which include Siebel Automotive, enable companies to establish a single, enterprise-wide view of their customers and execute key customer-facing business processes more efficiently and effectively.

MARUTI UDYOG LTD

1.5 INTRODUCTION

Maruti Udyog Limited, a subsidiary of Suzuki Motor Corporation of Japan, has been the leader of the Indian car market for about two decades. Its manufacturing plant, located some 25 km south of New Delhi in Gurgaon, has an installed capacity of 3,50,000 units per annum, with a capability to produce about half a million vehicles.

The company has a portfolio of 11 brands, including Maruti 800, Omni, premium small car Zen, international brands Alto and WagonR, off-roader Gypsy, mid size Esteem, luxury car Baleno, the MPV, Versa, Swift and Luxury SUV Grand Vitara XL7.

In recent years, Maruti has made major strides towards its goal of becoming Suzuki Motor Corporation's R&D hub for Asia. It has introduced upgraded versions of WagonR, Zen and Esteem, completely designed and styled in-house.

Maruti's contribution as the engine of growth of the Indian auto industry, indeed its impact on the lifestyle and psyche of an



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entire generation of Indian middle class, is widely acknowledged. Its emotional connect with the customer continues.

Maruti tops customer satisfaction again for sixth year in a row according to the J.D. Power Asia Pacific 2005 India Customer Satisfaction Index (CSI) Study.

The company has also ranked highest in India Sales Satisfaction Study.

The company's quality systems and practices have been rated as a "benchmark for the automotive industry world-wide" by A V Belgium, global auditors for International Organization for Standardization.

In keeping with its leadership position, Maruti supports safe driving and traffic management through mass media messages and a state-of-the art driving training and research institute that it manages for the Delhi Government.

The company's service businesses including sale and purchase of pre-owned cars (True Value), lease and fleet management service for corporate (N2N), Maruti Insurance and Maruti Finance are now fully operational. These initiatives, besides providing total mobility solutions to customers in a convenient and transparent manner, have helped improve economic viability of the company's dealerships.

1.6 CRM INITIATIVES IN MARUTI UDYOG LTD (MUL)

Maruti tops customer satisfaction again for sixth year in a row according to the J.D. Power Asia Pacific 2005 India Customer Satisfaction Index (CSI) Study. The company has also ranked highest in India Sales Satisfaction Study.

A new model of customer satisfaction measurement was deployed for the 2005study. Overall sales satisfaction was assessed on attributes grouped into six pre-defined factors:

Delivery process, Delivery timing, Sales person, Dealer facility, Paperwork, and The deal

The study also highlights a strong correlation between advocacy and loyalty parameters with overall sales satisfaction. Customers who are delighted with their sales experience at the dealership say they will recommend their dealer to at least three other people. On the other hand, a highly-dissatisfied customer will tell at least two other people not to shop at that dealership.



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The main aim of CRM is to retain the exiting customer’s. Now to obtain this MUL tried to follow number of strategies like

MARUTI SERVICE MASTERS (MSM) – In 1999, Maruti established a chain of model workshops across the country under the brand name, Maruti Service Masters (MSM). These service stations operated by franchises became one-stop shops to meet all vehicle needs for Maruti cars. The MSMs offered maintenance service, spares, accessories, insurance related services and took care of warranty claims.

CUSTOMER CALL CENTRES – Maruti also set up Customer Call centres in the National Capital Region, Bangalore, Hyderabad, Chennai and Mumbai. Incumbent and prospective customers could interact with the company through a toll free telephone number. Traffic on Maruti’s interactive web site, www.marutiudyog.com provided a wealth of information and practical help to customers.

Maruti Pact with GE for Strengthening CRM

Maruti strengthened its CRM (customer relationship management) drive. The company entered into a strategic alliance with the GE group for outsourcing its entire call centre activity. GE, which has a joint venture with the State Bank Of India (SBI) for its credit card business, started a call centre in Gurgaon for this business. Maruti Udyog had entered into a strategic alliance with this JV for

outsourcing its CRM operations. Five cities were covered under the call centre footprint __ Delhi, Bangalore, Chennai and Hyderabad. All needed is to call a toll free number and make a date to go for a test drive in an Alto or a WagonR. All the finer points like which vehicle has a power steering and how much it costs can be discussed with the call centre agent.

“We are reaching out to customers in three different ways: through our website, over the phone and through regular post (we have a separate cell that replies to these letters),'' Rajesh Uppal, general manager (information technology division), Maruti Udyog Ltd.

LARGEST NETWORK – MUL has 1,545 Maruti Authorized Service Stations (MASS) covering 898 cities and express service stations on 30 highways across the country

BUSINESS INTELLIGENCE SOFTWARE – Maruti Udyog in India uses solutions from Business Objects, and hopes to achieve benefits like warranty claims analysis. This can help reduce the return of components from its nationwide dealers. The company can also figure out which component is returned the most and how it impacts accounts or sales, and accordingly create its business forecasts. This reduces cost of operations.



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1.7 CRM INITIATIVES BY DEALERS OF MUL

A study was conducted to find out the various additional CRM initiatives taken by dealers of Maruti Udyog Ltd other than those mandated by the company.

Some of the initiatives taken are mentioned below:

CUSTOMER TRAINING – Some dealers run customer training programmes. They teach the customers the basics of car driving, maintenance, traffic rules. As Maruti dealers are able to sell large number of cars in one month, so they conduct training classes on first or second Sunday of the month. This makes the new customer who is first time buyer of car educated and he feels satisfied.

ALL SERVICES AVAILABLE UNDER ONE ROOF – All the services which a customer needs for buying a car are provided at a single place. There are insurance agents, loan experts sitting inside the dealer showroom which facilitates customer buying experience and reduces his hassle and time.

REMINDER FOR INSURANCE, SERVICES, REPLACEMENTS – Dealers do remind their customers about the renewal date of the insurance taken for the cars. They also remind the customers about the services or any replacements due. As customers are generally busy in their own life, they tend to forget these dates. The reminders from the dealers help them in keeping their cars in good and safe condition.

FREE SERVICE AFTER FIRST THREE FREE SERVICES – Some dealers give their customers an additional free service after first three free services given by the company.

NEW YEAR CARDS – Dealers also maintain relationship with their customers by sending the New Year cards to their customers.

CONDUCTING GAMES, TREASURE HUNTS – Some dealers also conduct games and treasure hunts. These are taken from the Harley Davidson successful club loyalty programmes. These places act as a point to make new friends and share the common views about the product of the companies. This also helps the dealers to maintain relationships with the existing customers. Also it provides them platform to show the new products launched by the company or any new accessories in the market.

CLOSED CIRCUIT CAMERAS IN WORKSHOPS – Indian customers are generally sceptic about everything. They don’t feel comfortable to leave their expensive thing to some strange person like mechanic. During service of the car, the customer generally wants to see what the mechanic is doing to his car. For the security purpose a customer is not allowed to stand in the workshop area. To solve the customer problem, some dealers have deployed Closed Circuit Cameras in workshops so that customer can see what is happening to his car while sitting in a rest room.



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1.8 Scope of improvement

Though Maruti is ahead of all its competitors in Customer Satisfaction, but there are still some areas of concern where it can improve upon. Some of these are listed below:

CUSTOMER RETENTION RATE IS VERY LESS (10-15% ONLY) BECAUSE OF LOW PRESENCE IN HIGHER SEGMENT – The main aim of CRM programme is to maintain customer loyalty. Today the life of car has come down from 7 years to 4-5 years. This means customer is changing his car every 4-5 years. In most of the cases the customer buys the car in upper segment. This is where Maruti loses out. Most of Indian buyers are having cars in less than Rs 4 lacs range. Maruti is having very good presence is this segment with its vast offerings like Maruti 800, Alto, Zen, WagonR, Swift. But above this range it is having only two cars Esteem and Baleno. Both of these are not faring well. So most of the Maruti customers who are satisfied with their present products have little choice to go for Maruti when they are upgrading.

TECHNOLOGY USED IS STILL IN NASCENT STAGE – Technology used is still in very early stages in Maruti. Though they are having Dealer Management System (DMS), provided by Wipro and L&T Infocomm but they don’t have any CRM solution.

DEALERS STILL PREFER TO USE THEIR OWN KNOWLEDGE & EXPERTISE

INSTEAD OF BUSINESS INTELLIGENCE SOLUTION – Dealers of Maruti are not very comfortable using the modern technology. They still prefer to use their own knowledge & expertise instead of Business Intelligence solution. This shows that proper training about using the software and the benefits of it are not properly told to the users.

LAUNCH OF SWIFT WAS ALSO ACCOMPANIED WITH LONG WAITING PERIOD – Launch of Swift was accompanied by long waiting periods. The waiting periods used to be 3-6 months. This has caused great discomfort to customers in this competitive industry. As a result many customers cancelled their bookings. This clearly shows that Maruti has not anticipated well the demand of its product. This is surely because of low use of technology and problem in feedback and evaluation systems.

NO USE OF SALES FORCE AUTOMATION – Maruti has still not employed CRM software. So they are not using SFA which can give it clear edge over its competitors. SFA is really helpful to sales team of the dealers and it also helps in responding to customers demands efficiently.

Though Maruti is still ahead of its competitors in Customer Satisfaction but it can’t sleep in its laurels. The competition in Indian Automobile Industry is getting hot with lot of MNCs coming to the country. They are also bringing global standards with them. Also Tata Motors is progressing really well. They are installing CRM solution provided by Siebel. So Maruti should pay more attention to its



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shortcomings to maintain its leadership position. It should launch new products in upper segments as more and more customers are moving to that segment.

REFERENCES

• http://www.networkmagazineindia.com

• http://www.domainb.com/

• www.Indiainfoline.com

• www.marutiudyog.com

• www.quickmba.com

• www.tutor2u.com

• www.businessline.com

• www.thehindu.com

• http://www.siebel.com/automotive-crm/

• http://www.it-director.com/article.php?id=1085 – Introduction to CRM; Published: 1st Oct 2000

• An article on CRM – By Khalid Sheikh, an associate professor of Supply Chain Management at S P Jain Institute of Management & Research, Mumbai

• CRM: From evolution to revolution – By Chetan Agarwal; team leader, Quark Systems, Chandigarh

• CRM helps transportation companies drive profits – By Lisa Picarille; CRM Magazine, February 2004

• Digitalisation, innovation, and industrial organisation: the pivotal case of the auto industry – By Olivier Bomsel and Gilles Le Blanc

• Dealership group tests the CRM waters…cautiously - Asbury Automotive Group implements customer relationship management – By Cliff Banks; Ward's Dealer Business, August 1, 2002

• GM Uses Web to Give Itself a Voice – By Beth Negus Viveiros; Direct, April 1, 2005

• Info tools help dealers target customers: Focused marketing with "clean" data could save lots of money - Information Technology – Article in Ward's Dealer Business, March 2002

• Phones provide more info than you might think – Article in Ward's Dealer Business, August 1, 2002

• Rejected by an apathetic dealership, he ends up at an independent shop – By Cliff Banks; Ward's Dealer Business, August 1, 2002



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TITLE: “UNDERSTANDING THE CONCEPT OF GREEN MARKETING IN CURRENT SCENARIO: A

CHALLENGE OR AN OPPORTUNITY”

MS. POOJA GUPTA*; MS. AARTI SHARMA**

*S.D.College of Management Israna Panipat Haryana E-mail: [email protected]

**S.D.College of Management Israna Panipat Haryana E-mail: [email protected]

ABSTRACT Green marketing is based on the premise that businesses have a responsibility to satisfy human needs and desires while preserving the integrity of the natural environment. A clever marketer is one who not only convinces the consumer, but also involves the consumer in marketing his product. Marketers also have the responsibility to make the consumers understand the need for and benefits of green products as compared to non-green ones. In green marketing, consumers are willing to pay more to maintain a cleaner and greener environment. Although environmental issues has influenced all activities but very few academic disciplines have inculcated green issues into their literature. Smart business houses have accepted green marketing as a part of their strategy. Green marketing imparts a proactive strategy for these companies to cater the market by imparting nature- friendly products/ services which otherwise reduce or minimize any detrimental impact on environment. Green marketing involves focusing on promoting the consumption of green products. Therefore, it becomes the responsibility of the companies to adopt creativity and insight, and be committed to the development of environment-friendly products. This paper will attempt to introduce – the concept of green-marketing; about the importance of green marketing; examine some reasons that make the organizations interested to adopt green marketing philosophy; it also explains the problems that organization may face to implement green marketing and it’s managerial implications along with few case points. Last part of the paper highlights the global scenario of Green Marketing in detail. KEYWORDS: environment, strategy, consumers, product etc.



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INTRODUCTION

GREEN MARKETING

MEANING

Green marketing refers to the process of selling products and/or services based on their environmental benefits. Such a product or service may be environmentally friendly in it or produced and/or packaged in an environmentally friendly way.

The obvious assumption of green marketing is that potential consumers will view a product or service’s “greenness” as a benefit and base their buying decision accordingly. The not-so-obvious assumption of green marketing is that consumers will be willing to pay more for green products than they would for a less-green comparable alternative product – an assumption that, in my opinion, has not been proven conclusively.

The term Green Marketing came into dominance in the late 1980s and early 1990s, began in Europe in the early 1980s when certain products were found to be harmful to the environment and society as a whole. Consequently new types of products were created, called "green" products, that would cause less damage to the environment.

According to Peattie (2001), the evolution of green marketing can be divided into three phases; first phase was termed as "Ecological" green marketing, to help solve environment problems through remedies. Second phase was "Environmental" green marketing with focus on clean technology that involved designing of innovative new products, which take care of pollution and waste issues. Third phase was "Sustainable" green marketing came into prominence in the late 1990s and early 2000 where it

becomes necessary for companies to produce environment friendly products as the awareness for such products is on the rise as customers are demanding eco-friendly products and technologies.

THE MAJORITY OF GREEN PRODUCTS HAVE ONE OR MORE OF THE FOLLOWING HEALTH OR ENVIRONMENTAL ATTRIBUTES

• They promote clean air quality (typically through reduced emissions)

• They are durable and have low maintenance requirements.

• They are recyclable and reusable.

• They are made using natural, renewable or environment friendly resources.

• They do not contain any ozone-depleting substances like green house gases.

• They do not contain highly toxic compounds, and their production does not result in highly toxic by-products or waste products harmful to society and environment.

DEFINITION

According to the American Marketing Association, green marketing is the marketing of products that are presumed to be environmentally safe. Thus green marketing incorporates a broad range of activities, including product modification, changes to the production process, packaging changes, as well as modifying advertising. Yet defining green marketing is not a simple task where several meanings intersect and contradict each other; an example of this will be the existence of varying social, environmental



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and retail definitions attached to this term. Other similar terms used are Environmental Marketing and Ecological Marketing.

THREE KEYS TO SUCCESSFUL GREEN MARKETING

Show potential customers that you follow green business practices and you could reap more green on your bottom line. Green Marketing isn’t just a catchphrase; it’s a marketing strategy that can help you get more customers and make more money. But only if you do it right.

For green marketing to be effective, you have to do three things; be genuine, educate your customers, and give them the opportunity to participate.

1) Being genuine means that a) that you are actually doing what you claim to be doing in your green marketing campaign and b) that the rest of your business policies are consistent with whatever you are doing that’s environmentally friendly. Both these conditions have to be met for your business to establish the kind of environmental credentials that will allow a green marketing campaign to succeed.

2) Educating your customers isn’t just a matter of letting people know you’re doing whatever you’re doing to protect the environment, but also a matter of letting them know why it matters. Otherwise, for a significant portion of your target market, it’s a case of “So what?” and your green marketing campaign goes nowhere.

3) Giving your customers an opportunity to participate means personalizing the benefits of your environmentally friendly actions, normally through letting the customer take part in positive environmental action.

EVOLUTION OF GREEN MARKETING

The green marketing has evolved over a period of time. According to Peattie (2001), the evolution of green marketing has three phases. First phase was termed as “Ecological” green marketing, and during this period all marketing activities were concerned to help environment problems and provide remedies for environmental problems. Second phase was “Environmental” green marketing and the focus shifted on clean technology that involved designing of innovative new products, which take care of pollution and waste issues. Third phase was “Sustainable” green marketing. It came into prominence in the late 1990s and early 2000.

WHAT EXACTLY IS GREEN MARKETING?

The American Marketing Association defines green marketing as efforts by businesses and organizations to produce, promote, package and reclaim product in a manner that is sensitive or responsive to ecological concern

In short, it’s just like marketing but motivated by the environment and appealing to the environmental concerns of consumers. It’s also sometimes referred to as ‘sustainability marketing’ or ‘ecological marketing.’ The deeper you go into examining the green industry, the more definitions there are to be aware of.

Carbon footprint A measurement of the effect a process or action has on the climate in terms of the amount of greenhouse gases it produces. Greenhouse gases, such as water vapour, carbon dioxide, methane, nitrous oxide, and fluorocarbons, are considered by many to directly contribute to global climate change.



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CARBON NEUTRAL

Reducing energy use and compensating for the amount of carbon dioxide a business or corporation generates through either obtaining energy from renewable sources or offsetting through measures like tree planting or investing in wind farms.

COMPOSTABLE

Product or packaging advertised as compostable must break down into usable compost in a safe and timely manner in a composting facility or in a home compost pile or device. Degradable

A product or package that completely breaks down and returns to nature in a reasonably short period of time after consumer disposal.

NATURAL

One of the most ambiguous of all the green terms, ‘natural’ products doesn’t necessarily have any environmental impact but rather are assumed to be made of natural materials or ingredients as opposed to those that are manmade. While a product marketed as ‘natural’ may sound better to the consumer, in many cases it’s just talk. Think about it: poison ivy, anthrax and gasoline are technically ‘natural’, but that doesn’t mean they’re better for you or the environment.

THE GREEN MARKETING CHALLENGE

Marketing approaches don’t have to preach or be gloomy. Green marketers can use the current call for greater sustainability as an opportunity to use talent and creativity to make green alternatives seem normal, acceptable, and attractive.

Marketers are bolstered to use green marketing methods by recent reports of

consumer green awareness. For example, a study released by Landor Associates in May 2007 said that in the previous year, market researchers saw one of the most complete and speedy revolutions in consumer attitudes ever toward the need to purchase responsible and sustainable products.

Grant says more businesses are measuring success in terms of the reduction of harm to the environment. Sustainable businesses make decisions not only based on financial factors, but also based upon their social and environmental impact. In so doing, businesses show banks and investors that they are less of a risk and more viable in the long run.

WHY GREEN MARKETING?

As resources are limited and human wants are unlimited, it is important for the marketers to utilize the resources efficiently without waste as well as to achieve the organization’s objective. So green marketing is inevitable.

There is growing interest among the consumers all over the world regarding protection of environment. Worldwide evidence indicates people are concerned about the environment and are changing their behavior. As a result of this, green marketing has emerged which speaks for growing market for sustainable and socially responsible products and services.

GREEN MARKETING CASES ELECTRONICS SECTOR

The consumer electronics sector provides room for using green marketing to attract new customers. One example of this is HP's promise to cut its global energy use 20 percent by the year 2010.To accomplish this reduction below 2005 levels, The Hewlett-Packard Company announced



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plans to deliver energy-efficient products and services and institute energy-efficient operating practices in its facilities worldwide.

INTRODUCTION OF CNG IN DELHI

New Delhi, capital of India, was being polluted at a very fast pace until Supreme Court of India forced a change to alternative fuels. In 2002, a directive was issued to completely adopt CNG in all public transport systems to curb pollution.

THE GREENING OF BUSINESS

A number of factors have caused business firms to behave more responsibly towards the natural environment. Perhaps foremost among these is the possibility of capitalizing on opportunities from the sale of environmental services and/or "earth-friendly" products. Environmental awareness has increased dramatically, particularly since the organized environmental movement emerged in the late 1960s. Issues ranging from global warming to animal rights to species preservation to the protection of wetlands are now prominent in the media and in the minds of consumers. "Green" consumers have thus arisen with preferences for products made from recycled materials or products whose use entails reduced environmental impact. Often such products command premium prices, and therefore the task of marketers has become all the more crucial.

As landfills fill up and public opposition mounts against opening new ones (the NIMBY, or "Not in My Back Yard," syndrome), waste treatment and disposal costs rise. Storage, transport, and disposal of hazardous wastes is quickly becoming unaffordable for many firms, stimulating a search for less-toxic alternative processes. Furthermore, liability and litigation costs

for environmental damages are skyrocketing with little sign of abatement. At the time of the first Earth Day in April 1970, there were approximately 2,000 federal, state, and local environmental regulations. In the late 1990s there were approximately 100,000 such rules. By some estimates, U.S. businesses have spent well over a trillion dollars since the 1970s on environmental law compliance.

Faced with a growing environmental consciousness, many business firms are adopting a pro-environment stance in hopes of improving credibility with the public. Unfortunately, some companies have been a bit overzealous with their environmental claims, prompting cries of "green washing" from critics. Another impetus causing business to embrace environmental concerns is to attract better employees and/or improve working conditions. Many young people entering the workforce today exhibit greater social concerns than those of ten years ago, and many wish to join firms perceived to be making a positive contribution to society.

Environmental regulations continue to increase in both number and complexity. Some firms have identified opportunities in this changing legal environment and are making changes to drive regulation for purposes of competitive advantage. Because many regulations require use of the "best available technology," firms actively involved in developing and implementing new technologies may achieve the benefits of monopoly status for a short while.

Companies are also becoming more environmentally responsible as part of an overall commitment to Total Quality Management or sustainable development. Sustainable development involves meeting the needs of the present without



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compromising the ability of future generations to meet their own needs.

MARKETING MIX OF GREEN MARKETING

When companies come up with new innovations like eco friendly products, they can access new markets, enhance their market shares, and increase profits. Just as we have 4Ps product prices, place and promotion in marketing, we have 4ps in green marketing too, but they are a bit different. They are buttressed by three additional Ps, namely people, planet and profits.

GREEN PRODUCTS

The products have to be developed depending on the needs of the customers who prefer environment friendly products. Products can be made from recycled materials or from used goods. Efficient products not only save water, energy and money, but also reduce harmful effects on the environment. Green chemistry forms the growing focus of product development. The marketer's role in product management includes providing product designers with market-driven trends and customer requests for green product attributes such as energy saving, organic, green chemicals, local sourcing, etc., For example, Nike is the first among the shoe companies to market itself as green. It is marketing its Air Jordan shoes as environment-friendly, as it has significantly reduced the usage of harmful glue adhesives. It has designed this variety of shoes to emphasize that it has reduced wastage and used environment-friendly materials.

There is no widespread agreement on what exactly makes a product green. Some general guidelines include that a green product

• does not present a health hazard to people or animals;

• is relatively efficient in its use of resources during manufacture, use, and disposal;

• does not incorporate materials derived from endangered species or threatened environments;

• does not contribute to excessive waste in its use or packaging; and

• Does not rely on unnecessary use of or cruelty to animals.

GREENER PRICING

Green pricing takes into consideration the people, planet and profit in a way that takes care of the health of employees and communities and ensures efficient productivity. Value can be added to it by changing its appearance, functionality and through customization, etc. Wal Mart unveiled its first recyclable cloth shopping bag. IKEA started charging consumers when they opted for plastic bags and encouraged people to shop using its "Big Blue Bag".

A central concern of many environmentalists is that product prices do not reflect total environmental costs. Waste disposal costs, for instance, are frequently incurred on a fixed-fee basis, regardless of how much waste is actually generated. Similarly, the national accounting systems of most countries do not incorporate the costs of environmental degradation or depletion. After-the-fact expenditures on pollution control and remediation are included, albeit as income. Greener pricing decisions are based on the premise that goods and services associated with greater environmental damage should cost more.



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GREEN PROMOTION

Green promotion involves configuring the tools of promotion, such as advertising, marketing materials, signage, white papers, web sites, videos and presentations by keeping people, planet and profits in mind. British petroleum (BP) displays gas station which its sunflower motif and boasts of putting money into solar power. Indian Tobacco Company has introduced environmental-friendly papers and boards, which are free of elemental chlorine. Toyota is trying to push gas/electric hybrid technology into much of its product line. It is also making the single largest R&D investment in the every-elusive hydrogen car and promoting itself as the first eco-friendly car company. International business machines Corporation (IBM) has revealed a portfolio of green retail store technologies and services to help retailers improve energy efficiency in their IT operations. The center piece of this portfolio is the IBM SurePOS 700, a point-of-sale system that, according to IBM, reduces power consumption by 36% or more. We even see the names of retail outlets like "Reliance Fresh", Fresh@Namdhari Fresh and Desi, which while selling fresh vegetables and fruits, transmit an innate communication of green marketing.

Perhaps no area of green marketing has received as much attention as promotion. In fact, green advertising claims grew so rapidly during the late 1980s that the Federal Trade Commission (FTC) issued guidelines to help reduce consumer confusion and prevent the false or misleading use of terms such as "recyclable," "degradable," and "environmentally friendly" in environmental advertising.

The FTC offers four general guidelines for environmental claims:

1. Qualifications and disclosures should be sufficiently clear and prominent to prevent deception.

2. Environmental claims should make clear whether they apply to the product, the package, or a component of either. Claims need to be qualified with regard to minor, incidental components of the product or package.

3. Environmental claims should not overstate the environmental attribute or benefit. Marketers should avoid implying a significant environmental benefit where the benefit is, in fact, negligible.

4. A claim comparing the environmental attributes of one product with those of another product should make the basis for the comparison sufficiently clear and should be substantiated.

GREENER DISTRIBUTION

Logistics and transportation costs are coming under greater scrutiny due to rising fuel prices, congested highways, and global-warming concerns. Package redesign for lighter weight and/or greater recyclability reduces waste while simultaneously reducing costs. In some countries, marketers must also consider two-way flows, as governments pass legislation requiring manufacturers to take back products at the end of their useful life ("reverse logistics"). Germany is again the world leader in this arena; it has already passed ordinances targeting the electronics, automobile, and packaging industries.

Green marketing strategies are also reducing inventory and production costs. Standardization and identification of product parts and packaging materials



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benefits the environment by reducing complexity and improving efficiency. Substituting electronic or computer controls for analog devices improve quality and reduces waste.

GREEN MARKETING IDEAS

Green marketing is not a new concept but many of us are not aware of it. Green marketing is nothing but the process of selling products or services that are presumed to be environment friendly by their manufacturers. In this kind of marketing, a manufacturer will obviously highlight the environmental benefits associated with a product or a service to motivate the consumer to buy the same. Manufacturers may alter or modify their product in terms of its production process and packaging, etc. Apart from this, green marketing also calls for eco-friendly advertising and marketing strategies. These green marketing ideas will help your products or services get recognized as environment friendly that may lead to increased profits. This article shares some of the popular and successful green marketing ideas that you can use for your business.

GREEN MARKETING IDEAS FOR BUSINESS

Green marketing ideas are subject to the industry and stream you are working with.

Considering the nature of your services or/and products, you may choose from the appropriate ideas given below: ADVERTISING ON ELECTRONIC MEDIA

There are many environmental benefits associated with advertising on electronic media that can boost your green business. No paper is wasted as advertisements are flashed on TV or internet. Online marketing tips saves automatic exhaust that may be caused otherwise. WORK FROM HOME

Having all the staff members come to office every day adds to various kinds’ pollutions. Instead design a system where in your employees can work from home, by which they do not have to commute long distance between home and office that can reduce the air pollution. This will also help you ease out the stress on the management of your company and save a lot of money as well.

ECO-FRIENDLY PACKAGING

This is one of the best green marketing ideas for product manufacturers. You can change the packaging style of your products by making them more environments friendly. For example, you can change the plastic cover in to a bag or a carton that is made of a biodegradable material. GREEN SCHEMES FOR CUSTOMERS

You can come with many 'green' schemes and offers for your customers. For example, you can gift a grocery bag to the customers so that they don't have to carry the grocery in the plastic bags. For an effective and free advertising, print the name of your company with a catchy 'no plastic' message on the bag.



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GREEN INCENTIVES FOR CUSTOMERS

It is again one of the best green marketing ideas that many companies are using successfully. You can offer various eco-friendly incentives to the customers by which their purchase would contribute to the well being of the planet. For example, if they buy your service, then one percent of each sale would go to an NGO that is dedicated to the environment. This way your customers can receive what they want and still experience the 'joy of giving'.

CO2 SERVER

All of us use Internet and computers for working and business. This too causes too much of E-waste and contributes to pollution. To cut down on such pollution you can resort to CO2 servers that are one of the great green marketing ideas. Such eco-friendly green web hosts offset some percentage of their energy usage with natural power such as wind power etc.

TRANSPORTATION

If your business involves or relies on transportation then you can make the transportation more environment friendly by switching to 'green vehicle' or using 'green fuel' for your vehicle etc. This too will help in reducing the air pollution.

Apart from this you can think of recycling and waste management as green marketing ideas for your business process. These were some of the green marketing ideas that you can use for your business. Most of these ideas will not only help you reduce the carbon footprint but they are also very profitable for the business. Many of the above ideas help you reduce the cost of your service or product that ultimately results in more profit. So try some of these ideas and be one of the successful green entrepreneurs.

WHY IS GREEN MARKETING CHOSEN BY MOST MARKETERS?

Most of the companies are venturing into green marketing because of the following reasons: A. OPPORTUNITY

In India, around 25% of the consumers prefer environmental-friendly products, and around 28% may be considered healthy conscious. Therefore, green marketers have diverse and fairly sizeable segments to cater to. The Surf Excel detergent which saves water (advertised with the message—"do bucket paani roz bachana") and the energy-saving LG consumers durables are examples of green marketing. We also have green buildings which are efficient in their use of energy, water and construction materials, and which reduce the impact on human health and the environment through better design, construction, operation, maintenance and waste disposal. In India, the green building movement, spearheaded by the Confederation of Indian industry (CII) - Godrej Green business Center, has gained tremendous impetus over the last few years. From 20,000 sq ft in 2003, India's green building footprint is now over 25 million sq ft.

B. SOCIAL RESPONSIBILITY

Many companies have started realizing that they must behave in an environment-friendly fashion. They believe both in achieving environmental objectives as well as profit related objectives. The HSBC became the world's first bank to go carbon-neutral last year. Other examples include Coca-Cola, which has invested in various recycling activities. Walt Disney World in Florida, US, has an extensive waste management program and infrastructure in place.



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C. GOVERNMENTAL PRESSURE

Various regulations rare framed by the government to protect consumers and the society at large. The Indian government too has developed a framework of legislations to reduce the production of harmful goods and by products. These reduce the industry's production and consumers' consumption of harmful goods, including those detrimental to the environment; for example, the ban of plastic bags in Mumbai, prohibition of smoking in public areas, etc.

D. COMPETITIVE PRESSURE

Many companies take up green marketing to maintain their competitive edge. The green marketing initiatives by niche companies such as Body Shop and Green & Black have prompted many mainline competitors to follow suit.

E. COST REDUCTION

Reduction of harmful waste may lead to substantial cost savings. Sometimes, many firms develop symbiotic relationship whereby the waste generated by one company is used by another as a cost-effective raw material. For example, the fly ash generated by thermal power plants, which would otherwise contributed to a gigantic quantum of solid waste, is used to manufacture fly ash bricks for construction purposes.

BENEFITS OF GREEN MARKETING

Today's consumers are becoming more and more conscious about the environment and are also becoming socially responsible. Therefore, more companies are responsible to consumers' aspirations for environmentally less damaging or neutral products. Many companies want to have an early-mover advantage as they

have to eventually move towards becoming green. Some of the advantages of green marketing are:

*It ensures sustained long-term growth along with profitability.

*It saves money in the long run, thought initially the cost is more.

*It helps companies market their products and services keeping the environment aspects in mind. It helps in accessing the new markets and enjoying competitive advantage.

*Most of the employees also feel proud and responsible to be working for an environmentally responsible company.

PROBLEMS OF GREEN MARKETING

Many organizations want to turn green, as an increasing number of consumers' ant to associate themselves with environmental-friendly products. Alongside, one also witnesses confusion among the consumers regarding the products. In particular, one often finds distrust regarding the credibility of green products. Therefore, to ensure consumer confidence, marketers of green products need to be much more transparent, and refrain from breaching any law or standards relating to products or business practices.

PATHS TO GREENNESS

Green marketing involves focusing on promoting the consumption of green products. Therefore, it becomes the responsibility of the companies to adopt creativity and insight, and be committed to the development of environment-friendly products. This will help the society in the long run. Companies which embark on green marketing should adopt the



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following principles in their path towards "greenness." * Adopt new technology/process or modify existing technology/process so as to reduce environmental impact. * Establish a management and control system that will lead to the adherence of stringent environmental safety norms. * Using more environment-friendly raw materials at the production stage itself. * Explore possibilities of recycling of the used products so that it can be used to offer similar or other benefits with less wastage.

RULES OF GREEN MARKETING

1 GREEN IS MAINSTREAM. Not too long ago, just a small group of deep green consumers existed. Today, 83% of consumers – representing every generation, from Baby Boomers to Millennial and Gen Ys – are some shade of green. Moreover, there are now finely defined segments of green consumers.

2 GREEN IS COOL. Once a faddish preoccupation of the fringe, green is not only mainstream, it’s chic. In fact, green consumers are early adopters and leaders who influence purchasing behaviour. Celebrities and other cool types generally are espousing green causes. People show off (and self-actualize) by tooling around in a Toyota Prius (or soon, we predict, in a Nissan LEAF electric), and carry cloth shopping bags to look the part.

3 GREENER PRODUCTS WORK EQUALLY OR BETTER – AND ARE OFTEN WORTH A PREMIUM PRICE. Thanks to advances in technology, we’ve come a long way since the days when greener products gathered dust on health food store shelves because they didn’t work as well and were not a good value. Organics, hybrid cars, and

safer cleaning products now command a price premium.

4 GREEN INSPIRES INNOVATIVE PRODUCTS AND SERVICES THAT CAN RESULT IN BETTER CONSUMER VALUE, ENHANCED BRANDS, AND A STRONGER COMPANY. Savvy managers no longer consider the environment to be a burden that represents added cost and overhead – but an investment that can pay back handsomely.

5 VALUES GUIDE CONSUMER PURCHASING. HISTORICALLY, CONSUMERS BOUGHT SOLELY ON PRICE, PERFORMANCE, AND CONVENIENCE. But today, how products are sourced, manufactured, packaged, disposed of – and even such social aspects as how factory and farm workers are treated – all matter.

6 A LIFE-CYCLE APPROACH IS NECESSARY. Single attributes such as recyclable, organic, or energy-efficient matter greatly, but don’t mean a product is green overall. Recycled products still create waste, organic strawberries can travel thousands of miles, and CFLs contain mercury. So a more thorough, life-cycle or carbon-based approach to greening is necessary.

7 MANUFACTURER AND RETAILER REPUTATION COUNT NOW MORE THAN EVER. In addition to looking for trusted brand names on supermarket shelves, consumers are now flipping over packages, saying, “Who makes this? Did they produce this product with high environmental and social standards?”

8 SAVE ME! Scrap the images of planets! Bag the daisies! Nix the babies! Even the greenest consumers no longer buy products just to “save the planet.” Today’s consumers buy greener brands to help



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protect their health, save money, or because they simply work better. That’s why products such as organics, natural personal care and pet care, and energy-efficient products are leading the way in sales.

9 BUSINESSES ARE THEIR PHILOSOPHIES. It used to be that companies were what they made. International Business Machines. General Foods. General Motors. Now, businesses and brands are what they stand for. Method. Starbucks. Timberland.

10 SUSTAINABILITY REPRESENTS AN IMPORTANT CONSUMER NEED, AND IS NOW AN INTEGRAL ASPECT OF PRODUCT QUALITY. Green is no longer simply a market position. Products need to be green. Brands need to be socially responsible. Period.

11 THE GREENEST PRODUCTS REPRESENT NEW CONCEPTS WITH BUSINESS MODELS WITH SIGNIFICANTLY LESS IMPACT. If we simply keep greening up the same old “brown” products we’ve been using forever, we’re never going to get to sustainability. With time running out, we’ve got to “leap” to service replacements for products, and adopt entirely new ways of doing business.

12 CONSUMERS DON’T NECESSARILY NEED TO OWN PRODUCTS; SERVICES CAN MEET THEIR NEEDS, PERHAPS EVEN BETTER. Consumers historically met their needs by owning products, but concepts like Zip car and eBooks are starting to prove that utility and service are what really matters.

13 THE BRANDS CONSUMERS BUY AND TRUST TODAY EDUCATE AND ENGAGE THEM IN MEANINGFUL CONVERSATION THROUGH A

VARIETY OF MEDIA, ESPECIALLY VIA WEBSITES AND ONLINE SOCIAL NETWORKS. Talking “at” consumers through traditional media and paid advertising can’t build loyalty among empowered consumers in a connected world.

14 GREEN CONSUMERS ARE STRONGLY INFLUENCED BY THE RECOMMENDATIONS OF FRIENDS AND FAMILY, AND TRUSTED THIRD PARTIES. With rampant cynicism about traditional forms of advertising and a backlash in place against perceived green washing, savvy marketers leverage purchase influencers and third parties like NGOs and especially eco-labellers.

15 GREEN CONSUMERS TRUST BRANDS THAT TELL ALL. BP, ExxonMobil, and SIGG learned this lesson the hard way. It’s no longer enough to have a well-known name. Today’s brands become trusted by practicing “radical transparency,” disclosing the good – and the bad.

16 GREEN CONSUMERS DON’T EXPECT PERFECTION. Just like there are no more whitest whites, there’s no greenest of the green. Consumers expect that you’ll set high goals (i.e., perform beyond mere compliance), keep improving, and report on progress.

17 ENVIRONMENTALISTS ARE NO LONGER THE ENEMY. Recognizing the power of the marketplace to effect change, many environmental advocates willingly partner with industry, offering useful guidance and expertise.

18 NEARLY EVERYONE IS A CORPORATE STAKEHOLDER. No longer confined to just customers, employees, and investors, publics of all stripes are now corporate stakeholders:



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environmentalists, educators, and children – even the unborn.

19 AUTHENTICITY. It’s not enough to slap on a recycling logo or make a biodegradability claim. Brands viewed as the most genuine integrate relevant sustainability benefits into their products. That’s why HSBC and Stonyfield Farm aim to reduce the carbon impacts of their operations.

20 KEEP IT SIMPLE. Plato was an environmentalist: “Simplicity is elegance.” Today’s consumers are cutting out the needless purchases, and getting rid of the gadgets and gizmos that don’t add value to their lives.

GREEN MARKETING STRATEGIES

Marketing literature on greening products/ firms builds on both the societal and social marketing research. Societal marketing implies that organizations (governments, businesses and nonprofits) need to determine the needs of target markets and to deliver the desired satisfactions in a way that enhances the consumer’s and the society’s well being. Social marketing focuses on designing and implementing programs that increase the acceptability of a social idea, cause, or practice in (a) target group(s) (Kotler, 1994).

Traditionally, marketers focus on individual needs for designing/marketing products to best serve these needs. This approach is predicated on two assumptions. First, individuals are motivated by the promise that products will satisfy their needs at outlays acceptable to them. Second, individual actions do not have significant externalities (the divergence between public and private costs/benefits), positive or negative. The presence of externalities often instigates actions from the nonmarket environment, mainly in the form of governmental regulations.

Unlike traditional marketers, social and societal marketers seek to persuade consumers to alter their behaviours that have significant externalities. However, these behavioural modifications may not directly/sufficiently benefit consumers or the benefits may also be no excludable.

In addition, social marketing literature suggests that consumers’ incentives may be eroded if they believe that their actions alone may not enhance the community’s welfare (Weiner and Doescher, 1991). Thus, the challenges for social/societal marketers are complex. Three such challenges – the role of incentives and structural factors, information disclosure strategies and greening products versus greening firms – are examined below.

THE ROLE OF INCENTIVES AND STRUCTURAL FACTORS

Drawing insights from the political economy literature discussed previously, marketing literature debates the relative efficacy of individual-level sacrifices (direct costs) versus collective sacrifices (indirect costs). Instead of individual-level sacrifices (paying a premium for green products or altering life styles to lessen the burden on the environment), from which consumers can opt out, some social marketers favour collective sacrifices or indirect costs, from which individuals cannot opt out (Weiner, 1993). It is predicted that by providing new institutional contexts, such collective sacrifices will persuade consumers to change their lifestyles. If the objective is to reduce emissions of greenhouse gases, collective sacrifices could be manifest as higher taxes (energy tax), stringent standards (residential building codes, automobile fuel efficiency standards) or some other collective restrictions that impose cost on or potentially change lifestyles of many people. In addition to mitigating collective action dilemmas,



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collective sacrifices provide consumers with greater levels of confidence that their actions will make a difference. One must note, however, that opting out from individual-level sacrifices may not be the only way for consumers to express their preferences. As the public policy literature suggests, individuals signal their preferences for a policy through ‘exit, voice, and loyalty’ (Hirschman, 1970). If they cannot ‘exit’ due to the imposition of collective sacrifices, consumers may seek to voice their preferences in the nonmarket arenas (see the previous discussion on stakeholder and institutional theories). Marketers need to correctly identify consumers’ propensities for the three routes at different value/price levels and accordingly design/market their products.

INFORMATION DISCLOSURES

Green marketing could be viewed as a subset of information disclosure strategies available to both managers and policymakers. Such disclosures can take place at the industry level (industry codes), firm level (annual environmental reports), the facility level (TRI program) and/or the product level (labels). Information disclosures could be voluntary (perhaps in response to market and/or nonmarket pressures) and/or required by law. Mandatory disclosures seek to ensure that adequate and standardized information is available to stakeholders/consumers, who then have the opportunities to compare the levels and the quality of greenness across products/ firms. Firms could seek to increase the credibility of disclosed information through internal, second-party or third-party audits.

GREENING PRODUCTS VERSUS GREENING FIRMS

This paper has discussed whether and how information on greenness impacts consumer decision making. This assumes

that consumers purchase products primarily based on products’ attributes. However, in some other cases, firm-level attributes (greenness of processes and systems) may be important for developing promotional strategies. Perhaps consumers want green products from green firms. From a managerial perspective, if brand attributes are more salient, firms should invest in greening products, but if corporate images are more important, focusing on firm-level processes/ systems is desirable.

Consumer goods companies, such as General Mills, Unilever, and Procter and Gamble, focus their communication on their brands and the benefits they deliver. This paper is not arguing that such brand-focused firms ignore their corporate image. They do not.

GLOBAL SCENARIO OF GREEN MARKETING

According to Paul Stoneman, financial incentives are necessary if the market for green products is to improve and grow.

Consumers in the United States are expected to double their spending on green products and services in the next year to an estimated $500 billion, according to an annual consumer survey by Landor Associates.According to market researcher Mintel, about 12% of the U.S. population can be identified as True Greens, consumers who seek out and regularly buy so-called green products. The European Commission's new "Green Package" of legislation on climate change and renewable energy represents a significant potential opportunity for European utilities, according to a report released by The Brattle Group and Trilemma UK. The Green Package sets targets that represent a step change in the energy market: save 20% of energy, increase the share of



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renewable energy to 20%, and cut greenhouse gas emissions by at least 20%, all by 2020.

According to Mintel's report, 66% of consumers in United States do not buy green products because of high cost, while 34% say there is lack of availability of green products in the market. This shows the huge potential for untapped market and customer demand and requirement for eco-friendly products which the companies can exploit for capturing the market share and thereby enhancing the profitability and sustainability of the organization in the global competitive scenario. Global Companies like Federal Express has taken up several initiatives that help to protect the environment including greenhouse gas reduction, renewable energy and noise reduction, recycling and using alternative fuels in its own transportation fleet for increasing their accountability towards the environment and the society as a whole. Businesses have an impact on the environment as a whole. Plantation and cultivation activities taken up by Intel India is an example of socially responsible firms contributing to preservation of environment. Recycling used products also acts as a step towards minimizing wastes. Many other firms are contributing to conservation of environment through Biodiversity, producing environmentally friendly products, conservation of energy, water and natural resources, climate protection, maintenance of schools, roads, parks, providing assistance for upliftment of the rural sector and the underprivileged, and so on. The Kyoto Protocol is an example of societies coming together to discuss climatic changes issues so that some solutions get incorporated into the negotiating process to create a new agreement that would come into effect 2012.

INITIATIVES TAKEN UP BY BUSINESS ORGANISATIONS TOWARDS GREEN MARKETING:

India is growing at 9% annually and expected to double its energy consumption between 2005 and 2030, is under pressure to take action for providing clean environment for all future generations to come.

Many Indian companies have come forward for the cause of environmental concerns and issues requiring immediate attention like: global warming, Water and Air pollution, E-waste.

NTPC Limited has decided to allocate 0.5% of distributable profit annually for its "Research and Development Fund for Sustainable Energy," for undertaking research activities in development of green and pollution free technologies.

In India, around 25% of the consumers prefer environmental-friendly products, and around 28% may be considered healthy conscious. Therefore, there is a lot of diverse and fairly sizeable untapped segment in India which green marketers can serve through offering eco-friendly products for profitability and survival in the era of globalization.

For example, Mahindra Group has formally announced the launch of project Mahindra Hariyali in which 1 million trees will be planted nation-wide by Mahindra employees and other stakeholders including customers, vendors, dealers, etc. by October 2008. Of these, 1, 50,000 trees have already been planted by Mahindra employees since September 2007.

Nokia's environmental work is based on life cycle thinking. This means that we aim to minimize the environmental impact of our products throughout our operations,



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beginning with the extraction of raw materials and ending with recycling, treatment of waste, and recovery of used materials.

CONCLUSION

In the short term, business solutions—the enlightened self-interest of commercial enterprises finding new ways to incorporate technology and carry on exchanges with greater concern for heretofore unpriced environmental goods and services—offer particular promise. Green marketing and the promotion of responsible consumption are part of that solution.

With the threat of global warming looming large, it is extremely important that green marketing becomes the norm rather than an exception or just a fad. Recycling of paper, metals, plastics, etc., in a safe and environmentally harmless manner should become much more systematized and universal. It has to become the general norm to use energy-efficient lamps and other electrical goods. Consumers, industrial buyers and suppliers need to pressurize effects on minimize the negative effects on the environment-friendly. Green marketing assumes even more importance and relevance in developing countries like India.

REFERENCES

INTERNET RESOURCE

Federal Trade Commission Bureau of Consumer Protection, Available from http://www.ftc.gov .

http://www.referenceforbusiness.com/encyclopedia/Gov-Inc/Green-Marketing.html#ixzz1E06TQ8Mf

http://www.pollutionissues.com/Fo-Hi/Green-Marketing.html#ixzz1E06XYRNg

www.greenmarketing.net/stratergic.html

www.epa.qld.gov.au/sustainable_ industries

www.wmin.ac.uk/marketing research/marketing/greenmix.html

http://www.coolavenues.com

http://en.wikipedia.org/wiki/Green_marketing

BOOKS

Polonsky, M. J. "An Introduction to Green Marketing." Electronic Green Journal 1, no. 2 (November 1994).

Prakash, A. (May2002) “ Green Marketing, public policy and managerial strategy”

Business Strategy and The Environment, Bus.Strat.Env.II, pg 285-297.

Frankel, C. 1992. “Blueprint for green marketing”, marketing executive review,2(5):pg22-23.

Freman, R.E and J. Liedtka.1991.” Corporate Social Responsibility: “A Critical Approach.” Business Horizons 34(4):pg 92-98.

Carlson, Les, Stephen Grove and Norman Kangun (1993),” A Content Analysis of Environmental Advertising.” Journal of Advertising Vol- 22(3), pg 27-38.

The ICFAI Journal of Environmental Economics, Vol-IV, No4, Nov.06.

“Down to Earth”, March 15, 2007 issue.



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Saxena Rajan(2006,3rd Edition), Marketing Management, New-Delhi, Tata McGraw-

Hill Publishing Co. Ltd.

Ottman J.A (1998, 1st Edition), Green Marketing: Opportunity for Innovation, NTC-McGraw- Hill, 1998.

Fuller D. 1999. Sustainable Marketing: Managerial– Ecological Issues. Sage: Thousand Oaks, CA. Greenpeace. 1994. The Greenpeace Book of Greenwash. Greenpeace International: Amsterdam.

Hart SL, Ahuja G. 1997. Does it pay to be green? Business Strategy and the Environment Henion KE, Kinnear TC (eds). 1976. Ecological Marketing.

Mitchell RK, Agle BR, Wood DJ. 1997. Towards a theory of stakeholder salience. Academy of Management Review

Osterhus TL. 1997. Pro-social consumer influence strategies: when and how do they work? Journal of Marketing

Peattie K, Ratnayaka M. 1992. Responding to green movement. Industrial Marketing Management

Phillips LE. 1999. Green attitudes. American Demographics

Vogel D. 1996. Kindred Strangers: the Uneasy Relationship between Politics and Business in America. Princeton

University Press: Princeton, NJ. Walley N, Whitehead B. 1994. It’s not easy being green.

Harvard Business Review May-June: 46–51.

Weiner JL. 1993. What makes people sacrifice their freedom for the good of their community? Journal of Public Policy and Marketing 12: 244–260.

Weiner JL, Doescher. 1991. A framework for promoting cooperation. Journal of Marketing 55: 387. Wilson JQ. 1980. The Politics of Regulation. Basic Books: New York.

Wood DJ, Jones RE. 1995. Stakeholder mismatching: a theoretical problem in empirical research on corporate social performance. The International Journal of Organizational Analysis 3: 229–267.



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A STUDY OF ISSUES AND CHALLENGES OF RETAIL FORMATS AND RETAIL

ENTREPRENEURSHIP IN INDIA

MS. GARIMA SHARMA*; DR. PARUL KHANNA**

*Singhania University Rajasthan **IMT Faridabad

ABSTRACT The retail market is becoming more segmented with retail formats focusing on the needs of particular consumers groups. The results are the development of a more complex retail environment. The traditional forms of independent owned small business and co-operatives have lost significant market share to certain extent. In developed economics, the retail sector is now characterized by large scale multiple chains run by powerful and sophisticated organizations implementing management skills. In the article we have discussed about organized and unorganized retail formats and their categories found in India. Since there is competition in the market, the article covers the retailer strategies which are being practiced by them and also covers the actions taken by Indian retailers in changing environment. KEYWORDS: Retail, Retail Formats, Organized Retail, Unorganized Retail, Retail Strategies.

INTRODUCTION

Retailing occupies a pre-eminent position in the economics of all modern societies as it is often stated that only constant in retailing is change and it is certainly true that the pace of development within retailing appears to be accelerating. More than ever before in the opening of 21st century there is evidence of new forms of retailing, in part in response to demand from increasingly sophisticated consumers. The retail market is becoming more segmented with retail formats focusing on the needs of particular consumers groups. The results are the

development of a more complex retail environment. Where once it was manufacturer’s brand, that were all important, the 1990s have been the power of retailers brands challenging the position of suppliers. The traditional forms of independent owned small business and co-operatives have lost significant market share. In developed economics, the retail sector is now characterized by large scale multiple chains run by powerful and sophisticated organizations like super bazaars and Kendriya Bhandar in New Delhi, Sarkari Bhandar in Mumbai, Spencer plaza, Niligiries, etc. As progress



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moved across America in the late 1800’s and early 1900’s millions of bright men and women opened main street stores. The first half of the twentieth century saw the arrival and the Grover of large retailer giants. This new group of discounts stores redefined value and varieties with low price and wide inventories. Though the arrival of super markets in India was a bit late but they are fast becoming the rang amongst the retail enthusiasts. There are several obvious reasoned for the burgeoning growth of the organized retailer formats. One, which is very obvious, is that earlier assembling large parts of land in locations, which offered good connectivity to the rest of the city, was a difficult task.

1. ORGANISED AND UNORGANISED RETAILING

Organised or unorganized retailing in India is more defined by the retail formats. There are some formats which come under unorganized retailing and the others come under organized retailing. In India (as defined earlier) Mom and Pop Stores (Kirana Shops) and Chai and Paan Shops, Haats, (A series of small shops selling the things to satisfy day to day needs) Melas (These are occasional and in the form of group of lots of shops selling many different types of products usually FMCG and other days to day requirement products like food, Groceries, apparels etc) and Mandis (Mandis are sepcialised for a particular type of product, In India Mandis are very popular for Vegetables etc.) are considered the unorganized formats of retailing.

2. THE FOLLOWING KINDS OF RETAIL FORMATS ARE FOUND IN INDIAi

MOM-AND-POP STORES

These are generally family-owned businesses catering to small sections of society. They are small, individually run and handled retail outlets.

CATEGORY KILLERS

Small specialty stores have expanded to offer a range of categories. They have widened their vision in terms of the number of categories. They are called category killers as they specialize in their fields, such as electronics (Best Buy) and sporting goods (Sport Authority).

DEPARTMENT STORES

These are the general merchandise retailers offering various kinds of quality products and services. These do not offer full service category products and some carry a selective product line. K Raheja's Shoppers Stop is a good example of department stores. Other examples are Lifestyle and Westside. These stores have further categories, such as home and décor, clothing, groceries, toys, etc.

MALLS

These are the largest form of retail formats. They provide an ideal shopping experience by providing a mix of all kinds of products and services, food and entertainment under one roof. Examples are Sahara Mall, TDI Mall in Delhi.

SPECIALTY STORES

The retail chains, which deal in specific categories and provide deep assortment in them are specialty stores. Examples are RPG's Music World, Mumbai's bookstore Crossword, etc.

DISCOUNT STORES

These are the stores or factory outlets that provide discount on the MRP items. They focus on mass selling and reaching



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economies of scale or selling the stock left after the season is over.

HYPERMARKETS/ SUPERMARKETS

These are generally large self-service outlets, offering a variety of categories with deep assortments. These stores contribute 30% of all food and grocery organized retail sales. Example: Big Bazaar.

CONVENIENCE STORES

They are comparatively smaller stores located near residential areas. They are open for an extended period of the day and have a limited variety of stock and convenience products. Prices are slightly higher due to the convenience given to the customers.

E-TAILERS

These are retailers that provide online facility of buying and selling products and services via Internet. They provide a picture and description of the product. A lot of such retailers are booming in the industry, as this method provides convenience and a wide variety for customer. But it does not provide a feel of the product and is sometimes not authentic. Examples are Amazon.com, Ebay.com, etc.

VENDING

This kind of retailing is making incursions into the industry. Smaller products such as beverages, snacks are some the items that can be bought through vending machines. At present, it is not very common in India.

Traditionally three factors have plagued the retail Industry:

1. UNORGANIZED

Vast majority of 12 million stores are small “Mom and Pop Stores”.

2. FRAGMENTED

Mostly small individually owned business average size of outlets equal 50 Sq. Ft. through the India has the highest number of retail outlets per capita in the world, the retail space per capita at 25 Sq. Ft. per person amongst the lowest.

3. RURAL BIAS

Nearly 2/3 of the stores are located in rural areas. Rural retail industry has typically two forms “Haats” & “Melas”. Haats are the weekly market serve group of 10-50 villages and sell day-to-day necessities. Melas are longer in size and more sophisticated in terms of the goods sold (like T.V.)

3. MALLS AND ORGANIZED RETAIL

There was no consumer culture there were limited brands and people bough what was available. There were no ‘shopping areas’. The retail industry lacked trained manpower. It was also difficult to compete with the unorganized sector because they operated with minimal labor costs and overhead. Tax laws and government restriction added to the problem.

Liberalization is changing all this. The customer has evolved. He has more spending power, it better educate, and most importantly, exposed to brands and products through television and foreign trips. The Indian customer now has the desire to acquire. Personal consumption is on the rise. Customer segments, already drivers, have been sub-divided with joint families giving way to nuclear families, and the increasing number of working couples. These changes, along with



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increased availability of retail space and qualified manpower, have had a positive impact. New players are now entering the market. Instead of a retail evolution, there is a retail revolution in India.

Retailing in Indian is gradually inching its way toward becoming the next boom industry. The total market of organized retiling in India is around Rs.20,000 crores and will grow eight-fold in the next decade. Chain stores have replaced one store management. Supermarkets have replaced the grocery stores, market places have given way to MALLS, and hospitals have become hospital chains. Fast food is the favored eatery and packed products have become the order of the day, the whole concept of format and consumer buying behaviour, ushering in a revolution in shopping in Indian.

The emerging purchasing power of the urban educated middle class and the growing work culture of the working woman (more and more woman turning to corporate jobs), has changed the buying habits of families, who are experiencing a growth in income and dearth of time. Rising incomes have led to increasing demand for better quality products while lack of time has led a demand for convenience and service. Consumers have started caring about where they would like to shop, be it multi-brand outlets, excusive stores or malls with entertainment facilities. Today’s consumers are not only more aware of the development around them but are also more demanding. They want superior quality at an affordable price and they want it instantly. Thus, we see there is a strong trend in favour of one-stop shops like malls and supermarkets. A Mall appeals because of its pleasant surrounding, better product display and the availability of a wide variety of brands. The store has accurate measure controls and allows economies of scale, a shopper also has the option of shopping for all

household necessities under one rood. In the future, with more dual income families, the consumer ability to spend will increase, but at the same time. It is predicted that the time available for shopping will go down. In such a scenario, the retailers will have to increasingly develop shopping as an experience and at the same time, the more successful ones will be those that provide faster service. Malls, in particular are contributing hugely to the development of organized retail market. Malls are coming up both within cities and at the outskirts vowing to create destinations that will attract thousands of customers every day. India is experiencing a “mall boom”. Shopping malls are set to one of the most visible faces of the Indian retail scene in the next few years.

New retail chains and formats are transforming the shopping experience of India’s increasingly prosperous consumer class for the better. In the last decade, the Indian retail landscape has witnessed a fast pace of experimentation in formats. For selecting an appropriate format, retailers have taken recourse for careful segmentation at the geographic, customer as well as product level. Food World, with its successful supermarket format, happily coexists with the ubiquitous Kirana stores. The raising demand for more choice in terms of brands and prices culminated in the evolution of multi-brand outlets. Corporate entered the retailing arena pioneering the concept of a hypermarket (e.g. Giant and Big Bazaar). While the Crossroads mall concept ushered in the era of shoppertainment, the idea of a three-screen multiplex (Prasads at Hyderabad) with multilevel shopping, food court and video games for children, has taken the country by storm. On the other hand Tanishq and Pantaloons have demonstrated the potential of ‘specialty’ stores in India.



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Universally it is accepted that format management is the central issue for retailers. As customers become increasingly sophisticated and competition intensified, the life cycles of traditional retail formats are shortening. Only those retailers who can achieve an appropriate balance between rejuvenating the existing formats and creating new and innovative ones will succeed in the long run. New opportunities open up only because of change. Social dynamics lead to emergence of new customer groups as well as new purchase opportunities. To grab piece of this hot cake, retailers have to constantly foresee the impending change and plan accordingly.

Looking at the shopping behaviors of the consumers there can be a powerful trigger to drive creating thinking about new formats. For example, Kolkata, the cultural – capital of India, is known for its intellectual ambience.

4. REGISTERED RETAILERS IN INDIA

Registered retailers are basically organized retailers. These are those who have their registered shops to trade and deal. Further they pay proper taxes and mainly they are the part of retail chain. Indian metro cities have witnessed a significant growth in and expansion of organized retailers but due to global meltdown they have become very much careful in opening the stores.

City No of Retailers City No of Retailers Delhi (807) Lucknow (224) Mumbai (571) Pune (221) Indore (238) Nagpur (155) Chennai (440) Coimbatore (200) Hyderabad (364) Kolkata (389) Raipur (115) Coimbatore (200) Tiruchirappalli (48) Vellore (47) Secundrabad (113) Vijayawada (90) Gaya (52) Patna (99) Mangalore (60) Tumkur (49) Indore (238) Jabalpur (49) Bhilwara (50) Bikaner (49) Jodhpur (91) Udaipur (85) Ahmedabad (258) Gandhinagar (48) Rajkot (51) Surat (95) Calicut (90) Kochi (277) Ahmadnagar (48) Kalian (50) Nashik (102) Pune (221) Pondicherry (50) Agra (32) Noida (94) Jhansi (49) Varanasi (55) Gurgaon (101) Ahmedabad (258) Jamshedpur (51) Ludhiana (173) Ranchi (51) Bangalore (677) Amritsar (95) Jalandhar (50) Ludhiana (173) Chennai (440) Salem (50) Madurai (98) Hyderabad (364)



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Dehra Dun (46) Hubl Dharwar (41) Visakhapatnam (124) Mysore (51) Panaji (49) Gwalior (50) Bhopal (206) Ajmer (39) Bhubaneswar (43) Kota (51) Jaipur (270) Trichur (111) Chandigarh (223) Junagadh (51) Jamnagar (51) Alleppey (49) Vadodara (147) Thiruvananthpura (157) Quilon (103) Nagpur (155) Mumbai (571) Ulhasnagar (52)

Thane (52) Ghaziabad (49) Allahabad (50) Lucknow (224) Kanpur (129) Source: www.webdunia.com

5. RETAIL MANAGEMENT STRATEGIES

RIGHT POSITIONING

The effectiveness of the mall developer's communication of the offering to the target customers deter mines how well the mall gets positioned in their minds. At this stage, the communication has to be more of relative nature. This implies that the message conveyed to the target customers must be effective enough in differentiating the mall's offering from that of its competitors without even naming them. The message should also clearly convey to the target audience that the mall offers them exactly what they call the complete shopping-cum-entertainment point that meets all their expectations. The core purpose is to inform the target customers about the offering of the mall, persuade them to visit the mall and remind them about the mall. The mall developer can create awareness about the offering among the target customers in a number of ways. Various communication tools available to the mall developer for this purpose may include advertising, buzz marketing (WoM), celebrity endorsement, use of print media, press releases and viral marketing .Once the message is being

conveyed through these channels, the mall developer must add a personal touch to his message by carrying out a door-to-door campaign in order to reinforce the message.

EFFECTIVE VISUAL COMMUNICATION

Retailer has to give more emphasis on display visual merchandising, lighting, signage’s and specialized props. The visual communication strategy might be planned and also be brand positioned. Theme or lifestyle displays using stylized mannequins and props, which are based on a season or an event, are used to promote collections and have to change to keep touch with the trend. The merchandise presentation ought to be very creative and displays are often on non-standard fixtures and forms to generate interest and add on attitude to the merchandise.

STRONG SUPPLY CHAIN

Critical components of supply chain planning applications can help manufacturers meet retailers' service levels and maintain profit margins. Retailer has to develop innovative solution for managing the supply chain problems. Innovative solutions like performance



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management, frequent sales operation management, demand planning, inventory planning, production planning, lean systems and staff should help retailers to get advantage over competitors.

CHANGING THE PERCEPTION

Retailers benefit only if consumers perceive their store brands to have consistent and comparable quality and availability in relation to branded products. Retailer has to provide more assortments for private level brands to compete with supplier's brand. New product development, aggressive retail mix as well as everyday low pricing strategy can be the strategy to get edge over supplier's brand.

6. PROPOSED MODEL IN INDIAN CONTEXT

Indian consumers today are more global with their thinking, which they have experienced with the changing retail scenario. The Indian consumer is very cost conscious, evaluating every rupee spent. It is therefore important for retailer to offer a price advantage as well as strong Private label programme to attract consumer. Retailer should keep pace with consumers to not only find out what they want today, but to find out what they will want tomorrow. India should look for new models in retail that would work in Indian context. With the changing needs, we propose the following new model which can be used in India.

7. ACTIONS BY INDIAN RETAILERS IN CHANGING ENVIRONMENT

PRICE DECISIONS

Rapidly rising food prices is forcing food and grocery retailers to take a hit of up to 50 per cent on their margins in pulses and groceries. Retail consultants said food and grocery retailers may see a drop of up to 20 per cent in their volumes if prices continue to shoot up, forcing shoppers to curb spending or downtrade in discretionary items. Food and grocery retailers normally make net margins of 4 per cent. Food Bazaar (One of the largest food retailers of India) is also pushing its combination pricing aggressively to attract customers, where two products such as

rice and oil are being bundled, so that customers can take the advantage of lower prices of one item even if the first item is expensive.Retailers accepts in India that modern retail prices were much more competitive during high inflationary conditions than kiranas and mandis because they do not alter prices drastically.

COMING TOGETHER

Cut-throat competition in India’s organised retail industry seems to have given way to harmony, with top players such as the Future Group, Aditya Birla Retail, Spencer’s and Reliance Retail coming together to cut operational costs and improve margins.

Customer Identification

Need

Wants

Desire

Retailers

Time

Value

Customer Satisfaction



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The retailers have formed a rainbow coalition that will align their sourcing operations and share private labels, logistics, warehouses and hiring details on a transactional payment basis, said top executives with some of the largest players in the sector. The move mirrors a similar step taken by manufacturing firms in the late 90s to share markets and cut costs.

Collaboration is the way forward in retail. Retailers are learning from each other and sharing infrastructure and resources.

Such a joint initiative would also need to address nimble mom-and-pop stores that are swifter in merchandising and understanding local nuances and requirements. Modern formats with their regional and central sourcing structures typically are unable to compete in such a s In grocery, burdened by consumer expectations of more frills compared to no-frills kirana shops, modern formats had to shell out 30% higher costs on rent, energy, bar codes, air-conditioning, bright lights and other aspects. Also, lifestyle retailers were forced to mark down prices to move volumes as consumers traded down to more affordable brands in a challenging environment. The collaboration also has to address issues such as unused fit outs essentially furniture or design and completion of shell space that instead of lying unattended in warehouses can be sold to fellow retailers. Then there is the issue of modern retailers who are keen to promote their own private labels. Under the new concept, retailers may have to sell such labels to each other.

CHANGING TECHNOLOGY

The companies came with lot of changes in the technology and delivery of the products and services as per the changing business environment. Online marketplace and footwear retail chain bigshoebazaar.com is planning to launch

an online cash-and-carry portal for wholesale footwear business as part of its plans to become a Rs 100 crore company by 2012.

CONCLUSION

The retail sector in India is witnessing a huge revamping exercise as traditional markets make a way for new formats such as departmental stores, hypermarkets, supermarkets and specialty stores. Western style malls have begun appearing in metros and second-rung cities which introduced the Indian consumer to a shopping experience like never before. Rated the fifth most attractive emerging retail market, India is being seen as a potential goldmine. It has been ranked 2nd in Global Retail Development Index of 30 developing countries drawn up by A. T. Kearney. Government of India has also opened the door for the retailing giants to enter into the markets. Many foreign investors are also showing keen interest to enter into the Indian market. With the flow of FDI, retail sector will have to see a many changes in the coming years. In their preparation to face fierce competitive pressure, Indian retailers must come to recognize the value of building their own stores as brands to reinforce their marketing Positioning, to communicate quality as well as value for money. Sustainable competitive advantage will be dependent on translating core values combining products, image and reputation into a coherent retail brand strategy. Retailers certainly need to innovative in designing the value preposition and deciding the format to deliver that to the customer. It is not all about deciding the format but all about serving the Consumer better, faster, and at less cost. The need of the hour for Indian retailers is to develop systems and processes keeping the unique nature of the country in mind. In the retail trade, change is the only constant; survival



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in retail will depend on the ability to adapt to these changes.

REFERENCES

1. Berman, Barry and Joel R. Evans (2001). Retail Management: A strategic Approach 8th ed. Englewood Cliffs, NJ: Prentice Hall

2. Levy Michael J (2002). Retail store planning and design manual. 2nd edition Cicninatti, OH: ST publications, Inc.

3. IMAGES-KSA Technopak INDIA RETAIL REPORT 2005

4. P. Narayana Reddy (2004), “Efficiency benefits pass on to consumers: New development in retail market environment in India, Indian Journal of Marketing, pp 23-25

5. Rahul and Rahil on Retail (STVP 2007-002) June 12, 2007

6. Sahai, Subodh Kant., (2007) India Retail forum,September 4,5,6.

7. P. Narayana Reddy (2004), “Efficiency benefits pass on to consumers: New development in retail market environment in India, Indian Journal of Marketing, pp 23-25

8. Agarwal, M.L. (1989), “Distribution Marketing for profits of productivity”, Journal of Product and Brand Management, pp 139-142

9. VV Gopal (2005), “Professionalism in retail management “, The ICFAI Journal of Service Marketing, pp14-18

10. Madona Devasahahayam (1998), “A big deal” Journal of Management.

11. Arvind Singhal, KSA Technopak (2000), “Changing gears-retailing in India”. Economics Times.

12. Raju M Rathod (2005), “Challenges and strengths of supermarket, Indian Journal of Marketing, pp28-30.

13. Rajiv Benerjee (2003), “Changing customers behavior impacting retail growth, Business world”.



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A STUDY ON BRAND LOYALTY OF MLM BRANDS

DR. ISITA LAHIRI*; SHRI MRINAL KANTI DAS**

*Department of Business Administration University of Kalyani West Bengal- 741235

**Centre for Management Studies JIS College of Engineering (Affiliated to WBUT Approved by AICTE)

ABSTRACT The concept of Multi-level Marketing (MLM) or Network Marketing is not very old in India. In India this concept was first introduced by Amway in mid 90s. Since then many companies have ventured into the MLM practices to have an exponential growth. MLM brands are attempting to acquire a larger share of other manufacturer brands. This paper is an endeavor to study brand loyalty of MLM brands as well as Non-MLM brands and underlying factors that consumers want to get from the purchase of MLM brands. The results of the study are based on field survey of 400 respondents selected from Kolkata and its outskirts by using convenience sampling technique. The study brings out several useful findings and the more important among them are – customers of MLM brands are loyal than that of Non-MLM brands; and factors behind selection of MLM brands are availability, quality, price and promotion. This study also established that there is no relationship between users of brands and occupation of users. KEYWORDS: Multi-level Marketing, Brand loyalty, Factors influencing choice of MLM brand.

INTRODUCTION

One of the fastest-growing forms of marketing is direct marketing. According to the estimates of the Direct Marketing Association (DMA) direct marketing sales will grow 6.6% annually through 2012, compared with a projected 5.7% annual growth for total U.S. sales. These figures prove that direct marketing plays a pivotal role in the economic development of a country. Network Marketing or Multi-level

Marketing (MLM) falls under direct marketing where product reaches the final customer from manufacturer via distributors. In network marketing no formal marketing infrastructure is required. Network marketing is the result of overcrowding of products in the shelves of the retailer. Globalization of the markets has further facilitated the growth of network marketing. Modern customer looks for convenience in shopping and



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getting the product delivered in the comfort of his home. Network marketing companies have exploited this opportunity by catering core customer value to its loyal customers.

To know the sustainability of network marketing this study measures how loyal the customers of network marketing companies are and to know the reasons behind customers preference of MLM brands. For this study, consumer survey was undertaken with 400 consumers in Kolkata and its outskirts. This study also reveals the number of customers using MLM brands out of total population and whether any relationship exists between users of brands and occupation.

EXISTING LITERATURES

Laudon (2004) has highlighted that network companies are able to cut down expenditure associated with advertising and other overheads. The costs of distribution and retailing often run at 70% or more of the gross turnover of conventional business operations. So MLM Companies can allocate these savings to the distributor network for marketing and servicing the customers on behalf of the Network Company.

The study of Saifuddin et al. (2006) revealed the social scenario and demographic characteristics of the members, distributors involved in the MLM practices in Bangladesh. This study focused on the positive outcome that MLM companies open up new avenue of earning opportunity. The researchers identified numerous other predictors that may also be important in addition to social scenario and demographic characteristics. Thus it encourages research examining the problems and opportunities available, motivations for involvement, economic impact of such practices on lifestyle and on economy of Bangladesh as a whole.

Lahiri and Das (2010) appeared with an observation that relationship performs an important role in motivating people to join network marketing. They concluded that experience as distributor in terms of the time period engaged in the business emphasizing nature of relationship exploitation and the more experience may increase the likelihood of approaching friends and colleagues than relatives. This study also revealed that brand names, not the age-groups, are important for marketing shampoo but for marketing conditioner age groups play positive role than brand name.

Lahiri and Das (2010) have developed a theoretical framework of network marketing in their study. They have evaluated and analyzed the performance of some successful network marketing companies to assess the market opportunity not only in the developed countries but also in the developing countries with facts and figures. Their study shows positive growth of network marketing in Asia, but not at par with other countries of the world. They concluded that in India network marketing companies can also exploit opportunities by educating prospect through proper communication.

OBJECTIVES OF THE STUDY

The following are the specific objectives of the study:

1. To study whether there is any relationship between users of brands and occupation of users.

2. To measure the brand loyalty of MLM brands and Non-MLM brands.

3. To determine the underlying factors consumers seek from the purchase of MLM brands



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METHODOLOGY

The study undertaken is basically empirical in nature and was carried out on the different areas of Kolkata and its outskirts with 400 respondents who are consumers. Purposive sampling technique was resorted to for selecting consumers of different areas through personal interview. A structured questionnaire was prepared to know whether there is any relationship between users of brands and occupation, to measure brand loyalty and to determine the underlying factors that consumers seek from the purchase of MLM brands. Chi-Square Test is used to know the relationship between brands and occupation. For measuring brand loyalty Preference-behaviour model with last five purchases was administered. To know the

factors behind purchasing MLM brads 14 questions were put in the questionnaire and the users of MLM brands were asked to indicate their degree of agreement with these on a seven point scale (1 = strongly agree, 7 = strongly disagree). Factor analysis was conducted using SPSS 10 and Chi-Square Test was conducted using Excel.

ANALYSIS, RESULTS AND DISCUSSION

I. CHI-SQUARE TEST

H0: There is no relationship between users of brands and occupation of users.

H1: There is significant relationship between users of brands and occupation of users.

TABLE 1: OBSERVED FREQUENCIES

User of Brands Occupation

Total Studen

ts Govt.

Employee Private

Employee Businessm

an Housewi

fe

MLM brands 13 8 19 11 35 86

Non-MLM brands 76 21 86 24 107 314

Total 89 29 105 35 142 400

TABLE 2: EXPECTED FREQUENCIES

User of Brands Occupation

Total Students Govt. Employee Private Employee Businessman Housewife

MLM brands 19.14 06.24 22.58 7.53 30.53 86

Non-MLM brands 69.86 22.76 82.42 27.47 111.47 314

Total 89.00 29.00 105.00 35.00 142.00 400



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TABLE 3: DATA

Level of Significance 0.05

Number of Rows 2

Number of Columns 5

Degrees of Freedom 4

TABLE 4: TEST RESULTS

Critical Value 9.487729

Chi-Square Test Statistic 6.741352

p-Value 0.150204

Accept the null hypothesis

The results of Chi-Square test accepts null hypothesis i.e., relationship is not there between users of brands and occupation of users. It indicates occupation does not help in purchasing MLM brands. From the observed frequency it is also seen that out of 400 respondents only 86 are the users of MLM brands and most them are housewives. It can be concluded that MLM companies are able to convert 21.50% of total respondents into their customer.

II. BRAND LOYALTY MEASUREMENT

The model used for this study has improvised Preference-behaviour model by taking last five purchases and seems more effective as a consumer’s last purchase may have been influenced by non availability of his preferred brand and, in turn, may provide a faulty loyalty measure. This model considers both the hard core loyals and potential switchers. Hard core loyals are those who always buy their most preferred brand. The other consumers are

potential switchers. Hard core loyals have a positive attitude toward the brand and buy their preferred brands. Potential switchers, on the other hand, purchase a brand but they may prefer another brand. In this model preference is considered as a measure of behavior. This model is developed with ‘most preferred brand’ and ‘number of purchases’.

An examination of the diagonal entries measures loyalty of consumers. The diagonal entries are the number of consumers who purchase their preferred brands. If the total number of consumers is compared with those who prefer the brand, a proportion of the preferences that have been converted into sales can be obtained. This proportion is termed as gravity that indicates the power of the brand to maintain consumers who prefer it. A brand with high gravity represents consumers who are very loyal to their favorite brand. A high gravity ratio indicates that consumers regard the brand as desirable, available, and a good value, a brand that is relatively resistant to competitive prices or



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promotions. A different perspective on the market is also revealed by comparing the diagonals with the total number of purchases. This ratio represents the proportion of sales that come from consumers who identify the brand as the most preferred and is termed as focus. A brand with high focus gets sales mostly from consumers who prefer it. Brands with low focus ‘steal’ customers from other brands.

In this study six Non-MLM brands (Pantene, Sunsilk, Garnier, Head & Shoulder, Clinic All Clear and Dove) and three MLM brands (Amway, Oriflame, and Avon) of shampoo are taken into consideration. An assumption of this model is that every prospect has a preferred brand. Based on survey the following table has been developed.

TABLE 5: PREFERRED BRAND BY NUMBER OF PURCHASES

Preferred Brands

Number of Purchases

TotalPantene Sunsilk Garnier Head &

Shoulder

Clinic All

Clear Dove Amway Oriflame Avon Others

Pantene 243 33 21 7 7 10 0 3 3 22 349

Sunsilk 35 271 14 8 9 8 1 4 1 16 367

Garnier 13 9 92 13 12 12 4 6 2 8 171

Head & Shoulder 10 8 13 121 20 11 2 2 2 15 204

Clinic All Clear 11 7 7 12 112 8 2 0 0 12 171

Dove 21 25 14 13 10 184 1 7 1 11 287

Amway 5 3 4 3 2 3 118 9 6 3 156

Oriflame 7 6 3 5 2 4 6 120 8 3 164

Avon 0 7 3 4 5 1 4 8 97 2 131

Total 345 369 171 186 179 241 138 159 120 92 2000

The right hand column of Table 5 indicates the number of respondents who identified each of the nine brands as the preferred brand - 349 for Pantene, 367 for Sunsilk, 171 for Garnier, 204 for Head & Shoulder, 171 for Clinic All Clear, 287 for Dove, 156 for Amway, 164 for Oriflame, and 131 for Avon. The columns of Table 5 indicate the number of purchases for each

preferred brand. Here out of the 349 who identified Pantene as their favorite brand, only 243 had purchased that brand, 33 had purchased Sunsilk, 21 had purchased Garnier, 7 had purchased Head & Shoulder, 7 had purchased Clinic All Clear, 10 had purchased Dove, 3 had purchased Oriflame, 3 had purchased Avon and 22 had purchased other brands.



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The diagonal entries in the table indicate consumers who purchased their preferred brands.

The data in Table 5 can provide considerable insight into the competition of the market. The preference measures indicate perceptions of brand quality or brand equity. In this study, Sunsilk had about 18% (367/2000) of the expressed preferences for the set of nine brands and

is, in fact, the region’s leading selling brand. On the other hand, the second leading selling brand of the nine is Pantene, which had only 17% share of preference. From table 5 it is evident that for MLM brands share of preference is not higher than that of other manufacturer brands, but MLM brands are able to create loyal customers and Table 7 is the proof of that.

TABLE 6: GRAVITY AND FOCUS RATIOS OF DIFFERENT NON-MLM BRANDS OF SHAMPOO

Non-MLM Brands Gravity (α) Focus (π )

Pantene 0.70 0.70

Sunsilk 0.74 0.73

Garnier 0.54 0.54

Head & Shoulder 0.59 0.65

Clinic All Clear 0.65 0.63

Dove 0.64 0.76

TABLE 7: GRAVITY AND FOCUS RATIOS OF DIFFERENT MLM BRANDS OF SHAMPOO

MLM Brands Gravity (α) Focus (π )

Amway 0.76 0.86

Oriflame 0.73 0.75

Avon 0.74 0.81

Another insight into the loyalty of consumers can be obtained from the study of diagonals. Gravity and focus ratios for the nine brands are presented in Table 6 and Table 7. For six Non-MLM brands,

the gravity proportions fall within a range of 0.54 to 0.74. Garnier is able to convert only 54% of its preferred customers into sales; whereas, Sunsilk converted 74%. MLM brands show high gravity which



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indicates the power of the brand to maintain consumers who prefer it.

Focus ratios are also calculated to know the proportion of sales come from consumers who identify the brand as the most preferred. In this study, again all MLM brands show high focus ratio ranging from 0.75 to 0.86. Some Non-MLM brands like Dove, Sunsilk, and

Pantene have high focus ratio. Of the nine brands, the highest focus ratio is 0.86 (Amway) and Garnier has the lowest focus ratio with 0.54.

III. FACTOR ANALYSIS

The data were captured in a spreadsheet and transported to a software statistical package (SPSS 10.0). The results of the factor analysis are shown below.

TABLE 8: KMO AND BARTLETT'S TEST

Kaiser-Meyer-Olkin Measure of Sampling Adequacy. 0.603

Bartlett’s Test of Sphericity Approx. Chi-Square 1852.550

Df 91

Sig. .000

TABLE 9: COMMUNALITIES

Initial Extraction

Q1 1.000 .952

Q2 1.000 .872

Q3 1.000 .927

Q4 1.000 .973

Q5 1.000 .947

Q6 1.000 .930

Q7 1.000 .941

Q8 1.000 .942

Q9 1.000 .720

Q10 1.000 .310

Q11 1.000 .953

Q12 1.000 .934

Q13 1.000 .922

Q14 1.000 .950

Extraction Method: Principal Component Analysis.



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TABLE 10: TOTAL VARIANCE EXPLAINED

Initial Eigen Values

Extraction Sums of Squared Loadings

Rotation Sums of Squared Loadings

Component Total % of

Variance

Cumulative % Total

% of Varianc

e

Cumulative % Total

% of Varianc

e

Cumulative %

1 4.405 31.466 31.4664.405 31.466 31.4663.950 28.214 28.214

2 3.126 22.326 53.7923.126 22.326 53.7923.273 23.381 51.594

3 2.969 21.207 74.9992.969 21.207 74.9992.968 21.202 72.797

4 1.773 12.666 87.6651.773 12.666 87.6652.082 14.868 87.665

5 .844 6.031 93.696

6 .392 2.799 96.495

7 .153 1.091 97.586

8 .139 .993 98.579

9 9.370E-02

.669 99.248

10 4.469E-02

.319 99.567

11 2.547E-02

.182 99.749

12 1.523E-02

.109 99.858

13 1.267E-02

9.050E-02

99.948

14 7.237E-03

5.169E-02

100.000


TABLE 11: COMPONENT MATRIX



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Component

1 2 3 4

Q1 -.507 .516 .629 .182

Q2 -.349 .608 .617 -5.062E-03

Q3 -.445 .576 .627 6.219E-02

Q4 .354 -.557 .650 -.340

Q5 .327 -.618 .622 -.267

Q6 .330 -.576 .649 -.260

Q7 -.343 -.423 .273 .755

Q8 -.134 -.524 .193 .782

Q9 -.618 .291 .285 -.415

Q10 .115 5.520E-02 -.523 -.140

Q11 .859 .352 .229 .196

Q12 .864 .391 .171 7.070E-02

Q13 .897 .254 .117 .194

Q14 .816 .500 8.735E-02 .161


a 4 components extracted.



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TABLE 12: ROTATED COMPONENT MATRIX

Component

1 2 3 4

Q1 -6.905E-02 .958 -9.105E-02 .147

Q2 4.906E-02 .928 -3.910E-02 -7.819E-02

Q3 -2.480E-02 .960 -6.504E-02 8.606E-03

Q4 8.302E-02 -2.675E-02 .983 2.839E-03

Q5 5.025E-02 -6.741E-02 .965 8.949E-02

Q6 7.658E-02 -2.533E-02 .957 8.457E-02

Q7 -.213 .122 5.360E-02 .937

Q8 -8.281E-02 -7.923E-02 .108 .958

Q9 -.477 .611 2.580E-03 -.346

Q10 -1.467E-03 -.389 -.297 -.265

Q11 .969 8.869E-03 .112 -3.558E-02

Q12 .946 -1.617E-02 9.859E-02 -.174

Q13 .943 -.142 .106 -2.493E-02

Q14 .961 1.141E-02 -6.779E-02 -.148


Rotation Method: Varimax with Kaiser Normalization.

a Rotation converged in 5 iterations.

TABLE 13: COMPONENT TRANSFORMATION MATRIX

Component 1 2 3 4

1 .854 -.421 .277 -.133

2 .411 .575 -.585 -.399

3 .160 .701 .666 .198

4 .277 .039 -.371 .886



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Rotation Method: Varimax with Kaiser Normalization.

To determine the appropriateness of the data set for factor analysis Bartlett’s test of sphericity and Kaiser-Meyer-Olkin (KMO) measure was adopted. High value (between 0.5 to 1) indicates that the factor analysis is appropriate. In this study, the result of Bartlett’s test sphericity (0.000) and KMO (0.603) indicate that the data are appropriate for factor analysis. The principal components analysis method was selected after determining the appropriateness of the data set. This approach considers the total variance in the data.

After that, only factors having eigen values greater than 1.0 are retained, the other factors are not included in the model. It is seen from the table 10 that eigen value greater than 1.0 results in four factors being extracted. From the cumulative percentage of variance, it is evident that four factors accounted for 87.67% of the total variance. This is a pretty good bargain, and thus, four factors appear to be reasonable in this situation.

Table 9 shows commonalities which provide relevant information after the desired number of factors have been extracted. The commonalities under ‘Extraction’ are different than under ‘Initial’ because all the variances associated with the variables are not explained unless all factors that are retained. The ‘Extraction Sums of Squared Loadings’ show the variances associated with the factors that are retained. It can be noted that they are the same as under ‘Initial Eigen Values’. This is always the case in the principle component analysis. The first factor accounts for (4.405/14) ×100 or 31.466% of the variance of fourteen variables. Likewise, the second, third and fourth factors accounts for

22.326%, 21.207%, and 12.666% of the variance respectively.

An important output from factor analysis is the factor matrix. The factor matrix contains the coefficients used to express the standardized variables in terms of the factors. These coefficients, the factor loadings, represent the correlations between the factors and the variables. A coefficient with large absolute value indicates that the factor and the variables are closely related. The coefficients of the factor matrix can be used to interpret the factors.

Although the initial or unrotated factor matrix indicates the relationship between the factors and individual variables, it seldom results in factors that can be interpreted, because the factors are correlated with many variables. Therefore, through rotation, the factor matrix is transformed into a simpler one that is easier to interpret. Here varimax procedure is adopted for rotation which is an orthogonal rotation method that minimizes the number of variables with high loadings on a factor, thereby enhancing the interpretability of factors. Table 12 reflects four variables Q11, Q12, Q13, and Q14 are correlated with factor 1 in the rotated matrix. Hence this factor may be labeled as ‘availability’ factor. The variables Q1, Q2, Q3 and Q9 correlate highly with factor 2. Factor 2 may be labeled as ‘quality’ factor. The variables Q4, Q5, and Q6 are correlated with factor 3 which may be named as ‘price’ factor. The remaining variables Q7 and Q8 correlates with factor 4. Thus, factor 4 may be labeled as ‘promotion’ factor. So one can summarize it by stating that consumers emphasize on four factors – availability, quality, price,



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and promotion while purchasing MLM brands.

CONCLUSION

This study tried to highlight on the relationship between brands and occupation, measuring brand loyalty of different brands, and underlying factors behind purchasing of MLM brands. This study reveals that only 21.50% of total population of the area under study is using MLM brands. Now-a-days many companies are offering MLM brands. Chi-Square test establishes no relationship between users of brands and occupation. But this study reveals that housewives are the main customers of MLM brands. It is also observed that network marketing companies are able to create loyal customers than other manufacturer brands. This study identified factors that consumers seek from purchasing MLM brands. These factors are availability,

quality, price and promotion. So network marketing companies must increase the number of distributors to make their products available to the customers. Though many companies are offering MLM brands but it is not enough to meet the demand of all customers and this is the reason behind low sales in Kolkata and its outskirts. Users of MLM brands are of the opinion that MLM brands charge fair price as they are required in less quantity and deliver quality to the customers. Promotion is also important for marketing products. Network marketing companies do not promote their products through mass media advertisement. But they offer some gifts to attract customers. Thus, network marketing companies must consider these four factors which customers seek from purchasing MLM brands. At the end it can be concluded that there is plenty of opportunity in Kolkata and its outskirts for network marketing companies if they considers above factors.



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APPENDIX I

QUESTIONNAIRE

Name: ………………………………….………………………………...

Address: ......................................................................................................

Ph No …………………………………………………………………….

Name of the Investigator………………………………Date…………….

1. Age of the respondent (complete years) ………………………………

16 to 20 21 to 25 26 to 30 31 to 35

36 to 40 41 to 45 46 to 50 51 to 55

56 to 60

2. Sex: Male Female

3. Present Status of respondent:

Student Government employee Private employee

Businessman Housewife

Others (Please specify)…………………………………………………

4. What is your favorite brand of shampoo? ………………………

5. Mention the number of purchases made on your favorite brand of shampoo out

of last 5 purchases (put tick on appropriate box).

0 1 2 3 4 5



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6. How many times you have purchased other brands of shampoo out of last 5 purchases

(put tick on appropriate box).

Name(s) of Brand

No. of purchases out of five purchases

1 2 3 4 5

7. Can you name a brand of shampoo which is not available in general stores or retail

shops?

……………………………………………………………………….

8. Listed below are different reasons for selecting MLM brands. Please indicate degree of

agreement with these on a seven point scale (1 = strongly agree, 7 = strongly

disagree):

Sl No. Statements Points

Q1 MLM brands increase lustre and make hair silky

Q2 MLM brands are suitable for everyday use

Q3 MLM brands promote hair growth and control hair fall

Q4 MLM brands charge fair prices

Q5 MLM brands are required in less quantity

Q6 Prices of MLM brands are suitable for third world economy like India

Q7 Free gifts are offered with MLM brands



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Q8 MLM brands are generally packed in a suitable container

Q9 MLM brands reduce dandruff

Q10 I come across advertisement of MLM brands every now and then

Q11 MLM brands are easily available

Q12 Many companies offer MLM brands

Q13 MLM brands are available in sachet or in strips

Q14 MLM brands sell a wide variety of hair-care products.

REFERENCES

1. Beri, G.C., (2000), Marketing Research, Tata McGrow-Hill, New Delhi, 3rd Edn.

2. Kotler, P., Armstrong, G., Agnihotri, P.K., and Haque, E.U. (2010), Principles of Marketing, 13th Ed., Pearson Education, New Delhi, pp. 415.

3. Lahiri, I., and Das, M.K. (2010), “Network Marketing: Looking through a new window”, Review of Professional Management, A Journal of New Delhi Institute of Management, Vol. 8, Issue-1, January-June,2010, pp. 90-99.

4. Lahiri, I., and Das, M.K. (2010), “Sustainability of Network Marketing: Brand to Brew”, NSHM Journal of Management Research and Applications (NJMRA), Vol. 2, No. 1, June 2010, pp. 32-43.

5. Laudon, Keneth C., and Laudon, Jane P. (2004), Management Information System: Managing the Digital Firm, 8th Ed., Prentice Hall of India Pvt. Ltd., New Delhi.

6. Nargundkar, R. (2008), Marketing Research, Tata McGrow-Hill Education Pvt. Ltd., New Delhi, 3rd Edn.

7. Saifuddin, Samina M., Huq, Mohammad N., and Hasan, Abu H R., (2006), “Social Scenario of Multi-Level Marketing in Bangladesh” Journal of Business Studies, Vol. XXVII, No. 1, pp. 1-20.

WEBSITE REFERENCE

1. http://classes.seattleu.edu/business_graduate/mktg561/obermiller/obermiller%20brand%20loyalty%20ms.doc – accessed on 10-11-2010.



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A STUDY ON TOURIST’S SATISFACTION LEVEL WITH A REFERENCE TO KERALA,

THE GOD’S OWN COUNTRY

RAJESH K*

*St. Aloysius College Elthuruth Thrissur Kerala S. India ABSTRACT Kerala popularly known as ‘God’s own country’ in the global tourism market was the first state in India to declare tourism as an industry way back in 1986. Though the performance of the state in tourism sector was low compared to other states in India, it could marked the highest growth rate of tourism development even in the world with 10.4% in 2002 along with Turkey. Both the public as well as private sector promote a series of reforms to encourage more foreign and domestic tourists to the state and the ever increasing flow of both foreign and domestic tourists to Kerala indicates that their efforts taken in the recent past have started paying dividends. But, for confirmation, one has to evaluate whether the brand image projected in the promotional activities has been perceived by the tourists when they actually visit the destinations. The congruence of the expected image of destination with what is perceived at destinations creates satisfaction about the destination. This satisfaction generated by meeting the desires of customers is a key element in the sustainability of destinations. Satisfaction encourages new and repeat visits of tourists. In this context this study aims to measure the satisfaction level of tourists towards the tourism attributes of the state. The present study was based on primary data which was collected during 2006 to 2007 from various coastal tourism centres of Kerala. The results indicates that Kerala has to go a lot to satisfy both the domestic and foreign tourists to make a sustainable tourism destination as visualised in the Vision 2025 of the state. KEYWORDS: Foreign and domestic tourists, multi-dimension scaling, satisfaction levels, spider graph.

INTRODUCTION

The stated objective of the state Government was to promote Kerala, always regarded as the God’s own country

in the global tourism market, more as a quality destination, attracting high spending tourists, than going for mass tourism chasing numbers (GOK, 1995). This conscious strategy of taking the



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destination away from mass tourism to a destination with a boutique image attracting tourists of specific taste resulted in developing new tourism products such as, house boats, heritage homes, Ayurvedic rejuvenation centres, etc. and new tourism destinations, such as, beaches, backwaters, wild life sanctuaries, plantations, etc. The Government, further, strengthened the policy framework with the declaration in 2000 of a new quality statement entitled ‘Vision 2025' (GOK, 2001). 'Vision 2025' reflected on the growing concern for environmental conservation, heritage and culture protection, lack of basic infrastructure surrounding major destinations and the need for proper quality assurance systems and legislations to regulate and bring quality in tourism. The revised quality framework thus emphasised the need for developing innovative and quality tourism products and appropriate marketing strategies. Creation of a variety of products and destinations offers tourists an enriching experience of Kerala. Efforts were taken at branding the destination along with the focussed promotional strategies around the theme 'God's own country' and these efforts helped to differentiate 'Destination Kerala' from other states of India. The congruence of the expected image of destination with what is perceived at destinations creates satisfaction about the destination. This satisfaction generated by meeting the desires of customers is a key element in the sustainability of destinations. Satisfaction encourages new and repeat visits of tourists. The latter can be best achieved by ensuring that the current offers are satisfying the needs, expectations and desires of current tourists and their propensity to recommend the destination to others.

Measurement of satisfaction involves an assessment of whether the experiences have resulted in the desired benefit sought

by the individual. Satisfaction, therefore, is a mere function of the needs and interests of the individual than the attributes and characteristics of the services provided. Measuring satisfaction of tourists about a destination is conceptually different from measuring satisfaction with the services delivered by individual enterprises (Pike, 2004). Definitely, the satisfaction achieved by tourists with various services at destination do influence the overall satisfaction about the destination because the traveller's perspective of a destination is made up of a composite of service encounters judged as a total experience (Medlik and Middleton, 1973). At the destination level the implication is that poor service provision by one or more sectors of the community which may or may not be directly involved in the tourism may ultimately impact on the success of other suppliers. The characteristics, such as, perishability, inseparability, intangibility, simultaneous production and consumption etc. of tourism make the measurement of satisfaction vitally important. Till date, there has not been any report on the satisfaction levels of tourists visiting tourism destinations of Kerala and a field survey had been conducted with the following objectives, (i.) to understand the demographic profile and the visitation profile of the domestic and foreign tourists of coastal tourism spots, (ii.) to study the expenditure pattern of domestic and foreign tourists in coastal tourism spots, and (iii) to study the level of satisfaction of tourists with regard to the tourist facilities in the state.

II. METHODOLOGY

In accordance with the objectives of the study, four important coastal tourism spots of Kerala, namely Kovalam, Varkala, Alappuzha and Fort Kochi were selected for the survey. Thirty foreign tourists and thirty domestic tourists (from outside Kerala) from each spot were interviewed



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at random over a period of six months from October 2006 to March 2007, coinciding with the peak tourist season in coastal tourism spots. A structured and validated questionnaire was used to interview the tourists. The questionnaire included queries on age, nationality, education, occupation, annual income of the tourist, their source of information about Kerala, mode of transport to Kerala, entry point in Kerala, number of members in their group, motivation of their visit, facilities availed, destinations visited/intended to visit, expenditure incurred, etc. Regarding the plan of their tour, they were asked their intentions to visit and stay at the major tourism destinations of the state like, Kovalam, Varkala, Alappuzha, Kumarakom, Fort Kochi, Kappad, Bekal, Thekkady, Munnar, Thiruvananthapuram city, Kochi city, Kottakkal, Thrissur and Guruvayoor. Further, to understand the satisfaction level of tourists, they were requested to commend on their satisfaction on various facilities/amenities needed by them at the destinations on natural beauty, transport, food, accommodation, attitude of local people, attitude of officials, cleanliness, atmosphere, climate, communication of the people, general price level, information regarding tourist sites, behaviour of shop keepers and availability of toilets, bathrooms etc. They were also requested to spell out any difficulty they had faced during their visit in Kerala. They were enquired whether they would make repeat visits to Kerala and would recommend the destination to their friends and relatives. The investigator himself interviewed the tourists by visiting each spot once in every month. Children below the age of 15 were excluded from the interview.

III. DEMOGRAPHIC AND VISITATION PROFILE OF TOURISTS

Altogether, 120 foreign and 120 domestic (out side Kerala) tourists responded to the interview and detailed results were presented elsewhere (Rajesh, 2009). Important information gathered is that the main tourism generating countries for the state are UK, Germany, Spain, USA and France. Majority of domestic tourists are from the neighbouring states of Tamilnadu, Karnataka, Maharashtra, Goa and Andhra Pradesh. The demographic profile of tourists showed that the majority of both foreign and domestic tourists were middle aged (31-50 years), highly educated (graduation and above) and well placed (professionals, government servants). The annual income of majority of foreign tourists was above US$ 20,000 and that of domestic tourists above Rs.2,00,000. For foreign tourists, internet was found to be the main source of information about Kerala. For domestic tourists, the main source of information was friends and relatives. The majority of foreign tourists were found to reach Kerala by air and domestic tourists by rail. Thiruvananthapuram and Kochi were the main entry points for the foreign tourists, whereas Palakkad and Kochi were the main entry points for domestic tourists. A small percentage of tourists made more than two visits to Kerala. A study of the expenditure pattern of domestic and foreign tourists showed that there was significant difference in the expenditure by the two categories. The per capita daily expenditure calculated was Rs.3878 for foreign tourists and Rs.2234 for domestic tourists. The major items of expenditure for both foreign and domestic tourists were accommodation, food and beverages.

In this paper, data related to the motivation of travel, major attractions of tourists and their satisfaction level are reproduced and discussed.

MOTIVATION FOR TOUR



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The tourists who were interviewed during the survey revealed that they had more than one motivation for visiting Kerala. The responses obtained were analysed by totalling all the motives expressed by the

tourists (table 1). About 91% of foreign tourists and 68% of domestic tourists informed that they came to Kerala mainly for recreation or pleasure along with other motives.

TABLE 1: MOTIVATION OF TOURISTS VISITING COASTAL TOURISM SPOTS

IN KERALA (2006-07) About 26% of foreign tourists and 39% of domestic tourists had visiting their friends and relatives in their agenda with other motives. Business was the motive for 30% of foreign tourists and 20.8% of domestic tourists, along with other motives. Nearly 12% of foreign tourists and 9% of domestic tourists came for health care. Nearly 26% of domestic tourists had religion/pilgrimage as their motive, whereas only 8% of foreign tourists stated this as a motive. DESTINATIONS PREFERENCE OF THE TOURISTS

Each of the 14 places specified in the questionnaire has its own specific attractions. Thus Kovalam, Varkala, Alappuzha, Kumarakom, Fort Kochi, Kappad and Bekal are known for beach/backwater tourism; Thekkady and Munnar for wildlife tourism; Thiruvananthapuram city, Kochi city and Thrissur for cultural tourism; Kottakkal for health care (Ayurvedic treatment) tourism, and Guruvayoor for pilgrimage tourism. As in the case of motives, tourists had more than one place of attraction. Table 2 gives the information on the important tourist destinations.

Motivation (Purpose) % of tourists

Foreign Domestic

Leisure, Recreation and Holidays 90.8 68.3

Visiting Friends and Relatives 25.8 39.2

Business and Profession 30.0 20.8

Health Treatment 11.9 9.1

Religion/Pilgrimage 8.3 25.8

Source: Field Survey



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TABLE 2: IMPORTANT TOURIST DESTINATIONS (2006-07)

Tourist Spots % of tourists

Foreign Domestic

Kovalam 83.0 59.0

Varkala 61.0 21.0

Alappuzha 46.0 32.0

Kumarakom 20.0 18.0

Fort Kochi 73.0 69.0

Kappad 0.0 3.0

Bekal 3.0 6.0

Kochi City 58.0 81.0

Thiruvananthapuram City 42.0 45.0

Guruvayoor 6.0 31.0

Kottakkal 5.0 3.0

Tekkady 27.0 26.0

Munnar 24.0 29.0

Thrissur 11.0 15.0

Others 48.0 49.0

Source: Field survey

About 83% of foreign tourists had visited/ or would visit Kovalam, 61% visited Varkala, 73% visited Fort Kochi, and 46% visited Alappuzha. Foreign visitors also visited Kochi city (58%) and Thiruvananthapuram city (42%) in large numbers. Next in order are Thekkady (27%) and Munnar (24%). Kumarakom which is gaining importance as a backwater tourism spot is yet to gain the needed publicity and only 20% of the foreign tourists had put Kumarakom in their visit plan. The tourism spots of Kappad (0%) and Bekal (3%) are yet to

attract foreign tourists. Fort Kochi (69%) and Kochi city (81%) are the most preferred tourist destinations for domestic tourists and are followed by Kovalam (59%) and Thiruvananthapuram city (45%). Next in preference is Guruvayoor (31%). Munnar (29%) and Thekkady (26%) are also attractions to domestic tourists. About 5% of the foreign tourists and 3% of the domestic tourists had plans to visit Kottakkal for Ayurvedic treatment.



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IV. MEASUREMENT SATISFACTION LEVELS OF TOURISTS

The satisfaction levels reported by tourists were graded into five classes: very good,

good, moderate, bad and very bad. The number of respondents expressed their satisfaction level to various constructs proposed in the study are given in table 3 for foreign tourists and in table 4 for domestic tourists.

TABLE 3: NUMBER OF RESPONSES OF FOREIGN TOURISTS

Attributes/Level of satisfaction

Very

Good Good Moderate Bad Very bad

Natural Beauty 65 43 10 0 0

Transport 18 56 40 4 0

Food 49 60 9 0 0

Accommodation 29 64 25 0 0

Attitude of local people 30 49 37 1 0

Attitude of officials 15 47 36 2 4

Cleanliness 12 31 43 23 7

Healthy atmosphere 20 49 40 7 2

Climate 26 61 25 6 0

Communication of the people 21 56 31 8 2

General Price level 27 65 65 1 0

Information regarding tourism sites 13 53 41 7 3

Behaviour of shop keepers 10 34 49 23 2

Availability of toilets, bathrooms, etc. at the sites 2 18 41 32 20

Source: Field Survey

From table 3, it can be seen that most of the foreign tourists visiting Kerala assign 'very good' or 'good' score to the natural beauty of the destinations. Most of them consider the amenities such as food, transport, accommodation, attitude of local people, climate, etc. also meet their expectations as they have accorded 'very

good' or 'good' satisfaction levels to these attributes.. However, a large number of foreign tourists expressed 'bad' or 'very bad' opinion over the cleanliness and availability of toilets, bathrooms, etc. at tourism destinations. A good number of foreign tourists recorded 'moderate', 'bad' or 'very bad' satisfaction levels against,



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general price levels, behaviour of shop keepers, information regarding tourism

sites, attitude of the officials and communication of the people.

TABLE 4: NUMBER OF RESPONSES OF DOMESTIC TOURISTS

Attributes/Level of satisfaction Very good Good Moderate Bad Very bad

Natural Beauty 73 39 8 0 0

Transport 20 70 27 3 0

Food 32 55 29 1 3

Accommodation 23 75 21 1 0

Attitude of local people 25 66 26 1 0

Attitude of officials 13 50 24 1 0

Cleanliness 22 52 39 5 0

Healthy atmosphere 22 66 24 5 0

Climate 28 72 13 4 0

Communication of the people 19 68 27 1 0

General Price level 15 64 28 13 0

Information regarding tourism sites 12 65 41 1 1

Behaviour of shop keepers 5 62 50 0 3

Availability of toilets, bathrooms, etc. at

the sites 3 31 52 16 15


Most of the domestic tourists also expressed 'very good' or 'good' opinion

about the natural beauty of destinations (table 4). Many of them assigned 'very



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good' or 'good' score for facilities such as, food, transport, accommodation etc., and, like foreign tourists expressed 'bad' or 'very bad' opinion about facilities like toilets, bath rooms, and cleanliness of destinations. A large number of domestic tourists assigned 'moderate' or 'bad' score to facilities like, behaviour of shop keepers, information regarding tourism sites, general price level, healthy atmosphere, attitude of local people, attitude of officials etc. Data indicate 'moderate' to 'very good' level of satisfaction on majority of attributes included in the questionnaire by both foreign and domestic tourists.

MULTI-DIMENSIONAL SCALING OF SATISFACTION LEVELS OF FOREIGN AND DOMESTIC TOURISTS

The mean scores obtained in table 4 were further subjected to multi-dimensional analysis1, using SPSS 15, in order to bring out the key dimensions which underlie the satisfaction levels of tourists. A two-dimensional solution was found to the best fit. Mean deviation of satisfaction levels of tourists are given in table 5. Here, the dimensions ‘nature’ represents natural attributes, and ‘people’ represents man-made attributes of tourism development.

1 Multi-dimensional scaling model is considered useful to find out the key dimensions which underlie the tourist’s perceptions of tourism products (Goodrich, 1978, and Fondness, 1990). This technique represents the structure of these perceptions in a graphic form, which thereby assists in interpreting the results (Kruskal and Wish, 1978).



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TABLE 5: MEAN DEVIATIONS OF SATISFACTION LEVELS OF TOURISTS (2006-07)

From table 5 it can be seen that both the foreign and domestic tourists assigned a high value to natural beauty of the state. This indicates the prominence given to the pristine natural attractions by the visitors to Kerala and emphasises the need for protecting the natural environment of Kerala for sustaining the tourism sector of the state.

For a visual understanding of the perceptions of satisfaction levels of tourists, the data are reproduced in figure 1 for foreign tourists and in figure 2 for domestic tourists. The figures give a spatial display of fourteen attributes in the study in two dimensions as obtained from the Multi-dimensional scale (MDS) model.

Attributes Foreign tourists Domestic tourists

Nature People Nature People

Natural beauty 2.0149 0.0700 2.1177 -0.0771

Transport 0.2383 0.3268 0.4605 0.2931

Food 1.4929 -0.2078 0.0008 1.8841

Accommodation 0.8436 0.2041 0.5904 0.7054

Attitude of local people 0.6259 0.4560 0.6760 0.1342

Attitude of the officials -0.3713 -0.4978 0.0456 -0.2909

Cleanliness -1.5838 -1.2586 0.0116 -0.7085

Healthy atmosphere -0.2408 -0.6859 0.5160 -1.1144

Climate 0.7605 -0.1469 0.7319 -1.0354

Communication of the people 0.0075 -0.7584 0.0231 0.4146

General price level 0.8278 0.5324 -0.7920 0.3708

Information regarding tourism sites -0.2197 0.2909 -0.0393 -0.0674

Behaviour of the shopkeepers -1.3164 1.1874 -0.7390 -0.3840

Availability of toilets, bath rooms -3.0794 0.4879 -3.6033 -0.1246




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FIG. 1: MULTI-DIMENSIONAL SCALING FOR SATISFACTION LEVELS OF FOREIGN TOURISTS

FIG. 2: MULTI-DIMENSIONAL SCALING FOR SATISFACTION LEVELS OF DOMESTIC TOURISTS

210-1-2-3

1.0

0.5

0.0

-0.5

-1.0

-1.5

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M ulti dim e ntional s caling m ode l for s atis faction le ve l of dom e s tic tour is ts



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In figures 1 and 2, the horizontal axis can be interpreted as a type of natural attribute, moving from right (highly influenced by nature) to left (least influence). Thus, natural beauty which is contributed wholly by nature occupies the extreme right position and availability of toilets, bath rooms etc., least influenced by nature, an extreme left. The attributes such as food, accommodation, general price levels, climate and attitude of local people which are closely associated with native resources and culture are seen on the right side of the axis. The tourists value these attributes of native Kerala as the most important attractions to them. The vertical axis can be interpreted as man made attributes that could be controlled by systematic practices. In the perception of foreign tourists, (fig. 2), the cleanliness of the destinations need urgent attention as it is at the extreme low position. On the other hand domestic tourists considers cleanliness, behaviour of shop keepers and availability of toilets, bath rooms etc. in the list which require immediate attention of destination managers.

COMPARISON OF SATISFACTION LEVELS OF FOREIGN AND DOMESTIC TOURISTS

From the above description it is clear that the satisfaction levels of tourists different from foreign and domestic tourists, which could be described with the help of a spider diagram or graph. A Spider diagram2 has been constructed to find out the difference between the satisfactions levels of foreign tourists to that of domestic tourists with various facilities. For this purpose, a five point Likert scale

2 A spider diagram is a two dimensional chart of three or more quantitative variables represented on axes starting from the same point. The relative position and angle of the axes are uninformative. According to Vavra (1997) in spider chart each vector represents a variable i.e. satisfaction level

was used as the response format with assigned values ranging from 5 = 'very good' to 1= 'very bad’ to represent satisfaction levels of tourists. Fourteen variables, namely natural beauty, transport, food, accommodation, attitude of local people, attitude of the officials, cleanliness, healthy atmosphere, climate, communication of the people, general price level, information regarding tourism sites, behaviour of shop keepers and availability of toilets and bath rooms were considered. The satisfaction level with respect to each variable was worked out and presented. Each axis in this spider chart represents one variable. The mean scores of satisfaction level of both foreign and domestic tourists, with respect to each variable, are plotted on the same axis. The mean scores obtained and marked in the vectors were then joined together to form ellipsoids to understand the differences in the satisfaction levels of foreign and domestic tourist’s visits to Kerala.

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‐ 114

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complained that they were affected by different types of strikes in Kerala. It was also found that 14.2 % of foreign tourists and 8.3% of domestic tourists were affected because of holidays. Most of the museums were reported closed on Mondays/Tuesdays. From local to state levels, strikes were common in Kerala. According to Mathrubhumi News Paper (Anon., 2007) there were six state-wide hartals and 200 regional hartals in Kerala during the period 2000 to 2007.

VI. CONCLUSION

Among the tourism attributes, except natural beauty, the levels of satisfaction are not appreciable by the tourists. The age-old political problems of the states like strikes, hartals etc. also act as a constraint of its tourism industry. Still the tourism sector in India and Kerala are in the progressive state. This may be attributed to the findings of Wilson (1997). With regard to satisfaction levels Wilson observes that the foreign tourists visiting India are well aware of the litter and garbage problems in public places. They visit India because of the persuasion of their friends who visited India earlier. The powerful attractions of tourists include cheap accommodation, enjoyable beaches, friendly local people and a general lack of harassment. The visitors anticipate that services and facilities will be bad (Wilson, 1997). From the tourism development point of view it is not sensible to consider all these issues are taken for granted. Increasing discretionary income of the tourists will change their attitude from price conscious to quality conscious hence, sustainability of any destination will depends on how it matches the tourists satisfaction levels with their expectation, and in this regard many efforts are needed to meet the expectations offered by the image ‘God’s own country’ as visualied in ‘Vision 2025’ of the state government.

ACKNOWLEDGEMENTS

The statistical analysis of the data was done by Dr. T. M. Jacob, Senior Lecturer, Nirmala College, Muvattupuzha and the author thankfully acknowledges the same.

REFERENCES

Anon., (2007): ‘Keralathil Hartalukal 200’, Mathrubhumi daily, 21st July 2007.

Fodness, D. (1990): ‘Consumer Perceptions of Tourist Attractions’, Journal of Travel Research, 28(1) pp. 3-10.

GOK, (1995): Tourism Policy of Kerala, Department of Tourism, Thiruvananthapuram, Government of Kerala.

GOK, (2001): Tourism Vision 2025, Department of Tourism, Thiruvananthapuram, Government of Kerala.

GOK, (2009): Kerala Tourism Statistics 2007, Department of Tourism, Thiruvananthapuram, Government of Kerala.

Goodrich, J.N. (1978): ‘A New Approach to Image Analysis Through Multidimensional Scaling’, Journal of Travel Research, 16(1) pp. 3-7.

Kruskal, J.B. and Wish, M., (1978), Multidimensional Scaling, Beverly Hills, London.

Lovelock, C. H. (1991): Services Marketing: Text, Cases and Readings, London, Prentice-Hall International.

Medlik, S. and Middleton, V.T.C. (1973): ‘The Tourist Product and its Marketing Implications’,



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International Tourism Quarterly, 3 pp. 28–35.

Pike, S. (2004): Destination Marketing Organizations, Amsterdam, Elsevier.

Rajesh, K. (2009): Coastal Tourism in Kerala: its Impact on Economy and Environment, Cochin, Thesis submitted to the Cochin University of Science and Technology.

Vavra, T.G. (1997): Improving your Measurement of Customer Satisfaction, Milwaukee, The American Society for Quality.

Wilson, D. (1997): ‘Paradoxes of Tourism in Goa’, Annals of Tourism Research, 24(1) pp. 52-75.

Williams, D. R. (1988): ‘Great Expectations and the Limits to Satisfaction: A Review of Recreation and Consumer Satisfaction Research’, in A. H. Watson (ed) Outdoor Recreation Benchmark: Proceedings of the National Recreation Forum. , U.S Forest Service. General Technical Report SE-52: 422-438.



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THE PERCEPTIONS OF THE INSURANCE BROKERS ABOUT MARINE INSURANCE PRODUCTS

AND MARKET- A STUDY

DR. BYRAM ANAND*; MR. SURAJ THERUVATH**

*Pondicherry University Karaikal Campus Karaikal Pondicherry-609605 **Pondicherry University Karaikal Campus Karaikal Pondicherry-609605

ABSTRACT “Perceptions of Insurance Brokers about the Marine Insurance products and Market” is carried out to study the insights of the Insurance Brokers about the marine insurance products and the market related to marine insurance. Insurance Broker remains in constant touch with the clients and cater to their problems by gathering proper information and assessing the risk profile and requirements. An attempt has also been made to take the views of the insurance brokers on various features that are preferred in a marine insurance policy by the clients and customers. Hence, interaction with the insurance brokers would give the company a sneak peek into various prospects mentioned above and would provide information and leads for the company to improve upon their coverage offerings and service quality.

Tata AIG General Insurance Company has been a pioneer in offering

Marine Cargo Insurance solutions to its clients amongst the private general insurance companies. The company has been catering to various needs of its clients related to insurance of their cargo and goods in transit. But the company has never made a conscious effort to study the reputation of its marine insurance policies in the market in comparison with the policies provided by other general insurance companies. Hence, an attempt has also been made to take the views of the insurance brokers on various features that are preferred in a marine insurance policy by the clients and customers.

The main objective of this present research work is to study The relative

performance of select general marine insurance companies in the market based on few criteria which are regarded as key for customer and client satisfaction Comparative analysis of the general insurance companies in the market with regards to their marine insurance products, service quality and value offered would be drawn out. For the purpose of the study both primary and secondary data was collected.



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As per the Brokers, the claim settlement process of the marine department is not on par with the high standards that it has set with respect to the above mentioned processes. As per the brokers, the claim settlement takes a bit longer time than it is expected from Tata AIG General Insurance Company. The introduction of eMarine web based insurance certificate issuing facility for the marine clients has added a lot of value to them for the premium they contribute for the policy. Insurance field will generate to the employment for the contry youth either directly or indirectly in the marine insurance brokering which in turn incresae the marine insurance business for the companies and develop the economy of the coutry KEYWORDS: Brokers, Claim settlement, Marine insurance, Prompt issue of policy, Underwriter promptness, technical expertise, online issue of policy.

INTRODUCTION

An Insurance Broker can be person or a firm which finds sources for contracts of insurance on behalf of their customers. Insurance brokers have a thorough knowledge and extensive experience in the insurance sector and are quite conversant with the contingent risks of life, non-life and their possible risk-management. They actually broker the insurance deal between the insurance company and the consumer and in lieu for this, extract a commission.

Insurance Broker remains in constant touch with the clients and cater to their problems by gathering proper information and assessing the risk profile and requirements. They are abreast with the new policies and schemes of the insurance companies so that they can choose and refer the right kind of insurance product for their client’s requirement.

This makes the Insurance brokers a one stop information centre to know how the insurance products of various companies are faring in the market in comparison with the competitor products. They can also provide a wide variety of other information like the market stand of a company, the fame of its products, the customer satisfaction levels, perceptions

regarding the service quality and value offered by a company in comparison with the competitors, any shortfalls with respects to insurance product, service offered, claim settlement, underwriter promptness, technical prowess of an insurance company.

Hence, interaction with the insurance brokers would give the company a sneak peek into various prospects mentioned above and would provide information and leads for the company to improve upon their coverage offerings and service quality.

RESEARCH PROBLEM

Tata AIG General Insurance Company has been a pioneer in offering Marine Cargo Insurance solutions to its clients amongst the private general insurance companies. The company has been catering to various needs of its clients related to insurance of their cargo and goods in transit. But the company has never made a conscious effort to study the reputation of its marine insurance policies in the market in comparison with the policies provided by other general insurance companies. The Company would be immensely be benefitted if it has access to information like relative ratings of the company in relation to such processes like



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the competitive rates to coverage offered, features in the policy mainly preferred by the clients, claim settlement, promptness at issuing the policy, underwriter promptness, technical expertise of the marine underwriters, online portal etc in comparison to other general insurance companies in the market.

These details can be efficiently obtained from the Insurance Broking Agencies who deal both with multiple insurance companies and clients on a day to day basis. The information thus obtained would help the company in improving upon its services and product offerings in the future.

Hence, an attempt has also been made to take the views of the insurance brokers on various features that are preferred in a marine insurance policy by the clients and customers.


The main objective of this present research work is to study

1. The relative performance of select general marine insurance companies in the market based on few criteria which are regarded as key for customer and client satisfaction

2. Comparative analysis of the general insurance companies in the market with regards to their marine insurance products, service quality and value offered would be drawn out.

METHODOLOGY

For the purpose of the study both primary and secondary data was collected.

PRIMARY DATA

The primary data was collected with the help of a questionnaire designed to derive information from Insurance Brokers.

SECONDARY DATA

Through books, magazines, journals, published and unpublished literature and in-house data of the firm.

SAMPLE SIZE AND AREA OF THE STUDY

A sample of 30 insurance brokers selected base upon the convenience sampling operating in the city of Hyderabad

PERIOD OF STUDY

Due to financial constraints and lack of time the period of study is restricted to period of eight weeks

LIMITATIONS OF THE STUDY

1. Due to lack of time and resources the study is restricted to eight weeks and the sample selected is only 30 which does not represents the universe , hence the inferences drawn may be biased

2. The study deals with only the non –life insurance i,e marine insurance brokers and it does not deals with the life insurances

ANALYSIS AND INTERPRETATION

The Company would be immensely be benefitted if it has access to information like relative ratings of the company in relation to such processes like the competitive rates to coverage offered, features in the policy mainly preferred by the clients, claim settlement, promptness at issuing the policy, underwriter promptness, technical expertise of the marine underwriters, online portal etc in comparison to other general insurance companies in the market hence the data



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collected is analysed in the following tables

PROPORTION OF MARINE INSURANCE BROKERS

It is observed that a sizeable proportion the Insurance Brokers met were providing Marine Insurance Broking Services to their clients.As per their inputs, out of their total revenues, 20-30% was contributed through Marine Insurance

Broking.Again there were brokers who didn’t have much or no expertise in marine and hence they have been counted under the ‘No’ response as the business they did through Marine Broking was very negligeable. It can be understood that Marine Insurance Broking is a profitable business for most of these Brokers and hence the company can make use of the network of these brokers in improving and expanding their marine insurance clientele.

TABLE 1

Source: Primary data

MARINE INSURANCE BROKING EXPERIENCE

Most of the big insurance brokers in the city had an experience of greater than five years in Marine Insurance Broking services which accounted for 55% and have a vast experience in Marine insurance advisory. Most of the high officials in these broking firms are ex-officials of the nationalized general insurance companies and ventured into insurance broking services based on their

wide experience and network and hence know the blood and vein of the Marine insurance business. 35% of the brokers had an experience ranging between 3-4 years while 8% and 2% of the brokers with 2-3years and 1-2 years of experience respectively. Hence, the inputs got from these brokers are very valuable for any insurance company. The smaller brokers around the city are relatively new to this field and constitute the younger generation who joined the field recently and are a minority in number.

TABLE-2

Particulars Number of Brokers Percentage

1-2 Years 1 2%

2-3 years 2 8%

3-4 Years 10 35%

Above 5 years 17 55%


Particulars Number of Brokers (Out of 30)

Percentage

Marine Insurance Brokers 19 65 % Non Marine Brokers 11 35%



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NATURE OF CLIENTS FOR MARINE INSURANCE

Manufacturers, Exporter/Importers, Contractors and Individuals are the major clients of Marine Insurance for any insurance company. As per the brokers views a major chunk (60%) of the Marine Insurance business comes from Manufacturers of various kinds especially

pharmaceuticals and Chemical manufacturers. A sizeable business comes from the Exporters and Importers at 30%, Contractors and Individuals being other minor contributors at 7% and 3% respectively. Hence, Manufacturers and Export/Import agents are the most favourable clients to be targeted to expand the marine insurance clientele.

TABLE-3

Client Composition

Particulars Percentage

Individuals 3%

Contractors 7%

Exporters/Importers 30%

Manufacturers 60%


CONTRIBUTION FROM EACH TRANSIT TYPE

Among the various types of transit, marine insurance policy is mostly taken for domestic transit of various types of goods which constitutes 56% of the marine insurance business as per the

Brokers.Export and Imports follow with 34% and 10% of the total marine business being contributed by the two categories. Hence there is a need for the insurance companies to peg on the Export and Import sector clients and bring their proportion on the same lines with the domestic transit



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TABLE-4

Marine Transit Type Contribution

Transit Type Percentage

Domestic 56%

Import 10%

Export 34%


CONTRIBUTION FROM EACH MODE OF TRANSIT

Transit of goods through Road and Rail and Sea are the major modes of transit for which Marine insurance is taken mostly as per the brokers. Road/Rail transit of goods

contributes 55% of the business while transit of goods through Sea contributes 40% of the business to Marine Insurance Companies. Courier though subscribes for marine insurance does not contribute any business as per the brokers of the city.

TABLE-5

Marine Transit Mode Contribution

Mode of Transit Percentage

Courier 0%

Road/Rail 55%

Sea 40%

Air 5%

PREFERENCE OF THE CLIENTS

The Brokers were asked about the features of a Marine Insurance Policy that the Clients would normally prefer. The options that were provided were Premium, Coverage, Value and Service. The Brokers mostly responded by saying that the clients wanted their cargo to be covered 24/7 during transit and be covered against losses caused by a wide range of perils and

hazards. Hence, they would mostly prefer a wider cover in a policy coupled with an affordable premium. The service level and value are secondary and is looked at by the clients only if the marine policy satisfies them with the first two features. Hence, it is important for the insurance underwriters to design marine cargo products which offer wider cover along with an affordable premium to conquer the market



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TABLE-6

Features of a Marine policy preferred by clients

Preference Number of Brokers Percentage

Coverage 18 60%

Premium 9 30%

Value-Service 3 10%


WHO DECIDES ON THE COVERAGE TO BE OFFERED UNDER THE POLICY

While asked who would normally decide over the coverage specification to be included in a marine cargo policy, 60% of the brokers responded by saying that normally it was insured who decided the coverage and would approach the brokers with the specifications regarding the coverage. The brokers would then look at

the various options of policies of different insurance companies and advice them with the best suited one. While 30% of the brokers said that it was the insurer who decided the extent of coverage based on the risk exposure of the insured, 10% of the brokers responded by saying that they themselves chose the coverage based on the client’s needs. Hence, as per the above table, it is observed that insured were the people who mostly decided on the coverage as per most of the brokers.

TABLE 7

Decision Regarding Coverage

Particulars Number of Brokers Percentage

Insurer 9 30%

Insured 18 60%

Broker 3 10%


MARINE INSURANCE POLICIES CONTRIBUTION TO MARINE INSURANCE BUSINESS

As per the inputs of the brokers, 50% of the total Marine premium generated was from selling the various Marine Open policies as this policy offered more convenience to the Manufacturers and Exporters who had regular shipments.

Marine specific policies are the second best contributor with 40% contribution to the marine insurance premium mainly opted by the clients having shipments once in a while.

Hence, majority of the clients in Marine insurance market opt for Marine Open Policies over Marine Specific Policy and Marine Open cover.



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TABLE-8

Policy Type Percentage Contribution

Marine Specific Policy 40%

Marine Open policy 50%

Marine Open Cover 10%


COMMODITY WISE BREAKUP OF THE MARINE INSURANCE BUSINESS

As per the Brokers, a majority of the marine insurance premium comes from the pharmaceuticals and chemical industry that is 50%.The pharmaceutical products manufactured in the country is routinely exported to other countries on a regular

basis. The same is the case with the chemical industry. Since there is a regular shipment of these products from these companies, they are regular clients of brokers and insurance companies for transit insurance. Transit of Machinery (20%) is the next big contributor to marine premium followed by Granite (15%), Tyres and tubes (10%) and Power sector (5%).

TABLE-9

Commodity Percentage Contribution

Pharmaceuticals/Chemicals 50%

Machinery 20%

Granite 15%

Power Sector 10%

Tyres and Tubes 5%


PERFORMANCE RATING OF SELECT GENERAL MARINE INSURERS

As per the responses received from all the brokers around the city, Tata AIG General Insurance Company is the front runner in the race amongst all the other general insurance companies with respect to its Marine Insurance practice. Tata AIG is

followed by the public sector companies New India Assurance company and Oriental Insurance Company.Other private insurance companies like the Reliance, IFFCO Tokio, ICICI Lombard and Bajaj Allianz have got mixed responses from all the brokers.As per the Brokers, Tata AIG Marine’s web based portal called ‘eMarine’ is the best online portal for



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issuance of marine insurance policies and adds a lot of value to its Marine policies.

TABLE-10


1- Excellent 2- Very Good 3-Good 4-Average 5- Poor

RATING OF GENERAL INSURANCE COMPANIES BASED ON THEIR ABILITY TO ACCEPT VARIOUS KINDS OF RISKS

As per the Broker’s experience Tata AIG is again the market leader when it comes to accepting various kinds of risks

related to Marine Insurance. Tata AIG is followed by Bajaj Allianz and the public sector giants New India Assurance and Oriental Insurance Company in rating. ICICI Lombard has got poor remarks in this regard as it has not established a favourable impression amongst most of the brokers in the city with respect to assuming risks.

Company Premium Rate to

Coverageoffered

ClaimSettlement

Prompt issue of

policy

Underwriter promptness

Technical Expertise

Online issue of policy

Tata AIG General Insurance Company Ltd

1 2 1 1 1 1

Bajaj Allianz 3 3 3 4 4 5

Reliance 3 3 3 4 4 5

IFFCO Tokio 2 3 3 3 3 5

ICICI Lombard 3 4 4 5 4 5

ew India Insurance 2 2 3 2 2 5

Oriental Insurance 2 2 3 2 2 5



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TABLE-11

Company Rating (1-5)

Tata AIG General Insurance 1

Bajaj Allianz 1

ICICI Lombard 5

Reliance 3

IFFCO Tokio 3

New India Assurance 2

Oriental Insurance 2 1- Excellent 2- Very Good 3-Good 4-Average 5- Poor

FINDINGS

1. Through the interaction with the various brokers in the city it was found that Tata AIG Marine has over the years earned a good reputation with them and the clients and customers.

2. The Broker’s are impressed with the quality of service offered by Tata AIG thanks to its dedicated team of marine underwriters and staff stationed in every branch of the company throughout the country.

3. As per the responses received from all the brokers around the city, Tata AIG General Insurance Company is the front runner in the race amongst all the other general insurance companies with respect to its Marine Insurance practice. It leads all the other general insurance companies in such features like premium rates to coverage offered, prompt issue of the policy, underwriter promptness, Technical expertise of the underwriters, and online issue of the policy.

4. As per the Brokers, the claim settlement process of the marine department is not on par with the high standards that it has set with respect to the above mentioned processes. As per the brokers, the claim settlement takes a bit longer time than it is expected from Tata AIG General Insurance Company.

DISCUSSIONS

Interaction with the Insurance Brokers was value add to gain hands on inputs in Marine Insurance Business and Market. One thing that came to light was the dearth of experts in the Marine Insurance underwriting. This reflects the various avenues that can open up for individuals trained and versed in Marine Insurance.

SUGESSIONS

1. The introduction of eMarine web based insurance certificate issuing facility for the marine clients has added a lot of value to them for the premium they



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contribute for the policy. It has eased the process of issue of Certificate of Insurance to the clients for their shipments. The idea that the clients can issue the certificate of insurance themselves by logging in to the website with their own unique User id and password is one of its kind in the market and is not seen elsewhere with respect to marine insurance. Again a thumbs-up to Tata AIG for this innovative initiative.

2. A majority of the business is observed to be coming from the Manufacturers and Exporters /Importers and not much from the Contractors and Individuals. Though the contribution is negligible and the scale of business with such individuals would be limited, it is advisable and a good business proposition to concentrate the company’s sales forces over pegging the Contractors and the Individuals into taking the marine insurance policy for their projects. In majority of the cases, the contractors and individuals hesitate from taking a policy as they would be having their own arrangements or might not be well aware of the benefits of taking a marine policy for their transits. Hence, a strategy of meeting the Contractors and Individuals in particular and educating them about the benefits of Marine insurance policy and the convenience offered by the eMarine facility of Tata AIG General Insurance Company would positively in all means result in a sizeable business

coming from them in addition to Manufacturers and Export/Import agents.

3. A lot of importance is given to coverage while the client or customer looks into a Marine policy. Premium and service levels are given secondary priority by the customers. As per the brokers, a customer is coaxed into taking the marine insurance policy when he feels that his needs are given due importance by the insurer and when most of his needs are covered by the policy terms decided by the underwriter. Hence, it would be a great prospect if the underwriting specialists at every branch of Tata AIG General Insurance Company look at every proposal in a unique way and try to custom design the policy terms as per the needs of the client keeping the interests of the underwriting principals and the company at the same time. This would elevate the company’s reputation as a specialist in offering marine insurance solutions.

CONCLUSION

The insurance business is developing in india with respect to life and non life insurance , but we see only few palyers are providing the marine insurance in india. For the development of marine insurance business we require the skilled trained persons to sell the marine insuramcne products , the insurance brokers paly a vital role in development of marine insurance products , they are to be trained according to norms and regulations and are aware of the marine insurance products and schemes that are



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offered by the companies so as to sell the products to the customers who require marine insuramce . Insurance field will generate to the employment for the contry youth either directly or indirectly in the marine insurance brokering which in turn incresae the marine insurance business for the companies and develop the economy of the coutry . hence there is need for the insurance brokers and training for them in the country like india and would be useful for the company in assessing its performance and also in designing better policies in future.

ACKNOWLEDGEMENTS

I would like to take this opportunity to thank Mr. Prasad Vattimilli , City Agency Manager and Mr. Santosh David, Manager Marine, Tata AIG General Insurance Company Limited, Hyderabad Branch for having given their most valued inputs for my research. I would like to thank my project guide and faculty advisor Dr. Byram Anand, Assistant Professor, Department of Management Studies for his constant

supervision of my work and his efforts to help me bring up this report.

REFERENCES

1. Ernst and Young Report on Insurance Trends and Perspectives

2. Ernst and Young Report on Insurance Industry June 2009

3. Howard Bennet, “The Law of Marine Insurance” Clarendon Press, 1996

4. Insurance Institute of India, “Marine Insurance IC-67”

5. William D.Winter, “Marine Insurance: Its Principles and Practice” Mc-Graw-Hill Book Company

6. Winsby’s Publishing 2006-07, “Reference book of Marine Insurance Clauses”, 76th edition.

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AN EVALUATION OF PROFITABILITY PERFORMANCE OF ESOP INDIAN BANKS

DR. RAMESH KUMAR DHIMAN*; VIRENDRA SINGH CHAUDHARY**

*Department of Commerce S.U.S Govt. College Matak Majri – Indri **MDLR Airlines Gurgaon

ABSTRACT An ESOP provides a way for employer and their employees to achieve the apex tail of profitability in chaos and growth of the business. The study under consideration is based on evaluation of profitability performance of Indian ESOP banks. The study surveyed the public sector banks in relation to ESOP. The sample size for the analysis is nine (9) Indian banks those implemented the restructuring technique known as employee stock option plan (ESOP) since 2000 to 2005 as study period. The period under consideration is divided into two parts pre-adoption and post-adoption period for which different financial ratios have been calculated and compared pre output to post output. The expenditure performance of the ESOP banks is not gained following adoption ESOP. Thus it can be concluded that profitability performance of India banking sector did not improve significantly after adoption of ESOP.

INTRODUCTION

The profitability is red blood of organization which leads to development and prosperity in modern fierce competitive world. The organizations try to get standard level of profitability by employed modern profitability tools in business operation. An ESOP provides a way for employer and their employees to achieve the apex tail of profitability in chaos and growth of the business. In some cases, employees can use an ESOP to acquire the whole of a business. This is technique of restructuring of the business unit with the involvement of employees.

The remarkable effect of ESOP is positive in terms of productivity on thousands of enterprises as observed. It is thought that financial participation schemes provide employees with incentives to work more and better, communicate information to management and colleagues and co-operate with each other. Evidence suggests that profit-sharing probably has a slightly stronger effect than employee share ownership on total factor of productivity. Schemes that offer a larger financial involvement have higher productivity effects. Cash profit-sharing schemes seem to have a short-term effect, whereas share schemes, which are more long-term oriented, probably have a more sustained effect. A growing body of evidence



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suggests that both main forms of financial participation have greater productivity effects when employees are well informed of the affairs of the firm, there is good communication with management, and employees participate in governance and decisions.

Most research on employee ownership shows positive effects. These studies show that employee owned firms are more productive and profitable, survive longer, and result in better shareholder returns. Adoption of ESOPs result in better post-adoption performance compared to pre-adoption performance and also compared to matched firms. Studies indicate nearly two-and-a-half percentage greater annual sales and employment growth among ESOPs as compared to conventional counterpart firms. Therefore the evaluation would be done of this restructuring activity in connection of Indian banks which have already followed the employee stock option plan for raising their productivity performance through employee’s involvement in the decision.

LITERATURE REVIEW

The following section of the study would like to review the previous studies have organized on the topic under consideration. Blasi and Kruse (1997) summarized eleven studies evaluating comparison of (a) performance before and after adoption of the ESOP, (b) ESOP to non-ESOP firms, and (c) post- adoption performance to matched non-ESOP firms. Most of the studies find positive and statistically significant effects on post-adoption performance. Blasi and Kruse (2003) analyzing the relationship between employee ownership and satisfaction. The studies indicate that satisfaction and motivation as derived leads to participation in decision making. Kardas (1994) found higher sales and employment growth in participatory ESOP companies compared

to non-participatory ESOP companies and non-ESOP companies at micro level of data set. Kruse (1984) ESOPs are associated with higher motivation; studies generally found that higher motivation in employee-owned firms as a consequent of employee stock option plan. Kruse and Blasi (1997) are able to conclude that on average in all the performance categories, ESOP companies do better per year than non-ESOP companies and that companies do better post-adoption than pre-adoption. They estimate the average effect on the performance of the firm was approximately 4% annually. Rosen and Quarrey (1987) found that a sample of ESOP firms outperformed a non-ESOP control group in terms of sales and employment growth and that the sales growth of the sample of ESOP firms significantly improved after ESOP adoption. Quarrey and Rosen (1993) compared companies before and after the adoption of ESOPs, and found faster employment growth after ESOP adoption. These six studies indicate nearly two-and-a-half percentage points greater annual sales and employment growth among ESOPs as compared to conventional counterpart firms. Quarrey and Rosen (1992) found significantly higher post adoption growth for ESOP companies that had participation groups and for ESOP companies in which management perceived higher worker influence, study found significant increases in productivity where the companies reported high levels of worker influence.


The study tried to maintain reasonably level of accuracy in data collection and used widely acknowledged statistical approaches for measuring ESOP effects across the industry groupings to achieve the study objectives. The study under consideration used nine banks which already implemented ESOP for the



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benefits of its workforce or to enhance its profitability before 2005. The whole study period divided into two parts pre-adoption period and pos-adoption period of 3 years each. Further different ratios of Assets, Net Assets, Income, Other Income, Expenditure, Operating Expenses, Gross Profit and Net Profit on per employees basis for pre-adoption period and post-adoption period for all the nine banks are calculated. The pre-adoption period have taken 3 years before the ESOP established whereas the 3 years being decided for the post-ESOP adoption.


Indian banking sector is one of the largest profit making and employment provider organization of the country. The study would like to achieve the following objectives.

1. To make available a benchmark on the trends and practice of ESOPs in India.

2. To examines the effect of ESOP adoption on the profitability

performance of Indian banking sector.

HYPOTHESES OF THE RESEARCH

In order to achieve the above said objectives and to evaluate the effect of the ESOP on the Indian banking profitability, the study will endeavor to test the following hypotheses.

H01: ESOP does not affect the profitability of banking sector in India.

H02: ESOP does not increase the remuneration costs in Indian banking sector.

SAMPLE SIZE AND DATA COLLECTION

To measure the effect of ESOP on profitability performance of banking sector in India, the study under consideration will used nine banks which already implemented ESOP for the benefits of its workforce or to enhance its profitability. The detail of all such Indian bank is given here under, who have adopted ESOP for their employees before 2005.

Sr. No. Name of the Bank Public/Private Year

1 HDFC Bank Limited Private 2000 2 IDBI Bank Public 2001 3 AXIS Bank Private 2001 4 The United Western Bank Limited Private 2001 5 ING Vysya bank Private 2001 6 ICICI Bank Private 2003 7 Kotak Mahindra Bank Private 2003 8 The Development Credit Bank Ltd, Public 2005 9 The ABN AMRO Bank, Private 2005

To find the relevance of ESOP on Indian banking sector, the secondary information are used in order to get the empirical results. For measuring the profitability the statistics so collected further analysis to

calculate different ratios which state the significance of the plan with two time window i.e. pre-adoption period and post-adoption period. The pre-adoption period have taken 3 years before the ESOT



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established whereas the 3 years being decided for the post-ESOP adoption. However, the others information requires in the study shall be collected from research journals, Business Standard, The Economic Times, The Financial Express, periodicals will be employed. In order to get the results the study has been used the

following financial rations for presenting the output in summary way.

MEASUREMENT THROUGH FINANCIAL TOOLS

The following financial ratios are employed to measure the profitability performance of the ESOP Indian banks.

Total Assets 1- Assets per Employee = Total No. of Employee

Where Total Assets = cash balance with RBI & other banks+ Investments+ Advances+ Net Assets + other Assets.

Net Assets

2- Net Assets per Employee = Total No. of Employee

Where Net Assets= Total Assets - Depreciation Total Income 3- Income per Employee = Total No. of Employee

Where the Total Income = Interest + other Income Other Income 4- Other Income per Employee = Total No. of Employee Expenditure 5- Expenditure per Employee = Total No. of Employee

Where Expenditure= Total of Interest expended + operating expenses

Operating Expenses 6- Operating Expenses per Employee = Total No. of Employee Gross Profit 7- Gross Profit per Employee = Total No. of Employee



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Where Gross Profit=Total income - Expenditure. Net Profit 8- Net Profit per Employee = Total No. of Employee

Where Net Profit= Gross profit – Tax provisions & Contingencies

The present study has used the statistical tools for getting the empirical results which are average, median and standard deviation. The value of average can be got by using the following formula:

Average=Sum of observation/No. of observation

PROFITABILITY PERFORMANCE OF ESOP INDIAN BANK

Indian banking sector is a set of all the Indian banks includes all the Public Sector Banks, Private Sector Banks and Foreign banks operating in India, Among all these Indian banks the study considered the banks who have adopted ESOP for their employee at least four years ago, i.e. prior to the year 2005 for analyzing the effect of ESOP properly.

TOTAL ASSETS PER EMPLOYEE (TAE) OF ALL THE INDIAN ESOP BANKS

Following results have been received while examining the 7 years data of all the 9 Indian banks who have adopted ESOP to examine the effect on assets per employee. The data shows that in almost all the banks the total assets per employee (TAE) is increasing in post adoption periods of the ESOP, the overall average of the all the bank data is also indicating the increasing trends in post ESOP adoption period. This means that the level (investment) of assets has increased in post-adoption period due to the employee involvement in investment decision making process through employee stock option plan in almost all the banks.

Name of the Bank

HDFC Bank Ltd ESOP-2000

IDBI Bank ESOP-2001

AXIS Bank ESOP 2001

UWB Ltd ESOP-2001

ING Vysya bank ESOP-2001

ICICI Bank ESOP-2003

KMB Ltd ESOP-2003

DCB Ltd ESOP-2005

The ABN AMRO Bank, ESOP-2005

Overall Average

Pre – ESOP adoption Period

2.975 1.161 4.080 1.508 1.168 7.107

3.206 3.459 0.858 2.84

Post- ESOP adoption Period

6.125 2.474 7.917 1.853 2.201 10.933 5.375 3.074 0.894 4.53

NET ASSETS PER EMPLOYEE (NAE) OF ALL THE INDIAN ESOP BANKS

Going through the data of all the 9 banks who have adopted ESOP in India to

examine the effect on the Net assets per employee under mentioned result have been received:



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Name of the Bank


IDBI Bank ESOP-2001

AXIS Bank ESOP 2001

UWB Ltd ESOP-2001



KMB Ltd ESOP-2003

DCB Ltd ESOP-2005


Overall Average


0.058 0.071 0.054 0.055 0.038 0.168 0.084 0.049 0.202 0.087


0.105 0.114 0.092 0.078 0.040 0.411 0.068 0.058 0.127 0.121

The above result shows that in all the banks positive trend has been observed in post adoption period of ESOP. In overall average column the amount for post ESOP adoption period is registered as Rs. 0.121 crore is showing which is higher in comparison to the amount shows in pre adoption overall average column i.e. Rs. 0.087 crore. This indicates that after adoption of ESOP in almost all the Indian

banks the Net asset per employee has been increased.

INCOME PER EMPLOYEE (IE) OF ALL THE INDIAN ESOP BANKS

The effect of ESOP on the Income of all the banks (9) who have adopted ESOP can be seen as per under mentioned table:

Name of the Bank

HDFC Bank Ltd ESOP2000

IDBI Bank ESOP-2001

AXIS Bank ESOP 2001

UWB Ltd ESOP-2001



KMB Ltd ESOP-2003

DCB Ltd ESOP-2005


Overall Average


0.350 0.115 0.354 0.108 0.131 0.670

0.572 0.283 0.123 0.301


0.368 0.215 0.740 0.145 0.237 0.788 0.765 0.290 0.204 0.417

The data of the above table indicating the increasing trend in the income per employee of the entire Indian bank who have adopted ESOP in the post adoption years. In overall average column also the

income per employee (IE) is higher in post adoption period. Thus in post-adoption period the income performance of the bank positively improved due to plan implementation.



‐ 139 ‐

OTHER INCOME PER EMPLOYEE (OIE) OF ALL THE INDIAN ESOP BANKS

The effects of ESOP on other income per employee of the Indian banks who have adopted it can describe from the data of the following table:

Name of the Bank


IDBI Bank ESOP 2001

AXIS Bank ESOP-2001

UWB Ltd ESOP-2001



KMB Ltd ESOP-2003

DCB Ltd ESOP-2005


Overall Average


0.061 0.012 0.060 0.016 0.020 0.114

0.234 0.060 0.045 0.069


0.087 0.048 0.191 0.045 0.063 0.213 0.410 0.110 0.077 0.165

The above table shows that other income per employee (OIE) is increased after adoption of ESOP by the Indian banks and overall average amount of post adoption year is registered as Rs.0.165 crore which is high in comparison to Rs.0.069 crore the amount of other income registered for pre adoption year for ESOP. Thus the other income performance of the Indian bank is improved in post-adoption period in

comparison of pre-adoption period in the Indian Banking Sector.

EXPENDITURE PER EMPLOYEE (EE) OF ALL THE INDIAN ESOP BANKS

The effect of ESOP on the Indian Banking Sector on expenditure per employee (EE) can be shown by the table mentioned hereunder:

Name of the Bank

HDFC Bank Ltd ESOP 2000

IDBI Bank ESOP 2001

AXIS Bank ESOP 2001

UWB Ltd ESOP2001


ICICI Bank ESOP2003

KMB Ltd ESOP2003

DCB Ltd ESOP2005


Overall Average


0.243 0.099 0.280 0.051 0.114 0.597

0.234 0.240 0.071 0.214


0.449 0.162 0.540 0.111 0.192 0.756 0.410 0.260 0.156 0.337

As per the data of above table the Indian banks who have adopted ESOP have shown rise in their expenditure per employee in the post adoption period of ESOP. The overall average table also following the similar trend of increases in

expenditure in post adoption period of ESOP. This means the expenditure performance of the bank is not improved after the implementation of ESOP.



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OPERATING EXPENSES PER EMPLOYEE (OEE) OF ALL THE INDIAN ESOP BANKS

The effects of ESOP adoption on the operating expenses per employee (OEE) of the Indian banks can be analysis as per under mentioned table’s data:

Name of the Bank

HDFC Bank Ltd ESOP2000

IDBI Bank ESOP-2001

AXIS Bank ESOP2001

UWB Ltd ESOP2001



KMB Ltd ESOP-2003

DCB Ltd ESOP2005


Overall Average


0.073 0.017 0.050 0.015 0.023 0.092

0.240 0.090 0.067 0.074


0.116 0.058 0.113 0.035 0.059 0.163 0.434 0.110 0.144 0.139

The data from the above table and from the overall average column clearly indicating that the operating expenses has been increased in the post adoption period of ESOP. Thus the performance of operating expenses per employee for post adoption period in Indian banking sector cannot be considered good.

GROSS PROFIT PER EMPLOYEE (GPE) OF ALL THE INDIAN ESOP BANKS

The effect on gross profit per employee (GPE) of adopting ESOP on the Indian banks can be shown through the following table:

Name of the Bank


IDBI Bank ESOP 2001

AXIS Bank ESOP 2001

UWB Ltd ESOP 2001


ICICI Bank ESOP 2003

KMB Ltd ESOP-2003

DCB Ltd ESOP-2005


Overall Average


0.100 0.017 0.073 0.058 0.018 0.163

0.136 0.050 0.052 0.074


0.116 0.052 0.202 0.043 0.045 0.172 0.182 0.022 0.048 0.098

The data from the above table shown that the gross profit is increasing during post adoption period of almost all the banks the overall average column also shows that Rs.0.098 crore in post adoption period in comparison to Rs. 0,074 crore in the pre adoption period, Thus after adoption of

ESOP in the Indian Banking Sector the gross profit shows increasing tends.

This states that the gross profit performance of the Indian Banks is improved after implementation of ESOP.

NET PROFIT PER EMPLOYEE (NPE) OF ALL THE INDIAN ESOP BANK



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The effects of adoption of ESOP on the net profit performance of the Indian banks can be analysis here by the below mentioned table. The data shows that except in 1 or 2 banks in all the banks the net profit has increased after adoption of ESOP. In those one or two banks also where profit was less, if we look at their balance sheet huge loss was observed during previous year (ESOP adoption year) and after adoption of ESOP profit performance was improved

and continuous improvement was registered thereafter.

In the overall column we can see that in post adoption period of ESOP per employee net profit was registered more (Rs.0.048 crore) in comparison to the pre adoption period (Rs.0.035 crore). Thus ESOP has played significant role in enhancing the net profit performance in post adoption period.

Name of the Bank


IDBI Bank ESOP 2001

AXIS Bank ESOP 2001

UWB Ltd ESOP-2001


ICICI Bank ESOP 2003

KMB Ltd ESOP 2003

DCB Ltd ESOP-2005


Overall Average


0.070 0.013 0.033 0.012 0.008 0.075

0.070 0.020 0.011 0.035


0.079 0.023 0.080 0.009 0.013 0.097 0.117 -0.020 0.014 0.048



‐ 142 ‐

CONSOLIDATED AVERAGE PROFITABILITY PERFORMANCE OF ESOP INDIAN BANKS

Var

iabl

es

Pre – ESOP adoption Period Post- ESOP adoption Period

HD

FC

IDB

I Ban

k

AX

IS B

ank

UW

B L

td

ING

Vys

ya

ICIC

I Ban

k

KM

B L

td

DC

B L

td

The

AB

N,

Ave

rage

HD

FC

IDB

I Ban

k

AX

IS B

ank

UW

B L

td

ING

Vys

ya

ICIC

I Ban

k

KM

B L

td

DC

B L

td

The

AB

N,

Ave

rage

TAE

2.97

1.16

4.08

1.50

1.16

7.10

3.20

3.45

0.85

2.84 6.12 5 2.47 4 7.91 7 1.85 3 2.20 1 10.9 30 5.37 5 3.07 4 0.89 4 4.53

NAE

0.05

0.07

0.05

0.05

0.03

0.16

0.08

0.04

0.20

0.08

0.10

0.11

0.09

0.07

0.04

0.41

0.06

0.05

0.12

0.12

IE

0.3

0.1

0.3

0.1

0.1

0.6

0.5

0.2

0.1

0.3

0.3

0.2

0.7

0.1

0.2

0.7

0.7

0.2

0.2

0.4

OIE

0.0

0.0

0.0

0.0

0.0 0.1

0.2

0.0

0.0

0.0

0.0

0.0

0.1

0.0

0.0

0.2

0.4

0.1

0.0

0.1

EE

0.24

0.09

0.28

0.05

0.11 0.59

0.23

0.24

0.07

0.21

0.44

0.16

0.54

0.11

0.19

0.75

0.41

0.26

0.15

0.33

OEE

0.0

0.0

0.0

0.0

0.0

0.0

0.2

0.0

0.0

0.0

0.1

0.0

0.1

0.0

0.0

0.1

0.4

0.1

0.1

0.1

GPE

0.1

0.0

0.0

0.0

0.0 0.1

0.1

0.0

0.0

0.0

0.1

0.0

0.2

0.0

0.0

0.1

0.1

0.0

0.0

0.0

NPE

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.1

- 0.0

0.0

T- value

t- values calculated through paired-samples t – test and testing at α = 0.05 level

-1.1

33

-1.2

94

-1.3

21

-1.5

03

-1.3

36

1.21

9

-1.4

45

0.87

1

-1.5

25

-1.3

28

No any value significant at α = 0.05

The consolidation average profitability performance shows by above table. The t-value is calculated using paired-samples t- test which comparing the pre and post profitability performance of the nine banks under consideration for the study. The t –value for the HDFC bank is -1.133 whereas -1.294 for IDBI bank which is not statistically significant at α = 0.05 level if risk. Moreover the t – value for ICICI bank is 1.219 whereas -1.328 for average profitability performance of nine banks of the study which are not significant at five percent (α = 0.05) level of risk. Thus null

hypothesis is accepted that profitability performance of India banking sector did not improve significantly after adoption of ESOP.

CONCLUSION

The study under consideration surveyed the public sector banks in relation to ESOP implementation since 2000 in Indian economy. After the micro analysis of nine bank’s data on different parts of profitability performance i.e. per employees based on total Assets, Net



‐ 143 ‐

Assets, Income, Other Income, Expenditure, Operating Expenses, Gross Profit and Net Profit for both pre-adoption period and post-adoption period, the research concluded that the total assets are increased after the adoption of ESOP in their business. ESOT play prominent role to raise the profitability performance as well as productivity performance of the firm in long run as observed in India whereas the upward trend for the both variable was observed in short run in abroad due proper implementation of the scheme but the scheme adopted by Indian industry since 2000 when Indian industry was suffering from shortage of talent of their workforce. The study under consideration has observed that income of the sample size increased during the study period. The other income performance of the nine Indian banks has improved whereas the expenditure performance has not improved as found by the study. Thus it can be concluded that profitability performance of India banking sector did not improve significantly after adoption of ESOP.

REFERENCE

• Blasi and Kruse (1997), “Employee stock ownership and corporate performance among public companies”, Industrial and Labor Relations Review, Vol.No.50 (1), pp. 134-136.

• Blasi, Joseph, Michael Conte & Douglas Kruse. (1996), “Employee stock ownership and corporate performance among public companies”, Industrial and Labor Relations Review, Vol.No.50 (1), pp. 60-79.

• Blair, Margaret, Douglas Kruse & Joseph Blasi. 2000. Is employee ownership an unstable form? Or a stabilizing force? In Thomas

Kochan and Margaret Blair, Eds., Corporation and Human Capital. Washington, DC: The Brookings Institution

• Conte M & A.S. Tannenbaum. 1978. Employee-owned companies: is the difference measurable? Monthly Labor Review: 97-102

• Kardas, Peter; Adria L. Scharf & Jim Keogh (1998), “Wealth and income consequences of ESOPs and employee ownership: a comparative study from Washington State”, Journal of Employee Ownership Law and Finance. Vol. no. 10(4), pp. 35-43.

• Kruse, Douglas & Joseph Blasi. 1997. Employee ownership, employee attitudes, and firm performance: a review of the evidence, In Daniel J.B. Mitchell, David Lewin, and Mahmood Zaidi, eds., Handbook of Human Resource Management. Greenwich, CT: JAI Press, 1997, pp. 113-151

• Kumbhakar, SC & AE Dunbar 1993. “The elusive ESOP-productivity link,” Journal of Public Economics, 52: 273-283 Lamberg, Juha-Antti, Grant T. Savage & Kalle Pajunen 2003. Strategic stakeholder perspective to ESOP negotiations: The case of United Airlines, Management 41:383-394.

• Quarrey, M. & Rosen, C. 1993. Employee ownership and corporate performance, Oakland, CA: National Center for Employee Ownership



‐ 144 ‐

• Rhodes, S.R. & R.M. Steers. 1981. Conventional vs. worker-owned organizations, Human Relations, 24: 1013-1035

• Rodrick, S. S. (2005) Leveraged ESOPs and Employee Buyouts (Fifth Edition), Oakland, CA: The National Center for Employee Ownership.

• Rosen, C. & M. Quarrey. 1987. How well is employee ownership working? Harvard Business Review 65(September/October):126–28, 132



‐ 145 ‐




PILGRIMAGE AT MATA VAISHNO DEVI: PROBLEMS AND REMEDIES

PADMINI TOMER*; DR. R.S. ARORA**

*Continental College of Higher Studies Jalvehra Fathegarh Sahib Punjab – 147001

**Department of Commerce Punjabi University Patiala Punjab - 147001

ABSTRACT Mata Vaishno Devi Shrine is one of the most popular destinations for religious tourism in India. A large number of people visit this place all over the year especially during Sawan and Navratras. It is the duty of government and the authorities to provide basic tourism infrastructure facilities to the tourists. In spite of huge tourism infrastructure facilities, visitors face several problems while visiting the Shrine. The study is based on a sample of 100 pilgrims. The data so obtained has been tabulated and analysed education-wise and type of pilgrim-wise. The major findings reveal some problems faced by the pilgrims at Katra, Enroute & Bhawan and suggest remedies to resolve them. KEYWORDS: Mata Vaishno Devi Shrine, Problems, Tourism, Tourist’s Behaviour.

INTRODUCTION

The holy shrine of Mata Vaishno Devi is situated at Trikuta Hills, about 13 Kms. from Katra town in Jammu and Kashmir State. The deity is situated here in the form of three pindies of Devi Mahalakshmi, Mahakali and Mahasaraswati. The journey to this destination starts mainly from Jammu. People can approach the Katra from here by road. The journey ahead is carried on the uphill mainly on foot or through horse (mule). Weight lifting

labour known as pithu is available to help the pilgrims to carry their belongings up to the shrine and back. A large number of people within and outside the country visit this shrine throughout the year. However, during savan (rainy months) and navratras, there is immense increase in number of pilgrims. It is worth mentioning that more than 82 lakh pilgrims visited the shrine in the year 2009.Mata Vaishno Devi Shrine Board provides civic amenities to the pilgrims and tourists visiting holy cave of Mata Vaishno Devi. It is also concerned with up keeping and maintenance of the places situated Enroute and at Bhawan. It has been observed that tourists face several



‐ 146 ‐

problems relating to accommodation, food, sanitation, drinking water, medical facility etc. while visiting this place. Hence, an attempt has been made in this paper to highlight the problems faced by them in this pilgrimage centre. The paper also suggests remedies to resolve such problems.


The present study is based on a survey of 100 pilgrims conducted during 2008 and 2009. In the absence of ready availability of any sampling framework, we have resorted to judgment sampling. The data has been collected with the help of a pre-designed questionnaire specifically prepared for this purpose by personally visiting Mata Vaishno Devi Shrine 5 times (covering Navratra also) with a gap of at least 3 months. While covering the group visitors (family or otherwise), only one respondent from the

group (family head or group leader) has been taken in the sample. Further, research paper has been divided into three sections. Secton-1 highlights the problems faced by tourists in Katra. Section-2 and Section-3 deal with the problems faced by them En-route and at Vaishno Devi (Bhawan) respectively.

The data so obtained has been tabulated and analysed education-wise and type of pilgrim-wise. Education wise, the respondents have been divided into five categories, viz. below matriculation (E1), matriculates and under graduates (E2), graduates (E3), postgraduates (E4), and professionals (E5). Similarly, type of pilgrim-wise the respondents have been divided into four categories, viz. individuals (T1), family group (T2), package tour group (T3), and friends group (T4). Category-wise profile of the respondents is as under:-

TABLE-1.1

EDUCATION-WISE/TYPE OF PILGRIM-WISE DISTRIBUTION OF THE RESPONDENTS

Pilgrim Categories Educational Categories Total

E1 E2 E3 E4 E5

T1 1

(1)

5

(5)

4

(4)

3

(3)

3

(3)

16

(16)

T2 8

(8)

9

(9)

11

(11)

5

(5)

8

(8)

41

(41)

T3 5

(5)

2

(2)

2

(2)

2

(2)

9

(9)

20

(20)

T4 - 3

(3)

6

(6)

6

(6)

8

(8)

23

(23)

N* 14 19 23 16 28 100

Note: 1. N represents total number of the respondents surveyed in this table and tables to follow. 2. Figures in parenthesis in this table and tables to follow represent percentages.



‐ 147 ‐

SECTION- I

PROBLEMS FACED BY PILGRIMS IN KATRA

Vaishno Devi Shrine is situated at Trikuta Hills situated at a distance of 12 Kms. from Katra. Registration of pilgrims at Katra is the pre-requisite for onward journey to the Shrine where a slip is issued to each group at one of the designated offices here. The journey to the Shrine is carried generally on foot which motivates the pilgrims to stay at Katra either before undertaking the onward journey or after

returning from the Shrine. People also like to purchase dry-fruits and antiques from here for their friends and relatives. People who come through taxi or by their own car are also required to park their vehicles at Katra. During Savan and Navratras, when a large number of people come for pilgrimage, sometimes authorities stop the people for onward journey for a day or two. Thus Katra, though a small town, generally remains a crowded destination due to the pilgrims. Following paragraphs highlight the analysis of responses obtained from the respondents regarding basic facilities at Katra.

TABLE 1.2

PROBLEMS FACED BY THE RESPONDENTS IN KATRA

(EDUCATION-WISE/PILGRIM-WISE DISTRIBUTION)

Problems

Educational Categories Pilgrims Categories Total

E1 E2 E3 E4 E5 T1 T2 T3 T4

Accommodation

Non availability 9

(64.28)

13

(68.42)

10

(47.61)

8

(53.33)

14

(51.85)

14

(87.5)

21

(52.5)

9

(45)

10

(50)

54

(56.25)

High tariff 13

(92.85)

14

(73.68)

17

(80.95)

13

(86.66)

19

(70.37)

14

(87.5)

30

(75)

17

(85)

15

(75)

76

(79.16)

Lack of cleanliness 12

(85.71)

13

(68.42)

17

(80.95)

10

(66.66)

15

(55.55)

11

(68.75)

36

(90)

8

(40)

12

(60)

67

(69.79)

Problem of room

reservation

2

(14.28)

3

(15.78)

2

(9.52)

2

(13.33)

4

(14.81)

3

(18.75)

5

(12.5)

1

(5)

4

(20)

13

(13.54)

N 14 19 21 15 27 16 40 20 20 96

Food

High rate 11 15 22 15 23 13 37 15 21 86



‐ 148 ‐

(78.57) (78.94)(95.65)(93.75)(85.18)(86.66)(90.24)(75) (91.30)(86.86)

Oily and spicy 8

(57.14)

6

(31.57)

10

(43.47)

9

(56.25)

13

(48.14)

8

(53.33)

15

(36.58)

12

(60)

11

(47.82)

46

(46.46)

Lack of freshness 7

(50)

5

(26.31)

12

(52.17)

9

(56.25)

13

(48.14)

5

(33.33)

18

(43.90)

10

(50)

13

(56.52)

46

(46.46)

Lack of sitting

facilities

5

(35.71)

5

(26.31)

10

(43.47)

13

(81.25)

12

(44.44)

9

(60)

18

(43.90)

7

(35)

11

(47.82)

45

(45.45)

N 14 19 23 16 27 15 41 20 23 99

Parking

Lack of space 2

(100)

- - 1

(100)

4

(100)

- 3

(100)

4

(100)

- 7

(100)

Lack of security 1

(50)

- - - 4

(100)

- 1

(33.33)

4

(100)

- 5

(71.42)

Misbehaviour by

concerned people

1

(50)

- - - 2

(50)

- 1

(33.33)

2

(50)

- 3

(42.85)

N 2 - - 1 4 - 3 4 - 7

Transportation

Overcrowding inbuses

9

(64.28)

12

(63.15)

16

(69.56)

12

(75)

20

(71.42)

9

(56.25)

26

(63.41)

13

(65)

21

(91.30)

69

(69)

Misbehaviour by

bus conductor

2

(14.28)

3

(15.78)

5

(21.73)

4

(25)

6

(21.42)

1

(6.25)

5

(12.19)

8

(40)

6

(26.08)

20

(20)

Inadequate busservice

To shivkhori

4

(28.57)

10

(52.63)

12

(52.17)

10

(62.5)

11

(39.28)

7

(43.75)

17

(41.46)

8

(40)

15

(65.21)

47

(47)

High tariff of taxi 1

(7.14)

7

(36.84)

9

(39.13)

7

(43.75)

17

(60.71)

7

(43.75)

11

(26.82)

10

(50)

13

(56.52)

41

(41)

High tariff of localauto

11

(78.57)

16

(84.21)

22

(95.65)

13

(81.25)

13

(46.42)

11

(68.75)

35

(85.36)

13

(65)

16

(69.56)

75

(75)



‐ 149 ‐

N 14 19 23 16 28 16 41 20 23 100

Sanitation

Less number oftoilets

8

(57.14)

8

(42.10)

9

(39.13)

11

(68.75)

24

(85.71)

8

(50)

24

(58.53)

15

(75)

13

(56.52)

60

(60)


(78.57)

16

(84.21)

21

(91.30)

13

(81.25)

24

(85.71)

16

(100)

36

(87.80)

15

(75)

18

(78.26)

85

(85)

Lack of water intoilets

3

(21.42)

5

(26.31)

5

(21.73)

7

(43.75)

16

(57.14)

5

(31.25)

12

(29.26)

9

(45)

10

(43.47)

36

(36)

Overcrowding 9

(64.28)

18

(94.73)

20

(86.95)

13

(81.25)

14

(50)

14

(87.5)

31

(75.60)

12

(60)

17

(73.91)

74

(74)

Overcharging bysweeper

3

(21.42)

2

(10.52)

3

(13.04)

4

(25)

7

(25)

1

(6.25)

8

(19.51)

1

(5)

9

(39.13)

19

(19)

Congested bathroom 7

(50)

12

(63.15)

15

(65.21)

12

(75)

11

(39.28)

10

(62.5)

26

(63.41)

7

(35)

14

(60.86)

57

(57)

Less ladies bathroom 4

(28.57)

3

(15.78)

8

(34.78)

9

(56.25)

10

(35.71)

2

(12.5)

16

(39.02)

6

(30)

10

(43.47)

34

(34)

Improper lighting 4

(28.57)

6

(31.57)

10

(43.47)

8

(50)

10

(35.71)

6

(37.5)

18

(43.90)

4

(20)

10

(43.47)

38

(38)

N 14 19 23 16 28 16 41 20 23 100

Drinking Water

Less number of taps 14

(100)

18

(94.73)

21

(91.30)

15

(93.75)

24

(85.71)

16

(100)

36

(87.80)

17

(85)

23

(100)

92

(92)


(35.71)

11

(57.89)

11

(47.82)

12

(75)

19

(67.85)

11

(68.75)

19

(46.34)

9

(45)

19

(82.60)

58

(58)

Non-availability offresh water

3

(21.42)

3

(15.78)

6

(26.08)

7

(43.75)

7

(25)

7

(43.75)

10

(24.39)

5

(25)

4

(17.39)

26

(26)

Non working taps 5 2 4 8 3 7 7 3 5 22



‐ 150 ‐

(35.71) (10.52)(17.39)(50) (10.71)(43.75)(17.07)(15) (21.73)(22)

N 14 19 23 16 28 16 41 20 23 100

Shopping

High rate 14

(100)

17

(89.47)

21

(91.30)

14

(87.5)

24

(85.71)

12

(75)

40

(97.56)

16

(80)

22

(95.65)

90

(90)

Lack of qualityproduct

8

(57.14)

7

(36.84)

8

(34.78)

7

(43.75)

19

(67.85)

8

(50)

9

(21.95)

15

(75)

17

(73.91)

49

(49)

Misbehaviour byshopkeeper

6

(42.85)

7

(36.84)

9

(39.13)

8

(50)

10

(35.71)

8

(50)

14

(34.14)

10

(50)

8

(34.78)

40

(40)

Lack of variety 7

(50)

6

(31.57)

6

(26.08)

12

(75)

9

(32.14)

10

(62.5)

12

(29.26)

8

(40)

10

(43.47)

40

(40)

N 14 19 23 16 28 16 41 20 23 100

Medical Facility

Information notavailable

6

(42.85)

7

(36.84)

8

(34.78)

8

(50)

11

(39.28)

5

(31.25)

19

(46.34)

5

(25)

11

(47.82)

40

(40)

Less number ofdoctors

3

(21.42)

2

(10.52)

6

(26.08)

3

(18.75)

8

(28.57)

- 14

(34.14)

2

(10)

6

(26.08)

22

(22)

Less number ofmedical shops

4

(28.57)

3

(15.78)

5

(21.73)

4

(25)

7

(25)

2

(12.5)

11

(26.82)

2

(10)

8

(34.78)

23

(23)

Less qualifieddoctors

2

(14.28)

2

(10.52)

4

(17.39)

1

(6.25)

4

(14.28)

- 6

(14.63)

3

(15)

4

(17.39)

13

(13)

Indifferent attitude ofmedical staff

2

(14.28)

2

(10.52)

4

(17.39)

1

(6.25)

2

(7.14)

- 7

(17.07)

1

(5)

3

(13.04)

11

(11)

Scarcity of medicines 1

(7.14)

2

(10.52)

1

(4.34)

1

(6.25)

2

(7.14)

- 4

(9.75)

1

(5)

2

(8.69)

7

(7)

N 14 19 23 16 28 16 41 20 23 100

Shelter



‐ 151 ‐

Less number ofshelters

14

(100)

18

(94.73)

22

(95.65)

15

(93.75)

21

(75)

15

(93.75)

38

(92.68)

18

(90)

19

(82.60)

90

(90)


(14.28)

4

(21.05)

7

(30.43)

5

(31.25)

12

(42.85)

4

(25)

10

(24.39)

6

(30)

10

(43.47)

30

(30)

Improper lighting 2

(14.28)

3

(15.78)

4

(17.39)

4

(25)

6

(21.42)

2

(12.5)

7

(17.07)

3

(15)

7

(30.43)

19

(19)

N 14 19 23 16 28 16 41 20 23 100

ACCOMMODATION

Accommodation is the basic requirement of every tourist and its choice depends upon many factors like tariff, safety, capacity to pay and comfort level etc. 96 respondents who have stayed in Katra have highlighted some problems regarding accommodation as shown in Table 1.2. The table reveals that 79.16 per cent of the respondents have faced the problem of high tariff followed by lack of cleanliness (69.79%), non availability (56.25%) and problem in reservation (13.54%). Education-wise a vast majority of the respondents irrespective of their educational categories have faced the problems of high tariff, lack of cleanliness and non availability (except category E3). Further, 10-15 per cent of the respondents have faced the problem regarding reservation of accommodation. Pilgrim-wise the table shows that a vast majority of the respondents irrespective of their pilgrim categories have faced problems of high tariff and lack of cleanliness (except category T3). Further, 87.5 per cent of the respondents from category T1 and 50-55

per cent of the respondents from categories T2, T3 and T4 have faced the problem regarding non availability of accommodation. However, 20 per cent of

the respondents from category T4 have reported the problem in room reservation.

FOOD

Food is a basic requirement of every tourist and its choice depends upon many factors like hygiene, rate, eating space, nature and variety of food etc. In response to a query, 99 respondents who have taken food in Katra have highlighted some food related problems. Table 1.2 depicts that a large number of the respondents (86.86%) have complained regarding high rate of food and almost 46 per cent of the respondents have highlighted the problems of oily and spicy food, lack of freshness and lack of sitting facility. Education-wise, a vast majority of the respondents irrespective of their categories have highlighted the problems of high rate. Further, 40-60 per cent of the respondents (except category E2) have faced the problems of oily & spicy food and lack of freshness in food. However, 81.25 per cent of the respondents from category E4 have reported the problem of lack of sitting facilities. Pilgrim-wise the table reveals that vast majority of the respondents irrespective of their category have highlighted the problem of high rate. Further, 60 per cent of the respondents from category T3 followed by category T1 (53.33%) have reported the problem of oily and spicy nature of food. However, 60 per cent of the respondents from category T1 have highlighted the problem of lack of



‐ 152 ‐

sitting facility while 56.52 per cent of the respondents from category T4 followed by category T3 (50%) have faced the problem of lack of freshness in food.

PARKING

Parking place is the basic requirement for those who use own vehicle for travelling and its choice depends on availability of space, parking charges, and security etc. 7 respondents who have used their own vehicle to visit Katra have highlighted some problems regarding parking as shown in Table 1.2. The table shows that a vast majority of the respondents have complained regarding lack of parking space (100%) and lack of security (71.42%) followed by misbehaviour by security persons (42.85%). Education-wise, a vast majority of the respondents from categories E1 and E5 have pointed regarding lack of parking space and lack of security. Further, an equal number of the respondents from categories E1 and E5 have complained regarding misbehaviour by security persons. Pilgrim-wise, the table shows that a vast majority of the respondents have highlighted the problem of lack of parking space and lack of security(except category T2) and misbehaviour by the security persons(except category T2).

TRANSPORTATION

Public transportation is the most popular way when people travel from one place to another but its choice depends upon many factors like tariff, availability and reservation facility etc. All the respondents have highlighted some problems regarding transportation as shown in Table 1.2. The table shows that 75 per cent of the respondents have complained regarding high tariff charged by local auto rikshaws followed by over crowdedness in buses (69%), inadequate buses to Shivkhori (47%), high tariff by

taxi (41%) and misbehaviour by the conductors (20%). Education-wise, the table indicates that a vast majority of the respondents have highlighted the problems of over crowdedness in buses, high tariff charged by local auto rikshaws (except category E5) and inadequate bus services to Shivkhori (except category E1 and E5). Similarly, 60.71 per cent of the respondents from category E5 and 35-45 per cent of the respondents(except category E1) have complained regarding high tariff charged by taxi. However, 25 per cent of the respondents from category E4 have complained regarding misbehaviour by bus conductor. Pilgrim-wise, the table shows that a vast majority of the respondents have faced the problem of over crowdedness in buses, high tariff by local auto, high tariff by taxi (except category T1 & T2) and inadequate bus services to Shivkhori (except category T1,T2 & T3). Further, 40 per cent of the respondents have complained regarding misbehaviour by bus conductor and problem in train reservation.

SANITATION

Sanitation is a basic requirement of tourists. All the respondents who have visited Katra have highlighted some problems regarding sanitation as shown in Table 1.2. The table reveals that 85 per cent of the respondents have reported regarding lack of cleanliness in toilets followed by overcrowding (74%), less number of toilets (60%) and congested bathrooms (57%). Further, 38 per cent of the respondents have complained regarding improper lighting followed by lack of water (36%), less number of ladies bathrooms (34%) and overcharging by sweepers (19%). Education-wise, majority of the respondents irrespective of their educational categories have complained regarding lack of cleanliness, overcrowding, congested bathrooms (except category E5) and less number of



‐ 153 ‐

toilets (except category E2, E3 & E4). Further, 57.14 per cent of the respondents from category E5 have complained regarding lack of water in toilets whereas an equal number of the respondents (25%) from categories E4 and E5 have reported the problem of overcharging by sweeper. However, 30-60 per cent of the respondents have highlighted the problem of less number of ladies bathroom (except categories E1 & E2) and improper lighting (except category E1). Pilgrim-wise, the table reveals that a majority of the respondents irrespective of their category have reported regarding lack of cleanliness in toilets, overcrowding, less number of toilets and congested bathrooms (except category T3). 45 per cent of the respondents from category T3 have highlighted the problem of lack of water while 39.13 per cent of the respondents from category T4 have reported the problem of overcharging by sweepers. Further, almost an equal number of the respondents from category T4 (43.47%) have complained regarding lack of water and less number of ladies bathrooms. However, almost 44 per cent of the respondents from categories T2 and T4 have complained regarding improper lighting in toilets.

DRINKING WATER PROBLEM

Providing drinking water to tourists remains a big challenge for the managers of a pilgrimage site. All the respondents who have visited Katra have highlighted some problems regarding drinking water as shown in Table 1.2. The table shows that majority of the respondents have pointed out the problems of less number of taps (92%) and lack of cleanliness near taps (58%) followed by non availability of fresh water (26%) and non working taps (22%). Education-wise most of the respondents irrespective of their

educational categories have faced the problems regarding less number of taps and lack of cleanliness near taps (except categories E1 and E3). Further, 50 per cent of the respondents from category E4 have highlighted the problem of non working taps whereas 43.75 per cent of the respondents from same category have reported the problem of non availability of fresh water. Pilgrim-wise the table reveals that a vast majority of the respondents (85-100%) have complained regarding less number of taps. Further, 82.60 per cent of the respondents from category T4 followed by category T1 (68.75%) have complained regarding lack of cleanliness near taps. An equal number of the respondents from category T1 (43.75%) have highlighted the problem of lack of fresh water and non working taps.

SHOPPING

People like to purchase goods at religious places because of sanctity attached with that place. Thus, many tourist centre are big business centres and provide good opportunities to sell for the marketers. However, choice of shopping place depends upon many factors like price charged for products, quality of products and behaviour of shopkeepers. In a response to a query, all the respondents who visited Katra have highlighted some problems regarding shopping as shown in Table 1.2. The table depicts that 90 per cent of the respondents have faced the problem of high rate. Further, 49 per cent respondents have communicated regarding lack of quality products. An equal number of the respondents (40%) have highlighted the problems of misbehaviour by shopkeepers and lack of variety. Education-wise the table shows that a vast majority of the respondents irrespective of their educational categories have pointed out regarding high rates, lack of quality products (except categories E2, E3 and E4) and lack of variety (except categories E2,



‐ 154 ‐

E3 and E5) at Katra. Further, 35-50 per cent of the respondents have reported regarding misbehavior by the shopkeepers. Pilgrim-wise the table shows that majority of the respondents have highlighted regarding problems of high rate and lack of quality products (except category T2). Further, 62.5 per cent of the respondents from category T1 followed by categories T4 (43.47%) and T3 (40%) have complained regarding lack of variety in goods. Similarly, an equal number of the respondents from categories T1 and T3 and almost 34 per cent of the respondents from categories T2 and T4 have reported regarding misbehavior by shopkeepers.

MEDICAL FACILITY

To provide proper medical facilities to the tourist is the responsibility of state government. All the respondents who have visited Katra have highlighted some problems regarding medical facilities as shown in Table 1.2. The respondents have pointed out the problems of non availability of information (40%), less number of medical shops (23%), less number of doctors (22%), less qualified doctors (13%), indifferent attitude of medical staff (11%) and scarcity of medicines (7%). Education-wise, the table reveals that 50 per cent of the respondents from category E4 followed by categories E1 (42.85%), and 30-40 per cent of the respondents from other categories have reported the problem of non availability of information. Further, 10-30 per cent of the respondents have highlighted the problems of less number of doctors, less number of medical shops, less qualified doctors (except category E4) and indifferent attitude by medical staff (except categories E4 & E5). The percentage share of the respondents who have complained regarding scarcity of medicines is negligible. Pilgrim-wise almost 47 per cent of the respondents from categories T2 and T4 have complained

regarding non- availability of information. Further, 25-35 per cent of the respondents from categories T2 and T4 have reported the problems of less number of doctors and less number of medical shops. Similarly, almost 17 per cent of the respondents from categories T2 and T4 have highlighted the problems of less qualified doctors and indifferent attitude of medical staff. However, the percentage share of the respondents who have complained regarding scarcity of medicines is negligible.

SHELTERS

Shelters are the basic requirement of pilgrims. All the respondents who have visited Katra have highlighted some problems regarding shelters as shown in Table 1.2. The table reveals that majority of the respondents (90%) have pointed out the problems of less number of shelters followed by lack of cleanliness (30%) and improper lighting (19%). Education-wise a vast majority of the respondents irrespective of their educational categories have reported the problem of less number of shelters. Further, 42.85 per cent of the respondents from category E5 and almost 31 per cent of the respondents from categories E3 and E4 have complained regarding lack of cleanliness. However, 15-25 per cent of the respondents (except category E1) have quoted the problem of improper lighting. Pilgrim-wise the table shows that a vast majority of the respondents irrespective of their categories have reported the problem of less number of shelters. Further, 43.47 per cent of the respondents from category T4 and 25-30 per cent of the respondents from other categories have complained regarding lack of cleanliness. 30.43 per cent of the respondents from category T4 have faced the problem of improper lighting.

SECTION-II



‐ 155 ‐

PROBLEMS FACED BY PILGRIMS EN-ROUTE

From Katra pilgrims move to Vaishno Devi Shrine (12 Kms.) on foot. The terrain is hilly and pilgrims can move ahead via road (used for mule) or by stairs which starts from Banganga (a sacred place where people generally take dip). The journey is tiring however Vaishno Devi

Shrine has wide arrangement for shelter, drinking water, toilets and cleanliness of path. Multiple shops having eatables are run by local people. To know the problems of pilgrims en-route (between Banganga and Vaishno Devi Shrine), they were asked few questions. Their responses have been given in Table 1.3 and paragraphs to follow.

TABLE 1.3

PROBLEMS FACED BY THE RESPONDENTS EN-ROUTE


Problems Educational Categories Pilgrims Categories Total

E1 E2 E3 E4 E5 T1 T2 T3 T4

Food

High rate 11

(84.61)

18

(100)

21

(100)

14

(87.5)

23

(88.46)

14

(93.33)

38

(97.43)

15

(83.33)

20

(90.90)

87

(92.55)

Oily and spicy 8

(61.53)

6

(33.33)

8

(38.09)

10

(62.5)

15

(57.69)

9

(60)

17

(43.58)

10

(55.55)

11

(50)

47

(50)

Lack of freshness 4

(30.76)

7

(38.88)

6

(28.57)

7

(43.75)

18

(69.23)

8

(53.33)

17

(43.58)

8

(44.44)

9

(40.90)

42

(44.68)

Lack of sitting facilities

6

(46.15)

9

(50)

6

(28.57)

9

(56.25)

8

(30.76)

8

(53.33)

14

(35.89)

7

(38.88)

9

(40.90)

38

(40.42)

N 13 18 21 16 26 15 39 18 22 94

Sanitation

Less number of toilets

8

(57.14)

8

(42.10)

9

(39.13)

9

(56.25)

23

(82.14)

9

(56.25)

20

(48.78)

13

(65)

15

(65.21)

57

(57)

Lack of cleanliness

11

(78.57)

17

(89.47)

18

(78.26)

14

(87.5)

15

(53.57)

14

(87.5)

32

(78.04)

12

(60)

17

(73.91)

75

(75)

Lack of water 6

(42.85)

9

(47.36)

7

(30.43)

7

(43.75)

6

(21.42)

9

(56.25)

11

(26.82)

6

(30)

9

(39.13)

35

(35)



‐ 156 ‐

Overcrowding 8

(57.14)

11

(57.89)

15

(65.21)

6

(37.5)

9

(32.14)

6

(37.5)

25

(60.97)

6

(30)

12

(52.17)

49

(49)

Overcharged by sweeper

4

(28.57)

7

(36.84)

6

(26.08)

4

(25)

5

(17.85)

6

(37.5)

10

(24.39)

3

(15)

7

(30.43)

26

(26)

Congested bathrooms

9

(64.28)

10

(52.63)

11

(47.82)

7

(43.75)

13

(46.42)

10

(62.5)

19

(46.34)

8

(40)

13

(56.52)

50

(50)

Less ladies bathrooms

5

(35.71)

7

(36.84)

8

(34.78)

3

(18.75)

8

(28.57)

6

(37.5)

11

(26.82)

5

(25)

9

(39.13)

31

(31)

Improper lighting 5

(35.71)

4

(21.05)

8

(34.78)

4

(25)

10

(35.71)

4

(25)

11

(26.82)

6

(30)

10

(43.47)

31

(31)

N 14 19 23 16 28 16 41 20 23 100

Drinking Water

Less number of taps

11

(78.57)

19

(100)

21

(91.30)

16

(100)

24

(85.71)

16

(100)

35 (85.36)

19

(95)

21

(91.30)

91

(91)

Lack of cleanliness

11

(78.57)

12

(63.15)

16

(69.56)

12

(75)

17

(60.71)

11

(68.75)

29

(70.73)

12

(60)

16

(69.56)

68

(68)

Non availability of fresh water

5

(35.71)

7

(36.84)

9

(39.13)

8

(50)

12

(42.85)

10

(62.5)

14

(34.14)

5

(25)

12

(52.17)

41

(41)

Non working taps 4

(28.57)

10

(52.63)

9

(39.13)

9

(56.25)

10

(35.71)

9

(56.25)

15

(36.58)

5

(25)

13

(56.52)

42

(42)

N 14 19 23 16 28 16 41 20 23 100

Medical Facility

Information not available

9

(64.28)

4

(21.05)

3

(13.04)

4

(25)

12

(42.85)

5

(31.25)

13

(31.701)

5

(25)

9

(39.13)

32

(32)

Less number of doctor

4

(28.57)

2

(10.52)

1

(4.34)

1

(6.25)

2

(7.14)

- 7

(17.07)

- 3

(13.04)

10

(10)

Less number of medical shop

8 7 11 9 10 2 21 7 15 45



‐ 157 ‐

(57.14) (36.84)(47.82)(56.25)(35.71)(12.5) (51.21) (35) (65.21)(45)

Less qualified doctors

1

(7.14)

2

(10.52)

- 3

(18.75)

1

(3.57)

- 5

(12.19)

- 2

(8.69)

7

(7)

Indifferent attitude by medical staff

1

(7.14)

2

(10.52)

1

(4.34)

3

(18.75)

2

(7.14)

- 6

(14.63)

- 3

(13.04)

9

(9)

Scarcity of medicines

1

(7.14)

1

(5.26)

1

(4.34)

3

(18.75)

1

(3.57)

- 6

(14.63)

- 1

(4.34)

7

(7)

N 14 19 23 16 28 16 41 20 23 100

Shelter

Less number of shelters

11

(78.57)

12

(63.15)

17

(73.91)

16

(100)

21

(75)

13

(81.25)

27

(65.85)

18

(90)

19

(82.60)

77

(77)

Lack of cleanliness

14

(100)

17

(89.47)

22

(95.65)

13

(81.25)

17

(60.71)

13

(81.25)

35

(85.36)

16

(80)

19

(82.60)

83

(83)

Improper lighting 9

(64.28)

10

(52.63)

12

(52.17)

10

(62.5)

18

(64.28)

8

(50)

25

(60.97)

13

(65)

13

(56.52)

59

(59)

N 14 19 23 16 28 16 41 20 23 100

FOOD

In response to a query, 94 respondents who have taken food en-route have highlighted some food related problems. Table 1.3 indicates that a large number of the respondents (92.55%) have complained regarding high price of food followed by oily and spicy nature of food (50%) and around 44 per cent of the respondents have highlighted the problems of lack of freshness and lack of sitting

facility. Education-wise, a vast majority of the respondents irrespective of their educational categories have complained regarding high rate. Further, 55-65 per

cent of the respondents (except category E2 and E3) have faced the problems of oily & spicy nature of food. However, 69.23 per cent of the respondents from category E5 have reported the problem of lack of freshness in food. Similarly, 40-60 per cent of the respondents from categories E1, E2 and E4 have reported lack of sitting facilities. Pilgrim-wise the table reveals that a vast majority of the respondents irrespective of their categories have highlighted the problems of high rate and oily and spicy nature of food (except category T2). Further, 35-55 per cent of the respondents have faced the problem of lack of freshness in food and lack of sitting facilities.

SANITATION



‐ 158 ‐

Regarding sanitation, Table 1.3 depicts that 75 per cent of the respondents have complained regarding lack of cleanliness in toilets followed by less number of toilets (57%), congested bathrooms (50%). Further, 49 per cent of the respondents have highlighted the problem of overcrowding followed by scarcity of medicines (35%), less number of ladies bathrooms & improper lighting (31% each) and overcharging by sweepers (26%). Education-wise, a large number of the respondents irrespective of their educational categories have reported regarding lack of cleanliness, overcrowding (except categories E4 & E5), less number of toilets (except category E2 & E3) and congested bathrooms (except category E3, E4 & E5). Further, 40-50 per cent of the respondents (except category E3 and E5) have complained regarding lack of water in toilets whereas 36.84 per cent of the respondents from category E2 and around 25 per cent of the respondents from categories E1, E3 and E4 have reported the problem of overcharging by sweeper. However, 30-40 per cent of the respondents have highlighted the problem of less number of ladies bathrooms (except categories E4 & E5) and improper lighting (except category E2 and E4). Pilgrim-wise, the table reveals that a majority of the respondents irrespective of their category have highlighted the problem of lack of cleanliness in toilets, less number of toilets (except category T2), overcrowding (except categories T1 and T3), congested bathrooms (except category T2 & T3) and scarcity of water (except categories T2, T3 and T4). Further, 25-45 per cent of the respondents have faced the problem of less number of ladies bathrooms, improper lighting and overcharging by sweepers (except categories T2 & T3),


All the respondents who have visited Mata Vaishno Devi have highlighted some

problems regarding drinking water en-route as shown in Table 1.3. The table depicts that majority of the respondents have complained regarding less number of taps (91%) and lack of cleanliness near taps (68%). Around 40 per cent of the respondents have complained regarding non-availability of fresh water (41%) and non working taps (42%). Education-wise most of the respondents irrespective of their educational categories have faced the problems regarding less number of taps and lack of cleanliness near taps. Further, 30-60 per cent of the respondents have complained regarding problem of non working taps and non-availability of fresh water. Pilgrim-wise the table reveals that a vast majority of the respondents have complained regarding less number of taps, lack of cleanliness near taps, non-availability of fresh water and non working taps (except categories T2 & T3).

MEDICAL FACILITY

All the respondents who have visited Mata Vaishno Devi have highlighted some problems regarding medical facilities en-route as shown in Table 1.3. The table reveals that the respondents have highlighted the problems of non availability of information (32%) and less number of medical shops (45%). Further, around 10 per cent of the respondents have pointed out the problems of less number of doctors, less qualified doctors, indifferent attitude of medical staff and scarcity of medicines. Education-wise, 35-65 per cent of the respondents have reported the problems of non availability of information and less number of medical shops. Further almost 19 per cent of the respondents from category E4 have faced the problems of less qualified doctors, indifferent attitude of medical staff and scarcity of medicines whereas 28.57 per cent of the respondents have highlighted the problem of less number of doctors. Pilgrim-wise, the table reveals that 65.21



‐ 159 ‐

per cent of the respondents from categories T4 followed by category T2 (51.21%) have complained regarding less number of medical shops. Further, 30-40 per cent of the respondents (except categories T3) have reported the problems of non availability of information. However, 10-20 per cent of the respondents have highlighted the problems of less number of doctors, indifferent attitude of medical staff, scarcity of medicines and less qualified doctors (except categories T4).

SHELTERS

Respondents visiting Mata Vaishno Devi have highlighted some problems regarding shelter en-route as shown in Table 1.3. The table reveals that majority of the respondents have pointed out the problems of lack of cleanliness (83%), less number of shelters (77%) and improper lighting (59%). Education-wise the table indicates that a vast majority of the respondents irrespective of their

educational categories have reported the problem of lack of cleanliness, less number of shelters and improper lighting. Pilgrim-wise the table shows that a vast majority of the respondents irrespective of their categories have faced the problem of lack of cleanliness, less number of shelters and improper lighting.

SECTION-III

After having bath in ice-cold water at Vaishno Devi people queue for the darshan at the cave site. Arrangements have been made here for stay of around 10000 pilgrims by the Shrine Board. Many people like to stay at night at these accommodations. They can have blankets (free of cost) from places meant for the purpose against some refundable securities. Food shops are around 1 Km. away from the shrine to keep the place clean. Due to high altitude some pilgrims face breathing problems here.

TABLE 1.4

PROBLEMS FACED BY THE RESPONDENTS IN BHAWAN


Problems

Accommodation

Educational Categories Pilgrims Categories Total

E1 E2 E3 E4 E5 T1 T2 T3 T4

Non availability 6

(100)

9

(100)

6

(100)

6

(100)

11

(100)

10

(100)

5 (100)

13

(100)

10

(100)

38

(100)


(100)

4

(44.44)

5

(83.33)

4

(66.67)

7

(63.63)

7

(70)

5

(100)

8

(61.54)

6

(60)

26

(68.42)

Problem in roomreservation

3

(50)

3

(33.33)

3

(50)

6

(100)

11

(100)

5

(50)

4

(80)

8

(61.54)

9

(90)

26

(68.42)

N 6 9 6 6 11 10 5 13 10 38



‐ 160 ‐

Food

High rate 13

(100)

15

(100)

22

(100)

15

(100)

19

(67.85)

13

(92.85)

37

(100)

13

(65)

21

(95.45)

84

(90.32)

Oily and spicy 5

(38.46)

3

(20)

4

(18.18)

5

(33.33)

9

(32.14)

4

(28.57)

12

(32.43)

7

(35)

3

(13.63)

26

(27.95)

Lack of freshness 3

(23.07)

6

(40)

3

(13.63)

4

(26.66)

4

(14.28)

2

(14.28)

8

(21.62)

6

(30)

4

(18.18)

20

(21.50)

Lack of sittingfacilities

9

(69.23)

13

(86.66)

17

(77.27)

14

(93.33)

10

(35.71)

11

(78.57)

31

(83.78)

5

(25)

16

(72.72)

63

(67.74)

N 13 15 22 15 28 14 37 20 22 93

Sanitation

Less number oftoilets

8

(57.14)

10

(52.63)

10

(43.47)

9

(56.25)

20

(71.42)

11

(68.75)

17

(41.46)

16

(80)

13

(56.52)

57

(57)


(57.14)

12

(63.15)

20

(86.95)

10

(62.5)

19

(67.85)

13

(81.25)

31

(75.60)

7

(35)

18

(78.26)

69

(69)

Overcharged bysweeper

1

(7.14)

3

(15.78)

4

(17.39)

4

(25)

8

(28.57)

1

(6.25)

9

(21.95)

1

(5)

9

(39.13)

20

(20)

Congested bathrooms

8

(57.14)

13

(68.42)

18

(78.26)

9

(56.25)

10

(35.71)

13

(81.25)

24

(58.53)

8

(40)

13

(56.52)

58

(58)

Less ladiesbathrooms

2

(14.28)

10

(52.63)

6

(26.08)

6

(37.5)

9

(32.14)

5

(31.25)

14

(34.14)

4

(20)

10

(43.47)

33

(33)

Improper lighting 3

(21.42)

7

(36.84)

8

(34.78)

6

(37.5)

7

(25)

5

(31.25)

15

(36.58)

2

(10)

9

(39.13)

31

(31)

N 14 19 23 16 28 16 41 20 23 100

Drinking Water

Less number oftaps

13

(92.85)

15

(78.94)

19

(82.60)

15

(93.75)

24

(85.71)

13

(81.25)

34

(82.92)

17

(85)

22

(95.65)

86

(86)



‐ 161 ‐


(35.71)

11

(57.89)

10

(43.47)

11

(68.75)

11

(39.28)

10

(62.5)

17

(41.46)

6

(30)

15

(65.21)

48

(48)

Non-availability offresh water

2

(14.28)

2

(10.52)

1

(4.34)

5

(31.25)

3

(10.71)

- 7

(17.07)

3

(15)

3

(13.04)

13

(13)

Non working taps 2

(14.28)

1

(5.26)

1

(4.34)

6

(37.5)

5

(17.85)

2

(12.5)

6

(14.63)

2

(10)

5

(21.73)

15

(15)

N 14 19 23 16 28 16 41 20 23 100

Shopping

High rate 14

(100)

17

(89.47)

21

(91.30)

14

(87.5)

24

(85.71)

12

(75)

40

(97.56)

16

(80)

22

(95.65)

90

(90)

Lack of qualityproducts

8

(57.14)

7

(36.84)

8

(34.78)

7

(43.75)

19

(67.85)

8

(50)

9

(21.95)

15

(75)

17

(73.91)

49

(49)

Misbehaviour byshopkeepers

6

(42.85)

7

(36.84)

9

(39.13)

8

(50)

10

(35.71)

8

(50)

14

(34.14)

10

(50)

8

(34.78)

40

(40)

Lack of variety 7

(50)

6

(31.57)

6

(26.08)

12

(75)

9

(32.14)

10

(62.5)

12

(29.26)

8

(40)

10

(43.47)

40

(40)

N 14 19 23 16 28 16 41 20 23 100

Medical Facility

Information notavailable

6

(42.85)

6

(31.57)

9

(39.13)

10

(62.5)

11

(39.28)

7

(43.75)

18

(43.90)

3

(15)

14

(60.86)

42

(42)

Less number ofdoctors

1

(7.14)

1

(5.26)

1

(4.34)

2

(12.5)

2

(7.14)

- 5

(12.19)

- 2

(8.69)

7

(7)

Less number ofmedical shops

2

(14.28)

3

(15.78)

5

(21.73)

6

(37.5)

3

(10.71)

1

(6.25)

9

(21.95)

- 9

(39.13)

19

(19)

Less qualifieddoctors

1

(7.14)

1

(5.26)

- 4

(25)

3

(10.71)

- 5

(12.19)

1

(5)

3

(13.04)

9

(9)

Indifferent attitudeof medical staff

1 1 1 3 2 - 6 - 2 8



‐ 162 ‐

(7.14) (5.26) (4.34) (18.75)(7.14) (14.63) (8.69) (8)

Scarcity ofmedicines

1

(7.14)

1

(5.26)

1

(4.34)

3

(18.75)

1

(3.57)

- 6

(14.63)

- 1

(4.34)

7

(7)

N 14 19 23 16 28 16 41 20 23 100

ACCOMMODATION

After a tiring journey many pilgrims like to rest at places of Shrine Board at Mata Vaishno Devi. Though there is arrangement of stay for around 10000 pilgrims here but sometimes people are seeing lying on roadside due to overcrowding. 38 respondents who have stayed at Bhawan have mentioned some problems regarding accommodation as shown in Table 1.4. The table reveals that all the respondents have faced the problems of non availability. Further an equal number of the respondents (68.42%) have highlighted the problems of lack of cleanliness and problem in reservation. Education-wise a vast majority of the respondents irrespective of their educational categories have faced the problems of non availability, lack of cleanliness (except category E2) and problems in room reservation (except category E2). Pilgrim-wise the table indicates that a vast majority of the respondents irrespective of their pilgrim categories have faced the problems of non availability, lack of cleanliness and problem in room reservation.

FOOD

In response to a query, 93 respondents who have taken food at Bhawan have highlighted some food

related problems. Table 1.4 indicates that a large number of the respondents (90.32%) have faced the problem of high rate of

food followed by lack of sitting facility (67.74%), oily and spicy nature of food (27.95%) and lack of freshness (21.50%). Education-wise, a vast majority of the respondents irrespective of their categories have highlighted the problems of high rate and lack of sitting facilities (except category E5). Further, 20-40 per cent of the respondents have complained regarding oily & spicy nature of food (except category E3) and lack of freshness in food(except categories E3 and E5). Similarly, the table reveals that a vast majority of the respondents irrespective of their categories have quoted the problems of high rate and lack of sitting facilities (except category T3). Further, 25-35 per cent of the respondents have complained regarding the problems of oily and spicy nature of food (except category T4) and lack of freshness in food (except categories T1, T2 and T4).

SANITATION

All the respondents who have visited Katra have highlighted some problems regarding sanitation as shown in Table 1.4. The table depicts that majority of the respondents have pointed out the problem of overcrowding (73%), lack of cleanliness (69%), congested bathrooms (58%) and less number of toilets (57%). Further, 35 per cent of the respondents have complained regarding less number of ladies bathrooms (33%), improper lighting (31%) and overcharging by sweepers (20%). Education-wise, majority of the respondents irrespective of their educational categories have highlighted the problem of lack of cleanliness, congested bathrooms (except category E5)



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and less number of toilets (except category E3). Further, 25-55 per cent of the respondents have complained regarding less number of ladies bathrooms, improper lighting, (except category E1) and overcharging by sweeper (except categories E1, E2 and E3). Pilgrim-wise, the table reveals that majority of the respondents irrespective of their category have complained regarding less number of toilets (except category T2), lack of cleanliness in toilets (except category T3), and congested bathrooms (except category T3). 25-45 per cent of the respondents highlighted the problem of less number of ladies bathrooms (except category T3), improper lighting (except category T3) and overcharging by sweepers (except categories T1, T2 and T3).


Regarding drinking water, the table shows that 86 per cent of the respondents have pointed out the problems of less number of taps followed by lack of cleanliness near taps (48%), non working taps (15%) and lack of fresh water (13%). Education-wise 75-95 per cent of the respondents irrespective of their educational categories have faced the problem of less number of taps. Further, 68.75 per cent of the respondents from category E4 followed by category E2 (57.89%) have highlighted the problem of lack of cleanliness near taps. However, 30-40 per cent of the respondents from category E4 have reported the problem of lack of fresh water and non working taps. Pilgrim-wise the table depicts that a vast majority of the respondents have complained regarding less number of taps and lack of cleanliness near taps (except categories T2 and T3). Further, 21.73 per cent of the respondents from category T4 and 17.07 per cent of the respondents from category T2 have complained regarding non working taps and lack of fresh water.

MEDICAL FACILITY

The table shows that the respondents have complained regarding the problems of non availability of Information (42%), less number of medical shops (19%), less qualified doctors (9%), indifferent attitude of medical staff (8%), less number of doctors (7%), and scarcity of medicines (7%). Education-wise, the table shows that 62.5 per cent of the respondents from category E4 and 35-45 per cent of the respondents from categories E1, E3 and E5 have reported the problem of non availability of information. Further, 20-40 per cent of the respondents from categories E3 and E4 have highlighted the problems of less number of medical shops and less qualified doctors. Further an equal number of the respondents from category E4 have pointed out the problems of indifferent attitude of medical staff and scarcity of medicines. The percentage share of the respondents irrespective of their educational categories have complained regarding less number of doctors is negligible. Pilgrim-wise, the table highlights that 60.86 per cent of the respondents from category T4 and almost 44 per cent of the respondents from categories T1 and T2 have complained regarding problem of non availability of information. Further, 39.13 per cent of the respondents from categories T4 have reported the problem regarding less number of medical shops. Similarly, 10-15 per cent of the respondents from categories T2 have highlighted the problems of less number of doctors, less qualified doctors, indifferent attitude of medical staff and scarcity of medicines.

SUGGESTIONS

In the light of above discussions the following is recommended:-

• More accommodation must be constructed both at Katra and



‐ 164 ‐

Bhawan and facilities must be provided to the tourists for on-line reservation. Further, there is need for a well managed system for the cleanliness of such places at Bhawan. At Katra also administration should issue guidelines on accommodation tariff and cleanliness of accommodation.

• Prices for food (at Katra, en-route and Bhawan), transportation (at Katra) and goods (at Katra and Bhawan) must be fixed. Further, some low price shops with good quality of food and goods must be opened by the tourism department or Vaishno Devi Shrine Board at Katra, en-Route and Bhawan. Number of shelters must be increased at Katra and enrute. Further, proper arrangements must be made for cleanliness and lighting in shelters. A separate path for mules must be constructed from Katra to Bhawan. Further, more facilities must be provided to mules, pitthu and palki owners.

• To avoid overcrowding in buses, there is need for increasing number of buses plying between Katra and Jammu.

• More toilets must be constructed at Katra, en-route and Bhawan and proper arrangements must be ensured at such places by employing more workers. This will automatically solve the problem of overcrowding as well.

• There is need for more taps of drinking water at Katra, en-Route and Bhawan. Further, proper arrangements for cleanliness near taps must be ensured.

• More parking facilities with proper security arrangements must be provided at Katra.

On the basis of some discussions with respondents it is felt that arrangements of hot water for bath at Bhawan and a trolley path for Bhawan to Bhaironath will be a big relief to the pilgrims visiting the shrine.

REFERENCES

• Ministry of Tourism, Govt. of Jammu and Kashmir.

• www.jammukashmir.nic.in

• www.maavaishnodevi.org



‐ 165 ‐




ECONOMICS OF LIVESTOCK MARKETING IN ORISSA

ANIRUDHA BISWAL*; SANJAY KUMAR**

*Division of Livestock Economics Statistics and Information Technology Indian Veterinary Research Institute

Izatnagar UP-243122 **Division of Livestock Economics Statistics and Information Technology

Indian Veterinary Research Institute Izatnagar UP-243122

ABSTRACT The marketing of livestock has been studied in Orissa. Data have been collected from ninety six farmers and thirty six market functionaries, selected randomly from the randomly selected markets of the six sample districts. Four marketing channels have been found in cattle and buffalo marketing. Farmer-Farmer marketing channel was found to be the most popular marketing channel for both male and female animal transaction. The major marketing cost components have been found as labour, market fee, misllaneous, expenditure for feed and fodder and transportation cost. Labour cost was found to be the major marketing cost for both cattle and buffalo marketing in all the four channels. The marketing cost was highest in Farmer-Middleman-Wholesaler-Farmer channel and lowest in Farmer-Farmer channel for both male and female animals. The market margin as a percentage in ultimate buyer’s rupee has been found increasing in order from Farmer-Farmer, Farmer-Middleman-Farmer, Farmer-Wholesaler-Farmer channel to Farmer-Middleman-Wholesaler-Farmer Channel. As a result, the producer’s share in ultimate buyer’s rupee was decreasing. Therefore Farmer-Farmer channel was found to be the most efficient marketing channel for both male and female animals and Farmer-Middleman-Wholesaler-Farmer channel was the least efficient one.

INTRODUCTION

In rural economy of Orissa, animal husbandry is closely associated with agriculture. Crop and livestock enterprise form two functional components of mixed farming in rural Orissa. Orissa possesses 13.9 million cattle and 1.39 million

buffaloes (17th livestock census, department of AHD&F, GOI) and hundreds of thousands of animals are transacted every year through livestock markets. However, very little is known about economic aspects of animal marketing. The marketing of large ruminants in Orissa is mainly done



‐ 166 ‐

through the weekly markets which are not systematic. Therefore, there are various important issues in the area of livestock markets in Orissa that require investigation on marketing channels, marketing margin, marketing efficiency, price spread etc.Hence, present study was undertaken with the objective to analyze the market structure, marketing channels, marketing margin, marketing efficiency, price spread of large ruminant marketing in Orissa.

METHODOLOGY AND DATA COLLECTION

The multistage stratified random sampling scheme was followed in the present study. Orissa was classified into three agro-climatic regions viz. Coastal, Southern/KBK (Koraput, Balangir and Kalahandi) and Northern regions. Considering each agro-climatic region as a stratum, two districts from each stratum were selected randomly. So Dhenkanal and Ganjam districts from coastal region, Koraput and Kalahandi district from Southern/KBK region and Keonjhar and Mayurbhanj from Northern region were selected randomly. From each selected district two livestock markets were selected randomly.The last stages of sampling involved selection of the respondents from the selected markets. Present study constituted two types of respondents viz. farmer/ livestock producer and market functionaries. Eight livestock producer who had come to the market for selling of cattle and buffalo along with three market functionaries (middle men, itinerate traders, commission agents etc.) from the selected market were selected randomly, which constituted ninety-six sample of livestock producer and thirty-six market functionaries.

For collection of primary data from sample respondents, an interview schedule was specially structured and pretested and the data were collected through personal survey method during the period from January to April, 2009. The data included about the disposal pattern of cattle and buffalo through various marketing channels, market structure, price received by the farmers, marketing cost incurred by farmers and market functionaries etc.Tabular analysis was done for disposal pattern, marketing cost, margin and price spread of cattle and buffalo.

RESULT AND DISCUSSION

MARKET STRUCTURE

Out of the twelve sample markets in the study area, eight (66.66 per cent) are regulated and operated by different market committees. Twenty five per cent of the markets are operated by gram panchayats and rest by urban local bodies. It was found that there was wide difference in market fees across different markets which ranges from 1per cent to 3 pre cent of sell price. In the respect of product differentiation, majority of cattle and buffalo transacted were local non-descriptive breeds. There was free entry and exit in all the markets without any restriction which satisfies the condition of perfect competition market.

II) DISPOSAL PATTERN

Four main marketing channels were identified for disposal of large ruminants in the study area and those are: Channel-I: Farmer-Farmer, Channel-II: Farmer-Middleman-Farmer, Channel –III: Farmer-Middleman-Wholesaler-Farmer, Channel-IV: Farmer-Wholesaler–Farmer



‐ 167 ‐

TABLE 1 DISPOSAL PATTERN OF ANIMALS IN DIFFERENT CHANNELS

Sl.No. Marketing channels Female cattle & buffalo

Male cattle & buffalo

Total no. of animals

1 Farmer-Farmer 17(30.35) 33(40.74) 50(36.49)*

2 Farmer-Middleman-Farmer

22(39.29) 26(32.09) 48(35.04)*

3 Farmer-Middleman- Wholesaler -Farmer

9(16.07) 12(14.82) 21(15.33)*

4 Farmer- Wholesaler -Farmer

8(14.29) 10(12.35) 18(13.13)*

Note: Figures in parentheses are percentage to the total male and female animals transacted.

As a perusal of the above figures in table 1, it is revealed that the majority (36.49%) of the animals were transacted through the channel-I (farmer-farmer). Channel-II (farmer-middleman-farmer) was emerged as the second important channel as 35.04% of the animals were transacted through it followed by 15.33% in channel-III (farmer-middleman Wholesaler -farmer) and 13.13% in channel-IV (farmer- Wholesaler -farmer). Again 39.29% of the female animals were transacted through channel-II and emerged as most important channel where as, 40.74% of male animals were transected through channel-I and

regarded as most popular channel. Kumar et al. (2004) found in Rohilakhand region in Uttar Pradesh that farmer- farmer channel was most important channel except in Rithura market where farmer- butcher channel was popular.

MARKETING COST

Average marketing cost by farmer and middleman in Farmer-Farmer channel and Farmer-Middleman-Farmer channel was worked out separately for both the male and female cattle and buffalo and presented in Table 2 and Table 3

TABLE 2 AVERAGE COST INCURRED BY FARMER AND MIDDLEMAN IN MARKETING FOR MALE CATTLE AND BUFFALO IN DIFFERENT CHANNELS

Sl Items CHANNEL-I CHANNEL -II

Farmer Farmer Middleman

1 Labour 100.32(58.86) 92.6(55.71) 189.0(35.18)

2 Marketing fee 18.86(11.07) 23.83(14.34) 33.94(6.32)

3 Transportation 0 0 100.0(18.61)

4 Others/miscellaneous 51.25(30.07) 49.78(29.95) 70.45(13.12)

5 Feed and fodder 0 0 143.8(26.77)

Total 170.43(100) 166.21(100) 537.19(100)



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Figures in parentheses are percentage of total marketing cost

TABLE 3 AVERAGE COST INCURRED BY FARMER AND MIDDLEMAN IN MARKETING FEMALE CATTLE AND BUFFALO IN DIFFERENT CHANNELS

Sl.No. Items CHANNEL-I CHANNEL-II

Farmer Farmer Middleman

1 Labour 100.9(64.63) 91.53(57.33) 228.0(42.71)

2 Marketing fee 16.12(10.32) 26.6(16.66) 78.75(14.75)

3 Transportation 0 0 0

4 Others/miscellaneous 39.09(25.05) 41.53(26.01) 90.0(16.87)

5 Feed and fodder 0 0 137.0(25.67)

Total 156.10(100) 159.66(100) 533.75(100)


It was observed from the table 2 and table 3 that the farmer had to incur Rs.170.43 for selling one male cattle or buffalo and Rs.156.10 for selling one female cattle and buffalo. The cost on labour in the total cost was 58.86 percent for male and 64.63 percent for female animals. Other major items of expenditure were miscellaneous cost (30.07% for male and 25.05% for female) which included expenditure for self, preparation of animals, feeding straw at market etc. and market fee (about 11% for both male and female animals). A wide difference in market fee structure was observed across different markets. At the time of negotiation between the buyer and seller, it was decided who had to pay the market fee. Some times it was shared by both.

It was found that the farmer had to incur Rs. 166.21 for selling one male cattle or buffalo and Rs.159.66 for one female cattle or buffalo. Middle man had to incur Rs.537.18 and Rs.533.75 for selling male cattle or buffalo and female cattle or buffalo respectively. Like channel-I, labour cost was found to be the major component (55.71% for male and 57.33% for female animal) in case of farmer. Similarly labour cost was 35.18% for male cattle and buffalo and 42.71% for female cattle and buffalo in case of middleman. Miscellaneous cost was found to be the 2nd major cost for farmer where as cost incurred for feed and fodder was second most important expenditure for middleman.



‐ 169 ‐

TABLE 4 AVERAGE COST INCURRED BY FARMER, MIDDLEMAN AND WHOLESALER IN MARKETING MALE CATTLE AND BUFFALO IN

DIFFERENT CHANNELS

Sl. Items CHANNEL-III CHANNEL-IV

Farmer(Rs) Middleman

(Rs)

Wholesaler (Rs)

Farmer(Rs) Wholesaler (Rs)

1 Labour 146.66

(73.82)

245.0

(64.47)

198.33

(52.21)

70.0

(41.17)

60.0

(26.08)

2 Marketing fee 1.0

(.50)

15.0

(3.95)

29.17

(7.68)

50.0

(29.41)

30.0

(13.04)

3 Others/

miscellaneous

51.0

(25.68)

50.0

(13.16)

48.33

(12.72)

50.0

(29.41)

40.0

(17.39)

4 Feed and fodder

0 70.0

(18.42)

104

(27.38)

0 100.0

(43.47)

Total 198.66

(100)

380.0

(100)

379.83

(100)

170.0

(100)

230.0

(100)


In Farmer-Middleman-Wholesaler-Farmer channel, on an average the cost incurred by farmer, middleman and whole saler was Rs.198.66, Rs.380.0 and Rs.379.83 for male and Rs.116.46, Rs.337.5 and Rs.379.5 for female cattle and buffalo respectively. From the Table 4 and Table 5, it is observed that labour cost was the major cost for farmer (73.83% for male and 61.53% for female animals), for middleman (64.47% for male cattle and buffalo and 44.45% for female cattle and buffalo) and for wholesaler (52.21% for male and 46.51% for female animals). The cost incurred for feed and fodder by middleman (18.42% for cattle and buffalo and 17.78% for female cattle and buffalo)

and by Wholesaler (27.38% for cattle and buffalo and 16.34% for female cattle and buffalo) was the major cost next to labour. In Farmer-Wholesaler channel farmer and wholesaler had to spend Rs.170.0 and Rs 230.00 respectively to sell one male cattle or buffalo and Rs.126.25 and Rs.215.0 to sell one female cattle or buffalo. The cost on labour was major for farmer (41.17% for male cattle and buffalo and 55.44% for female cattle and buffalo) where as cost on feed and fodder was major for wholesaler (43.47% for male cattle and buffalo and 23.26% for female cattle and buffalo) as Wholesaler had to keep the animals at home for longer period before selling.



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TABLE 5 AVERAGE COST INCURRED BY FARMER, MIDDLEMAN AND WHOLESALER IN MARKETING FEMALE CATTLE AND BUFFALO IN

DIFFERENT CHANNELS

Sl,No.

Items CHANNEL -III CHANNEL-IV

Farmer(Rs)

Middleman(Rs)

Wholesaler (Rs)

Farmer(Rs)

Wholesaler (Rs)

1 Labour 71.66

(61.53)

150.0

(44.45)

260.0

(68.51)

70.00

(55.44)

100.0

(46.51)

2 Marketing fee

1.8

(1.54)

77.5

(22.96)

22.5

(5.92)

12.5

(9.90)

30.0

(13.95)

3 Others/

miscellaneous

43.0

(36.92)

50.0

(14.8)

35.0

(9.22)

43.75

(34.65)

35.0

(16.28)

4 Feed and fodder

0 60.0

(17.78)

62.0

(16.34)

0 50.0

(23.26)

Total 116.46

(100)

337.5

(100)

379.5

(100)

126.25

(100)

215.0

(100)


Similar study conducted by Khan and Gopalrao (1997) in Karnataka and revealed that overall average marketing cost of the seller was Rs. 297.38 and Rs.334.69 for marketing local and up graded buffaloes. Of the five items of the cost, the cost of preparation was found to be the highest i.e. 59.40% and 58.42% for local and upgraded respectively followed by brokerage 20.97% and 22.16% for local and upgraded buffaloes, respectively but

labor cost is the major cost in the present study as animals were taken by the laborers for grazing

MARKETING MARGIN AND EFFICIENCY

Marketing margin and efficiency analysis was carried out for each channel separately for both the male and female animals and presented in Table 6 and Table 7



‐ 171 ‐

TABLE 6 MARKETING MARGINS AND EFFICIENCY OF MALE CATTLE AND BUFFALO IN DIFFERENT CHANNELS

Channels Marketing cost (Rs)

Marketing margin(Rs)

Price received by the producer(Rs)

Price paid by ultimate buyer (Rs)

Marketing efficiency

Channel-I 170.43(2.90) 0 5865.63 5865.63 34.41

Channel-II 703.38(9.98) 644.92(9.15) 5864.58 7046.69 4.34

Channel-III 958.49(11.87) 1333.65(16.52) 5953.53 8069.01 2.59

Channel-IV 400.00(5.56) 812.91(11.30) 6150.42 7193.33 5.07

Note: figures in parentheses indicate share in ultimate buyer rupee in percentage

TABLE 7 MARKETING MARGINS AND EFFICIENCY OF FEMALE CATTLE AND BUFFALO IN DIFFERENT CHANNELS

Channels Marketing cost (Rs)

Marketing margin(Rs)

Price received by the producer(Rs)

Price paid by ultimate buyer (Rs)

Marketing efficiency

Channel-I 156.10 (2.17) 0 7180.0 7180.0 45.99

Channel-II 693.41 (8.87) 732.08 (9.96) 6548.46 7814.29 4.59

Channel-III 833.46 (11.07) 1428.00 (18.96) 5383.33 7528.33 2.38

Channel-IV 341.25 (5.50) 872.5 (14.07) 5112.5 6200.0 4.21

Note: figures in parentheses indicate share in ultimate buyer rupee in percentage

In Farmer-Farmer channel, the share of marketing cost in buyer’s rupee was 2.90 per cent for marketing male cattle and buffalo and 2.17 per cent for female cattle and buffalo. The marketing efficiency was 34.41 for male cattle and buffalo and 45.99 for female cattle and buffalo and considered as most efficient marketing channel. It was noted that the prices of animal were fixed through negotiation between seller and buyer.

Through Farmer-Middleman-Farmer channel, the share of marketing

cost in buyer’s rupee was 9.98 per cent for male and 8.87 per cent for female cattle and buffalo. The share of marketing margin in ultimate buyer’s rupee was 9.15 per cent in marketing male cattle and buffalo and that for female cattle and buffalo was 9.96 percent. The marketing efficiency was 4.34 and 4.59 in marketing male cattle and buffalo and female cattle and buffalo respectively.

In Farmer-Middleman-Wholesaler-Farmer channel, the share of marketing cost in buyer’s rupee was highest among



‐ 172 ‐

the four channels found in the study area. The share of marketing cost in ultimate buyer’s rupee was 11.87 per cent and 11.07 per cent in marketing male and female animals respectively. The share of marketing margin in ultimate buyer’s rupee was 16.52 per cent in marketing male cattle and buffalo and that for female cattle and buffalo was 18.96 per cent. Due to the higher marketing margin and cost, the marketing efficiency was as low as 2.59 and 2.38 for male cattle and buffalo and female cattle and buffalo and found to be the least efficient channel among the four channels.

The share of marketing cost in ultimate buyer’s rupee in Farmer-Wholesaler-Farmer channel was 5.56 per cent and 5.5 per cent for male and female cattle and buffalo, respectively. The marketing margin was observed to be 11.30 and 14.07 per cent for male cattle and buffalo and female cattle and buffalo.

The marketing efficiency was 5.03 and found to be the second most efficient marketing channel in marketing male cattle and buffalo. The marketing efficiency for female cattle and buffalo was 4.21 and ranked third in the term of efficiency.

Similar study conducted by Khan and Gopalrao (1997) in Karnataka revealed that marketing efficiency was 8.44 and 9.04 for local and upgraded buffaloes respectively in farmer-farmer marketing channel and considered to be the most efficient marketing channel which agrees with the findings of the present study.

III) PRICE SPREAD ANALYSIS

Price spread analysis was carried out for each channel separately for both the male and female animals and presented in Table 9 and Table 10

TABLE 8 PRICE SPREAD IN DIFFERENT CHANNELS FOR MALE CATTLE AND BUFFALO IN DIFFERENT CHANNELS

Particulars Marketing channels

Channel-I Channel-II Channel-III Channel- IV

Net price received by producers

5695.20(97.09) 5698.37 (80.86) 5776.87 (71.59)

5980.42 (83.14)

Marketing cost 170.43(2.90) 703.38(9.98) 958.49(11.88) 400.00(5.56)

Marketing margin 0 644.92(9.15) 1333.65(16.53) 812.91(11.30)

Price paid by ultimate buyer

5865.63(100) 7046.69(100) 8069.01(100) 7193.33(100)

Price spread 0 1348.32 2292.14 1212.91

Note: Figures in the parentheses share in ultimate buyer’s rupee in percentage



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TABLE 9 PRICE SPREAD IN DIFFERENT CHANNELS FOR FEMALE CATTLE AND BUFFALO IN DIFFERENT CHANNELS

Particulars Marketing channels

Channel-I Channel-II Channel-III Channel- IV

Net price received by producers

7023.89 (97.82)

6388.8 (81.75) 5266.87 (69.96) 4986.25(80.42)

Marketing cost 156.10 (2.17) 693.41(8.87) 833.46 (11.07) 341.25 (5.50)

Marketing margin 0 732.08(9.96) 1428.00 (18.96) 872.5 (14.07)

Price paid by ultimate buyer

7180.0 7814.29 7528.33 6200.0

Price spread 0 1425.49 2261.46 1213.75

Note: Figures in the parentheses share in ultimate buyer’s rupee in percentage

Through Farmer-Farmer channel, the producer got a higher share of about 97 per cent in the ultimate buyer’s rupee for both male and female cattle and buffalo. In Farmer-Middleman-Farmer channel, about 81 per cent of buyer’s rupee was shared by producer for both male and female cattle and buffalo. The price spread was Rs.1348.32 and Rs.1425.32 for male and female cattle and buffalo respectively which is higher than that of Farmer-Farmer channel as middleman was involved in channel-II. Through channel-III (Farmer-middleman-Wholesaler-Farmer), the least efficient channel in marketing both male and female cattle and buffalo. On a whole, the producer farmer received a lower share of 71.59 per cent and 69.96 per cent in ultimate buyer’s rupee for male cattle and buffalo and female cattle and buffalo, respectively. Price spread was as high as Rs. 2292.14 and Rs.2261.46 for male and female cattle and buffalo respectively. It was observed from channel-IV(Farmer-Wholesaler-Farmer) that farmer producer received 83.14 per cent and 80.42 per cent for male cattle and buffalo and female cattle and buffalo from ultimate buyer’s rupee and

price spread for both male and female cattle and buffalo was about Rs.1200.00.

Patil et al. (1979) revealed that the owner of cow received a share of 67.52 percent in the consumer’s rupee which is less than the present finding. The lower share in consumer rupee may be due to the higher marketing cost and margin by the intermediaries.

CONCLUSIONS

Farmer-Farmer marketing channel was emerged as the most popular marketing channel as maximum numbers of animals were transacted through this channel. Marketing cost in Farmer-Farmer channel was very less compared to other channels followed in the study area as no intermediary was involved in this channel. The labour cost, market fee, expenditure on feed and fodder and miscellaneous expenditure were observed to be the major items of marketing costs. The marketing cost was highest in Farmer-Middleman-Wholesaler-Farmer Channel and lowest in Farmer-Farmer Channel for both male and female cattle and buffalo marketing. The market margin as a percentage in ultimate



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buyer’s rupee has been found increasing in order from Farmer-Farmer channel, Farmer-Middleman-Farmer channel, Farmer -Wholesaler-Farmer Channel to Farmer-Middleman-Wholesaler-Farmer channel. As a result, the producer’s share in ultimate buyer’s rupee was decreasing. Hence, it could be concluded that the Farmer-Farmer channel was the most efficient marketing channel for both male and female cattle and buffalo marketing and Farmer-Middleman-Wholesaler-Farmer channel was the least efficient one.

REFERENCES

Acharya, S.S. and Agarwal, N.L., 2007. Agricultural marketing in India: Fourth edition: PP-506

Bhatia, J. Pandey, U.K.and Suhag, K.S., 2005. Small Ruminant’s Economics of Semi-Arid Region in Haryana. Indian journal of Agricultural Economics, 60 (2:163-183)

Bhardwaj, S.P. and Panwar, S., 2007. A study of Livestock Marketing in India. Indian journal of Agricultural Economics, 62 (3:468)

Dixit, A.K. and Sukla, B.D., 1995. Efficiency of different marketing channels for goats in Etawah district of Uttar Pradesh. Indian Journal of Agricultural Economics, 50(3: 331)

Francis, P.A. and Ingawa, S.A., 1988. Small ruminant marketing in southwest Nigeria. African Journal of Agricultural Sciences, 15(1/2: 69-82)

Jain, B. and Khan, M.A., 2007. Structure and working of Cattle markets and Fairs in Chhattishgarh. Indian journal of Agricultural Economics, 62(3:52-482)

Khan, H.S.S. and Rao, H.S., 1997. An Economic Analysis of Marketing of Milch

Buffaloes in Karnataka. Bihar Journal of Agril. Marketing, 4(465-473)

Kumar, D., Singha, M., Suman, C.L.and Singh, R.2004. Economic investigation of marketing aspects of livestock enterprises in Rohilakhand regions of Uttar Pradesh. IVRI Annual Report, (2004-2005)

Kumar, S. and Singh, S., 1999. Marketing of goat and goat meat in tribal areas of Chotanagpur plateu, India. The Bihar journal of Agricultural marketing, 9(4:434-439)

Pandit, A. and Dhaka, J.P., 2005. Efficiency of male goat markets in the central alluvial plains of West Bengal. Agricultural Economics Research Review, 18(197-208)

Pant,D. C., Rao, P.S. and Singh,H.,2007. Price Spread and Efficiency of Milk Marketing in Udaipur District of Rajasthan. Indian Journal of Agricultural Economics, 62(3:480)

Patil, S.J, Patil, S.M. and Hinge, B.J., 1979. Price Spread of Livestock Animals in Dhule Market of Maharastra state. Indian Journal of of Agricultural Economics. 34 (4: 185-190)

Rasane, V.S., Raut, R.C. and Kasar, D.V., 1996. Marketing of Buffaloes and Crossbred Cows in Dhule Market (Maharastra), Ind. Jour. Agril. Mktg. 10 (1: 63-68)

Singh, H., 1988. Marketing of buffaloes. Indian journal of Animal Production Management, 4(3&4:133-138)

Singh, J.P. and Singh, A., 2001. Economic analysis of Livestock marketing in eastern Uttar Pradesh: Opportunities, problems and Strategies. The Bihar journal of Agricultural marketing, 9(3: 308-315)



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Singh, R.B. and Verma, S., 2007. A study on Structure of Livestock Markets in Bundelkhand region of Uttar Pradesh. Indian journal of Agricultural Economics, .62, (3:473)

Sukla, A.N. and Hussain, N., 2007. Live Animals Marketing Pattern in Western Utter Pradesh. Indian journal of Agricultural Economics, 62 (3:455)



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IN-STORES DISPLAY: ONE OF THE EFFECTIVE ELEMENTS TO INCREASE SALES IN RETAIL

DR. GEETA NEMA*; MS. DHANASHREE NAGAR**

*International Institute of Professional Studies DAVV Indore-452001 (MP) India

**Shri Vaishnav Institute of Management Sch. No. 71 Gumasta Nagar Indore - 452009 (M.P.)

ABSTRACT Indian retail industry is passing through drastic changes. To compete with the local retailers, a number of players like Reliance, Future Group with Big Bazaar, Pantaloons and Central, Tatas and Bharti are in the game with few more competitors to enter in. An attractive product arrangement displayed for customers and passers bye is an effective tool to entice the customers to retail outlet. Various studies carried out to measure the effectiveness of retail sales, have proved that maximum shopping decisions are taken at a point of purchase. Window display, one of the attributes of in-stores displays, play an important role with this respect. In-stores arrangements and display of products can also be one of the reasons to select a retail outlet for shopping along with advertising and promotion. Whether a store is in a shopping mall or on the street, the customer has only few seconds to view the merchandize and be attracted by stores displays. Thus, it is very essential for a retailer to display his products in a convenient way for his customers. The present study has been carried out to measure the role of the in-stores arrangements and display to increase footfalls and retail sales. The data has been measured with Factor Analysis and the findings suggest that the factors like overall product display and arrangements, window display, shelf space etc. contribute significantly to increase footfalls resulting into increased sales of a retail outlet. KEYWORDS: Retailing, In-stores display, Footfalls, Retail Sales.

INTRODUCTION

Retailing involves sale of goods and services to the end user for personal use. According to Philip Kotler, (2010) retailing includes all the activities involved in selling goods or services directly to the

final consumer for personal or non-business use. Indian retail industry is the fastest growing industry of the economy. The retailers have tapped the opportunity in growing Indian market. The results can be seen with the emergence of huge super markets and shopping malls like Big Bazaar, Central, Pantaloons, Shopper’s



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Stop, Nilgiris, Pyramid, Reliance, More and many more. With the changing lifestyle of Indian customers and their favour for one stop shopping and entertainment, many more super and hyper markets are soon planning to expand themselves in India. Changing purchasing power of the consumers, increased double income families and changing economic policies of Government of India are few more reasons for growth of retail industry in India. Retailers in the present era have glamorized the entire activities undertaken by them. From use of modern technology for improving the customer service to providing baby care and entertainment for making shopping a memorable experience to the customers, retailing has been revolutionized.

INDIAN RETAIL INDUSTRY

The Indian retail sector is categorized into various types of retail outlets like kirana stores, super markets, hyper markets, departmental stores and shopping malls. The unorganized retail sector, also known as ‘Kirana Stores’ still comprises large share in total retail pie. These are the typical nearby grocery stores generally owned by a family, catering to the needs of consumers. According to CII- AT Kearney Report 2006, Most of the organized retailing in India has been started recently and have concentrated mainly in metropolitan cities. Within a short span of five years retail sector in India has witnessed great changes on account of a gradual increase in the disposable incomes of the middle and upper-middle class consumers. Indian retail industry stands second in terms of employment generation after agriculture and is characterized by the widely dispersed retail outlets situated at each corner whether its urban India or rural. Organized retail in India constitutes a very little share of around 7.8% of the total retail market. Through the 1990s organized retail added just 1million square

feet of space a year. From 2001 onwards, the pace quickened dramatically and 2003 alone saw an addition of 10 million square feet retail space. As per the Business World, The Marketing White book 2010-2011, Indian retail market is estimated at US$ 280 billion but organized retail is estimated at only US$ 14 billion. The sector accounts for over 10% of the country's GDP and 8% of total employment of the nation's workforce. Growth in the retail sector had fuelled a rapid mall building scenario across the country, with the total number of malls expected to increase to 600 by 2010 from an estimated 300 by end of 2007. Several retailers, including Indian corporate houses, are foraying into the retail sector through different formats, unlike foreign retailers who usually maintain three to four formats.

Success of retail outlet lies not only in good promotions and services but also organizing special events and displays for customers, proper co-ordination of activities as well as good merchandizing. A retail display is a merchandising display that attractively showcase shop inventory or featured products. An immense number of products in the retail market are competing for attention. And the offer of new brands seems to increase day by day. According to statistics provided by POPAI (Point of Purchase Association International), at least 60% of purchases are decided right in the store. The way products are displayed in show windows also has a lot to do with enticing the guests into the store. Whether a store is in the mall or on the street, the customer has only a few seconds to view and be attracted to displays. Getting customers inside your store is only part way to making a sale. Thus, in-store displays promote individual products and lines which results into increase footfalls, as well as sales.



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IN-STORES DISPLAY AND RETAIL SALES

Stores display or presentation is also known as Visual Merchandizing or Product Merchandizing. It is an art, science and business of presenting merchandise in a retail outlet. It is a powerful tool that can be effectively used to programme, channel, and lure customer into impulse buying in the world of cut-throat competition. Visual merchandising - also known as window dressing - has been a familiar feature on the high street for over 100 years and is an influential factor that not only allows potential customers to view the retail stock but can also be used to encourage them to make all important purchase. Merchandising varies from sector to sector so it's important to apply techniques dependent on the kind of item you are selling. In other words, stores display acts as a silent salesman of the retail store. A retails format presentation can also be one of the reasons to increase footfalls and sales in Retail. A good window display will motivate the customer to enter into stores and visual merchandize or in-stores merchandize display will bring a customer into a shopping mood.

An important element in any store design is the look of the storefront, product and space arrangement, cleanliness and hygiene and proper lighting system. The way merchandise is displayed in show windows and racks also has a lot to do with attracting the guests into the store. Whether you have a store in the mall or on the street, the customer has only a few seconds to view and be attracted by your displays. (Sinha et al. 2000), and thus, effective display is the need of retail outlet to increase footfalls and sales.

REVIEW OF LITERATURE

Retailers are facing a keen competitive market place and as a consequence of that they find many difficulties to differentiate their stores on the basis of product, place, people, price and promotion. Retail store elements such as colour, lighting and visual merchandising have always been considered as having immediate effects on the buying decision making process. The emphasis has moved away from in-store product displays, towards elements that excite the senses of shoppers such as flat screen videos or graphics, music, smells, lighting and flooring that tend to capture the brand image or personality and help to create an unique environment and shopping experience (McGoldrick, 1990).

According to Wanninayake and Randiwela (2007) most of supermarkets use visual merchandising as point of sales promotions within their supermarket premises. And also the major supermarket chains are highly concerned about background music and in store fragrance. According to their research, all major supermarket chains spend more than 40% of their promotional budget on in store promotions. The major reason behind this is that many of the marketers today reasonably assume that a considerable influence can be made on buying decisions of consumers through visual merchandising.

According to Rawal (2009) product merchandizing or in-stores displays have been found to have a significant influence on consumer shopping behavior. Due to the availability of range of merchandise being offered across different formats, the competition has become intense and unpredictable. It has been established in the research that there is a direct correlation between product purchase and product visibility. In reality most of the consumers do not research before making a final choice of a product purchase. Most of them hardly take five to ten seconds in



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taking a decision. Therefore, product display on the shelves of the retail store needs to be highly eye catching. While many shoppers have brand preference for numerous products, they are not brand insistent or even brand loyal for a large majority of products that they purchase. For example, individuals who have a brand preference may decide to try a new brand if there are sufficient in-stores advertisements inducing them to switch. Stores displays that help to reinforce consumers' decisions in a positive direction are extremely valuable to the retailer. In fact, as much as 75 percent of buying decisions are made in-store. (Sinha et al. 2000)

Similarly, merchandising and promotion around the point of purchase area is particularly important because it represents the final opportunity to entice them to buy products and if planned correctly, it can be one of a store's most profitable areas – however only about five percent of marketing spend goes on in-store advertising and promotions. (Catherine, 2007) Point of purchase is where the marketers can highlight their products, and thereby draw the customer attention. Such in-store advertising is strategically designed to draw the attention of the consumers and entice them to try and buy the product. A good merchandize of product can boost the sales and enhance the brand visibility at the most crucial point of consumer buying. (Cobb and Hoyer 1986),

As most of buying decisions are made at the point of sale/purchase so the most important factors are location, store and display design which will decide whether or not your products get noticed. If well designed and optimally placed in the retail space, custom retail displays show improved results on your bottom line profits. Right choice of retail display and retail space design will help store owners

to differentiate from other stores and persuade shoppers to come in, stay longer and come back. (Rawal 2009)

According to Tendai and Crispen (2009) each retailer’s ability to sustainably sell its merchandise, largely depends on the strategic strength of its marketing mix activities. In-store marketing activities such as point-of-purchase displays and promotions, through background music and supportive store personnel are all instrumental in both winning consumers and encouraging them to spend more. In-store promotions are usually aimed at digging deeper into the consumers’ purses at the point of purchase through encouraging impulsive (unplanned) purchases. Given the power of impulsive buying in pushing revenue and profits up, most marketers have since tried to influence the in-store decisions of their potential consumers through creating enjoyable, attractive and modern state-of the- art environments ranging from background music, favorable ventilation, freshened scent, attractive store layout.


1. Analyze various elements of stores display and presentation used by super market.

2. Analyze those elements which lead to increase footfalls in supermarkets.

3. Measure the effectiveness of these elements to increase retail sales.

METHODOLOGY

• Desired sample size: 100. Out of which selected respondents were 77. 23 questionnaires were rejected due to incomplete data.

• Sampling Method: Random Sampling



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• Sources of data collection: i) Primary- Structured questionnaire to

be filled by customers.

ii) Secondary: Internet, journals, Books etc.

For the purpose of measuring their preference, five parameter Likert Scale has been used. The highest satisfaction level is

ranked as 5 and dissatisfaction as 1. On the basis of rating given by the respondents average ranking has been calculated.

• Data Analysis tool: Factor Analysis

ANALYSIS AND FINDINGS

After collecting the data, they are analyzed by using factor analysis. The detailed analysis is as under:

TABLE 1

DESCRIPTIVE FACTOR ANALYSIS

Factor Name of Factor

Eigen Value Statements Factor Loading

Total % of variance

1. Product information

1.302 8.138

Variety of products available (Stores merchandize)

.771

1.107 6.916

Signboards and displays about product

.399

.963 6.016 Convenience to locate the product

.613

.740 4.622

Spacious to move shopping cart

.619

.534 3.335

Updates and information about new stuff

.656

2. In Stores atmospheres 3.658 22.860 Space between the

.627



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products displayed on shelf.

.909 5.681 Attractive window display

.608

.501 3.131 Stores ambiance

.784

.439 2.742 Stores cleanliness

.485

3. Staff support in shopping decision .843 5.272

Product demonstrations by staff

.621

.658 4.114 Staff co-operation

.804

.220 1.375 Food court facility

.536

4. Lighting and preservation .324 2.023 Lighting arrangement

.780

.314 1.965

Preservation system for food and perishables

.745

5. Product arrangement and food court 3.658 22.860

Logical arrangement of products

.714

1.790 11.187 Ambiance of food court

.786

For the purpose of measuring effectiveness of stores display and presentation, sixteen variables have been formulated. They are, Variety of products available (Stores merchandize), Signboards and displays about product, Convenience to locate the product, Space to move shopping cart, Updates and information about new stuffs and arrivals, Space between the products

displayed on shelf, Attractive window display, Stores ambiance, Stores cleanliness, Product demonstrations by staff, Staff co-operation, Food court facility available, Ambiance of food court, Lighting arrangement, Preservation system for food and perishable products and Logical arrangement of products.



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To measure the parameters, factor analysis has been used. From the available data total five factor groups have been extracted named as Product information, In-Store Ambiance, Staff support in shopping decision, Lighting and Preservation and Product Arrangement and Food Court.

The study shows that when a customer selects a retail outlet for shopping, he not only considers the availability of information about what and where of the products, but also the stores ambiance and staff co-operation in buying as the important factors for buying decision. The various elements of stores presentations were analyzed. The factor group Product Information has highest number of variables. So the present study shows that customer gives highest weightage to the availability of product related information i.e stores display and presentation. To increase sales in a retail stores, this information can be made available to the customers through attractive and colorful signboards and displays. Even these tools can be used to communicate the customers about new arrivals, various promotions and schemes etc. related to the different categories of products. Customers enter into the shop due to window display, and what makes them locate or buy the product is in-stores display. So it is suggested that the retail outlets should make use of signages, display and sign boards and other aids which help the customers to locate the product and earn the related information easily, understand the promotion schemes and make purchases.

CONCLUSION

In-stores display is all about the use of various aids to lure the customers to buy the product. The present study has come up with various factors considered by the customers while shopping from a retail outlet. From the findings of the study it

can be concluded that out of the total 16 variables taken in the study, it is the product information and the store atmosphere that helps a customer to visit a particular retail outlet. This can be done by the marketer by using proper signboards and displays about the products so that the customer can have the proper information and ease to locate the product which will ultimately help in making the decision faster from the customers point of view.

A retailer can effectively inform the customers about changes and availability in promotional schemes and availability of various brands through attractive and eye catching in-stores displays. Effective use of in-stores and window displays will help the customers to pick up right product that satisfies their need and value for money. On the other hand right choice of retail display and retail space design will help store owners to differentiate from other stores and persuade shoppers to come in, stay longer and come back.

REFERENCES

1. Agarwal, Vaishali (2007), “The Era of Retail Revolution: Contribution to economy”, International Conference organized by Gyan Jyoti Institute of Management and Technolgy, Mohali , http://www.ibainternational.org/greater_noida/Retail_Revolution-vaishali.pdf

2. Business World, The Marketing White book 2010-2011: One stop Guide for Marketers, ixth Edition, January 2010, The Media and Entertainment Industry, pp. 214-229

3. Chevalier, Michel (1975), “Increase in Sales Due to In-Store Display”, Journal of Marketing



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Research, Vol. 12(4), pp. 426-431, http://www.jstor.org/stable/3151091

4. CII Retail Scenario in India-Unlimited Opportunity, www.ibef.org/attachdisplay.aspx%3Fcat...

5. Cobb, C. J. and Hoyer, W.D. (1986), “Planned Versus Impulse Purchase Behavior”, Journal of Retailing, Vol. 62, Winter, pp.67–81.

6. Das Abhijit, “Mall Management with Case Studies”, 2nd Ed., Taxman

7. DasSharma, Tamoghna, (2006) “Retail Industry”, available at http://www.indianmba.com/occasional_papers/op129/op129.html

8. Ernst & Young, The Great Indian Retail Story, 2006.

9. Gupta, Sumeet, Heng, Xu and Sahu, Vimal (2009), “Impact of Store Size on Impulse Purchase”, The Icfai University, Journal of Marketing Management, Vol. VIII, No.1, pp.7-21.

10. http://icmr.icfai.org/casestudies/catalogue/Marketing/MKTG114.htm

11. http://www.fibre2fashion.com/industry-article/5/413/basic-tips-for-better-visual-merchandising1.asp

12. http://www.fibre2fashion.com/industry-article/6/547/the-art-of-visual-merchandising1.asp

13. Impact of Retail Display And Store Design On Buying Decisions, Posted: Aug 07, 2009 Available at: http://www.articlesbase.com/management-articles/impact-of-retail-

display-and-store-design-on-buying-decisions-1104670.html

14. Kotler, P; Armstrong G., Agnihotri P and Ehsan-ul-Haque (2010) Principles of Marketing-13th Ed. A South Asian Perspective, pp.316

15. McGoldrick, P. (1990), “Retail Marketing, Maidenhead”, McGraw-Hill,

16. Newman, Andrew J. and Cullen Peter, “Retailing Environment and Operations”, Indian Edition, pp.237-291

17. Nicolas, Catherine (2007), “POS advertising-Retelling’s final frontier”, Retail Therapy, The Australian Centre for Retail Studies, pp.1-9

18. Popkowski, Leszczyc, Sinha, A. and Timmermans H. J. P. (2000), “Consumer Store Choice Dynamics: An Analysis of the Competitive Market Structure for Grocery Stores”, Journal of Retailing, Vol. 76(3), pp.323-345.

19. Rawal, Priyanka (2009), “Driving Impulse Purchases with POP Advertising”, Advertising Express, The ICFAI University Press, pp.35-39.

20. Retail in India: Getting organized to drive growth, A CII- A.T. Kearney Report, November 2006, pp 1-34.



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WORK-LIFE BALANCE PRACTICES, OPPORTUNITIES & CHALLENGES - ITS IMPACT ON ORGANISATIONAL PERFORMANCE

IN INDIAN CONTEXT

DR. KIRTI AGARWAL*; YOGESH BHARDWAJ**

*GNIT Greater Noida **JJT University Rajasthan

ABSTRACT This paper examines the key issues associated with Work-Life Balance (WLB) with a particular focus on practices within the in Indian organisations. Findings suggest that Indian organisations have started realizing that WLBPs are crucial for organisational performance. The paper provides an overview of the general literature and then the research that relates specifically to WLB in the Indian organisations. It builds on previous research in this area to present an adapted framework for addressing the key variables of WLB. The paper recognizes challenges for success of WLBPs and discusses its prospects. Recommendations are placed to facilitate employers to see employees’ work-life balance as a core strategic issue in corporate arena and obtain productive steps to have a robust framework of WLB.

INTRODUCTION

Work-Life Balance (WLB) is an important area of Human Resource Management that is receiving increasing attention from Government, Researchers, Management & Employee Representatives and the popular media (Pocock, Van Wanrooy, Stazzari & Bridge, 2001; Russell & Bowman, 2000). Changes in the way we work, driven by the globalisation of commodities and services,

have impacted on perceptions of leisure time, travel, study and careers. For many Indian organisation employees, working in frontline positions of 24/7 operations, it is difficult to maintain a healthy lifestyle, travel or study. Contemporary demographic changes such as increasing number of women in the workforce, dual career and nuclear families have generated an urgent need of employees to balance work and non-work life. Changes in the markets, ways of working, and labour market conditions have put tremendous pressure on all organisations to stay



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competitive and consequently, organisations have put increasing pressure on their employees to deliver the best. Well motivated people are more productive and the same has also been acknowledged. A healthy balance between professional and personal life keeps an individual motivated, committed and engaged. Hence, maintaining a balance between professional and personal life is crucial and matter of strategic concern to the corporate stakeholders. WORK-LIFE BALANCE PRACTICES The world of work has changed. There is new technology, new opportunities, skills shortages and an aging population. Many companies are also facing new demands presented by the increasingly global 24/7 economy with customers expecting service at times that suit them. To be competitive, organisations must meet these challenges to achieve the best results from their most valuable asset - their workforce. Work-life balance is about good management practice and sound business sense. Organisations who adopt initiatives that help their employees achieve a better balance between work and the rest of their lives focus on achievement. They build more resilient organisations - better able to adapt and be successful. They attract better talent as a best practice employer, a benefit that impacts directly on their business's bottom line, with improved recruitment and retention of a more diverse workforce. Work-life balance initiatives can result in benefits to business as well as to the employees - the classic 'win-win'. WLBPs are those institutionalised, structural and procedural arrangements as well as formal and informal practices that enable individuals to easily manage the conflicting worlds of work and family lives (Osterman, 1995). Some common statutory policies are maternity

benefits and discretionary policies are flexi-time, telecommuting and job sharing. Employee assistance programmes like counseling and stress management also fall under WLBPs (Perry-Smith and Blum, 2000). All these can be classified under policies, benefits and services. Policies cover the formal and informal ways that employees’ work and leave schedules are handled, including part-time work, job-sharing, flexi-time, and parental/family leave. Benefits cover forms of compensation that protect against loss of earnings, payment of medical expenses and vacation or all of these. Services include on-site or near-site childcare centers, counseling and eldercare programs. Today, WLBPs have become an integral part of high commitment work systems (Osterman, 1995) and not merely a response to address increasing problems including stress, absenteeism and turnover which have emerged due to increased percentage of women in the workforce (Lambert, 2000). The trend shows growing recognition for the need to support not only those with visible family needs and responsibilities (working mothers) but all employees at different stages of life, who experience work-life stress regardless of their family status. ADVANTAGE OF WORK-LIFE BALANCE PRACTICES Finding a ‘perfect’ balance between work and life is rare. The nature of that balance is different for every person, and changes over time for each person. So we shouldn’t strive for perfection, but to constantly be aware of making choices that will benefit all aspects of our lives. Achieving work/life balance is an investment – it does take time and effort to implement the changes necessary. But it’s worth the effort! Work/life balance offers some major rewards. Here are some of the potential benefits:



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AT WORK

Feeling more rested and energized

Working more productively and getting more accomplished, leading to greater career success

More fulfillment from work

IN LIFE

Improving relationships with family and friends

Better physical and mental health

Making choices about your priorities, rather than sacrifices among them

More leisure time to spend with loved ones, or time for yourself.

Availability of WLBPs reduces employee absenteeism and enhances organisation’s productivity. These practices are increasingly being considered as strategic, innovative, crucial and progressive (Perry-Smith and Blum, 2000) worldwide. However, there is lesser evidence of the status and impact of these practices in Indian organisations (Poster, 2005; Wang, Lawler, Shi, Walumbwa & Piao, 2008). Research findings show that WLBPs help employees manage their work and family better (Thomas and Ganster, 1995) and enhance their attitudes and behaviors such as organisational attachment, job satisfaction and intention to stay WORK-LIFE BALANCE PRACTICES IN INDIAN ORGANISATIONS As a part of an ongoing project on “Evaluate the impact of Human Resource Development

and Information Systems on the Activities of Good Leadership and Strategic Human Resource Management” (An Empirical Study), Dr. Kirti Agarwal & Yogesh Bhardwaj conducted a qualitative study to examine the scope and coverage of work-life balance practices in some of the leading organisations in India. Based on review of literature, empirical study and analyses of reports of news paper articles, as compared to present scenario, it was observed that organisations in India have lot of range to cover in future to treat WLBPs as strategic aspect of organisational performance. Organisations do present many benefits and policies from flexible work arrangements to stress management programs in the name of work-life balance activities. However, these policies and practices many a times are not integral parts of their policy handbooks and vary extensively in terms of their scope. At IBM, the focus is on- Values, Equal Opportunity, Mobile Working, Healthcare, Rewards, Diversity, Flexibility, Culture, Compensation & Benefits. In knowledge centric organisations like IT and ITES sectors, where women workforce participation is relatively higher, statutory policies such as maternity leave and benefits are common, while practices such as flexi-time, work from home and part-time work are still sporadic, since these practices are discretionary in nature. Commonly offered statutory benefits across most organisations are leave plans such as maternity and paternity leaves with/without pay. Flexible work arrangements such as flexi-time, part-time work and telecommuting are yet to become strategic interventions in organisations, though these practices are prevalent in IT organisations to some extent. Health and Life Insurance coverage and reimbursement of medical expenses for employees and their families although are included as a part of



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compensation package, their scope and extent vary significantly from organisation to organisation. Stress management workshops and training programs on work-life balance are being conducted by organisations as a part of welfare provisions but are not regular practices in most of the organisations. Comparative analysis of the responses of top officials and employees of each organisation on the availability of WLBPs showed notable disparity in their responses. In spite of having an existence of WLBPs in organisations the employees does not perceive them. It may be due to lack of proper communication and implementation. It was found that WLBPs have not been implemented in the organisations appropriately and much needs to be done by Managers to create a visibility of the same. A STRATEGIC CONCERN WLB is an issue increasingly recognized as of strategic importance to organisations and of significance to employees. An organisation need to attract and retain valued employees in a highly competitive labour market is a strong motivating factor for increased organisational awareness and action with regards to implementation and management of WLB strategies. Many researches on work-life balance family conflict shows that this is an issue that employers must pay attention to as a significant strategic business issue. Employees who perceive that their employer is supportive of their personal work-life balance:

Are more committed to the company

Have higher job satisfaction

Have better physical and mental health

Experience less job stress

Miss less time at work

Are less likely to be thinking of leaving the company

These things will all impact a company’s recruitment costs, absenteeism, presenteeism, benefits cost, productivity, and ultimately the bottom line. WLB has emerged as a strategic issue for HRM and a key element of an organization’s employee retention strategies (Cappelli, 2000; Lewis & Cooper, 1995). It has been argued that organizations need to be aware of the changing needs of employees and provide flexible WLB strategies1 in order to retain their employees. Organizations that seek to increase employee morale, commitment and satisfaction, and reduce sources of stress and problems at work, will improve their ability to recruit and retain talented and valued employees (Cappelli, 2000). Whether the introduction of WLB strategies is effective in reducing work/family conflict is uncertain; it may simply improve employee attitudes towards the organization (Lambert 2000). In the context of a ‘war’ for skilled talent (Way, 2000), such outcomes may be significant. In response to the market changes, talent attrition and changing needs and demands of employees, organisations are applying employee-friendly strategies for attaining superior performance. Today, organisations are forced to look beyond routine human resources (HR) interventions and execute initiatives such as flexible working hours, alternative work arrangements, leave policies in lieu of family care responsibilities and employee assistance programs. These initiatives are referred to as ‘family-friendly policies’ or ‘work-life balance practices’ (WLBPs) in literature (Grover and Crooker, 1995; Kopelman, Prottas, Thompson and Jahn, 2006).



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OPPORTUNITIES FOR INDIAN ORGANISATIONS It is time to acknowledge and realise that WLBPs are of value to all, which attract prospective employees and are tools for employee retention and motivation (Galinsky, Friedman and Hernandez, 1991). One should also keep in mind that new generation employees evaluate their career progress not only in terms of lucrative job assignments but also in terms of their ability to maintain healthy balance between their work and non-work life. In a research study (Baral, 2009) on 730 managerial employees from various organisations in India; it is clearly found that family significantly contributes to work in terms of enhancing performance and positive emotions at the workplace. The findings indicate that one of the important determinants of work-life balance is availability of WLBPs. When an organisation offers its employees policies, practices, benefits and services to help them integrate their work and family responsibilities, they feel committed to the organisation and indulge themselves in organisational citizenship behaviors. A careful scrutiny of the literature on compensation and reward management clearly shows that our salary structure and reward system are at par with other high performing organisations across the globe. But, most of the incentives, schemes, rewards, and facilities are crafted around jobs and organisations. This is because of the assumption that people can and will be motivated if their performance is recognised and they looked after by organisations. There is evidence that work and family are no longer two separate role domains rather are interdependent and have positive influence on each other (Greenhaus and Powell, 2006).

Comparing with the past, today, one can see a noticeable difference in Indian organisation’s vision, philosophy, leadership styles and people oriented HR interventions. Consequently, Indian Organisation’s have started getting respect globally. HR practitioners are striving to experiment the existing policies and exploring other innovative policies, schemes and interventions to motivate and involve large number of employees. However, managing employee work-life balance has still not become a core strategic facet of people management practices in Indian organisations, which have the competitive advantage in terms of young talents in comparison to the West. This demands attention of policy makers to tap available talent for superior performance. Contemporary challenges emerging from services organisations. It has also put tremendous pressure on HR professionals to rethink their approach for utilising the talent of such people without compromising on their non-work related commitments. Increasing number of women in the workforce and increase in dual career couples have put immense pressure on working couples to juggle between work and family responsibilities while being productive at work. Such trends have made work-life balance a pertinent strategic issue to be seriously and urgently considered by employers in India to attract and retain talent. Considering organisation as an open system, one has to consider external influences on the system’s functioning and therefore, assumption of employers that work and family are two separate spheres needs correction. CHALLENGES TO SUCCESS OF WLBPS



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The world of work has changed. There is new technology, new opportunities, skills shortages and an aging population. Many companies are also facing new demands presented by the increasingly global 24/7 economy with customers expecting service at times that suit them. To be competitive, organisations must meet these challenges to achieve the best results from their most valuable asset - their workforce. Work-life balance is about good management practice and sound business sense. Organisations who adopt initiatives that help their employees achieve a better balance between work and the rest of their lives focus on achievement. They build more resilient organisations - better able to adapt and be successful. They attract better talent as a best practice employer, a benefit that impacts directly on their business's bottom line, with improved recruitment and retention of a more diverse workforce. Work-life balance initiatives can result in benefits to business as well as to the employees - the classic 'win-win'. While it is clear that improving employee work-life balance has real value to organizations, defining and improving the work-life balance of employees can be challenging. To better understand how organizations can most effectively deliver and maximize ROI in this area, CEB analyzed the most essential elements of employee work-life balance and determined the key lies in creating the right work-life proposition (WLP). The WLP is a set of work-life practices that employees perceive as the value they gain through employment in the organization. This includes six categories: work time, work location, family, development, services and health. The challenge for employers, however, is that while an effective WLP demonstrates

compelling benefits, most organizations struggle to successfully design and deliver a valuable one. The three most common root causes of why organizations fail are:

1. Few employees are aware of the work-life practices offered by their employer.

2. Most work-life practices are not targeted at the most important drivers of work-life balance.

3. Even fewer employees actually participate in the work-life practices offered by their employer.

While these challenges seem difficult to overcome, there is a series of cost-effective strategies that the most innovative organizations are using to effectively improve the work-life balance of their employees. Organisations and policy makers need to understand the key challenges before introducing new WLBPs or implementing existing ones. (Bhargava & Baral 2009)

Interviews with HR executives further revealed that the nature of job and difficulty in cost benefit analysis of such practices are the major reasons behind limited implementation of WLBPs such as flexible work arrangements. Preventing employees to misuse the provisions such as flexi-time is also one of the concerns raised by them.

Many work-life balance programs

frequently glitter without substance. Efforts must be taken to understand the needs of employees and design the programs accordingly. In India, people consider work as a source of earning and



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social status and they put considerable hours at work and efforts to succeed in their career as well as to prove themselves at the workplace. Simultaneously, they consider family as the social institution that provides not only emotional support but stands with them in crisis. Most Indians value family ties and work hard to provide better living to their family members. The meaning of family is not confined to spouse, parents and children. People still feel that they are part of extended families. Hence, ignorance to employee specific needs may hinder the effectiveness of WLBPs.

Unsupportive organisational culture is the

major impediment for the effectiveness of WLBPs (Thompson, Beauvais and Lyness, 199). Managerial or supervisory support is one of the major components of organisational culture that facilitates integration of employee work-life balance. Employees will avail WLBPs when they perceive their supervisor as supportive of their work-family integration efforts. Employers, co-workers or colleagues may perceive that those who avail WLBPs such as flexi-time or leave for family reasons are not committed to their work and this perception may significantly influence their career progression. Implicit or explicit time demands at the work place or norms concerning the number of hours, which employees are supposed to devote to work or work-related activities, are also impediments to utilisation of WLBPs. Hence, offering of WLBPs should be supported by supportive organisational culture that values integration of work and family. (Bhargava & Baral 2009)

LIMITATION OF STUDY

The Lack of well intended evaluative studies on WLBPs in Indian context and insertion of only few organisations in our research unquestionably limit us to present a concrete state of WLBPs in India. CONCLUSIONS AND SUGGESTIONS Work/life programs have the potential to significantly improve employee morale, reduce absenteeism, and retain organizational knowledge, particularly during difficult economic times. In today’s global marketplace, as companies aim to reduce costs, it falls to the human resource professional to understand the critical issues of work/life balance and champion work/life programs. Be it employees whose family members and/or friends are called to serve their country, single mothers who are trying to raise their children and make a living, Generation X and Y employees who value their personal time, couples struggling to manage dual-career marriages, or companies losing critical knowledge when employees leave for other opportunities, work/life programs offer a win-win situation for employers and employees. Organisations have to broaden their policies and practices to support employees’ participation in many life roles and even personal developments to make work-life balance a reality in Indian corporate landscape. Recent developments in the strategic HR practices across organisations in India suggest some developments towards work-life integration. Balancing work and non-work life is going to remain as one of the employee needs in the foreseeable future. Hence, organisations should continue to look for innovative ways to cater to this need in order to retain the key employees. Work-family integration should not be seen as a parenting or dependent care issue only. To



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make WLBPs successful, utmost care should be taken from their introduction to implementation. Effort to understand the status and scope of WLBPs in India is in a position to provide some directions to HR professionals in India to review their present policies and practices towards work-life balance and redesign them accordingly. It can be concluded that techno-economic and socio-demographic changes have made it crucial to consider work-life balance as a strategic concern for HR managers to recruit, engage and retain talented employees. Organisations should note that they will benefit only when they will advocate employees’ needs for work-life balance and

effectively apply WLBPs. Work-life balance must be supported by top management and encouraged at all levels of the organisation. Organisational culture must be developed in such a way that employees making efforts to have healthy work-life balance will not be looked down upon. Only then in true sense will work-life balance gain strategic recognition in India. The growth of WLBPs in India has not been commendable, Top HR fraternity in our study were found to be extremely positive about its future. They avow that WLBPs are gaining value day by day and will be a vital part of organisation’s HR policy and corporate strategy which will enable a positive enrichment on business performance.

REFERENCES Galinsky, E., Friedman, D.E and Hernandez, C. 1991. The Corporate Reference Guide to Work-Family Programmes. Families and Work Institute: New York. Greenhaus, J.H. and Powell, G.N. 2006. When work and family are allies: A theory of work-family enrichment, Academy of Management Review, 31(1), 72-92. Grover, S.L. and Crooker, K.J. 1995. Who appreciates family-responsive human resource policies, The impact of family–friendly policies on the organisational attachment of parents and non-parents, Personnel Psychology, 48, 271-288. Fineman, M. (1999). Why diversity professionals should care about work/life balance. Mosaics, 5, 6, 6-7. Fingerman, J. (2003). Tip of the Month for February 2003. Work & Family Connection. Retrieved February 4, 2003,from [email protected]

French, J. R. P., Caplan, R. D., & Van Harrison, R. (1982). The mechanisms of job stress and strain. New York: Wiley. Wang, P. Lawler, J.J, Shi. K., Walumbwa.F. & Piao, M. 2008. Family-friendly employment practices: Importance and effects in India, Kenya, and China Advances in International Management, 21, 235-265. Kopelman, R.E.; Prottas, D.J.; Thompson, C.A. and Jahn, E.W. 2006. A multilevel examination of work-life practices, Is more always better? Journal of Managerial Issues, 18, 232-253. Baral, R. 2009. Examining Antecedents of Work-Family Enrichment and its Effect on Individual, Family and Organisational Outcomes. Unpublished Doctoral Dissertation, IIT Bombay. Bhargava, S. and Baral, R. 2009. Work-life Balance Practices in India. IIT Bombay.



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Dex, S. and Scheibl, F. 1999. Business Performance and Family-Friendly Policies, Journal of General Management, 24, 22-37. Kossek, E.E. and Ozeki, C. 1998. Work-family conflict, policies, and the job-life satisfaction relationship, A review and directions for organisational behavior-human resources research, Journal of Applied psychology, 83, 139-149. Lambert, S.J. 2000. Added Benefits, the Link between Work-Life Benefits and Organisational Citizenship Behavior, Academy of Management Journal, 43, 801-815. Poster, W.R. 2005. Three reasons for a transnational approach to work-life policy. In E.E. Kossek & S.J. Lambert (Eds.).Work and Life Integration: Organisational, Cultural, and Individual Perspectives: 375-400. London: Lawrence Erlbaum Associates. Sands, J. and Harper, T.L. 2007. Family-Friendly Benefits and Organisational Performance, Business Renaissance Quarterly, 2, 107-126. Thomas, L.T. and Ganster, D.C. 1995. Impact of family-supportive work variables on work-family conflict and strain: A control perspective, Journal of Applied Psychology, 80, 6-15. Human resource strategies for transforming the workplace (pp. 221–243), Blackwell, Cambridge, MA. Osterman, P. 1995. Work/family programmes and the employment relationship, Administrative Science Quarterly, 40, 681-700.

Perry-Smith, J.E. and Blum, T.C. 2000. Work-family human resource bundles and perceived organisational performance, Academy of Management Journal 43, 1107-1117.



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CONSUMER PREFERENCES AND COMPARATIVE ANALYSIS OF SELECT PRIVATE LIFE INSURANCE COMPANIES -

AN EMPIRICAL STUDY

T. SOBHA RANI*

*AITS Rajampet

ABSTRACT With a huge population base and large untapped market, insurance industry is a big opportunity area in India for national as well as foreign investors. India is the fifth largest life insurance market in the emerging insurance economies globally and is growing at 32-34% annually. This impressive growth in the market has been driven by liberalization, with new players’ significantly enhancing product awareness and promoting consumer education and information. The strong growth potential of the country has also made international players to look at the Indian insurance market.Since 2000 as Government allowed Private players and FDI (Foreign Direct Investment) up to 26%, Private players both domestic and international are offering greater choice in terms of products and services. This paper analyzes and rates selected private life insurance companies by analyzing certain variables and measuring the customer perception, purchase behavior and consumer awareness. From this study, it was found that the purchasing decision of the consumer depends on quality, accessibility and promptness of services, which may lead a company to get the maximum share in the insurance market. KEYWORDS: Consumer awareness, consumer perception, purchase behavior, and promptness of services.

INTRODUCTION

The Indian insurance market in spite of having a history covering almost two centuries took a turn after the establishment of the Life insurance Corporation in India in 1956. From being an open competitive market to being

nationalized and then back to a liberalized market again, the insurance sector has witnessed all aspects of contest. The Indian insurance market conventionally focused around life insurance until recently, a various range of other insurance policies covering



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sectors like medical, automobile, health and other classes falling under general insurance came up, generally provided by the private companies. The life insurance of India added 4.1% to the GDP of the economy in 2009, an immense growth since 1999, when the gates were opened for the private company in the market. The Insurance Regulatory Development Act, 1999 (IRDA Act) allowed the entry of private companies in the insurance sector, which was so far the sole prerogative of the public sector insurance companies. The act was passed to protect the concerns of holders of insurance policy and also to govern and check the growth of the insurance sector.

MAJOR PRIVATE LIFE INSURANCE COMPANIES IN INDIA ARE

• Aviva Life Insurance

• Bajaj Allianz

• Bharati AXA Life Insurance

• Birla Sun Life Insurance

• HDFC Standard Life Insurance

• ICICI Prudential

• ING Vysya

• Kotak Mahindra

• Max New York Life Insurance

• MetLife India Insurance

• Reliance Life Insurance

• SBI Life Insurance

• Shriram Life Insurance

• Tata AIG Life Insurance

Aviva Life Insurance Company India Ltd ranking dropped to 10th in 2007-08 from 9th last year. It has presence in more than 3,000 locations across India via 221 branches and close to 40 bancassurance partnerships. Aviva Life Insurance plans to increase its capital base by Rs 344 crore. With the fresh investment, total paid-up capital of the insurer would go up to Rs 1,348.8 crore.

Bajaj Allianz Life Insurance Co Ltd has reported a growth of 52% and its market share went up to 6.98% in 2007-08 form 5.66% in 2006-07. The company ranked second (after LIC) in number of policies sold in 2007-08, with total market share of 7.36%.

Birla Sun Life Insurance Co Ltd market share of the company increased from 1.22% to 2.11% in 2007-08. The company moved to the 7th position in 2007-08 from 8th a year before, pushing down Max New York Life insurance company.

HDFC Standard Life Insurance Co Ltd with an income of Rs 2,680 crore in FY2007-08, registering a year-on-year growth of 64%. Its market share is 2.88% and it ranks 6th among the insurance companies and 5th amongst the private players.

ICICI Prudential Life Insurance Co Ltd is the biggest private life insurance company in India. It experienced growth of 58% in new business premium, accounting for increase in market share to 8.93% in 2007-08 from 6.97% in 2006-07.

Kotak Mahindra Old Mutual Life Insurance Ltd the fiscal 2007-08, the company reported growth of 80%, moving from the



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11th position to 9th. It captured a market share of 1.19% in 2007-08. Last year the company doubled its branch network to 150 from 74.

Max New York Life Insurance Co Ltd has reported growth of 73% in 2007-08. Total new business generated was Rs 641.83 crore as against Rs 387.51 crore. The company was pushed down to the 8th position from 7th in 2007-08.

Reliance Life Insurance Co Ltd Total collected was Rs 2,792.76 crore and its market share went up to 2.96% from 1.23% a year back. It now ranks 5th in new business premium and 4th in number of new policies sold in 2007-08.

SBI Life Insurance Co Ltd in terms of new number of policies sold, the company ranked 6th in 2007-08. New premium collection for the company was Rs 4,792.66 crore in 2007-08, an increase of 87% over last year.

REVIEW OF LITERATURE

A study conducted by Patil Kallinath S (2003) aimed at critically evaluating the performance of existing insurance products. It revealed that the insurance coverage of agricultural groups and agricultural labor is very low. The performance of children-related policies like Jeevan Kishore, Jeevan Balya, etc., is very poor, except the children money back policy, which also has not been contributing significantly. The demonstration of product features, by the agents, is unsatisfactory. Raman and Gayatri (2004) observed customers’ awareness towards new insurance companies. It was found that 53% of the respondents belong to the age group up to 30, 24% between 31 to 40, 20% between 41 to 50, and the remaining above 50. They also observed that a large percentage of the insured

respondents (32%) are professionals, and 56% of the respondents are married. It was also found that most of the respondents (52%) had taken a policy to cover the risk, 44% to avoid tax, and the remaining to invest the surplus amount. The study suggests that understanding the customer better will enable insurance companies to design appropriate products, determine price correctly and to increase profitability. Jagendra Kumar (2005), in his study, revealed that the life insurance penetration in India is just about 2% of the GDP, while the life insurance premium per capita is just Rs. 550. LIC is the largest player with over 2,000 officers. After liberalization, it has improved efficiency and customer services among the private life insurance companies. ICICI prudential life Insurance and Birla Sun Life are the first and second largest players. Other prominent companies in competition are Bajaj Allianz, HDFC Standard Life, Kotak Mahindra, ING Vysya Aviva Life, MetLife, etc. Namasivayam et al. (2006) analyzed the socioeconomic factors that are responsible for taking life insurance policies and examined the preferences of the policyholders towards various types of policies of LIC. From the analysis, it was found that factors such as age, educational level and sex of the policyholders are insignificant. However, income level, occupation and family size are significant while deciding on an insurance policy. From the analysis, it is inferred that respondents belonging to the age group of 31 to 40 years are much interested in taking a life insurance policy.


The main objective of the study is to measure the customer perception, purchase behavior, and consumer awareness regarding the life insurance industry and rate the selected private life insurance companies by



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analyzing certain variables.

METHODOLOGY

RESEARCH DESIGN: Explorative Research

SAMPLING TECHNIQUE: Stratified Random sampling

SAMPLE SIZE: 500

SOURCE OF DATA: Primary as well as Secondary data, Chennai.

STATISTICAL TOOLS: Mean Correlation and Rank Correlation.

PRODUCT PORTFOLIO

Based on the objective, plans offered by insurers can be classified under three categories

(1) Insurance products (term plans);

(2) Pure investment products (pension plans) and

(3) Investment cum Insurance products (endowment, money back, whole life and unit-linked insurance plans).

ANALYSIS

TABLE 1: PURPOSE OF PURCHASING A POLICY Purpose of Purchase Percentage

(i) Tax saving 5.6 (ii) Investment to get return 1.2 (iii) As a risk cover of death 5.6 Both (i) and (ii) 23.0 Both (ii) and (iii) 19.6 Both (i) and (iii) 10.6 (i), (ii) and (iii) 34.4 Total 100.0

Out of the 500 respondents, the purpose to purchase of insurance products, 1.2% purchase policy as an investment to get return, 5.6% as a risk cover of death—as a tax saving scheme (Table1).From this, we can clearly know that consumers expect more benefits than the single benefit offering because customers are now beginning to incorporate insurance plan while drawing up their financial

plans, as it now works as a good saving instrument and also it shows source of tax concessions. Hence, companies should plan and offer products which can assist their customers in building complete financial plan. Hence insurance companies must move from selling insurance to marketing as essential financial products.



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TABLE 2: COMPANY AWARENESS OF CUSTOMERS Company Percentage

ICICI Prudential 71.2 HDFC Standard 62.4 Allianz Bajaj 61.6 Birla Sun Life 57.4 Max New York Life 56.2 Om Kotak Mahindra 54.8 AMP Sanmar 53.2Tata AIG 51.8 SBI Life 50.8 ING Vysya 47.8 Aviva Life 46.8 MetLife 45.6

Table2 clearly explains about insurance companies' awareness among Chennai city respondents and we observed that out of 500 respondents private insurance policy holders, 71.20% of the respondents are aware of ICICI Prudential. This shows that awareness and growth prospects good for the private players; competition among ICICI, HDFC, Allianz

Bajaj, Birla Sun Life, etc. is immense because across the globe Information Technology has become increasingly popular with consumer these days .The private players feel that convenience, time savings and money saving schemes is the key factor to the success of business and now they clearly tapped consumers expectation.

TABLE 3: CONSUMER PREFERENCE RATE OF PRIVATE COMPANIES FOR NEW POLICY PURCHASE

Company Percentage ICICI Prudential 32.20 HDFC Standard 22.50 Allianz Bajaj 10.90 Birla Sun Life 06.90 Max New York Life 02.40 Om Kotak Mahindra 02.10 AMP Sanmar 01.30 Tata AIG 7.20 SBI Life 02.50 ING Vysya 2.30 Aviva Life 01.50



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MetLife 01.30 Total 100.00

Specifically, we analyzed consumers for policy preferability among Chennai based 500 respondents (Table 3). 32.2% prefer ICICI Prudential, 22.5% preferred HDFC, 10.9% preferred Allinaz Bajaj and rest, i.e., Tata AIG, Om Kotak, AMP Sanmar, SBI Life were preferred by few consumers ranging between7.2% to 1.3%. From this table, we observed that Aviva Life and MetLife new policy are not preferred by respondents but it cannot be said that there is no chance of a new

policy preference because our study is limited to Chennai city and it may vary in another place, depending on the awareness, promotional activities and channels of distribution of private players. Here, we orally analyzed about the preference to the distribution of new policy. They clearly reflected that degree of preference given to the agent channels than the Internet and other channels of distribution.

TABLE 4: REASON BEHIND THE PREFERABILITY OF A PARTICULAR COMPANY

Variables 1st 2nd 3th 4th 5th 6th 7th Mean Value Rank

More Awareness 35 101 195 74 57 38 0 4.73 3

Less Premium 213 136 95 31 25 0 0 5.06 2 Variety of Policy 20 69 83 189 91 35 13 4.16 4 More Benefits 0 7 32 109 204 84 64 2.96 5 Coverage Network 0 0 0 40 44 105 311 1.63 7

More Returns 236 182 82 0 0 0 0 6.31 1 Advertisement 0 3 11 57 79 238 112 2.25 6

Table 4 presents the most preferable factors behind the consumer preferring a particular company. Here, consumer response goes to more returns from policy, less premium, more awareness created by companies, variety of policy and advertisement and these are ranked as 1st, 2nd, 3rd, 4th, 5th and 6th, respectively, by using mean value calculation.



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TABLE 5: RATING OF THE LIFE INSURANCE COMPANIES BASED ON THE PURCHASE OF 500 POLICY HOLDERS.

Company Percentage Ranking ICICI Prudential 3.6 1 HDFC Standard 2.8 2 Allianz Bajaj 2.4 3 Birla Sun Life 2.2 4 Tata AIG 2.2 4 Max New York Life 1.8 5 Om Kotak Mahindra 1.4 6 AMP Sanmar 1.4 7 SBI Life 1.2 8 Aviva Life 1.2 8 ING Vysya 1.0 9 MetLife 0.8 10 Total 100.0

Table 5 presents that the well established LIC is dominating with78.2%, ICICI Prudential with 3.6%, HDFC Standard with 2.8%, Allinaz Bajaj with 2.4% of policy holders. And out of the 500 respondents, only 0.8% respondents with MetLife. There are too many factors contributing to the successful purchase of a policy, and in that, the important factor is brand awareness and time of establishment of business. We can judge that LIC has maximum policy holders and ranked as 1st among other insurance companies,

and ICICI Prudential, HDFC Standard and Allianz Bajaj hold the 2nd, 3rd, 4th ranks, respectively, and Birla Sun Life, Tata AIG ranked 5th Max New York Life as 6th, Om Kotak Mahindra and AMP Sanmar as 7th, and SBI Life and Aviva Life insurance companies as 8th among other private players.

Correlation has been calculated between the ranks of primary and secondary data by considering the variables of consumed policies and consumer preferences (Table 6).

TABLE 6: CORRELATION ANALYSIS

Company X Y ICICI Prudential 2 1 HDFC Standard 5 2 Allainz Bajaj 4 3 TataAIG 3 4 AMP Sanmar 12 4



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Max New York Life 6 5 Birla Sun Life 7 6 Om Kotak Mahindra 11 7 Aviva Life 8 8 SBI Life 10 8 ING Vysya 9 9 MetLife 13 10 Correlation ( R ) 0.75

Note: X: the ranks based on the market share on consumed policies (secondary variable); Y: the ranks based on consumer ratings and mean values (primary variable).

Correlation has been calculated between the ranks of primary and secondary data by considering the variables of consumed policies and consumer preferences and found that R=0.75, that means there is a strong and positive relationship between the ranks given by the consumers and ranks attained by the companies through the market.

CONCLUSION

In many ways the entry of private players has marked a second coming for the sector. Within three years, the sector has undergone a makeover offering the market more choice, better service, quicker settlement, tighter regulations, and greater awareness. Furthermore, from this study, it was strongly believes that the purchasing decision of the consumer depends on quality, accessibility and promptness of services, which may lead a company aquire the top rank with a huge market share.

REFERENCES

1. T.Devasenathipathi, P T Saleendran and A Shanmugasundaram (2007), "A study on consumer preference and Comparative Analysis of All Life Insurance Companies

", The Icfai University Press, Vol. II, No. 4, pp.07-18.

2. Jagendra Kumar (2005), “Innovative Environment in Renovated Insurance Industry”, The Insurance Times, Vol. 25, No.4.

3. Namasivayam N, Ganesan S and Rajendran S (2006), “Socioeconomic Factors Influencing the Decision in Taking Life Insurance Policies”, Insurance Chronicle, August, The Icfai University Press, pp. 65-70.

4. Patil Kallinath S (2003) “Life Insurance Corporation Of India, Its Products and Their Performance Evaluation: A Special Reference to Gulbarga District”, Finance India, Vol. 17, No. 3, pp. 1037-1040.

Raman N and Gayatri C (2004), “A Study on Customer Awareness towards New Insurance Companies”, Indian Journal of Marketing, Vol. 34, July, pp. 9-15.



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SUPPLY CHAIN MANAGEMENT IN FRESH FRUITS AND VEGETABLES SEGMENT: UNORGANIZED V/S ORGANIZED SECTOR

LOKESH VIJAYVARGY*; PRERNA JAIN**

*Jaipuria Institute of Management Jaipur **Jaipuria Institute of Management Jaipur

ABSTRACT With the increasing need to assure consumers that the food they intend to consume is safe and nutritious, the food industry is moving away from the traditional means of buying towards a more direct and reliable means of procurement where buyers exert greater control over prices, quality and production methods and unable to respond to the demands of the institutional buyers, most smallholder farmers will become increasingly marginalized. The lack of incentives, the added costs, the lack of knowledge and the inability to make appropriate investments will inevitably result in a dualistic food distribution system where smallholder farmers will face diminishing returns. The present study compares the traditional mandi system with organized retail system along with various parameters like mark-up at each stage, gains of farmer v/s price paid by end consumer, wastage, lead time, and use of IT. The paper suggests that to break away from the commodity trap and to enter higher value markets, smallholder farmers need to consolidate and differentiate to add value to their product offer. A range of support mechanisms will be required to overcome many of the impediments and to facilitate this transition. Comparing unorganized food chain Vs organized food chain the paper shows how supply chain minimizes the cost of vegetables and fruits.

INTRODUCTION

A supply chain describes the full range of activities that are required to bring a product or service from conception through the different stages of production and processing to deliver superior value to the customer at least cost to the supply chain as a whole.

While the concept of supply chain management is not new, its application to the fresh produce industry is more recent. Agri-supply chain includes growers, pickers, packers, processors, storage and transport facilitators, marketers, exporters, importers, distributors, wholesalers and retailers.



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As the Indian population is increasing, the demand for fresh fruits and vegetables is also increasing. Owing to the perishable nature and very short shelf life, these items require proper storage and transportation facilities in order to reach to the customer in fresh state. This requires a considerable amount of effort from the involved parties. The entire chain is fraught with issues like lack of transparency in pricing (at the farmers' end), dominance of traders, weak links in supply chain, etc. This leads to loss of revenue to the farmer and increased additional costs to the other supply chain partners, which ultimately enforces the final consumer to bear extra burden on his pocket. Since organized retail has started showing interest in fresh fruit and vegetable markets and has already entered into the market with huge investments, the issues involved in the supply chain have changed dramatically and are influencing not only the supply chain partners but also the whole agriculture sector in India.

According to FICCI report of October 2004, India is the second largest fruit and vegetable producer in the world (approx 135 million tonnes), second largest producer of milk, fifth largest producer of eggs, and sixth largest producer of fish with volumes of 5.2 million tonnes.

With such a vast store of natural resources at its disposal it is a pity that India plays a very meager role in world food trade. High delivery costs, caused primarily by a fragmented supply chain, bad logistics, together with poor standards are hurting India’s horticulture exports much more than trade barriers, according to a World Bank report.

Despite producing 11 per cent of the world’s vegetables and 15 per cent of fruits at very competitive costs of about 53 per cent and 63 per cent of average global prices, India’s share in global fruits and vegetables trade has remained at only 1.7 per cent and 0.5 per cent, respectively, the report points out.

Even international transport costs are 20-30 per cent higher than in other countries. For instance, it costs $790 to transport one tonne of grapes from India to the Netherlands, which is two and a half times higher than what the Chileans are paying, although it is twice as far from the Netherlands as India.

ISSUES

Though India is the second largest fruit and vegetable producer in the world (134.5 million tones), cold storage facilities are available only for 10% of the produce. In spite of abundant agricultural produce, India ranks below 10 in the export of food products with processing levels in fruit and vegetable sectors at around 2% only.

The food supply chain is complex with perishable goods and numerous small stakeholders. In India, infrastructure connecting numerous small stakeholders like farmers, wholesalers, food manufacturers, retailers is very weak. Farmers bring whatever they produce to the market without any knowledge about the demand in the market. Inadequate usage/improper management of cold chains are leading to loss in quality of the vegetables and fruits which in turn is leading to loss of profits and business opportunity. Lot of investments need to be made in cold chains in India.



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FIG 1

Weak alignment of supply chain strategy with business strategy is also another major problem with the Indian vegetable and fruit sector. Rapid entry of corporates into this sector is helping farmers as many corporates are going for direct tie-ups with farmers eliminating the middle men. The current challenge is to adopt best practices in supply chain like collaborative forecasting, data integration, increased usage of IT, demand based production, incorporating a pull system for fruit and vegetable production rather than a push system sharing risk and rewards by the supply chain partners, etc.

Another issue is to keep abreast of globalization by constantly upgrading competencies which will ultimately lead to better supply chain practices in Indian food industry. When compared to China or Philippines, India lags far behind in terms of exporting food items. Similarly, many Asian countries like China have better storage capacities and well coordinated supply chain in the food sector.

THE TRADITIONAL MODEL

The Agricultural Products Marketing Act of India legislated the creation of physical market places, called mandis, to enable a more equitable distribution of the gains from

agriculture among producers, consumers, and traders. The mandi is central to the functioning of the marketing channel, and acts as delivery point where farmers bring produce for sale to traders.

MANDIS or market yards probably came into existence to regularize the flow of agri-produce and to protect the interest of the farmer.

Today, the market yard system of transacting agricultural produce has come to represent the main problem of Indian agriculture – like too many intermediaries, wastage, farmer not getting the right remuneration and the overall quality of produce etc.

Though the mandi system is not being done away with, the Union Government had recently announced that private companies will be allowed to directly procure foodgrains from farmers instead of going through mandis. Disintermediation will definitely lead to savings as buyers as well as farmers will not incur transaction costs. The mandi system makes it mandatory for the farmer to sell his produce through the market yards resulting in double handling and transportation costs.

The operation of the mandi consists of a number of different stages, from the logistics



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of transporting grain to the market to quality inspection, auction, bagging and weighing, and payment. Based upon local information within the village, farmers decide in which of the nearby mandis to sell. They transport their crops to the mandis in carts drawn by animals or tractors. Very often, to avoid peak-time crowds, farmers will arrive at the mandi the night before they intend to sell. When the mandi opens in the morning, farmers bring their carts to display areas within the mandi.

The inspection by buyers is by sight. There is no formal method of grading the produce and the only instrument used is the moisture meter; the crop is not tested for oil content.

Once potential buyers have inspected the produce, a mandi employee conducts the auction, where commission agents place bids. The auctions are typically open oral auctions with incremental bidding. The auction represents a stark contrast from the buyer’s and seller’s perspectives. For the farmer, the moment is pivotal: a scant 30 seconds assesses the results of six months of investment and hard work and establishes the value of one of only two or three paydays he will have in the year. For the commission agent, on the other hand, the moment is routing; he has many more carts of produce to buy and his margin is assured irrespective of the price.

Once the price has been established by the auction, the farmers move the cart to the weighing area run by the buying commission agent. In most cases, the weighing area is in the mandi complex. In some cases, especially if the mandi is small, the weighing area may be at the commission agent’s home near the mandi. Here, the produce is transferred from the cart into individual sacks. The sacks are then weighed, one at a time, on a manual scale. After weighing, the full value of the grain is calculated. The farmer goes to the

agent's office to collect a cash payment. The agent pays a mandi fee (1 % of purchase value in Madhya Pradesh) to the mandi. The bagged produce is then loaded on to the buyer's trucks and transported to the processing plant.

LIMITATIONS

• The mandi does not serve the farmer well, and is burdened by inefficiency. Because the farmer does not have the resources to analyze or exploit price trends, the timing of the sale may not result in the optimal price for the crop.

• In addition, farmers find the auction process demeaning. Agents belong to a close-knit community that is socially and economically distinct from the farmers' community. While they may not collude in pricing, they do collude in establishing the practices of the trade that uniformly favor agents and exploit the farmers' situation.

• Farmers feel that the weighers consistently under-weigh their produce by applying practiced and timely nudge to the scale.

• The multiple points of handling in the supply-chain require the produce to be bagged, which takes four to five times longer to be unloaded at the processing plant than unbagged produce. Traders generally do not have the capacity to store and manage different qualities and grades of produce, inhibiting efforts to produce better crop grades.

• From the company's point of view, the key problem is the agent's control of the market and the resulting distortions of price and quality. Agents purchase grain on a trading company's behalf.



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Some of the produce they buy is of good quality and therefore command a premium price, while other crops are of poor quality and therefore sell at a discount. In any given day, an agent purchases produce with a range of crop quality at a range of prices. The agent often mixes the different quality crops together and charges the trading company a single price near the higher end of the price spectrum.

THE MODERN ORGANISED MODEL

Food companies are using increased delivery frequencies, smaller orders and faster order cycle times to keep costs low while meeting their customers' and consumers' increasing demand for fresh food.

Some of the latest trends in the fresh fruit supply chain are

INCREASED FOCUS ON FRESHNESS

This requires that fruits, vegetables and semi processed (ready to eat) salads must be presented to consumers in immaculate condition while maximizing shelf life to avoid costly waste.

PROLIFERATION IN FRUIT AND VEGETABLE PRODUCT VARIETY

Along with meeting increased demand for organic and imported specialty fruits and vegetables, retailers must be able to secure high quality local and imported products all year round. This requires wholesalers to act as both local agent and a value added sourcing specialists.

INCREASED ATTENTION TO MAINTAINING THE "COLD CHAIN"

FACTORS INFLUENCING FOOD AND VEGETABLE SUPPLY CHAIN IN INDIA

Several factors influence the supply chain of fresh food in India. A few of them are:

1. GOVERNMENT

The government of India is aware of the importance of the sector and has taken several steps to boost the sector. In the light of high perishability of products in the sector, the government allows import of cold storage equipment or establishing cold storages in India without any restrictions. Foreign companies are allowed to have a share of upto 51% in cold chain projects. There are several arrangements to provide subsidies in the sector, for example, National Horticulture Board (NHB) drives a subsidy scheme which provides 25% (max Rs. 50 lakhs) subsidies to the promoter in overall capital investments. There are about 60 Agri-Export Zones (AEZ) in India promoted by Agricultural and Processed food products Export Development Authority (APEDA). These zones not only channel proper exports but also tend to reduce inefficiency in the value chains of the agro products.

2. INTEGRATION IN AGRO SECTOR

Agro food sectors in many developing countries are undergoing changes leading to closer vertical coordination. One of the reasons that can be cited is the transaction cost economics. Transaction costs are higher in open market where there are a large number of small players. However, these costs tend to be lower in an environment of strategic alliance through contracting, or within a vertically integrated firm. In India, setup of retail chains like Reliance Fresh of Food World has low overall transaction costs for a given volume of transactions when compared to the same volume traded by a large number of small players.



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3. EMERGENCE OF ORGANIZED RETAIL

The emergence of organized retail, which presents superstore as the primary outlet, goes together with new retail strategies demanding emphasis on establishing the retail brand as a source of competitive advantage. From a supply chain point of view, the more important aspects of emergence of organized retail have resulted in a close focus on identification and exploitation of hidden supply chain costs and efficiencies. Emergence of organized retail is leading to direct benefits to the framer, and low cost and better quality to the end consumer.

METHODOLOGY

The present study aims at finding out quantitative differences between traditional mandi system and modern organized retail chains. The field study was undertaken covering tomato, potato, onion and banana because of their major percentage in national vegetable produce and universal consumption.

The study was based on in-depth interviews with commission agent-Muhana mandi, Sanganer, Jaipur (Raj.) wholesalers and retailers in Jawahar Nagar area, Jaipur and organized retailers like Reliance Fresh, Jaipur.

THE STUDY EXAMINED THE FOLLOWING AREAS

• Mark-up at each stage of fresh food supply chain

• Gains of farmer v/s price paid by end consumer

• Wastage

• Lead Time

• Use of IT and modern storage systems

A thorough literature review was also done to reveal factors influencing fruits and vegetable supply chain in India, trends in fresh food supply chain, the APMC act, its limitations and also perceived benefits of prevalent organized retail chain.

TABLE 1: TRADITIONAL DISTRIBUTION SYSTEM: PRICES AND MARKUP

Price per kg of Produce Tomato Potato Onion Banana

Price paid by end consumer (INR) 16 8 16 14

Price received by farmer (INR) 10.5 3.75 9.75 2.5

Markup (%) (price paid by 52 113 64 460 end consumer to the price

received by farmer)

The given table states the difference in price received by farmer for his harvest compared to price paid by the end consumer. The markup

varies from 52% (for tomato) to 460% (for banana). The level of markup clearly describes that there are a large number of intermediaries



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in given supply chain that raises the cost for end consumers.

TABLE 2: TRADITIONAL DISTRIBUTION SYSTEM: WASTAGE, TRANSPORTATION AND HANDLING COSTS, LEAD TIME AND SOURCE

Tomato Potato Onion Banana

Wastage (%) (per kg) 13.33 15.00 15.00 12.50

Transportation and labour cost (per kg) Rs 2 Rs 2 Rs 2 Rs 2 Lead Time (hrs) 30-32 12 12 21

Source Nasik UP UP Gujarat, MP, Maharashtra

This table shows that wastage in the supply chain can vary from 12.5% (for banana) to (15% for onion and potato). This is the wastage incurred at retailer’s end only. However previous studies reveal that wastage at farmer’s end during transportation can be as high as 20%. This means that cumulative wastage throughout the supply chain can be 30%-35%.

KEY FINDINGS

The data collected are pertaining to price mark-ups, gross margins, lead time and wastage for traditional and modern fresh food supply chain. The keys findings of the study are:

A. MARK-UP AT EACH STAGE OF FRESH FOOD SUPPLY CHAIN The traditional supply chain has a markup of 52% for tomato to 460% for onion. It is important to note that retailers have highest margins whereas the risk borne by them is the lowest. As the number of intermediaries in the supply chain increases, so does the markup paid by end consumer. Part of the markup by commission agent is paid as fixed tax (7.6%) under the APMC act.



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TABLE 3: TRADITIONAL DISTRIBUTION SYSTEM: MARK-UP AT EACH LEVEL OF SUPPLY CHAIN

INR Tomato Potato Onion Banana

End consumer 16 8 16 14

Reseller 12.30 5.04 11.49 5.84

Commission agent 10.50 3.75 9.75 4.50

Farmer 8.50 1.75 7.75 2.50

(B) GAINS OF FARMER V/S PRICE PAID BY END CONSUMER

Gross margin for farmer is as low as--- whereas for retailer it is highest at ---. This is inequitable as risk taken by farmer is higher as

he cultivates the produce for months and this is his only source of income. On the other hand, risk undertaken by retailer is low as most of his goods are sold within 1-2 days and he gets daily earnings with higher gross margins.

TABLE 4: TRADITIONAL DISTRIBUTION SYSTEM: GROSS MARGIN AT EACH LEVEL

(%) Tomato Potato Onion Banana

Commission agent 9.52 26.67 10.26 22.22

Reseller 30.10 58.89 39.24 139.64

(C) WASTAGE

The traditional supply chain is wrought with wastage. The wastage can be as high as 15% per kg for onion and potato at retailer’s end and 30-30% for complete supply chain.

This wastage is being estimated at 25% of total produce or approx Rs. 50000 crores or US $ 10 billion.

Main reasons for wastage are

1. Shortages of Cold Storage facilities and Refrigerated transport lead to inefficiency in handling perishables which manifest itself into wastage.

2. Wastage borne by farmers is highest as retailers buy a smaller lot of produce on daily basis and are able to sell even



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spoiled food to lower income group people at cheaper rates.

3. It has been noted that even organized

retailers are facing problem of lack of established cold chain. The agro-produce collected at distribution centre is stale by the time it reaches retail outlets. To overcome this problem, organized retailers started sourcing

most of their fresh food from nearby mandis. This highlights the need for large scale integration of information and installation of infrastructure.

(D) LEAD TIME

Lead time for order fulfillment varies from 12 hrs for onion and potato to 32 hrs for tomato depending on the source of supply.

TABLE 5: BENEFITS TO END CONSUMER: TRADITIONAL DISTRIBUTION SYSTEM V/S MODERN DISTRIBUTION SYSTEM

Price per kg of Produce Tomato Potato Onion Banana

Traditional Distribution system (INR) 16 8 16 14

Modern Distribution system (INR) 12.5 5.44 8.57 8.31

Improvement (%) 21.88 32.00 46.44 40.64



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FIG. 2

(E) USE OF IT AND MODERN STORAGE SYSTEMS

IT, like EPOS and RFID, is being used by organized retailers. However it is notable that IT can be availed to the fullest only if farmers start processing and packaging at their end. IT is also be used by farmers but mainly for the food grains market which is more organized. However perishability rate in this segment is much lower.

No accurate maintenance of records about prices, demand and supply was found with the commission agent i.e. at mandi.

Cold storage systems are installed at shops of large retailers and wholesalers however markup by them is also higher. Moreover, main wastage that is incurred during transportation from farmer to consolidator is uncontrolled due to lack of refrigerated storage at framer’s end itself.

RECOMMENDATIONS

It can be inferred from the present study that modern fresh food supply chain is much better as compared to traditional supply chain. There is an enormous scope of improvement in the current mandi system. Accordingly a few recommendations are suggested:

USE OF IT

One of the major benefits of Electronic Point of Sale (EPOS) technology is that, in concurrence with delivery information and frequent stock counts, the sales data collected presents a very clear picture of market demand patterns.

Along with EPOS, sales based ordering system is becoming popular which enables orders to be generated automatically in response to customer

demand. This provides retailers an opportunity to develop a seamless information flow, from the checkout to retail stock control and replenishment functions. EPOS and Enterprise Resource Planning are the technologies popular with Indian food retailers like Reliance Fresh and Spencer’s.

From the economies of scale point of view, the costs associated with these technologies are justified only in case of large organized and integrated players.

Sachin and Kuttayan (2003) conducted a descriptive study on ITC’s E-choupal initiative. The study clearly delineated effect of emerging technologies on Indian food supply chain. The authors found that farmers get the benefits like faster processing time, prompt payment and access to a wide range of information, including accurate market information, and market trends, which help them to make efficient selling decisions. Also, farmers selling directly to ITC through an e-choupal receive a higher price for their crops than they would receive through the mandi (traditional) system, on an average 2.5% higher.

The overall benefits to farmers include lower price for inputs and other goods, higher yields and a sense of empowerment. E-choupal saves farmers from the dreaded agents, time wasting mandi system and transportation costs. At the same time, ITC also gets the benefits of lowering procurement costs (it saves the commission fee and part of the transportation cost it would otherwise pay to traders who serve as its buying agents at the mandi).

ITC recovers its equipment cost from an e-choupal in the first year of operation and venture as a whole becomes profitable. The system also provides direct access to information about conditions on the ground and weather which helps farmers in planning for the next crop.



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ITC’s IT initiative is also paving ways to educate and update the Indian farmers with the latest happenings in the commodities world and other agricultural products.

IMPROVED SUPPLY CHAIN SUGGESTED

As aggregation will reduce cost of the supply chain, development of terminal markets is suggested. These are professionally managed competitive structure developed to provide market services to farmers at their door step and a comprehensive solution to stakeholders in the supply chain. A terminal market is developed to benefit from aggregation through following format:

• HUB-AND-SPOKE FORMAT Terminal Market (the hub) to be linked to number of collection centres (the spokes).

• COLLECTION CENTRES to be conveniently located at key production centres to allow easy access to farmers

• PROVIDE STATE OF ART FACILITIES FOR – Transparent price discovery

(electronic auction),

– Primary value addition( washing, grading, packing etc),

– Sourcing for processing and exports,

– Other services such as banking etc.

INFRASTRUCTURE AT VARIOUS STAGES

• AT TERMINAL MARKET Electronic auction facility, Packhouse, Quality testing facility, Palletisation, Material handling equipment, Cold storage, temperature controlled warehouse, ripening chamber etc.

• AT COLLECTION CENTRE Washing, grading & sorting facility for produce, Weighing, and Plastic Crates

SERVICES

• AT TERMINAL MARKET Transport (including cool chain), Warehousing and commodity exchange, Transactional Banking services, Dissemination of Market information, and Settlement of payment

• AT COLLECTION CENTRE Collection & Aggregation of produce, Spot payment to farmer at CC, Advisory on inputs, prices, quality, Multi-modal transport to TM



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FIG. 3 FORMAT OF A TERMINAL MARKET

As can be seen, this structure resembles the cooperative system developed for dairy produce. Implementation of this structure would result in added value not only for the farmers but also for consumers. Collection centres would ensure that regular payments are made to the farmers to their produce. Also proximity of these centres to the site of production would reduce losses incurred due

to transportation. Incorporation of banks into the system would allow farmers to benefit from financing from safe avenues instead of falling into the clutches of local money lenders extracting exorbitant interests.

The greatest benefit ensues from removal of several layers of intermediaries from the supply chain as this reduces the markup greatly.



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FIG. 4

Encouraging processing and value addition at farmer’s level which will also enhances export quality of the produce

The fruit and vegetable processing industry in India is highly decentralized. A large number of units are in the cottage/home scale and small scale sector, having small capacities upto 250 tonnes/annum though big Indian and multinational companies have capacities in the range of 30 tonnes per hour or so. The processing level in India is estimated to be around 2%, as compared to about 80% in Malaysia, 30% in Thailand, and 60-70% in the UK and USA. The domestic consumption of value added fruit and vegetable products is however, very low compared to the primary processed food in general and fresh fruits and vegetables in particular which is attributed to higher incidence of tax and duties including that on

packaging material, lower capacity utilisation, non-adoption of cost effective technology, high cost of finance, infrastructural constraints, inadequate farmers-processors linkage leading to dependence upon intermediaries. The inability for market promotion is an important reason for inadequate expansion of the domestic market. Proper development of processing industry will not only result in greater employment opportunities but also enormous reduction in losses incurred in fresh food supply chain.

• Disintermediation or delayering of

supply chain which will result in better realization by farmers and lower markup for consumers.

• Development of cold chains.



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CONCLUSION

As India’s population increases, demand for fresh food will increase. Building shiny new stores to meet that demand is easy. The hard part will be supplying them with fresh, clean and safe vegetables and fruit through a sophisticated supply chain that links farms and consumers, country and cities. It's here that the real revolution lies. At the moment, India has one of the most fragmented produce-supply chains on the planet. Industry experts estimate more than 30% of all fresh produce is lost or spoils before it reaches the market. On average, goods pass through six or seven middlemen before a consumer can buy it, resulting in tortuous journeys, big markups and poor quality. Replacing that system requires not just building a modern, efficient network but adapting it to Indian conditions.

In India, need of the hour is to invest in systems that retailers take for granted in other countries. To ensure refrigeration units keep humming during the country's frequent power outages, Reliance is installing diesel generators not only in all its shops but also at its rural collection hubs, where farmers bring their produce, and at its processing centers, which usually sit on the outskirts of a city. A reliable supply of safe water in which to wash fruits and vegetables is also a basic necessity. Because city water often runs dry and can carry dangerous bacteria, Reliance has installed reverse-osmosis machines at its processing centers to clean the local water supply. Reliance says it will invest $6 billion in retail over the next few years, with some 60-70% of that going to its distribution network. "It's the cost of providing clean, safe food to consumers," says Gunender Kapur, head of Reliance's foods business.

Transport is also a challenge. India's government is pouring billions of dollars into

its highway system, but thanks to a swelling middle class and booming car sales, the roads are filling up faster than they can be built. For now, Reliance plans to buy mostly from farmers located within a couple of hours of major cities to shorten transport times. The company will build up its own fleet of trucks, but will also outsource some of its transport needs. Eventually, trucks will be fitted with radio or satellite transmitters that will allow a central control room to track locations and cargo—a far cry from the bullock carts and rusty trucks that currently link producers and customers. Still, even the fanciest trucks must slow for bureaucracy. The country's 35 states and territories run separate tax and duty systems. To get from Bangalore to Hyderabad, about 550 km away, for example, the driving time is about 16 hours, but stops at border and tax-inspection checkpoints add two to three hours to the trip.

Thus organized retailing and public-private partnership accommodated with a willing government is the answer to challenges faced in fresh food supply chain.



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YOUNGSTERS PERCEPTION REGARDING READYMADE GARMENTS IN HARYANA

DR. MAITHILI R.P. SINGH*

*Department of Management

Central University of Rajasthan Kishangarh Ajmer

ABSTRACT Readymade garment segment is the main key drives of growth for Indian textile industry. The Indian readymade garment industry has been the largest foreign exchange earner for the country and accounts for almost 14 per cent of the total foreign exchange earned by the country. ‘Consumerism’ is the part of our daily life. For marketers, it is important for us to decide to whom to direct the promotional efforts by recognizing why and how individuals make their consumption decision. Consumer preferences are changing and becoming highly diversified. Readymade garments as the name itself implies the garments ready for wearing. Ready to wear garments have been finding more and more acceptance in the indigenous as well as export markets mainly due to low cost fabrication. The trend for using readymade garments is increasing day by day. Readymade garments may be classified like formal wear, fashion wear and casual wear. Because of the acceptance of readymade garment by the youngsters, readymade garment companies manufacture different types of readymade garments. The readymade garment segment will be the principal drivers of growth even in the domestic industry. The changing preference of Indian consumer from buying clothes to readymade garments has promoted several companies to move up the value chain into the finished product segment. The present study highlights the youngsters’ perception about readymade garments in India. KEYWORDS: Readymade Garment, Textile, Formal Wear, Casual Wear, Fashion Wear.



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INTRODUCTION

In India readymade garment market is rising at a significant rate of growth. Indian readymade garment markets are having a tough time in pushing up sales in the United States with the large retail chain, there slashing the volume of sales in the face of serious financial crunch. In the early era, there is no scope of readymade garments but now-a-days, trend of readymade garments is increasing day by day at a very rapid pace. Each nook and corner has its own tale to tell. Readymade garment segment is the main key drives of growth for Indian textile industry. The Indian readymade garment industry has been the largest foreign exchange earner for the country and accounts for almost 14 per cent of the total foreign exchange earned by the country. Readymade garments exporters were worth US $ 8 bn in FY 2006 and will cross US $ 16 bn by the end of 2010 assuming a conservative growth of 15 per cent per annum. According to estimates, investment textiles are expected to touch US $ 31 bn by 2010. ‘Consumerism’ is the part of our daily life. For marketers, it is important for us to decide to whom to direct the promotional efforts by recognizing why and how individuals make their consumption decision. The initial thrust of consumer research was from a managerial respective. Marketing manager wanted to know the specific causes for consumer behaviour. The size of the consumer market in this country was vast and constantly expanding. Consumer preferences are changing and becoming highly diversified. Consumer preferences are changing and becoming highly diversified. Even in industrial markets buyers are exhibiting diversified preferences and less predictable purchase behaviours. To better meet and needs of specific groups of consumers, most marketers adopted a policy of market

segmentation which called of the division of their total potential markets into smaller, homogeneous segment for which they cough design specific type of garments. Readymade garments as the name itself implies the garments ready for wearing. Ready to wear garments have been finding more and more acceptance in the indigenous as well as export markets mainly due to low cost fabrication. The trend for using readymade garments is increasing day by day. Manufacturing of Jeans and Shirt is one of the important products of readymade garments. Readymade garments may be classified like formal wear, fashion wear and casual wear. Whatever you wear, your clothes tell other people a lot about you. People started wearing clothes many thousands of years ago, mainly to protect themselves against the climate. Over the centuries clothes have come to mean much more than that. They can hide or show off the parts of the body, according to what is considered attractive or even decent at a time. They can indicate someone belongs to a particular religion. In many parts of the world, people still wear the traditional styles of clothes that their ancestors wore hundreds of years ago. In India, for example, many women wear a sari, a dress made by winding a long length of fabric around the body. But now the time has been changed. Fashion market is continuously evolving. Fashion is never stagnant, it is never stable. The fact is that buyers are becoming preference savvy and smarter in order to what they shop. They acquainted that a throwaway piece of fast fashion from a retail chain store will complete their outfit choices. People wanted to wear the branded readymade garments. Today youngsters are extremely aware of the various brands in the market and very conscious about the products. They pick and choose very carefully according to their



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needs, style, preferences etc. They also exercise a lot of independence in decision-making and influence the family buying behaviour. Because of the acceptance of readymade garment by the youngsters, readymade garment companies manufacture different types of readymade garments. The readymade garment segment will be the principal drivers of growth even in the domestic industry. The changing preference of Indian consumer from buying clothes to readymade garments has promoted several companies to move up the value chain into the finished product segment. Several companies that are engaged in fibre manufacturing are now keen to enter the readymade garments space. A recent entrant is Siyaram which launched its readymade garment range in November, 2006 following suit with other majors line Century Textile and Raymonds. With the help of Kewalkiran Clothes, we can see the growth of readymade garments. Net sales of the business is 26.12 crore in 2004-05 which increase to 302.98 crore in 2006-07 and profits after tax in 2004-05 is 3.72 crore, 11.93 crore in 2005-06 and 15.44 crores in 2006-07. The growing phenomenon observed among Indian Textile companies is the setting up of manufacturing facilities in the strategic regions outside India where they can avail of duty concessions and reduce exports lead time. Zodiac and Ambattur clothing have set up facilities in the Gulf region to cut down on export delivery schedules to the European and US markets. Raymonds has set up unit in Bangladesh to avail of the zero duty access to the EU. REVIEW OF LITERATURE

Chawla (1991) has made an attempt to build an ARIMA model to forecast export of Indian

readymade garments. The monthly data on readymade garments export for the period April 1991 to December 2000 is used to build the model. The forecast are obtained for the period January 2001 to December 2001 by using the ARINA model. The accuracy of ex-post forecast is also tested. The forecasts indicate a slowdown in growth of exports in January to March 2001 as compared to the same month in year 2001. He suggests a review of government policy towards the industry.

Ahluwalia (1996) surveyed that the readymade garment segment has vertical growth. This industry is growing at the rate of 20 per cent with massive viability and considerations margins. The largest segment for the readymade garment segments includes the age group of 16-35 that is very brand conscious and gives priority to high quality. Branded readymade garments account over 21per cent of the readymade garment industry. Despite substantial growth, company to the international readymade garment market of nearly 183 mm USD. The Indian readymade garment market is still in a budding phase. The main obstacle in the organised players is the huge unorganised scenario of the market like Siyaram’s venturing into the readymade garment to grip the continuously changing fashion trends. It is becoming a prominent design of men’s readymade garments.

Kathuria and Bhardwaj (1998) surveyed on import quotas on textiles and clothing which impose a non-transparent burden on both the importing and exporting countries. The agreement on textiles and clothing promises abolition of all quota restrictions in international trade by the end of year 2005. They provide comprehensive estimates of the magnitude of the implicit export taxes resulting from the labyrinth of quotas imposed under the WTO agreement on textiles and



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clothing. Over the period 1993 to 1997, export tax equivalent for garment exports to the USA were found to be about twice the EU. In both the garment and textiles sectors, India’s strength lie basically in natural resources and low cotton.

Sharma (2000) has explained that export growth in India has been much faster than GDP growth over the past few decades. Several factors appear to have contributed to this phenomenon including foreign direct investment (FDI). However, despite increasing inflows of FDI especially in recent years there has not been any attempt to assess its contribution to India’s export performance.

Mahmuda (2000) explains that in the last decade of the twentieth century the readymade garment sector of Bangladesh gave the country and its women an image boost, both in South Asia and rest of the world. Bangladesh exports 35 types of garment products to about 31 centuries around the world. The readymade garment sector is a 100 per cent export oriented industry. Bangladesh maintained its position as the sixth largest exporter of apparel to the United States in 1994-95; it was the largest exporters of T-shirts and shirts to the European Union in 1992-93.

Hashim (2004) portrays that textile industry contributes heavily to GDP, industrial output, foreign exchange earnings and employment. In 2000-01, it contributed around 4 per cent to GDP, 14 per cent to industrial production, 27 per cent to the country’s export earnings and 18 per cent to the employment of the industrial sector. India’s share in the global textile industry is 4 per cent and the same in the global garment industry is 3.4 per cent. During 1991-92 to 2001-02 India’s textile and garment exports grew at an annual growth rate of 8.5 per cent. During 1999-2000 while the former contributed Rs. 239.8 billion (49.1%),

the later contributed Rs. 248.3 billion (50.9%) to the foreign exchange earnings.

Padhi (2004) in his study found that India’s apparel-export industry is facing a moment of truth. The removal of world trade quota restrictions in January 2005 could bring a huge increase in India’s annual exports and make it the big winner in the global market, after China. This breakthrough will occur, however, only if the government accelerates the pace of reform and local manufacturers adopt measures to improve their competitiveness, a study shows productivity, labour costs and quality, at least for higher-end goods, will determine which country win or lose once the arrangement on textiles and clothing quota restrictions on apparel exports expire. China is likely to capture almost all of the resulting growth in global exports. Regardless of whether the United States and the European Union allow brand owners and retailers to buy freely or impose transitional safeguard mechanisms and increase duties, Asian countries that want to increase exports will have to take market share from one another and from countries outside Asia.

Ananthakrishnan and Jain Chandra (2005) in their study analyse the impact of the elimination of textile and clothing (T & C) quotas in India. Their simulations suggest that while Indian exports of T & C will continue to expand in the presence of the safeguards on China, they will be affected once these safeguards’ are lifted. They argue that India could emerge much stronger and expand its trade in T & C at a much faster pace, if some of the key domestic structural weaknesses are overcome. They analyse the impact of the quota elimination on India using GTAP. The results of the simulations do not present an optimistic scenario for India in terms of export growth of T & C in a quota free world. They also show that Indian exports of T & C will



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continue to expand in the presence of the safeguards on China but will be adversely affected once these are lifted, essentially providing India’s T & C industry some respite until 2008, when all safeguard on China will be lifted.

Saggi (2006) in his study has established that garment industry is one of the biggest sources of export with the considerable and rapid increase in growth (much of it over the last four decades), there has been a corresponding race to the bottom insofar as labour standards and wages are concerned. Figures estimate that India’s readymade garments industry contributes around 16 per cent of total export earnings and is the largest net foreign exchange earner for the country. Garment exports have been raised from a mere $ 2 million in 1960-61 to $ 696 million in 1980-81 and further to $ 2236 million in 1990-91 and almost doubled to $ 4765 in 1990-2000.

It is evident from the review of literature that majority of the work undertaken in this area is related to the conceptual issues of garment industry, its contribution towards GDP, garment exports etc. Even researchers have not given much attention to understand the consumer’s perception and why, what, how, when and where of their consumption behaviour. Therefore, the present research has been endeavoured to fill up these gaps and strived to deal with youngsters’ perception about readymade garments.

OBJECTIVE OF THE STUDY To examine the consumer perception towards the readymade garment, brand awareness &

preferences and the factors influencing purchase decision regarding readymade garments.

RESEARCH METHODOLOGY The study is exploratory in nature and based on primary data collected with the help of structured questionnaire. Sample units are the youngsters working and non-working in the age group of eighteen to twenty five years. Sample size for the study is 200. The population consists of districts of Hisar, Rohtak and Ambala in the state of Haryana. The sample technique used for this study is convenience sampling. Secondary data is collected from published information in various journals, magazines and websites. The data collected through structured questionnaire have been duly tabulated and classified. Then the data have been analyzed by using average, percentage, and ranking with the help of statistical package for Social Sciences (SPSS). ANALYSIS AND FINDINGS 1. CONSUMER PROFILE

The field of consumer behaviour studies individual, groups and organisation select by use and dispose of goods, services, ideas or experiences to satisfy their needs and desires. In consumer profile we have to study some demographic characteristics of consumers such as age, sex and income so that we can make better strategic marketing decisions. It is important for us to recognize why and how individuals make their consumption decisions.



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TABLE 1: RESPONDENT’S GENDER

Gender Frequency Percentage

Male 160 80

Female 40 20

Total 200 100

Source: As per survey. Table 1 indicates that the male respondents are 80 % and female respondents are 20%.

TABLE 2: RESPONDENT’S AGE GROUP

Age (Years) Frequency Percentage

18-21 120 60

21-25 80 40

Total 200 100

Source: As per survey. Table 2 shows that 60% respondents are from the age group of 18-21 years and 40% from age group of 21-25 years.

TABLE 3: RESPONDENT’S FAMILY MONTHLY INCOME

Income (Rs.) Frequency Percentage Up to 10,000 25 12.5 10,000-15,000 75 37.5 15,000-20,000 60 30 Above 20,000 40 20 Total 200 100 Source: As per survey. Table 3 shows that 12.5% respondent’s family monthly income is below 10,000 while 37.5% respondents are those whose monthly income of the family is Rs. 10,000-15,000, 30%

respondent’s family monthly income is Rs. 15,000-20,000 and 20% respondent’s family monthly income is above Rs. 20,000.



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2. CHANGE WITH CHANGE IN NEW FASHION

Youngsters are found to be innovative and change with change in fashion, the table 4

explains their response towards change according to changing fashion.

TABLE 4: TIME PERIOD OF RESPONDENT TO CHANGE HIM WITH A NEW FASHION

Time Frequency Percentage

Very easily 95 47.5

By the passing time 76 38.0

Very late 29 14.5

Total 200 100

Source: As per survey. Table 4 indicates that around 48 % youngsters change with new fashion easily, 38%

respondents change by the passing time and approximately 14 % change very late.

3. FACTORS INFLUENCING PURCHASE OF READYMADE GARMENTS

The table 5 explains the various factors being considered by youngsters while purchasing readymade garments.

TABLE 5: VARIOUS FACTORS WHILE PURCHASING READYMADE GARMENTS

Factors Frequency Percentage

Brand 30 15

Availability 10 5

Price 28 14

Quality 68 34

Personality 64 32

Total 200 100

Source: As per survey. It is evident from the Table 5 that quality and personality both are the most effecting factor on the buying decisions of youngster and the least influencing factor is product quality.

4. READYMADE GARMENTS AND SELF CONFIDENCE

There may be different views of respondent’s about readymade garments like whether they



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can improve the self confidence or not, indicated by table 6.

TABLE 6: BRANDED READYMADE GARMENTS VERSUS SELF-CONFIDENCE

Decision Frequency Percentage

Yes 169 84.5

No 31 15.5

Total 200 100

Source: As per survey. Table 6 indicates that approximately 85% respondents think that wearing branded readymade garments increase their self-confidence.

5. READYMADE GARMENTS AND PRICE

There may be different views of respondent’s about readymade garments like the brand which they buy are overpriced, appropriate priced or under priced, which is indicated by table 7.

TABLE 7: BRANDED READYMADE GARMENTS VERSUS PRICE

Frequency Percentage

Over priced 43 21.5

Appropriate priced 126 63

Under priced 31 15.5

Total 200 100

Source: As per survey. It is evident from Table 7 that 63 % respondents think that brand they buy have appropriate price and around 21 % say that it is overpriced.

6. RESPONDENT’S PREFERENCES FOR BRANDED GARMENTS Table 8 shows respondent’s preference for local and branded readymade garments.



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TABLE 8: RESPONDENT'S PREFERENCE REGARDING READYMADE GARMENT TYPE

Type Frequency Percentage

Local 20 10

Branded 70 35

Both 110 55

Total 200 100

Source: As per survey. It is evident from Table 8 that 55% of the respondents prefer both type of garments whether local or branded, followed by 35 % prefer branded and 10 % prefer local readymade garments.

7. SINGLE BRAND BEING USED IN A FAMILY

Youngsters are found to be innovative and they may not follow the use of similar brands used by their family, the table 9 explains they use the same brand of family or not.

TABLE 9: SINGLE BRAND USED IN A FAMILY

Frequency Percentage

Yes 30 15

No 170 85

Total 200 100

Source: As per survey. Table 9 shows that 85% of the youngsters never use the same brand used in a family.

8. BRAND SWITCHING

Table 10 shows respondent’s time frame of brand switching behaviour for readymade garments.

TABLE 10: RESPONDENT'S FREQUENCY OF CHANGE THE BRAND OF READYMADE GARMENTS

Time period Frequency Percentage

Never 10 5



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In a month 40 20

In a year 40 20

More than one year 15 7.5

Can’t say 95 47.5

Total 200 100

Source: As per survey.

It is evident from the Table 10 that around 48 % of the respondents can’t state the time period to change the brand of readymade garments, and as low as 5 % respondents never change their brand of readymade garments.

9. REASONS OF PURCHASE LOCAL VERSES BRANDED READYMADE GARMENTS

There are a lot of factors which affect the buying decision of youngsters. Youngsters buy readymade garments because of many reasons. Table 11 and 12 explain the various factors under consideration for purchase of local and branded readymade garments.

TABLE 11: VARIOUS FACTORS CONSIDERATION WHILE PURCHASING LOCAL READYMADE GARMENTS


Low price 120 60

Shop near to your residence 20 10

Good quality 50 25

Ignorance about branded readymade garments 10 05

Total 200 100

Source: As per survey. It is evident from Table 11 that low price has emerged as most important factor for purchasing local readymade garments.



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TABLE 12: VARIOUS FACTORS CONSIDERATION WHILE PURCHASING BRANDED READYMADE GARMENTS


Suitable price 10 05

Good quality 80 40

Stylish 80 40

Comfortable fit 30 15

Total 200 100

Source: As per survey. It is evident from Table 12 that good quality and stylish have emerged as two important factors for purchasing branded readymade garments.

10. BRAND PREFERENCE FOR READYMADE GARMENTS

There are a number of brands present in readymade garments. Table 10 shows respondent’s preference for various brands of readymade garments.

TABLE 13: RESPONDENT’S PREFERENCE ABOUT THE BRAND OF READYMADE GARMENTS

Factors Frequency

Koutons 157

Lee 145

Adidas 95

Allen Cooper 43

Charlie Outlaw 57

Cotton County 78

Black 15

Nike 25

Capture 5

Source: As per survey. It is evident from the Table 13 that most

preferred brand is Koutons, followed by Lee,



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Adidas, Cotton County, Charlie Outlaw and Allen Cooper. Brands like Nike, Black and Capture are less preferred brands.

11. ADVERTISEMENT AND ITS IMPACT

Advertisement have a great impact on buying decisions of youngsters so advertisers have to

plan their advertisement carefully to make sure that the stimulus they want noted is seen as figure and not as ground. Table 14, 15 and 16 explain sources of information, effect of advertisement on purchase decision, and features of advertisement which attracts the youngsters the most.

TABLE 14: RESPONDENT’S SOURCES TO GET INFORMATION ABOUT READYMADE GARMENTS

Sources Frequency Percentage

Newspaper 42 21

Radio 3 1.5

Television 67 33.5

Friends & Relatives 63 31.5

Others 25 12.5

Total 200 100

Source: As per survey. It is evident from Table 14 that television and friend & relatives are found to be important

sources for gathering information regarding readymade garments.

TABLE 15: EFFECT OF ADVERTISEMENT ON PURCHASE DECISION

Effect Frequency Percentage

Yes 147 73.5

No 53 26.5

Total 200 100

Source: As per survey. It is evident from the table 15 that approximately 74 % respondents agree that

watching the advertisement has a great impact on buying decision of customers.



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TABLE 16: FACTORS WHICH ATTRACT THE MOST TO THE RESPONDENT


Jingle 15 7.5

Actor 35 17.5

Music 25 12.5

Theme/idea 120 60

Others 5 2.5

Total 200 100

Source: As per survey. It is evident from the Table 16 that theme/idea of the advertisement is the most attracting factor to the youngsters, followed by actor, music and jingle.

12. AFTER PURCHASE/USE EFFECTS Sometimes consumers do not get satisfaction after purchase/use of readymade garments. In

this case they can switch the brand, switch the category or may continue to be loyal to the brand. Table 17 shows the decision they take after dissatisfaction of readymade garments.

TABLE 17: DECISIONS AFTER DISSATISFACTION OF READYMADE GARMENTS

Decision Frequency Percentage

Brand switching 90 45

Category switching 50 25

Brand loyal 60 30

Total 200 100

Source: As per survey. It is evident from Table 17 that 45 % of the respondents, after dissatisfaction in readymade garments switch the brand, 25 % respondents switch the category and 30 % respondents are loyal to the brand.

CONCLUSION

It may be concluded from the study that majority of youngsters change with change in fashion in readymade garments. Quality, personality and brand have emerged as important criterion for purchase of readymade garments. A large majority of youngsters believe that wearing readymade garments enhances self-confidence. Branded readymade garments are preferred more by them and



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perceived as reasonably priced. Majority of respondents do not follow the brand patronage of their family rather they prefer newer and other brands as well as they switch over brands of readymade garments frequently. Low price and good quality are main reasons for the purchase of local readymade garments. Good quality, stylish and comfortable fit have emerged as main reasons of purchase of branded garments. Most preferred brand by the youngsters is Koutons, followed by Lee, Adidas, Cotton County, Charlie Outlaw and Allen Cooper. Brands like Nike, Black and Capture are less preferred brands. Television and friends & relatives are the main source of information used by youngsters about readymade garments. They appreciate the impact of advertisement on their purchase decision. If youngsters are dissatisfied with the garments after use, it may lead to brand and category switching.

REFERENCES 1. Das, Keshabananda (1996). Surviving

and Growing in a Garment Cluster, Journal of Entrepreneurship.

2. Hossain, Mohammad A. Trade Liberalisation in Bangladesh, Journal of Developing Areas. 39.1

3. Sharma, Kishore (2000). Charles Stuart University (Australia), Export Growth in India: Has FDI played a role, Connecticut-06520-8269.

4. Sagi, Naiyyaa (2006). A Critical Analysis of Adherence of Labour Standards and Solutions. Summer Research Internship Program 2006, Centre for Civil Society, Journal of Garment Indsutry, Bangalore (Working paper No. 150).

5. Hashim, Danish A. (2004). Post MFA implications, cost and productivity in Indian textiles. Nov. 2004.

6. Lee, Cheryl L. (2002). Appalachian State University, Journal of Family and Consumer Sciences, education vol. 20, No. 1, Competencies in clothing and textiles needed by beginning family and consumer science teachers.

7. Murphy and Steward (1990). Journal of Family and Consumer Sciences, education vol. 20, No. 1, Competencies in clothing and textiles needed by beginning family and consumer science teachers.

8. Pauley (1996). Journal of Family and Consumer Sciences, education vol. 20, No. 1, Competencies in clothing and textiles needed by beginning family and consumer science teachers.

9. Reynolds and Watson (2000). Journal of Family and Consumer Sciences, education vol. 20, No. 1, Competencies in clothing and textiles needed by beginning family and consumer science teachers.

10. Fang, Jing-Jing (2003). 3D collar design creation, International Journal of Clothing Science and Technology, vol. 15, issue 2, 88-106.



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11. Ahluwalia, I.J.R. Mohan and Oman, C. (1996). Journal of Policy Reforms in India (Paris: Organisation for economic cooperation and development).

12. Gioello, Dettie A. (1985). Van Cort Landt Park Ave. Yonkers, NY 10705, Appliance No. 362164.

13. Chawla, Deepak (1991). Journal of Forecast of Indian Readymade Garments. Exports using in ARIMA model, International Management Institute, New Delhi, India.

14. Kathuria, Sanjay and Bhardwaj, Anjali (1998). Export quotas and policy constraints in the textile and garment sectors.

15. Quddus, Mohammada and Rashid S. (2000). Journal of Labour and Management. Entrepreneur Development the remarkable story of garment exports from Bangladesh, The University Press Limited, Dhaka, 229.

16. Kelegama, Saman (2004). Book of Readymade garment Industry in Sri Lanka: Facing the global challenge. 4 Aug 2004, Ceylon continental Hotel, Colombo.

17. Padhi, Asutosh, Pauwels, Geal, Taylor, Charlie (2004). Journal of freeing India’s textile industry, 00475394.

18. Ananthakrishnan, P. and Jain Chandra S. (2005). The Impact on India of Trade Liberalization in Textiles and Clothing Sector. pp. 1-29.

19. Moodley, Sagren; Morris, Mike and Vela, Myriam (2005). E-commerce for exporting garments from South Africa: Digital dividend or leap of faith, working paper 182.

20. Stubbs, Katherine (1998). Reading material: Contextualizing clothing in the work of Anzia Yezierska, Vol. 23.



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LEVEL OF AWARENESS IN RURAL INVESTORS TOWARDS INSTITUTIONAL INVESTMENTS -

A CASE STUDY OF BIJAPUR DISTRICT

DR. A. S. SHIRALASHETTI*

*P. G. Dept. of Commerce Karnatak University Dharwad-3

ABSTRACT The process of economic growth of a country depends on the amount of capital formation in various sectors of economy. The savings and investments are not only essential to meet the present and future expected requirements but also essential to meet the unexpected requirements. The savings, in many times, act as shock absorber in the day-to-day life of investors. The savings and investments pattern by the people vary from person to person and even with same person during two periods of time due to differ in motives. The main motives of savings and investments are to earn present income to meet present requirements and future requirements. The main objectives of the study are to examine the relation between the level of awareness and demographic factors of respondents and the sources of awareness and reasons for investments.The present study has based on both primary as well as secondary data. The primary data are collected through pre-tested questionnaires from 450 respondents from rural area of Bijapur district. The respondents are selected randomly as sample from villages of different Talukas of Bijapur district. The collected data are analyzed by using statistical tools to draw inferences. The study suggested that the Government and non government agencies should take care in bringing awareness and educating the rural population to save a portion of their earnings and invest judiciously.

INTRODUCTION

The economic growth of a country depends on the level of investment made by the citizens in various sectors of economy. The people

usually save and invest to earn income and meet the future expenses and contingencies. The savings act as shock absorber in the day today life of investors. The amount of savings of investors and their judicious investments



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depend on the size of income, nature of occupation, size of the family, number of earning members, commitments towards family, consumption pattern, attitudes towards investments, perceptions towards risk and return and investment environment, etc.

The savings and investments pattern by the people vary from individual to individual and even with same individual during two periods of time due to differ in motives and perceptions. There are many motives behind savings and investments. However, capital appreciation, regular income, tax planning, diversification and minimization of risks, health and education of family members, performance of ceremonial activities like marriage, birth and death, purchase of fixed and current assets, construction of houses, etc, are some important motives behind savings and investments in people. Further, the savings and investments are also essential to meet the requirements during old age due to lack of social security measures in India. The majority of Indians depends on their children during old age. Of late, the support from the family members to old age people has been declining due to westernization of Indian culture. Hence, people must save and invest not only for present requirements but also for future requirements during old age.

The household savings and investments consist of physical savings, financial savings and marketable savings. The physical savings comprise of investment in fixed and current assets like land and buildings and their improvements, gold and jewels, durables and non-durables, automobiles like two wheelers and four wheelers, domestic animals, etc. The financial savings consists of bank deposits, post office savings, life insurance, provident and pension funds, etc. The marketable savings comprise

of investments in share, mutual funds and debenture, etc.

The majority people prefer to invest in physical and financial savings. They consider these investments are safer. The people of India are investing voluntarily more in various schemes of postal savings as compared to other modes of investments. “The postal savings in India during April-July 2010 was Rs.83130 crores as against Rs.60987 crores during April-July 2009 whereas the deposits in banks were Rs.146770 crores as against Rs.236348 crores during the same period”1. This indicates that the rate of return on postal savings is higher than the bank deposits and people can access services of post offices easily due to spread of postal network throughout the country. The investors are investing in insurance to cover the risk against life and property even though return on investment may be lower. Recently, urban investors prefer for capital and commodity market to take the advantage of market determined income. However, rural investors prefer either for bank deposits or postal savings or both due to low awareness towards investment in capital market. Recently, the insurance sector has entered some part of rural India to increase its business and to meet the needs of rural people. In this background, an attempt has made to analyze the level of awareness in rural investors towards institutional investments.

REVIEW OF EARLIER LITERATURES

MADHUSHDHAN KARMAKAR (2001)2

The author made an attempt to analyze the investment behaviour of house hold sector. 50 respondents were selected randomly as sample for the purpose of the study and data were collected through questionnaire from these sample respondents. The study found that people in general are risk averse and they



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want to invest in safe assets and they considered stock market as risky.

C KRISNAMOORTHY (2007)3

The author made an attempt to study the investment pattern and awareness of salaried class investors in Niligiris District. The study used the primary data, collected from 600 salaried investors through questionnaire. The study revealed that 81 per cent of respondents have preferred for bank deposits and insurance investments.

FULBAGH SINGH AND SANIA CHAWLA (2007)4

They made an attempt to analyze the consumer preference for life insurance in Northern India. They had selected sample of 300 policy holders from Northern States like Haryana, Punjab, J&K, Himachal Pradesh and New Delhi. Likert Scale has used to collect the information. Anova and Post hoc test has applied to test the consumer preference towards investment. The study concluded that consumers of post-liberalization period have given higher weightage to rate of return, surrender value, extra coverage, tax benefits, maturity amount and risk coverage as compared to consumers of pre-liberalization period.

N.YASODHA DEVI, V.S.KANCHANA, AND S SUJATA (2008)5

The researchers made an attempt to analyze investment behaviour of salaried persons in Coimbatore City. They examined the attitudes of respondents towards savings and investment pattern by collecting information from 200 sample respondents from study area. The study revealed that the investors’ main intention to save is to save tax. Therefore, the study suggested to take steps to create awareness among the investors about

other savings schemes and investment avenues.

SAFIA JOSMEENA (2009)6

The researcher made an attempt to examine the investment choice of individual investors. The researcher employed SPSS package to calculate chi-square to examine the association between demographic factors and the risk. The study revealed that over 50 per cent respondents have made low risk investment. The study concluded that there has no significant association between demographic factor and the risk.

SARAVANA KUMAR (2010)7

The researcher made an attempt to examine the investors’ preference towards equity and future market. The researcher selected a sample of 100 investors of JRG Securities Ltd. The data were collected through questionnaire. The study revealed that the investors were satisfied with the service provided by the JRG Securities Ltd. The study suggested to have through knowledge before making investment decision.


The main objectives of the study are;

• To know the sources of awareness of different investment avenues.

• To examine the reasons for investments.

• To examine the causes of low interest in investments in capital market.

• To assess the relationship between the level of awareness and demographic factors of respondents.



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HYPOTHESIS OF THE STUDY

The present study has based on following hypothesis.

Ho; There has no relation between the level of awareness and demographic factors.

Ha; There has relation between the level of awareness and demographic factors.

METHODOLOGY OF THE STUDY

The present study is based on both primary as well as secondary data. The primary data are collected through pre-tested questionnaires from 450 respondents from rural area of Bijapur district. The respondents are selected randomly as sample from villages of different Talukas of Bijapur district. The collected data are analyzed by using statistical tools like percentage, average and chi-square test to draw inferences. The investors are classified into low and high awareness investors based on the level of awareness towards institutional investments like bank deposits, post office savings, insurance, mutual funds and shares of companies. The average is calculated from the data collected to classify investors into high awareness and low awareness investors. The investors whose awareness is above the average are classified as high awareness investors and the investors whose average is below the average are classified as low awareness investors. Further, secondary data are collected from journals, books and daily newspapers to support the study.

SCOPE OF THE STUDY

The present study confines itself to examine the relation between the level of awareness towards investments and demographic factors of rural household investors of Bijapur district. Further, the study also concentrates on the reasons for investments, reasons for low interest in investments in capital market and priority of investments by the investors.

ANALYSIS OF LEVEL OF AWARENESS IN INVESTORS TOWARDS INVESTMENTS

The Chi-square test is used to analyze the relationship between demographic factors like age, sex, education, level of income, caste, family system, occupation and marital status, etc, and the level of awareness of investors towards institutional investments like investments in bank deposits, post office savings, insurance and stock market. In addition, the other aspects like sources of awareness, awareness towards various avenues of investments and the pattern of investments are also analyzed.

The quality of decision depends on the quality and quantity of information and their sources. Friends, relatives, agents, family members and media like press and audio-video, etc are the main sources of awareness for rural investors. It is clear from Table 1 that the main sources of awareness in rural investors towards institutional investments are family members and friends. But the role of media is least in creating awareness. This shows that informal sources have played key role in modeling the rural people.



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TABLE -1: SOURCES OF AWARENESS AMONG RURAL INVESTORS TOWARDS INVESTMENTS

Sources of Awareness Number of Response Percentage

Family Members 225 50.00

Friends 206 45.78

Relatives 125 27.78

Agents 99 22.00

Media 91 20.22

Total 450 100.00

Source; Field Survey.

Note: Multiple Responses.

TABLE-2: AWARENESS OF RURAL INVESTORS TOWARDS INVESTMENT AVENUES

Investment Sources Number of Response Percentage

Banks 450 100.00

Insurance 230 51.11

Post Office 450 100.00

Mutual Funds 98 21.78

Shares 75 16.67

Pension Funds 77 17.11

Total 450 100.00



Generally, the rural people are both illiterate and low educated as compared to urban and as a result they have less knowledge of investments in shares, mutual funds and pension funds. Table 2 clears that all respondents aware of investment in banks and postal savings and

51.11 per cent respondents aware towards insurance sector. Out of total, only 21.78 per cent aware mutual funds, 16.67 per cent aware shares and 17.11 per cent aware pension funds. This shows that majority of investors lack awareness towards mutual funds, shares and



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pension funds. This signifies the need of creating awareness in rural investors towards investments in capital markets as more than 60 per cent of Indian population belongs to rural India.

The pattern of investments and their priorities depend on the perceptions and attitudes of investors towards risk and return and their knowledge. The rural investors usually prefer for investing in domestic animals, gold and silver as compared to institutional investments due to low awareness and low literacy. They consider investments in capital market are unsafe. They prefer to invest more in

bank deposits and postal savings due to quality of return on their investments. But the investors invest in insurance sector to cover against the risk but not to earn income. It is revealed from Table 3 that rural investors have given top priority for postal savings as compared to banks, insurance and capital market. Out of total response, 77.78 per cent invested in post office, 46.67 per cent invested in banks and 34.44 per cent invested in insurance, 10 per cent invested in mutual funds, 7.11 per cent invested in shares and only 6.44 per cent invested in pension funds. This indicates the need of highlighting to the rural investors the significance of investments in capital market.

TABLE-3: PATTERN OF INVESTMENTS BY RURAL INVESTORS

Investments Number of Response Percentage

Banks 210 46.67

Insurance 155 34.44

Post Office 350 77.78

Mutual Funds 45 10.00

Shares 32 07.11

Pension Funds 29 6.44

Total 450 100.00





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TABLE -4: REASONS FOR INVESTMENTS BY RURAL INVESTORS

Reasons for Investments Number of Response Percentage

Accretion of Income 411 91.33

Regular Income 325 72.22

Performance of Ceremonial Functions 350 77.78

Education and Health of Family Members 225 50.00

Old age Requirements 90 20.00

Unexpected Contingencies 75 16.67

Total 450 100.00

Source; Field Survey. Note: Multiple Responses.

There are many reasons for investments in various avenues of investments. The investments may be for current income or future income or both. It is revealed from Table 4 that accretion of income has been the top reason and unexpected contingency is the least reason for investments. Out of total responses of rural investors towards investment of their savings, accretion of income is the reason for 91.33 per cent, regular income is the reason for 72.22

per cent and performance of ceremonial functions is the reason for 77.78 per cent, education and health of family members is the reason for 50 per cent, the old age requirement is the reason for 20 per cent and the unexpected contingency is the reason for only 16.67 per cent. This clears that the investors have given high importance for current income and low importance for old age requirements and unexpected contingencies.

TABLE -5: REASONS FOR LOW INTEREST IN INVESTMENTS IN CAPITAL MARKET

Reasons Number of Response Percentage

Uncertain Income 232 51.56

Procedural Problem 233 51.77

Lack of Expertise 275 61.11

Lack of Information 263 58.44

Lack of Confidence 272 60.44

Total 450 100.00




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Today, many investors are hesitating to invest in institutional investments like mutual funds and shares due to uncertain earnings on the one side and high risk on the other side. Further, they have less confidence in return of principle and income their on. It is revealed from Table 5 that out of total number of respondents having different reasons for

low interest in investing capital market, the uncertain income is the reason for 51.56 per cent, procedural problem is the reason for 51.77 per cent, lack of expertise is the reason for 61.11 per cent, lack of information is the reason for 58.44 per cent and lack of confidence is the reason for 60.44 per cent of respondents.

TABLE-6: AGE AND LEVEL OF AWARENESS OF RESPONDENTS

Level of Awareness

Age Group

21-30 31-40 41-50 Total

High 97(44.09)

(52.43)

72(32.73)

(47.37)

51(23.18)

(45.13)

220(100.00)

(48.89)

Low 88(38.26)

(47.57)

80(34.78)

(52.63)

62(26.96)

(54.87)

230(100.00)

(51.11)

Total 185(41.11)

(100.00)

152(33.78)

(100.00)

113(25.11)

(100.00)

450(100.00)

(100.00)


Figures in parentheses to the right and below the figures indicate percentages to the respective row and column totals.

Table 6 shows the relationship between age of respondents and level of awareness towards institutional investments. The table value of X2 at 5 per cent level of significance for 2 degree of freedom is 5.991 and the calculated value of X2 is 6.286. Since

the calculated is higher than the table value of X2, it is inferred that there has direct relationship between age and level of awareness of respondents towards various investments.



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TABLE-7: SEX AND LEVEL OF AWARENESS OF RESPONDENTS

Level of Awareness Sex of Respondents

Male Female Total

High 175(79.55)

(59.32)

45(20.45)

(66.67)

220(100.00)

(48.89)

Low 120(52.17)

(40.68)

90(47.83)

(66.67)

230(100.00)

(51.11)

Total 295(65.56)

(100.00)

135(34.44)

(100.00)

450(100.00)

(100.00)



Table 7 analyzes the relationship between level of awareness and sex of respondents. The table value of X2 at 5 per cent level of significance for 1 degree of freedom is 3.841 and the calculated value of

X2 is 25.747. Since the calculated is higher than the table value of X2, it is inferred that that there has direct relationship between sex and level of awareness of respondents towards various investment avenues.

TABLE-8: ANNUAL INCOME AND LEVEL OF AWARENESS OF RESPONDENTS.

Level of Awareness

Annual Income of Respondents

Less than Rs1Lakh

Rs1Lakh to Rs2Lakh

Above Rs2Lakh Total

High 52(23.64)

(36.88)

73(33.18)

(48.34)

95(43.18)

(60.13)

220(100.00)

(48.89)

Low 89(38.70)

(63.12)

78(33.91)

(51.66)

63(27.39)

(39.87)

230(100.00)

(51.11)

Total 141(31.33)

(100.00)

151(33.56)

(100.00)

158(35.11)

(100.00)

450(100.00)

(100.00)




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Table 8 indicates level of income and level of awareness towards institutional investments among sample respondents. The table value of X2 at 5 per cent level of significance for 2 degree of freedom is 5.991

and the calculated value of X2 is 16.436. As the calculated value is higher than the table value of X2, it is inferred that there has direct relationship between income and their level of awareness of respondents.

TABLE-9: TYPE OF OCCUPATION AND LEVEL OF AWARENESS OF RESPONDENTS

Level of Awareness

Type of Occupation

Landless labours

Farmers Businessmen Employees Total

High 42(19.09)

(33.60)

65(29.55)

(43.62)

62(28.18)

(57.94)

51(23.18)

(73.91)

220(100.00)

(48.89)

Low 83(36.09)

(66.40)

84(36.52)

(56.38)

45(19.57)

(42.06)

18(07.82)

(26.09)

230(100.00)

(51.11)

Total 125(27.78)

(100.00)

149(33.11)

(100.00)

107(23.78)

(100.00)

69(15.33)

(100.00)

450(100.00)

(100.00)



Table 9 shows information relating level of awareness and type of occupation of respondents in the study area. It is revealed that the calculated value of X2 is 33.774 and the table value of X2 at 5 per cent level of significance for 3 degree of freedom is 7.815.

Since the calculated value is higher than the table value of X2, there has direct relationship between level of awareness towards institutional investments and type of occupation of sample investors.



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TABLE-10: FAMILY SYSTEM AND LEVEL OF AWARENESS OF RESPONDENTS

Level of Awareness Family System

Individual Joint Total

High 118(53.64)

(47.20)

102(46.36)

(51.00)

220(100.00)

(48.89)

Low 132(57.39)

(52.80)

98(42.61)

(49.00)

230(100.00)

(51.11)

Total 250(55.56)

(100.00)

200(44.44)

(100.00)

450(100.00)

(100.00)



Table 10 highlights information relating to level of awareness and type of family system of sample respondents. It is revealed from the calculation of X2 that there has no relationship between the type of family and the level of awareness towards institutional investments because the

calculated value of X2is less than the table value at 5 per cent level of significance (i.e. X2 is 0.5761 and the table value of X2 at 5 per cent level of significance for 1 degree of freedom is 3.841). Therefore, the null hypothesis is accepted and the alternative hypothesis is rejected.

TABLE-11: MARITAL STATUS AND LEVEL OF AWARENESS OF

RESPONDENTS

Level of Awareness Marital Status

Married Single Total

High 185(84.09)

(51.10)

35(15.91)

(39.77)

220(100.00)

(48.89)

Low 177(76.96)

(48.90)

53(23.04)

(60.23)

230(100.00)

(51.11)

Total 362(80.44)

(100.00)

88(19.56)

(100.00)

450(100.00)

(100.00)




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Table 11 clears the relationship between level of awareness towards institutional investments and marital status of sample respondents. The table value of X2 at 5 per cent level of significance for 1 degree of freedom is 3.841 and the calculated value of

X2 is 3.617. As the calculated value is less than the table value of X2, accept the null hypothesis and reject the alternative hypothesis. This clears that marital status has no direct relationship with level of awareness towards institutional investments.

TABLE-12: CASTE AND LEVEL OF AWARENESS OF RESPONDENTS

Level of Awareness

Caste of Investors

SC ST Others Total

High 42(19.09)

(53.16)

18(08.18)

(46.15)

160(73.73)

(48.20)

220(100.00)

(48.89)

Low 37(16.09)

(46.84)

21(09.13)

(53.85)

172(74.78)

(51.80)

230(100.00)

(51.11)

Total 79(17.55)

(100.00)

39(08.67)

(100.00)

332(73.78)

(100.00)

450(100.00)

(100.00)



Table 12 shows the relation between the awareness level towards investments and caste of sample respondents. The calculated value of X2 is 1.286 and the table value of X2

at 5 per cent level of significance for 2 degree of freedom is 5.991. Since the table value is

higher than the calculated value of X2, accept the null hypothesis and reject the alternative hypothesis. This clears that there has no direct relationship between the level of awareness and caste of respondents in the study area.



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TABLE-13: LEVEL OF EDUCATION AND LEVEL OF AWARENESS OF RESPONDENTS

Level of Awareness

Level of Education

1-7th 8-10th PUC Degree Total

High 89(40.45)

(45.41)

67(30.45)

(47.18)

43(19.55)

(54.43)

21(09.55)

(63.64)

220(100.00)

(48.89)

Low 107(46.52)

(54.59)

75(32.62)

(52.82)

36(15.64)

(45.57)

12(05.22)

(36.36)

230(100.00)

(51.11)

Total 196(43.56)

(100.00)

142(31.56)

(100.00)

79(17.55)

(100.00)

33(07.33)

(100.00)

450(100.00)

(100.00)



Table 13 provides the information relating level of awareness towards institutional investments and level of education of sample respondents. It is clear from the calculation of X2 that there has no direct relation between the level of awareness and level of education in respondents. The calculated value of X2 is 4.958 and the table value of X2 at 5 per cent level of significance for 3 degree of freedom is 7.815. Since the table value is higher than the calculated value of X2, accept the null hypothesis and reject the alternative hypothesis.

MAJOR FINDINGS

Following are the major findings of the study:

• Postal savings till hold higher priority among institutional investments in rural area.

• Personal sources of information have played greater role as compared to

official sources in bringing awareness regarding institutional investments.

• Investors have given least importance for their old age requirements and unexpected contingencies.

• Lack of confidence and lack of expertise are the main reasons for low interest in investors towards institutional investments.

• There has direct relation between age of respondents and level of awareness towards various investments.

• There has direct relationship between sex of respondents and level of awareness towards various investment avenues.

• There has direct relation between income of respondents and their level of awareness.



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• There has direct relationship between level of awareness towards institutional investments and type of occupation of sample investors.

• There has no direct relationship between type of family and level of awareness towards institutional investments.

• Marital status, caste and level of education have no direct relation with the level of awareness towards institutional investments.

SUGGESTIONS

• AWARENESS PROGRAMMES The percentage of literacy in India among rural population is low as compared to urban. Therefore, majority of rural people have insufficient knowledge towards the benefits of institutional investments. Therefore, it is necessary to bring awareness in rural people through various rural means of promotions.

• INVEST FOR OLD AGE AND UNEXPECTED CONTINGENCIES The culture of India has moving towards western due to the advancement in information technology and the joint family system has been loosing its significance. It is very difficult for old age people to lead their life without sufficient savings. Hence, they should invest for old age and unexpected requirements.

• OPENING OF STOCK BROKING OFFICES The stock brokers have concentrated on urban area and they rarely spread to semi-

urban and no spread to rural areas. Therefore, it is essential to open their offices in rural area as around 70 per cent population are residing.

• IMPROVEMENT IN ADULT EDUCATION The Government has been investing in reducing illiteracy through adult education programme. However, the implementation of adult education programme is not only poor but also the contents of education are low. Therefore, it is essential to add investment education in of adult education.

• INVOLVEMENT OF NGOS AND GOVERNMENT AGENCIES The NGOs and Government agencies may try to educate the rural population regarding the benefits of institutional investments.

• ENTRY OF INSURANCE COMPANIES The insurance companies of public and private sectors have concentrated more on urban and semi-urban areas and they thought less to cover the rural population which accounts for around 70 per cent of total population. Therefore, insurance companies spread their branch network to rural India to provide risk coverage to the life and assets.

CONCLUSION

The savings and investments are the part and parcel of every citizen’s day to day life and it is very difficult for one to meet expected and unexpected expenditures without proper amount of savings and their judicious



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investments. No doubt, there are many avenues of investments for investors to invest their savings in the present scenario but these avenues have concentrated more on urban areas. In view of this, the rural investors are not coming forward to invest their savings capital market due to lack of knowledge to manage their investment portfolio to maximize their return and to minimize risk. Education through various awareness schemes and entry of institutional agencies to rural area can help the rural folk to improve their financial health and standard of livings. Therefore, the Government and non government agencies may take care in bringing awareness and educating the rural population to save some portion of their earnings and invest judiciously.

REFERENCES

• Business Line, Daily, 11-12-2010.

• Madusudhan Karnakaran. 2001. Investment Behavior of Household Sector A Study of A Rural Block of West Bengal, The Indian Journal of Commerce, 54(12):58-65.

• Krishnamoorthy, C.2007. A Study of Investment Pattern of Investment Pattern and Awareness of Salaried Class Investors in Niligiris District, SMART Journal of Business Management, 3(2):73-78.

• Fulbagh Singh and Sania Chawla. 2007. Liberlisation and Consumer Preference for Life Insurance in Northern India, The Indian Journal of Commerce, 60(4):

• Yasodha Devi, N. Kanchana, V.S.and S Sujata. 2008. A Study on Investment Behavior of Salaried Persons in

Coimbatore City, SMART, Journal of Business Management, 4(1):47-58.

• Sofia Jasmeen. 2009. Investment Choice of Individual Investors, The Indian Journal of Commerce, 62(4):58-63.

• Saravana Kumar. 2010. An Analysis of Investors Preference towards Equity and Derivatives, The Indian Journal of Commerce, 63(3):71-78.

• Sharnma,Vivek. Hur,Jungshik and Lee,Hawai. 2008. Glamour versus Value: Trading Behaviour of Institutional and Individual Investors, The Journal of Financial Research, 31(1):65-84.

• Hiryappa, B. 2008. Investment Management, New Age International Publishers, Bangalore.

Documents

IJMMR APRIL 2011